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Vp sharma, ceo of map group

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Kusumo martanto, ceo of blibli.com

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Vp sharma, ceo of map group

  1. 1. THE METEOR IS COMING: How eCommerce is saving future of retail brands? Presentation by V.P. Sharma Group CEO of
  2. 2. SO TRUE FOR ECOMMERCE! It was the best of times, it was the worst of times… - Charles Dickens -
  3. 3. Thanks to impact of eCommerce on brick & mortar retail. Source: TheWall Street Journal, Monday,April 24, 2017
  4. 4. Change in Market Share ByValue of Sales Between 2011 and 2016 Embraced digital early!
  5. 5. So, does e-Commerce predict demise of brick & mortar?
  6. 6. On average 620 Superregional Malls profits in the US $8.33 psf up from $5.50 just 4 years ago US MALLS PROFITS UP
  7. 7. Globally, 92% of retail spending is still in stores and in Indonesia it’s 99%!
  8. 8. Physical store is the channel of choice for all ages, from ‘Millennials’ to ‘Senior Citizens’!
  9. 9. Even pure play online retailers are turning to physical stores to provide best customer experience. WHAT IS MORE? 'Amazon to set up 2000 stores in the next few years' Example: Amazon Books & Amazon Go, Warby Parker, Bonobos, Gilt, etc.
  10. 10. CONSUMERS SPEND MORE TIME IN STORES! Source: A.T.Kearney Future of Stores study, 2013 Stores Online Catalog Mobile61% 31% 4% 4% Physical Stores
  11. 11. Source: A.T.Kearney Future of Stores study, 2013 More than planned The same or less than planned % of shoppers Shopping in stores Shopping online 60% 75% 40% 25% CONSUMERS SPEND MORE MONEY IN STORES!
  12. 12. % SHOPPERS USING STORES AND MOBILE COMMERCE Source: A.T.Kearney Future of Stores study, 2013 % of shoppers Stores Online 55% 45% 81% 19% 24% 76% 24% 76% 83% 17% Research Test or Try on Purchase Pickup or delivery After-sales experience FOR
  13. 13. PHYSICAL VS ONLINE SHOPPING A visit to stores is an important social event and a motivation to spend time with family & friends and get instant gratification. PHYSICAL: Occasion Trips Vs ONLINE: Mission Trips
  14. 14. LONGER TERM PENETRATION OF E-COMMERCE Source: Forrester ForecastView Online Retail Forecast 2016-2021 (US), July 2016; Bain analysis Percentage of e-commerce penetration 100% 80 60 40 20 0 2000 2005 2010 2015 2020 2025 2030 Historical Forecast Example of category with high e- commerce penetration All e-commerce Example of category with low e-commerce penetration 28% in 15 years Brands
  15. 15. The business for Physical Retailers is not 'as usual’
  16. 16. LINES BETWEEN OFFLINE AND ONLINE SHOPPING EXPERIENCE ARE BLURRING Source: Ipsos OTX/Google 2012 Holiday Shopping Intentions SurveyWave 1: (Q11). In which of the following ways do you think you’ll approach your Holiday shopping?
  17. 17. Retailers around the globe are witnessing : • higher competition from pure plays • cost pressures to offer products across multi-channel • price pressures - from price transparency! STORES ON THEIR OWN, HAVE BECOME LESS PRODUCTIVE
  18. 18. • Retail stores will remain at the heart of customer relationship • Retailers should execute a customer centric omni-channel strategy to succeed Customers always value 'store experience’ to build TRUST & LOYALTY PHYSICAL STORES NEED TO REDEFINE THEIR NEW ROLE AND STRATEGY
  19. 19. RETAILERS NEED TO EVOLVE BEST ROLE FOR STORES •  Data analytics is the key - how and why consumers shop •  keeping stores as centre of customer relationship •  as distribution centres for online orders •  as seamless touch point for convenience - order on line & pick up at stores
  20. 20. Closing of so many malls and stores or failure of brands should NOT be all attributable to eCommerce
  21. 21. To provide customers the ability to shop - when & where they want to shop … and create exciting experiences both in the stores and online MANTRA
  22. 22. Good example: Macy's - 'Ship-from-Store' initiative Macy's planned to have 500 of 800 stores to double as fulfillment centres to provide omni-channel experience
  23. 23. STRATEGY ON FUTURE STORES • Traditional SSSG and store level EBIDTA is not the right measure • Optimising store sizes & locations • Store formats - large stores for promoting discovery & entertainment • Integrating retail operations across channels Examples: 1. House of Fraser, UK - Click n Collect Program: stockless shop – using iPad, laptops, next day delivery, store size optimised from 100k sqft to 1.5k sqft 2. Bonobos, similar excellent program
  24. 24. INDONESIA LOGISTIC COSTS AND DWELLING TIME IS VERY HIGH
  25. 25. Source: Archana Vidyasekar and Akshay Gakhar, Visionary Innovation Research group, Frost & Sullivan, 23rd Jan’13 Beyond BRIC : Next Game Changers 2025 INDONESIA – A COMPELLING PROSPECT
  26. 26. Retail Development Index 2016 GRDI country a2rac3veness
  27. 27. Digital transac3on value 130 bil $ by 2020 A potential opportunity for all ‘eTailers’ Source: Govt of Indonesia, Ecommerce projections Source: Investvine 2014, Estimates for 2015 INDONESIA ECOM OPPORTUNITY 80 Millions Connected to Social Media
  28. 28. INDONESIA ECOM 33% 37% 40% 43% 45% 48% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2014 2015 2016 2017E 2018E 2019E Fig 12 High and rising smartphone penetration… Smartphone penetration Source: Macquarie Research, April 2017 22 25 28 32 35 39 0 5 10 15 20 25 30 35 40 45 2015 2016 2017E 2018E 2019E 2020E Fig 13 But relatively low number of digital buyers Source: Macquarie Research, April 2017 No of digital buyers 0.0% 0.1% 0.1% 0.2% 0.2% 0.3% 0.4% 0.6% 1.6% 2.4% 3.7% 5.8% 8.9% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E Fig 1 Indonesia online retail sales as % of total retail Source: Euromonitor, Statista, Macquarie Research estimates, April 2017 Indonesia
  29. 29. The impact on Retailers as Amazon and Alibaba get active in the country POSITIVE ! • E commerce is not easy and cheap • Market places tend to improve eCom adoption and development of eco system • Can be leveraged by retailers in their pursuit of omni-channel • Most small to mid retailers can hope to go online almost instantaneously
  30. 30. •  with many retailers registering on the market place, scope for counterfeit/fraud may increase •  aggressive price war - wiping out many smaller retailers, as it has happened in other Asian countries POTENTIAL RISKS
  31. 31. OPPORTUNITIES FOR INDONESIA TO EXPAND ECOM FOOTPRINT •  Govt has announced support for eCom and Jack Ma as advisor •  With our competitive advantage of cheaper land and labor, Indonesia should aim to become digital hub of ASEAN.
  32. 32. Vision of making Indonesia ‘eCom logistics hub’ for Southeast Asia • Attract Foreign Brands to set up e commerce distribution centers in Indonesia (Inditex in HK) • eCom exports to be duty-free to promote sales to ASEAN / Asian Consumers. • Will promote significant logistics development in the country OPPORTUNITIES FOR INDONESIA
  33. 33. CONCLUSION •  Disruptions all around •  Retailers need to pick up right strategy •  On line players should embrace Retailers and have them on their market place and make use of their stores for omni channel •  Ecom will not take over the world; will rather complement offline
  34. 34. CONCLUSION •  The future of the Retail will be seamless, dynamic and transparent, esp. Retail Price •  So, please don’t take the customers for granted! WE ARE RECASTING THE RETAIL STORES FOR AN EXCITING OMNI-CHANNEL JOURNEY
  35. 35. THANK YOU

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