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Omni Channel - Telstra WhitePaper


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Omni Channel report from Telstra on status in Australia

Omni Channel report from Telstra on status in Australia

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  • 1. How you can jointhe OmnichannelShopper intransformingAustralian retail 1
  • 2. Executive summary 4 Bricks v. bytes: the changing face of retail 5 Shopping Without Boundaries: the Omnichannel Shopper’s world 6 Case Study: John Lewis – an early Omnichannel adopter profits 8 Telstra’s research: Omnichannels in Australia 10 How new technologies are changing the way in which Australians shop 11 What the research shows: Internet usage and shopping patterns 12 Social Media and the new shopping experience – what it means for retailers 25 Segmenting your customers in an Omnichannel marketplace – Deloitte’s View 27 Vital Omnichannel lessons for Australian retailers 28 Case Study: Coca-Cola Amatil goes Omnichannel in Australia (sidebar) 30 Conclusion 32 ABOUT THE AUTHORS 342 3
  • 3. EXECUTIVE Bricks v. bytes: SUMMARY the changing face of retail With the ongoing evolution of technologies such as For many years, Australian retailers saw the the Internet, Wi-Fi and Smartphones, retailers today decision to trade online as an alternative to are faced with a plethora of choices for engaging trading in a physical store. with customers, and thus driving sales. Traditionally, retailers have segmented the This whitepaper also explores how Preference for online or physical channels Retailers judged their decision to trade Overseas, traditional retailers embraced market into those who shop online and those technology continues to drive the evolution varies by product category but overall the online in the same way they assessed the online trading much more readily. In the who shop in a physical store. Increasingly, of retail, the many possibilities now research shows that consumers are looking viability of adding an extra site to their UK, where online now represents 12% of however, the boundaries are blurring and a available to Australian retailers, and critical for a blended online/offline experience when bricks and mortar network. If online could retail sales1, traditional bricks and mortar new consumer paradigm is fast emerging: considerations for those who wish to build they shop. The things they like about bricks not stand-alone and make a profit, it was operators dominate the list of top online the Omnichannel Shopper. an Omnichannel retail experience for their and mortar stores are sensory (touch, feel, dropped like any other loss making venture. retailers. High street chains like Tesco, Next, customers. service) whereas they value the anywhere, Thus, a number of high profile Australian Debenhams, John Lewis, Currys, Topshop Equally comfortable to research and shop anytime convenience of shopping online. retailers entered the online world then and B+Q all feature in the top 202 and there on the Internet or in a store, depending on Our findings show that the Omnichannel Combining the two delivers the best of both exited again when they didn’t see profitable are six bricks and mortar chains in the top circumstances, the Omnichannel Shopper customer does indeed exist in Australia. They worlds. results. 10. In the USA, traditional bricks and mortar has much to offer Australian retailers, are as well, if not better, equipped than their retailers also dominate the list of top online including a rich source of data on consumer overseas peers to search and shop in an Other Australian retailers resisted trading retailers. Internet Retailers 2012 Top 500 list behaviour and buying patterns, and scope to Omnichannel world and they are shopping online altogether. They feared that trading of online retailers in the USA has Staples, target shoppers more precisely with offers the Omnichannel way already. In some online would cannabilise their existing Apple, Wal-Mart, Office Depot, Sears and relating to their individual preferences. product categories more than 80% of online bricks and mortar businesses. For these CDW in the top 10. buyers also shop for the same goods they retailers, trading online would be like A lot has been said about the Omnichannel buy online in bricks and mortar stores. opening a store next door to one that had shopper in Australia over the last 12 already been fitted out and a lease signed. months but most of it is based on overseas They felt that the customer would choose experience and research. To discover how one outlet or the other, but that there would best Australian retailers can both reach and not be enough extra business to justify the harness the power of this new consumer, additional investment. Telstra commissioned a unique research study to identify the prevalence of the Omnichannel customer in the Australian marketplace, their drivers and behaviours. Contrasted here against case studies from domestic and international experience, the results make for fascinating reading. 1 Centre for Retail Research 2011 Study 2 IMRG Experian Hitwise Hot Shops Feb 20124 5
  • 4. Shopping Without Boundaries: the Omnichannel Shopper’s world The success of traditional retailers online has given birth to the idea of the Omnichannel shopper, a new concept in retail that has critical implications for distribution channel design. In traditional distribution channel design, The Omnichannel hypothesis is that a market is segmented into groups of traditional channel design is not effective customers that are maximally similar by for retailers. The customer who’s browsing group and maximally different between the online channel for clothes is the same groups. Channels of distribution are then customer who visits the store looking for designed to suit the needs of these groups of clothes. The customer who’s looking online customers. For example, your bank probably for a holiday is the same customer who visits has separate channels for large corporate, a store to buy a holiday. Online and physical small business and consumer customers. stores are not separate channels in the Likewise, at Telstra, we operate Enterprise traditional sense because the one person and Government, Business and Consumer may use both channels. In fact, online and channels. Underlying this model is the belief physical more rightly should be considered that each customer buys only from one an Omnichannel. channel, and thus that the profitability of each channel should be judged separately. When a business is designed this way, management spends a lot of time on their channel P&Ls, wondering whether one channel is cannabilising another.6 7
  • 5. CASE STUDY: John Lewis an early Omnichannel adopter profits John Lewis entered the online retail market in 2001. Like many other bricks and mortar retailers 2. Click and connect The results have been impressive: of the time, they did so through the Introduced in 2008, “Click and Collect” • Online sales have increased as a acquisition of an established online only gave customers the ability to order online proportion of total sales every year since operator. (In John Lewis’ case, the online and pick up their purchase in a store of the launch of the online site. Online sales operator was the UK arm of “”) their choice. Or they could order in a store now represent 22% of total sales at John Rather than run the online operation as a and have the goods delivered home. This Lewis3. separate entity, John Lewis soon recognised strategy delivered a tangible benefit to the • Overall, John Lewis sales have continued the value of integrating the online Omnichannel shopper. For the first time, to increase on a like-for-like basis over the experience with the in-store experience. To the shopper could combine the benefits last 10 years4. achieve this, John Lewis implemented three of a physical distribution channel with the key strategies: • John Lewis customers are Omnichannel convenience of an online channel. To the customer, online and in-store became part shoppers. According to the IDC Retail 1. Collaborate, don’t compete of the same shopping experience. They Insights Report “ John Lewis: The Path to ceased to be separate channels. Omnichannel”, published in May 20125: The first strategy aimed to ensure that the online operation did not cannibalise −− 27% of John Lewis customers research the bricks and mortar stores, and involved what they want in store and then 3. Online, while in store purchase it online rewarding physical stores for online John Lewis’ third key strategy was to bring sales that were made in their trade area. −− Over 60% of customers research online online in to the physical in-store shopping Store employees (partners) were given an before going to the store experience. Terminals were installed in incentive to encourage shoppers to use the −− More than 20% of John Lewis John Lewis stores so that partners could John Lewis online site, and because staff customers buy online and collect assist shoppers with online purchases were rewarded for the desired behaviour, in store in what was known as the PACT (Partner there was a very real reason for them to Assisted Customer Transaction) program. −− 40% use their phones to interact with collaborate and not compete. In addition shoppers in John Lewis stores the brand when in a store. were encouraged through signage and • The Omnichannel shopper is John Lewis’s later through QR code links to go online most valuable customer. On average, the for information on extra product ranges, Omnichannel customer spends 3.5 times stock availability, finance terms and other more than the customer who shops in information that might assist them in their store or online exclusively. Quite simply, shopping mission. access to an Omnichannel shopping experience encourages more spending. 3 John Lewis Annual Report 2012 4 John Lewis Annual Reports, 2002-2012 5 IDC Retail Insights, John Lewis: “The Path to Omnichannel” Doc #GRRS03U, May 20128 9
  • 6. Telstra’s research: How new technologies Omnichannels are changing the way in in Australia which Australians shop A number of dedicated research studies into the Before looking at the results of our research, it’s Omnichannel customer have been conducted overseas, worth considering the technological environment that although none – until now – in Australia. exists in Australia to support the Omnichannel shopper. Given the relative immaturity of online respondents across Australia. Quotas In particular, what technologies are • Consumers are increasingly using their among traditional retailers in Australia, were applied to provide for adequate Australian shoppers equipped with? And mobile devices to access the Internet Telstra was interested to find out if the representations in each age group and how does the Australian technological while commuting or travelling. According Omnichannel customer exists in the both genders. Quotas were also applied environment compare with that available to to Nielsen, the proportion increased from Australian market. And, if so, we wanted to on location to ensure coverage across shoppers in Europe and North America? 42% in 2010 to 55% in 2011. Of these, find out who they are and what merchandise metropolitan and regional areas in each 31% report using their mobile devices to • The Australian consumer is categories they favoured. We also wanted State and Territory. The interview fieldwork research products. overwhelmingly an online consumer. to discover the critical considerations for was conducted in March/early April Ranked by Internet users as a percentage • Consumers are growing accustomed to Australian retailers wishing to build an 2012. The data was weighted by age and of total population, Australia has the 5th a multiple screen life. Six in 10 online Omnichannel retail experience for their gender within location so that the results highest level of Internet penetration in the Australians have used the Internet while customers. are reflective of the actual Australian world. Total penetration in Australia, as at watching TV while more than one third population. Sample sizes by age and gender The research consisted of a telephone December 2011, lies at 90% – just ahead do it on a daily basis. Of these, two thirds are shown below. survey of 813 randomly selected of Netherlands and Denmark. Australia is have used the Internet to shop while the only non-European nation amongst simultaneously watching TV. the top five countries ranked by Internet total male female • According to Nielsen’s Social Media penetration6. Report: Q3 2011 Australians use social 14 to 19 years of age 95 44 51 • According to the Nielsen 2012 Australian media more than any other developed 20 to 29 years of age 97 47 50 Online Consumer Report, Australians country. What’s interesting for retailers now spend an average of almost 22 is that social media is increasingly being 30 to 39 years of age 126 55 71 hours per week online. In terms of media used to interact with brands. One of consumption, this is 40% more time than the key areas of growth in Australians’ 40 to 49 years of age 141 70 71 they spend in front of a TV. participation with social media in 2011 50 to 64 years of age 196 96 100 was in ‘Liking’ brands (now 57%, up from • Time spent online is increasingly 46% in 2010) and interacting with brands 65+ years of age 158 79 79 facilitated by a proliferation of mobile on social media platforms (now 47%, devices. Nielsen say that 51% of all up from 41% in 2010). 71% read other Total 813 391 422 online Australians aged 16+ owned a consumers’ opinions and discussions Smartphone in 2011, up from 36% in about brands online. Cisco’s IBSG group 2010 (and they forecast Smartphone in the U.S. found that online reviews are penetration to be at 64% by 2013). This now five times more influential than in- compares to penetration rates of 45% in store assistants in influencing shopper the UK and 38% in the USA7. Time spent choice8. accessing the Internet from Smartphones increased by 20% in 2011 to an average of 4.2 hours per week, in addition 18% of Australian households now own a tablet computer, up from 8% in 2010 and forecast to be 39% by 2013. 6 Internet World Stats: 7 Google Mobile Internet and Smartphone Adoption Report January 2012 8 Cisco ISBG “Catch ‘em and keep ‘em 2011”10 11
  • 7. What the research shows: Internet usage and shopping patterns Internet usage is now almost ubiquitous in Proportion who access the internet Australians are very frequent users of the Frequency of accessing the internet Australia across all demographic groups Internet. Over 50% of consumers access and is still increasing. the Internet every day and almost a third access the Internet more than five times TOTAL 98% MORE THAN FIVE TIMES A DAY 32% per day. MALE 99% EVERYDAY 52% FEMALE 97% MOST DAYS 6% 14-19 100% A FEW TIMES A WEEK 5% 20-29 100% ABOUT ONCE A WEEK 2% 30-39 100% 1% LESS OFTEN THAN WEEKLY 40-49 99% NEVER 2% 50-64 99% 65+ 93% Proportion who access the internet – trends The Internet is being used for shopping Proportion who purchased online in the past 12 months by two thirds of consumers. Men are somewhat more likely to shop on the 98% Internet than women, while Internet TOTAL 66% shopping is most popular among 30-39 year olds. Almost four in five consumers 92% have shopped on the Internet in the last MALE 71% 91% 90% 12 months in this age group. 89% 61% FEMALE 86% 86% 14-19 50% 83% 20-29 69% 2005 2006 2007 2008 2009 2010 2011 2012 30-39 78% Source: Sensis® e-Business Report, Sweeney Research 40-49 70% 50-64 68% 65+ 55%12 13
  • 8. What the research shows: Internet usage and shopping patterns (cont.) Online shoppers each spent an average of Amount spent online in the past year More than two thirds of online shopping Proportion of online purchases from overseas $2,218 last year. On average, men spent takes place in Australia – i.e. goods are more than double online than women. bought from Australian-based retailers. This is likely to be due to men having This finding is consistent with the UP TO $200 22% NONE 21% a higher average income. The spend Australian Government’s Productivity amount increased dramatically for those Commission Report, “Economic Structure on higher incomes, rising from $1,159 $201-$1000 37% and Performance of the Australian Retail UP TO 20% 34% per online shopper with an income up Industry,” published in November 2011. to $55k per annum, to $1,171 per online $1001-$5000 27% 21%-50% 21% shopper with an income between $56k and $85k per annum and $3,820 per OVER $5000 9% OVER 50% 22% online shopper with an income above $85k. Only 28% of females had incomes AVERAGE = 31% DON’T KNOW 5% DON’T KNOW 4% AVERAGE = 31% over $85k per annum, compared with 38% of males. Regional shoppers spend more online Base – purchased online Base – purchased online than metropolitan shoppers, but the difference is relatively small (around 7%). Average spend online in the past year TOTAL $2,218 MALE $2,959 FEMALE $1,388 14-19 $475 20-29 $2,449 30-39 $3,330 40-49 $3,073 50-64 $1,396 65+ $1,63314 15
  • 9. What the research shows: Internet usage and shopping patterns (cont.) The most popular categories for online Types of products/services purchased online The online shopper is overwhelmingly an Online purchasers who had also purchased the same purchasing are clothing/accessories and Omnichannel shopper. The most popular product offline in the past 12 months books while the least popular are cosmetics Omnichannel category is clothing/ and sporting goods. accessories, with 89% of online buyers CLOTHING/ACCESSORIES/SHOES 39% also shopping in-store. The least popular 89% CLOTHING/ACCESSORIES/SHOES Omnichannel category is airline tickets, but BOOKS 35% even here 31% of online buyers also buy in BOOKS 82% APPLIANCES AND ELECTRONIC 26% bricks and mortar stores. EQUIPMENT (OTHER THAN COMPUTERS) APPLIANCES AND ELECTRONIC 69% EQUIPMENT (OTHER THAN COMPUTERS) VIDEOS/DVDS/GAMES 18% VIDEOS/DVDS/GAMES 75% AIRLINE TICKETS 18% AIRLINE TICKETS 31% HOTEL RESERVATIONS 17% HOTEL RESERVATIONS 33% MUSIC 16% MUSIC 48% COMPUTER HARDWARE 14% COMPUTER HARDWARE 66% GROCERIES & ALCOHOL 13% GROCERIES & ALCOHOL 83% COMPUTER SOFTWARE 12% COMPUTER SOFTWARE 55% COSMETICS 9% ALL OTHER RESPONSES LESS THAN 5% 72% COSMETICS SPORTING GOODS/FITNESS 6% EQUIPMENT/FISHING GEAR SPORTING GOODS/FITNESS 61% EQUIPMENT/FISHING GEAR Base – purchases online (66%) Base – had purchased product online in past 12 months16 17
  • 10. What the research shows: Internet usage and shopping patterns (cont.) Consumers vary in their preference for Preferred shopping method Consumers gave their top reasons for Benefits of shopping online online or in store shopping by category. preferring to shop online as being price Overall, they’re fairly evenly divided between and the convenience of being able to shop those who prefer shopping online, those who from anywhere. The top reasons given prefer shopping in store and those who have HOTEL RESERVATIONS 84% 14% 2% for preferring to shop in a physical store CHEAPER PRICES 41% no preference. A full analysis of individual were sensory (feel, touch, the ability to try COMPUTER SOFTWARE 61% 23% 15% CAN SHOP AT ANY TIME OF DAY/AT HOME 32% consumers (where each consumer was on clothes, etc.) as well as face-to-face assigned a preference, depending on their customer service. IT IS EASY/CONVENIENT 23% MUSIC 59% 16% 25% overall preferences across the full range of goods, and with each preference assigned a CAN RESEARCH MANY PRODUCTS AT 17% AIRLINE TICKETS 54% 25% 21% THE SAME TIME/COMPARE PRICES value of “1”) showed that 42% of consumers CAN FIND PRODUCTS NOT favour bricks and mortar, compared with BOOKS 37% 28% 35% AVAILABLE IN STORES 17% 29% preferring online and 29% having BETTER RANGE/VARIETY OF PRODUCTS 7% balanced preferences across the different VIDEOS/DVDS/GAMES 36% 28% 36% /FROM OVERSEAS channels. GROCERIES & ALCOHOL 35% 6% 59% IT IS FAST/QUICK/TIME SAVING 6% CONVENIENT DELIVERY/POSTAGE 6% COMPUTER HARDWARE 33% 40% 27% & HANDLING/FREE POSTAGE APPLIANCES AND ELECTRONIC DO NOT NEED TO DEAL WITH SALES PEOPLE 4% EQUIPMENT (OTHER THAN COMPUTERS) 29% 32% 38% CAN GET BETTER PRODUCT 4% COSMETICS 25% 22% 53% INFORMATION ONLINE CLOTHING/ACCESSORIES/SHOES 19% 21% 61% Base – purchased online (66%) Prefer online No preference Prefer physical store Base – had purchased products both online and in a physical store in Benefits of shopping in a physical store past 12 months PREFER TO PHYSICALLY SEE/TRY THE PRODUCT 80% BEFORE I BUY/BE ABLE TO TOUCH IT/TRY IT ON PREFER A FACE-TO-FACE SALES 20% PERSON/PERSONAL SERVICE DON’T HAVE TO WAIT FOR DELIVERY 9% MORE CONVENIENT 4% ENJOY THE EXPERIENCE/RETAIL EXPERIENCE 2% LIKE THE SOCIAL ASPECT OF 2% SHOPPING/A GOOD DAY OUT Base – purchased online (66%)18 19
  • 11. What the research shows: Internet usage and shopping patterns (cont.) The online world has given birth to Have you researched goods in a physical store then bought them online? Consumers value Omnichannel shopping How consumers rate different Omnichannel benefits “showrooming.” Showrooming occurs when for the way it combines the strength of a consumer uses a bricks and mortar store in-store and online to create an anytime, to touch, feel and try a product but then anywhere shopping experience. For ABILITY TO RETURN PRODUCTS THROUGH A PHYSICAL 71% buys online. Our research shows that the example, they see benefit in being able STORE EVEN IF PURCHASED ONLINE 23% 3% 2% showrooming phenomenon is real. Half of to order in-store or online and then take ABILITY TO TRACK ORDER STATUS 50% 35% 8% 6% the population has researched a product in delivery somewhere else, to check stock EITHER AT A STORE OR ONLINE a physical store then bought it online, but availability across various locations, or to of these about a quarter made the online check out extended ranges online while NOTIFICATION OF DELAYS IN DELIVERY 46% 38% 11% 6% purchase from the same retailer with visiting a store. NOTIFICATION WHEN FAVOURITE PRODUCTS ARE ON SALE 43% whom they did the research. In other words, NO YES 36% 10% 11% 51% 49% REGARDLESS OF WHETHER AT A STORE OR ONLINE showrooming results in an online sale for ABILITY TO CHECK STOCK LEVELS AT 42% 36% 14% 7% the physical retailer in about 25% of cases. VARIOUS STORES ONLINE ABILITY TO MODIFY AN ORDER MADE ONLINE 38% 36% 17% 8% THROUGH A PHYSICAL STORE ABILITY TO SEARCH FOR EXTENDED 30% 39% 15% 13% RANGES ONLINE WHILE IN-STORE PROVISION OF WIFI HOTSPOT TO ALLOW 22% 24% 22% 29% FREE ONLINE BROWSING IN-STORE Base – purchases online PROVISION OF EXTRA PRODUCT INFORMATION ONLINE 12% 39% 21% 28% THROUGH LINKS PROVIDED ON DISPLAYS IN-STORE Was the online purchase made from the same retailer? PERSONALISED OFFERS DELIVERED 8% 14% 26% 49% TO YOUR MOBILE WHILE IN-STORE 89% Extremely valuable Somewhat valuable Valuable Not valuable Base – purchases online YES 24% NO 76% Base – researched in a store then purchased online20 21
  • 12. What the research shows: Internet usage and shopping patterns (cont.) A large proportion of Multichannel shoppers Proportion who purchased from the same retailer both The Omnichannel shopper values Why purchased at retailer’s physical location – those who shop both online and in physical in their stores and online in the past year convenience. While the benefits of online stores – are already Omnichannel shoppers. shopping centre around comparison- More than a third of the population who shopping, and the benefits of shopping bought online and in-store in the last in-store centre around the senses, both I HAPPENED TO BE THERE/CHANCE PURCHASE/IMPULSE BUY 35% TOTAL 36% 12 months did so from the same retailer. online and physical shoppers rate spatial The Multichannel customer is most convenience as their top reason for CONVENIENCE/EASY/CAN STAY AT HOME 29% MALE 34% likely to be Omnichannel in the younger shopping. For retailers, this means the demographics (14-49) and less likely in the best Omnichannel prospects are those LIKE TO SEE THE ITEM/LIKE TO TRY ITEM ON/ 28% FEMALE 39% QUALITY OF ITEM over 65 age group. who live in the trade area of your physical store location. IMMEDIACY/GET THE PRODUCT STRAIGHT AWAY 21% 14-19 41% Examining the sales that businesses YOU CAN BROWSE IN-STORE/SEE OTHER ITEMS/ 10% make online reinforces this. The Sensis® BUY OTHER ITEMS 20-29 37% e-Business Report is a large scale BETTER DEAL/BETTER VALUE/DIDN’T WANT TO PAY 5% survey of 1,800 small and medium SHIPPING/POSTAGE/BETTER PRICE/FREE DELIVERY 30-39 42% businesses that has been tracking the online behaviour of small and medium 40-49 44% businesses since 1995. Over this time, it Base – purchased at same retailer online and in-store (36%) has consistently been found that the main 50-64 34% customer base for SMEs that sell online comes from those who live locally. Indeed, 65+ 19% 60% of SMEs mainly make their sales locally. Why purchased at retailer’s online site CONVENIENCE/EASY/CAN STAY AT HOME 29% IT’S CHEAPER 27% IT WASN’T AVAILABLE IN-STORE/DIFFICULT TO FIND/ 13% ONLINE PURCHASE ONLY BETTER DEAL/BETTER VALUE/DIDN’T WANT TO PAY 9% SHIPPING/POSTAGE/BETTER PRICE/FREE DELIVERY CAN SHOP AT ANYTIME THAT SUITS ME 8% OUTSIDE TRADING HOURS AVAILABILITY/WIDER RANGE/VARIETY/ 7% ONLY AVAILABLE ONLINE COULDN’T GET TO THE STORE/LIVE TOO FAR FROM THE 7% STORE/STORE ITEM NOT AVAILABLE LOCALLY IT’S QUICKER 5% Base – purchased at same retailer online and in store (36%)22 23
  • 13. What the research shows: Internet usage and Social Media and the new shopping patterns (cont.) shopping experience – what it means for retailers In Australia, the consumer social media market already displays a degree of maturity. Types of customers SME’s sold to: Only 38% of online Australians do not use Products or services researched on social networking sites social media – a figure that has not changed in the past year. But those who do use it are MAINLY TO TOTAL TO TOTAL SELL TO: using it more frequently, with 36% of online SELL SELL Australians using social media at least CLOTHING/FASHION 53% SMALL MEDIUM once a day in 2012, up from 30% in 2011. BUSINESS BUSINESS An enthusiastic 10% of online Australians 32% MUSIC Local – same city or town 60% 87% 87% 86% report using social media more than five times a day. ELECTRICAL GOODS 31% Elsewhere in state 13% 48% 48% 56% Social media has been playing a growing COSMETICS/BEAUTY/FRAGRANCE 22% Interstate 16% 45% 44% 61% influence on consumers’ purchasing Overseas 3% 27% 27% 35% behaviour in recent years. Social media COMPUTERS/SOFTWARE 20% users are more likely to report purchasing online than non-users. While 66% of FURNITURE/THINGS FOR THE HOME 17% Australians reported having made purchases online, 71% of social media users VIDEOS 14% Meet the Omnichannel Shopper reported online purchasing, increasing to 74% of Australians who used social media SOFTWARE 14% a. The Omnichannel Shopper to feel and touch things I go to a bricks every day. Jane (not her real name) is in her 50’s and mortar store but if I want something COMPUTER GAMES 10% On the other hand, while business use of and lives in Tasmania. She accesses the specific I like the convenience of buying social media has been increasing (27% Internet more than five times a day but online.” Her favourite bricks and mortar CARS/PARTS 6% of small businesses have a social media does not use social media. In the past 12 store is Myer because of its product range. presence in 2012, up from 14% in 2011), BOOKS 5% months she has bought books, clothing, Her favourite online store it still lags consumer usage. However, by airline tickets and hotel reservations is Ezibuy. It’s interesting to note that examining the consumer data, it is evident online but has also bought all of these Ezibuy acquired Myer Direct in 2002. If not ENTERTAINMENT/EVENTS 3% that the opportunities that social media categories in a physical store. She uses for this acquisition Jane would have had a provides for businesses are considerable. SPORTS/RECREATION EQUIPMENT 2% in-store and online for different purposes. classic Omnichannel relationship with the For example, some 16% of social media “When I need traditional service or need Myer brand. users reported that they used social media OTHER 11% to research products and services that they might want to buy. The opportunity for Omnichannel retail is clear, with the types of products most suited to the Omnichannel Base – users of social media to research products or services model also being the types of products that Source: Sensis® e-Business Report, Sweeney Research consumers are most likely to be researching on social media. Of those social media users who researched products and services, 40% reported that their last search had resulted in a purchase. While 72% of those purchases were conducted online, some 28% resulted in an “offline” purchase in a physical store.24 25
  • 14. Social Media and the new shopping experience – what it means for Segmenting your customers in retailers (cont.) an Omnichannel marketplace –Deloitte’s View The benefits of the Omnichannel model How social media users rate different Omnichannel benefits The Omnichannel consumer is making faster, more accurate data is at the fingertips of retailers today; making good use of resonated strongly with regular social media and more sophisticated purchasing decisions than ever before. it – irrespective of where it sits in the organisation – is achievable users, who rated them equal or higher than Traditional consumer behaviours are being replaced by Omnichannel within a short timeframe. online shoppers in general. In particular, consumer behaviours. ABILITY TO RETURN PRODUCTS THROUGH A 96% 2. Advanced analytics tell the story social media users rated access to Wi-Fi PHYSICAL STORE EVEN IF PURCHASED ONLINE 96% Through their actions and transactions, Omnichannel consumers hotspots and links to additional product Traditional consumer Omnichannel consumer offer up data that provides a behavioural and then granular information in-store more highly than 90% behavioUr behavioUr ABILITY TO TRACK ORDER STATUS view of what they are doing. Much like the innovations in regular online shoppers. EITHER AT A STORE OR ONLINE 85% Research by reading printed Scan the Internet to “comparison technology available to consumers in an Omnichannel world, Social media users were slightly more media or watching a TV advert, shop” based on the value of one so too retailers today can avail themselves of many advanced 86% likely to report researching online and then NOTIFICATION OF DELAYS IN DELIVERY often with a local focus offer against another offer. analytic tools. These tools are not cost prohibitive, and search the purchasing in a physical store than the 83% Refer to peer opinions via their traces of data a consumer leaves with retailers to unveil stories general population (75% compared with social media networks – even of behaviour. Similar to a social networking environment, the NOTIFICATION WHEN FAVOURITE PRODUCTS ARE ON SALE 85% while in a physical store 73%). They were also significantly more resulting behavioural segments act like communities of likeness REGARDLESS OF WHETHER AT A STORE OR ONLINE 78% likely to report researching in a physical Make an early decision on where Keep purchase options open right – consumers effectively self-select where they best reside within store and then purchasing online (59% 82% to purchase up to the point of sale the segmentation model based on how similar their shopping ABILITY TO CHECK STOCK LEVELS compared to 49%). AT VARIOUS STORES ONLINE behaviours and preferences are to a particular community. 78% Shop based on the opening hours Browse and purchase when They are not assigned into a group because they fit a pre- of a physical store convenient configured persona. ABILITY TO MODIFY AN ORDER MADE 80% ONLINE THROUGH A PHYSICAL STORE 74% Constrain themselves to what is Find the product that is best 3. Constant evolution, to reflect a constantly changing market available in the physical store suited to their needs – globally The segmentation model becomes a living breathing asset that ABILITY TO SEARCH FOR EXTENDED 74% or locally. Geography is often can be refreshed to monitor changes in behaviour, evolves over RANGES ONLINE WHILE IN-STORE 70% irrelevant time, and allows the retailer to respond with agility to meet customers where they are now in their own shopping experience. PROVISION OF WIFI HOTSPOT TO ALLOW 59% So how can retailers build in the agility to recognise this change in FREE ONLINE BROWSING IN-STORE 46% the market, respond to or even pre-empt further changes? How can Imagine the ability to identify those customers who are similar you make the right offer, at the right time, through the right channel – firstly, because they buy running gear; secondly, because they PROVISION OF EXTRA PRODUCT INFORMATION ONLINE 61% to win the customer’s attention – in a way that entices them with a like the same brand; and thirdly, because they’re prepared to pay THROUGH LINKS PROVIDED ON DISPLAYS IN-STORE 50% value proposition that speaks directly to their desires and needs? a slightly higher price to get the latest product – especially after payday. Then imagine that they are also similar because they prefer PERSONALISED OFFERS DELIVERED 28% More than ever, segmentation is the key to answering these to make their first purchase in-store, but will then repeat purchase TO YOUR MOBILE WHILE IN-STORE 22% questions. Traditional segmentation approaches are not designed online – except for weekends, when again they will revert to browsing for the Omnichannel consumer – they are often too high level, based and buying in-store. What does this tell us about how, where and on attributes like demographic, life-stage and socioeconomic status, Daily social media users Online shoppers when we can influence these customers? and undertaken as a point-in-time, survey-based, research exercise. Proportion that rated feature as very or quite valuable The result is a simplified matrix that assumes a customer resides On a given day, imagine having the opportunity to recognise these Base – purchases online only in one segment and can only be managed as a single persona. shoppers are online, call up prior purchases and present them with the products that are most appealing to them. You can entice So what does segmentation look like in an Omnichannel world? them, not by offering price discounts, but instead by giving them 1. Amazingly granular data, used smartly an incentive to bundle, cross-selling to them, based on the choices Omnichannel segmentation makes smart use of the amazing they’ve made in the past. What’s more, you’re not just campaigning data that the Omnichannel consumer is providing retailers at to them, but also to all those within their community of likeness, every touch-point, across each channel, with every decision and reaching out to them through their most prevalent channel of transaction they make. In this new world, a distinction must be interaction at the most relevant time of day. This is the power that drawn between aggregate customer data that gives no insight in segmentation in an Omnichannel world can provide. how an individual’s behaviour changes over time, and rich granular data that provides insight into every customer interaction. Having a strategy that recognises how this data is going to be gathered and sourced across these touch-points is the first step in re- thinking the role of segmentation. Surprisingly, most of this26 27
  • 15. Vital Omnichannel lessons for Australian retailers The Omnichannel world changes the way retailers must think about the customer experience. 1. Managing the Customer Experience is that online access is “free”. “Free” is customer’s previous shopping history. implemented a giant screen and a 3. Omnichannel shopping companions Retailers should also remember that The Omnichannel world changes the way still the most powerful word in retail. For the customer, it’s like having a well- seating area in their Union Square the old physical world, customers In the digital relationship they gain with retailers must think about the customer You see this in the supermarket on informed and trusted sales assistant flagship in New York City. The area is often used store catalogues as shopping an Omnichannel shopper opens up a experience. In the old world, the customer Saturday when customers crowd with them throughout their time in the intended for customer education and companions. Now, in the Omnichannel new way to talk to customers one to one. experience was only about what happened around a cooking demonstration on the store. entertainment with the objective of world, your consumers’ preferred shopping Once profiles of shopping behaviour and within the physical confines of the shop. promise of a “free” knife that they don’t having customers spend more time companions are the Smartphone and preference are built up offers can be Wi-Fi hotspots are about to gain in the branch and build a deeper the tablet. These mobile devices give developed for individuals and distributed Then, the foundations of the customer really need. Likewise, when Wi-Fi is free, further value to the retailer, thanks to a relationship with the brand. Through customers access to the online world to them before they shop. Messaging experience were physical e.g. doors customers will be much more inclined specification called Hotspot 2.0, which Content Delivery Networks (CDN) it is when they are in your store or doing platforms like Whispr can ensure that open and close, security gates work, air- to use it – even though the cost of their is being developed by the Wi-Fi Alliance. possible to stream content to any device something completely different. Online the message is compatible with any conditioning functions, floors are clean, own mobile data may effectively be the One of the features of Hotspot 2.0 will with an internet connection so that a they’ll find your sites and apps, your connected device. Combine a digital aisles navigable, stock on display and same. Retailers are therefore much be the ability to track a customer’s cooking demonstration in the event area competitors’ sites and apps, and – most relationship with a Wi-Fi hotspot and faced, signage up to date, etc. Retailers more likely to get customers online and movement around a store and be of the store could also be streaming to importantly – the opinions of others. there is even the possibility of messaging were in large part facilities managers. enjoying an Omnichannel experience authenticated using the SIM card on the Smartphone in your hand. Now that Smartphones and tablets are a customer while they are in the store and when there is a Wi-Fi hotspot than In the Omnichannel world, however, their Smartphone or tablet. This will the key shopping companions retailers making their buying decisions. when there is no Wi-Fi hotspot. In retailers have an online extension to their facilitate traffic mapping and feedback Digital screens also have the potential needs to ensure that their online sites some circumstances, the availability shop that allows them to trade 24/7 and in to plannogram development. to offer individual assistance to the The most influential technology of all is of a hotspot may also be a reason for are optimised for mobile, yet according reach a much wider geography. Here, the shopper. This assistance can take social media. Social media applications customers to choose to shop in one If Wi-Fi is offered to customers in-store, to Google’s May 2012 report “Our mobile foundations of customer experience are various forms, the most basic of which are the most popular category of store rather than another. retailers should make sure that it is planet: Australia – understanding the technological not physical e.g. continuity is in-store navigation. In shopping application accessed by users of done in a way that the security of the mobile consumer”, only 21% have done of service, bandwidth, speed of data Another reason to consider a Wi-Fi centres today, you can already see Smartphones. This should be no surprise corporate network is maintained. so. As well as being optimised for mobile transfer, ease of communication, etc. If hotspot as an Omnichannel access customers using digital screens to to experienced retailers. When people it is imperative that retailers keep up the technology doesn’t work, the customer driver is that mobile coverage on ii) Digital Media navigate their way around. Some stores shop they have always shopped for a with the plethora of devices and version experience is damaged. Omnichannel some networks may not be optimal Digital screens are the doorways to the like John Lewis and Best Buy are also relationship as well as the functional changes made by manufacturers so retailers, in large part, need to be for your store’s location. Heavy use of Omnichannel world. Customers enter using digital screens as kiosk access benefits of product and price. The that applications can continue to work technology managers. some networks is known to reduce the online extension to your shop via points to the Internet. Customers relationship could be with an individual effectively. performance, so if your store is in a busy the screens on their Smartphone, tablet can use these kiosks to find extra sales assistant, the product brand or the The first imperative for the Omnichannel shopping centre and many people are information about products or to gain The proliferation of devices means a store brand but it’s the relationship that or PC. Even in the physical world of the retailer is therefore to work with trusted using their mobile phones, the online access to additional products not proliferation of ways a customer will will cause customers to keep coming back retail store, screens offer customers a partners that provide robust and resilient experience for customers may be poor. available in the physical store. Screens contact you. The Omnichannel customer to your store or paying a premium for a link back to the online world where they infrastructure, dedicated customer This is particularly important if you can also be used to keep the shopping expects to be able to interact with their product. Social media offers retailers a started their Omnichannel shopping service teams and local expertise so that want to share data rich content, such as going even when the physical store is favourite retailer from anywhere and virtual way to maintain their customer experience. Digital screens have two the online extension of their store will be video, with your customers. closed. Some retailers have deployed at any time of day or night, and reach relationships. It also offers the opportunity basic functions in retail: one is to always open for business. touch screens on their front windows so the information or resource they need to monitor wider conversations about your display content (passive); the second As well as providing encouragement for that customers can browse even when instantly. SMS and MMS are widely products and brands. 2. Managing the bridge between the is to offer individual assistance to the customers to enter the Omnichannel the store is shut. adopted forms of communications that physical and the virtual worlds shopper (interactive). world, Wi-Fi hotspots can provide retailers could easily incorporate into the The essence of Omnichannel is the retailers with invaluable data about A more advanced use of screen When a digital screen displays content, online experience to provide customers constant movement of the customer their customers. Each customer that technology for customer assistance can it is essentially an animated version of a instant communications on areas of between the physical and virtual worlds. In enters the network can be identified. be seen at retailers like Home Depot in poster, but it does offer some important interest. A unified communications store, two technologies play a critical role This gives retailers a new level of the USA and the Royal Bank of Canada. additional benefits. The first of these is framework can provide retailers with in facilitating this, namely Wi-Fi hotspots intelligence on their customers’ Here digital screens are being used timeliness. When content in retail stores a means to integrate communications and Digital Media. shopping behaviour. Whereas the loyalty to facilitate remote access to subject is displayed on networked screens, media into the customer experience i) Wi-Fi hotspots card gives retailers the ability to link a offers can always be up-to-date. This matter experts from the store location. design and into the enterprise systems. Providing a Wi-Fi hotspot in your basket of shopping to an individual at is especially important in competitive At Home Depot customers can get Importantly, it enables retailers to evolve physical store may seem overly the checkout, the Wi-Fi hotspot gives sectors where day-to-day tactics are access to specialist kitchen designers their experience design in accordance generous and unnecessary in Australia, retailers the ability to link an individual the key to success. Digital media gives via in-store video conference and at the with consumer preferences that may where many customers have large to a potential sale before it happens. retailers the potential to quickly change Royal Bank of Canada, small business include social media and video. data allowances on their mobile phone Retailers now have the opportunity their offer, based on competitive actions owners can get access to specialists in plan. However, the provision of free to market to customers as they walk or changes in environmental conditions their sector via screens in retail bank Wi-Fi has important benefits for both around the shop – perhaps offering like the weather. Digital Media can branches. retailers and their customers. For the them the latest specials or items also be used to create events in-store customer, the most important benefit that may be of interest, based on the or at the shopping mall. Citibank have28 29
  • 16. Case Study: Coca-Cola Amatil goes Omnichannel in Australia Coca-Cola is one of the best-known brands in the world and here in Australia, Coca-Cola Amatil (CCA) is licensed to manufacture and distribute Coca-Cola products. Terry Davis has been Group Managing Today, CCA uses digital screens in pubs Director of CCA since 2001. In that time, and clubs to display advertising for their he’s presided over a dramatic change products, with rich content delivered to in the CCA business – overseeing its individual screens via the Internet. This transformation from a carbonated means that the content is always in-line beverages business to a diversified, with current promotions, and can be premium beverage and food business with swiftly changed in response to competitor a product range that now includes coffee, activity or even changes in the weather – spring water, juice, tea, fruit snacks and something a paper poster could never do. alcohol, as well as the famous trademark The screens also have built-in wireless Coca-Cola brands. The results have been routers, effectively creating a Wi-Fi impressive in this period, with eight out of hotspot for customers in close proximity 10 years of double-digit earnings growth, to the screen. CCA use this as a proximity- shares outperforming the market by based marketing engine, offering free Wi- almost three times and dividends paid Fi to customers who buy a CCA product in to shareholders increasing four-fold. participating pubs and clubs: “Buy a Jim CCA and Telstra are long-term partners Beam and get free Wi-Fi for 30 minutes.” – indeed, CCA signed an exclusive The results have been impressive. Barry partnership agreement with Telstra in Simpson, Chief Information Officer for CCA 2009- and, in 2011, Telstra was CCA’s says: “We’ve been able to measure point supplier of the year for IT. of sale data and see the uptake. Product Terry Davis attributes part of CCA’s sales have increased – which is exactly success to keeping abreast of consumer what we were trying to do – and that up- trends and keeping marketing of its 171 take has been anywhere from 20%”. brands relevant to the changing world: The value doesn’t end there for CCA or its “We’ve spent a lot of time understanding customers. By entering the Wi-Fi hotspot, our consumer, understanding how music customers have the opportunity to opt in has changed in particular, how food styles to a digital relationship with CCA. Both have changed in each of our markets… sides benefit, with customers getting And, of course, you have to use technology access to relevant offers based on unique somewhere in that process to understand individual requirements and CCA gaining what consumers are actually doing. valuable customer profiling information Generational relevance is critical for any that ultimately allows them to serve their consumer brand. You don’t want to get to customers better. the stage where a customer says “Well, I don’t drink that because my dad does.” Says Davis: “By reading data from our customer, we can understand consumer CCA saw an opportunity to communicate behaviour better…what do they buy more effectively with its customers and when they go into a supermarket, how to drive brand preference by combining many times do they buy a Coke with a the two key facilitators of an Omnichannel hamburger, how many times do they buy experience – Digital media and Wi-Fi a Coke with something else? All of this is hotspots – with the key Omnichannel extremely useful knowledge for our sales- shopping companion, the Smartphone. force and helps us develop new solutions. Telstra partnered with CCA to develop the It’s invaluable to us, and even more so for solution. our customers.”30 31
  • 17. Conclusion The vast potential of the new Omnichannel world still remains to be tapped in Australia. Retailers with existing physical store networks are in the best position to exploit this potential because they can combine the benefits of physical distribution with the convenience of online. Most online shoppers are already Omnichannel shoppers. They are well equipped and are keen to build broader relationships with retail brands. To take advantage of the Omnichannel opportunity retailers must recognise that the foundations of customer experience in the Omnichannel world are technological. If the technology platform is not right customer experience is damaged, sales are not made and relationships are not built. It is especially important for retailers to build bridges between the physical world and the virtual world through the provision of in- store Wi-Fi and Digital Media and to ensure that all online applications are optimised for the new shopping companion of choice, the Smartphone. The Omnichannel opportunity makes this one of the most exciting times in history to be in retail for those skillful enough to grasp the opportunity.32 33
  • 18. about the Authors Gareth Jude Christena Singh Jenny Wilson Gareth was born in the UK and educated Christena Singh joined Sensis in 2003 as Jenny Wilson leads Deloitte Australia’s in the UK, USA and Australia. He has spent the author of the Sensis® Business Index Customer Markets practice, with a over 20 years in a variety of senior sales, and the Sensis® e-Business Report. As particular expertise in the domain of marketing and general management roles well as authoring and providing media Customer Segmentation and Customer including two years as CEO of an Australian commentary on Sensis’ major public Growth Strategy. sporting goods retailer and seven years in economic and technology reports, Christena Today Jenny is assisting organisations like the DSE division of Woolworth’s, responsible is also passionate about communicating the Telstra to develop truly customer-centric for group-wide merchandise management, success of Australian small and medium strategies for growth, retention, channel marketing and store planning. In addition businesses, and how the adoption of optimisation and service improvement. Gareth has spent a number of years technology has helped them grow. Prior to consulting to retailers as well as lecturing joining Sensis, Christena worked for the This expertise is supported by over five in retail at Sydney, Macquarie and Shanghai Federal Government on small business years experience in the field of digital media, Jiao Tong Universities. policy and its role in the Australian economy. multi-channel strategy and innovation across retail, financial services, energy In 2011 Gareth was appointed Retail The Sensis® Business Index is the flagship and tourism. Industry Executive in Telstra’s Industry of Sensis’ SME research program. Since its Development team. inception in 1993, the Sensis® Business Index has been one of the most extensive Gareth holds a Master’s degree in and comprehensive surveys of small management from University of Technology, businesses, with its findings are regularly Sydney. reported in the media and quoted in parliaments across the nation.34 35
  • 19. Call 1300 telstra Contact your Telstra Account Executive This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Member of Deloitte Touche Tohmatsu Limited Liability limited by a scheme approved under Professional Standards Legislation. © 2012 Deloitte Touche Tohmatsu36