RAI – TCS: State of Multichannel Retail

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This report benchmarks 40 brands in India – on ‘e-tail’ v/s ‘retail’ – strategy, operations, processes, technology & supply chain.

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RAI – TCS: State of Multichannel Retail

  1. 1. Retail Operations Benchmarking and Excellence Survey 2014 The State of Multichannel Retail
  2. 2. Benchmarking and Excellence Survey 2014 Agenda • Context • Scope & Methodology • Key Insights • Call to Action -1- ROBES 2014- The State of Multichannel Retail TCS Public
  3. 3. Context Why Multichannel? Reduce store Size Increase Reach Reduce stores Dependency Reinvent your Operations Delight your Customers differently Multichannel offers opportunities to reorient the business radically ! -2- ROBES 2014- The State of Multichannel Retail TCS Public
  4. 4. Context Why Multichannel? -3- ROBES 2014- The State of Multichannel Retail TCS Public
  5. 5. Multichannel Offerings Today Multi-channel Options Web, Contact centre, Marketplace, Mobile, Catalogue Transactions COD, Mobile, Credit, Debit Delivery Next day delivery, Click & Collect, Delivery tracking, Service at delivery After Sales Service Multi-channel returns, complaint resolution, troubleshoot on social Engagement Comparative sites, SEO, Social sharing, Info kiosk -4- ROBES 2014- The State of Multichannel Retail TCS Public
  6. 6. Survey Preview Good News >15% For majority, e-commerce has seen healthy growth 70% have online business reporting directly to CEO or COO 6371 ATV on website -5- ROBES 2014- The State of Multichannel Retail TCS Public
  7. 7. Survey Preview Reality & Challenges • Only 30% have a single view of customer orders • 38% pursue uniform pricing across channels • Only 17% have a unified marketing calendar • Only 25% incentivize cross-channel collaboration at stores • Only 17% have a unified CRM program Are retailers ready to do justice to the potential? Are these tactical or strategic issues? -6- ROBES 2014- The State of Multichannel Retail TCS Public
  8. 8. Scope & Methodology Parameters & Processes The first-ever comprehensive multichannel retail benchmarking study covers the following parameters: Customer Experience Financial management Key Performance Indicators (KPIs) Strategic Focus Areas Marketing Process Maturity Technology Operations Organization 1 2 3 -7- ROBES 2014- The State of Multichannel Retail TCS Public
  9. 9. Participating Brands *The logos are property of their respective corporations -8- ROBES 2014- The State of Multichannel Retail TCS Public
  10. 10. Methodology Used for This Study TCS‟ Process Maturity Framework was used to: TCS Process Maturity Framework 100% • Define process maturity from Level 1 (Low Maturity) to Level 4 (High Maturity) LEVEL 4 Unified Customer Marketing & Relationship Program 75% • Allocate scores to each level of maturity, which ranged from 25 to 100 percent LEVEL 3 Over-lapping programs (common promotions) 50% LEVEL 2 • One-to-one, in-depth interactions with CXOs captured data and insights. Channel specific programs 25% LEVEL 1 Store-based CRM program Example: Customer Experience • 1,200 data points were gathered across six process areas. -9- ROBES 2014- The State of Multichannel Retail TCS Public
  11. 11. Key Insights - 10 - ROBES 2014- The State of Multichannel Retail TCS Public
  12. 12. Industry Level KPIs Contribution of revenue from nonstore channels What is the sales growth of the nonstore channels (e-commerce)? Less than 1% 43% 0-5% 8% 1% to 3% 21% 5-10% 8% 3% to 5% 7% 10-15% 0% 5 to 10% 21% 15-20% 28% >10% 7% >20% 56% What is your average transaction value (ATV) in the channels that you operate (Rs.)? Store What is the proportion of repeat/loyalty customers for nonstore channels (e-commerce)? 5737 Website 6371 Marketplace 3967 What is the percentage of customer returns for your non-store channels (e-commerce)? Mobile Channel 4300 0-3% 65% < 30% 58% 30-40% 11% 3-5% 9% 40-50% 32% 5%-10% 13% 50-60% 0% 10%-15% 9% > 60% 0% >15% 4% Loyal customers are driving your non store sales. The ATV on the website is higher than the physical store ! - 11 - ROBES 2014- The State of Multichannel Retail TCS Public
  13. 13. Primary Objective of Multichannel Prime objective of multi-channel strategy (FY2014-15) (% of retailers for whom this item is a top priority 21% 21% 18% 17% 13% 10% Improving Customer Experience and Geographical Expansion high on retailers‟ multichannel strategy for FY2014-15 - 12 - ROBES 2014- The State of Multichannel Retail TCS Public
  14. 14. Industry Maturity • Overall industry maturity is “low” • Organizational structures are evolving to meet the dynamic requirements Overall Process Maturity – Cross Segment Marketing 100% 80% 57% Financial 63% 40% Operations 53% 20% • The industry still faces challenges on “one version of truth” – Customer, product, and inventory information across channels 60% 0% 50% Customer 75% Experience Technology 70% Organization Overall low process maturity - 13 - ROBES 2014- The State of Multichannel Retail TCS Public
  15. 15. Overall Multichannel Process Maturity Is Low Marketing Customer Experience Operations Leaders Leaders 43% Leaders 40% 57% 33% 53% 37% Industry benchmark 75% 30% Industry benchmark Laggards Laggards High Scope to share best practice: Medium Finance Technology Leaders Leaders 17% 57% 33% 63% 70% Industry benchmark Laggards High Organization Leaders Industry benchmark 40% 57% Industry benchmark 50% 20% Laggards 40% Industry benchmark Laggards Scope to share best practice: Laggards High Medium High A lot to learn from each other on good practices - 14 - ROBES 2014- The State of Multichannel Retail TCS Public
  16. 16. P&L Single or Separate for different Channels ? High Maturity Single P&L for all channels 17% Separate P&L for each individual channel (Intra Channel Decision Making) 66% Stores + Non-store (owner of multichannel) P&L 7% Stores P&L only 10% Low Maturity Trade-off between collaboration and speed - 15 - ROBES 2014- The State of Multichannel Retail TCS Public
  17. 17. Multichannel Operations • 18% have store pick up of orders made from any channel Delivery options offered- Cross Segment % respondents High Maturity • 52% have channel specific supply chain network but share inventory Buy on any Channel & PickIn-Store in any location Buy on any Channel & PickIn-Store in specific locations • 71% have “one view” of their inventory Buy on any Channel & Deliver to Home Buy on limited Channels (say, only Store or Online) & Deliver to Home 18% 4% 18% 61% Low Maturity There is some way to go in terms of integrated multichannel operations - 16 - ROBES 2014- The State of Multichannel Retail TCS Public
  18. 18. Multichannel Technology • Only 10% have complete integration of their systems IT System Landscape- Cross Segment % respondents High Maturity • Only 10% of retailers have one view of customers Complete integration 10% Marginal integration • 65% of respondents spend <10% of IT budget on non store channel 34% Low integration 28% Independent 28% Low Maturity Technology is the least matured function - 17 - ROBES 2014- The State of Multichannel Retail TCS Public
  19. 19. Multichannel Organization • Only 21% provide cross channel incentives Cross Channel Incentives- Cross Segment % respondents • Only 34% share the same customer and product view across channels Yes 21% • 70% of the retailers have multichannel sponsorship from the CXO‟s office No 79% Need to build synergies between the store and non store channels - 18 - ROBES 2014- The State of Multichannel Retail TCS Public
  20. 20. Best & Next Practices Marketing Operations • P Cross-channel unified view of P• Continuous, cross-channel • P Cross-channel unified T• Cross-channel order customer and order data marketing and promotion calendar assortment planning fulfillment T• „One view‟ of inventory crosschannel Organization Finance • P Single cross-channel view of customer • P Intense oversight by • Channel-optimized annual P operating plans P• Unified P&L across channels CEO/COO for combined decision making • T Reporting for collaboration Customer Experience T Unified CRM program across • all channels • P Multiple options for order pickup and delivery • P Multiple return options to customer for non-store purchases Technology • T Integrated cross-channel technology platform • T Real-time, cross-channel update of data, promos and pricing P Process, Policy T Technology A combination of mindset, policy changes and technology intervention can create value - 19 - ROBES 2014- The State of Multichannel Retail TCS Public
  21. 21. Summary The first ever Multichannel Operations Benchmarking & Excellence Survey reveals that: • FY14 is a mixed bag in terms of performance • True multichannel “integration” is not visible • Overall maturity is low, though retailers are putting in place the organization structures and processes for a multichannel play - 20 - ROBES 2014- The State of Multichannel Retail TCS Public
  22. 22. Call to Action… There is a great opportunity in the making to personalize, reach out and transform customer experience 1. Re-evaluate and reboot your multichannel strategy ; Go back to the drawing board and create roadmaps for all areas 2. Get your organization structure and people aspects right; Collaborate and Innovate both 3. Unlock value of your “loyal customers” and leverage your assets(stores) ; Build synergies between the store and non store channels 4. Technology is the least evolved area ; Need to invest ; Have a long term view and do not settle for “chalta hai solution” 5. Continued CEO involvement - 21 - ROBES 2014- The State of Multichannel Retail TCS Public
  23. 23. Thank You Anil Rajpal Head Practice – Retail, CPG & E-Commerce, Emerging Markets Global Consulting Practice Tata Consultancy services a.rajpal@tcs.com

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