Is Mobile the New Answer to Propel Growth? A new battle wages to redesign the shopping experience. All retailers are turning to mobility, and the use of digital technologies, to capture market share. While mobile strategies offer great opportunities for the extended supply chain, from the shopper through supplier’s supplier, the current focus is on demand generation. It is early. The efforts are in test mode, but excitement abounds.

1. Retail Mobility
Is Mobile the New Answer to Propel Growth?
7/1/2012
By Lora Cecere
Founder and CEO
Supply Chain Insights LLC

2. Contents
Contents ................................................................................................................................. 1
Executive Summary................................................................................................................ 2
The Race Is On ...................................................................................................................... 3
Focus ..................................................................................................................................... 4
Barriers................................................................................................................................... 4
Convergence Takes Many Forms ........................................................................................... 5
Recommendations.................................................................................................................. 6
Appendix ................................................................................................................................ 8
About Supply Chain Insights LLC .......................................................................................12
About Retail Connections...................................................................................................12
About Lora Cecere .............................................................................................................12
Copyright © 2012 Supply Chain Insights LLC Page 1

3. Executive Summary
In the last two years, retail growth has shifted to e-commerce pure-play retailers. Revenue per
store has flattened and the consumer is more fickle expecting more from a cross-channel
experience. While the e-commerce pure-play retailer has continued to power growth in the post-
recession economy, as shown in table 1, the traditional store formats of mass merchant and
specialty retailers have not been so lucky.
TABLE 1: Growth by Industry Retail Sector
Growth by Retail Sector
2000-2004 2005-2009 2010-2012
e-commerce Retailer 15.7% 16.0% 26.6%
Drug Retailer 14.8% 19.7% 9.5%
Grocery Retailer 12.2% 21.5% 19.6%
Mass Merchant 30.6% 9.6% 9.1%
Specialty Retailer 14.7% 12.2% 3.0%
Source: Supply Chain Insights LLC Analysis of Annual Returns
A new battle wages to redesign the shopping experience. All retailers are turning to mobility, and
the use of digital technologies, to capture market share. While mobile strategies offer great
opportunities for the extended supply chain, from the shopper through supplier’s supplier, the
current focus is on demand generation. It is early. The efforts are in test mode, but excitement
abounds.
This report shares insights from a quantitative study of forty retailers conducted in May-June
2012. The study was designed and developed in conjunction with RetailConnections in
support of their Mobile Impact Summit 2012.
Copyright © 2012 Supply Chain Insights LLC Page 2

4. The Race Is On
The study results are clear: the current focus for the retailer in mobility is on demand generation.
While there are a myriad of opportunities in the extended supply chain, the focus for retailers
today is on e-commerce/social and mobile convergence. It is more marketing driven than
market driven. It does not extend to supply.
The barriers are more human than technical. Listening, testing and learning are new concepts.
The redesign of the shopper experience is fraught with organizational change management
issues. By and large, today, the retail mobile efforts are embedded deep into the e-commerce
organization with companies taking first, and often baby, steps.
The techniques vary both by industry sub-segment and by technology adoption maturity. The
results will be over-arching and will extend across the extended supply chain; but this will
happen over time, not today. The focus is currently marketing within the retailer’s marketing
organization. This is good news and bad news. While retail marketing professionals embrace
new technologies, they don’t always understand the implications of technology adoption. As a
result, this offers a new opportunity for retail Information Technology (IT) professionals and
marketing within retailers to collaborate.
In figure 1, we share high level insights from the quantitative study:
Figure 1: Survey Findings
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5. Focus
The sands are shifting. The mobile initiatives are a little over a year
old, but it is slowly transitioning from mobile for mobile’s sake to digital
convergence. While many in the industry have given up on social -50% of US adults own a
smartphone.
commerce (the use of social technologies to improve the shopping
experience and drive commerce), in this study, we find increasing -Worldwide, there are now
more smartphones sold than
interest in social commerce. Slowly the digital strategies are coming computers.
together within marketing. However, the use of mobility for the larger
-33% of shoppers are willing to
organization is still uncharted territory. share geolocation data.
-36% of shoppers make
Barriers purchases while on their
phone in the store.
The barriers are many. The believed benefits are great. Executive
support is high. The mission is clear. The race is on. The largest -44% buy digital media while
18% buy groceries through
barrier is human. Getting the right talent is a limiting factor for the mobile applications.
team building the mobile strategy. The second barrier is existing Electronics and clothing are
the fastest growing categories.
technology.
-The number one reason for
The technology limitations are two-fold: the use of mobile for shopping
is “I am bored and looking to
• Outside-in. Increasingly teams working on mobile pass time.”
strategies find that there is no place to put the new forms of -There is a higher conversion
data coming from mobile applications. The reason is rate on tablets than
Smartphones. Browse-to-buy
simple. The design is outside-in: from the customer, back conversion is 2X higher on
to the organization. This is in stark contrast to the tablets than smartphones with
larger average sales
conventional design of enterprise technology systems that purchases (25%).
were designed from the financial code of accounts out.
-34% of shoppers start on one
• Pace and Rhythm. Traditional systems have been built on device and finish on another.
near real-time data. Mobile data is real-time. The pace and
-Mobile shopping as a
volume of data is exponential. It makes the traditional percentage of e-commerce
definitions of Customer Relationship Management (CRM) tripled in the past year.
obsolete. Source: Facts from
• Type of Data. QR codes, social data, tags, streaming data, presentations from Retail
Connections Conference
video, geolocation, are all new data elements. They are
each key to mobile techniques, but they are largely outside
the scope of traditional retail enterprise applications.
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6. Figure 2: Barriers to Mobile Strategy
Convergence Takes Many Forms
For the retail respondents, the focus of their mobile strategy is demand. The central theme is
mobile/social and e-commerce convergence. The average respondent has 1.6 mobile
applications, and operates under three banners. They manage two e-commerce sites and over
three Facebook sites. While the majority of companies have complex supply chains, and 54%
turnover in store operations, approximately 1/3 of respondents have a group dedicated to
improving operations through the use of mobile.
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7. Figure 3: Importance versus Performance of Retail Mobile Strategies
Recommendations
The retailer has never had a better opportunity to know their shopper. Use this opportunity to
redefine and differentiate the shopper experience.
Build Organizational Listening Capabilities. Organizations are used to traditional
marketing with global broadcasting of marketing messages. The trained behaviors are
‘yelling’ not listening. The organization has been built with a big mouth and no ears to
listen to the shopper and adapt product strategies based on consumer sentiment.
The power has shifted to the shopper. Social data allows holistic listening, but too few
organizations know how. Use the investments in e-commerce and mobility to build cross-
functional listening skills.
Reward Systems Change. With multiple devices, the shopping experience will now
start on one device and end on another; or the shopper in the store may buy on a
device. As a result, a major push for the retail mobile strategy needs to be a close
examination of retail metrics.
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8. Fail Forward. Test. Test. Test. As an organization, do not take the time to get mobile
right. You will not have the time for perfection. Invest in technology with the intent that it
is an investment that will quickly become obsolete.
Build the Right Bricks. While mobile strategies today do not extend to the extended
supply chain, the impacts will quickly permeate the organization. Prepare now by
implementing perpetual inventory, supply chain visibility and real-time sensing in the
supply chain. Use these projects to focus on store reliability.
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9. Appendix
This quantitative study was conducted in cooperation with Retail Connections in the period of
May-June 2012 for their Retail Mobile Impact Summit held in Dallas, TX on June 25th, 2012. The
content of this report is based on answers from forty respondents on the role of mobility in their
IT strategies. The highest percentage of the survey responses were from specialty retail IT
executives with an average of twenty-one years of retail experience.
The respondents’ organizations are complex. The average person answering this survey works
at a company operating three banners, managing five distribution centers, and operates stores
with 54% employee turn-over. They are also manufacturers with 50% of the companies
answering the survey managing supply chains that provide products for their own stores.
The survey represents an active buyer of retail mobility solutions. Over 73% of the respondents
are either directly involved in the purchase of retail mobility solutions or manage groups of
people that are actively involved in mobility projects.
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13. About Supply Chain Insights LLC
Supply Chain Insights LLC (SCI) is a research and advisory firm focused on helping supply
chain teams improve value-based outcomes. The offerings include research-based Advisory
Services, a Dedicated Supply Chain Community and Web-based Training. Formed in February
2012, the company helps technology providers and users of technologies gain first mover
advantage.
About Retail Connections
RetailConnections serves senior retail executives by hosting events that provide exceptional
learning and networking. We believe the value of establishing new business relationships in
person far outweighs other forms of communication. In this era when knowledge from all retail
departments is intertwined, events that bring together top-level management from every function
area deliver the greatest business insights.
About Lora Cecere
Lora Cecere (twitter ID @lcecere) is the Founder of Supply Chain Insights
LLC and the author of popular enterprise software blog Supply Chain
Shaman currently read by 4500 supply chain professionals. Her book,
Bricks Matter, publishes in the fall of 2012.
With over eight years as a research analyst with Altimeter Group, AMR
Research, Gartner Group and now as a Founder of Supply Chain
Insights, Lora understands supply chain. She has worked with over 600
companies on their supply chain strategy and speaks at over 50
conferences a year on the evolution of supply chain processes and technologies. Her research
is designed for the early adopter seeking first mover advantage.
Copyright © 2012 Supply Chain Insights LLC Page 12