Retail Insights Seminar Presentation - April 2011


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Slides from the Maclean Retail Insights seminar, in partnership with IBM

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Retail Insights Seminar Presentation - April 2011

  1. 1. Retail Insights May 2011
  2. 2. Retail Insights May 2011
  3. 3. Agenda Capitalising on the Smarter Consumer Ian Wong - IBM Smarter IT to drive business growth Chris Maclean - Maclean
  4. 4. Ian Wong
  5. 5. IBM Institute for Business ValueRetail Industry PerspectiveCapitalising on the Smarter ConsumerUnderstanding and Responding to the Consumers Wants and Needs
  6. 6. Who is this „Smarter Consumer‟? Instrumented Interconnected Intelligent They have instantaneous They use multiple They have clearly defined access to information about technologies to interact with expectations of what they retailers, products and other other consumers and with want from their retailer now consumers‟ experiences retailers and in the future through technology7
  7. 7. Executive summary & research methodologyToday‟s consumers are fundamentally changing industries, brands,interactions, and relationships “Sales of 4,500,000 iPads in 3Q 2010”* 8 Source: :Fortune October 5, 2010
  8. 8. Executive summary & research methodologyThis year we found the smarter consumer wants to be served, not sold to,trusts their social network above retailers and is increasingly digital Technology is a given Shopping process Serve me, affected by more than don’t sell to me technology 36 % Increase in willingness to use technology in consumers are optimistic about income, but are not Listen to me New consumer focus going back to pre- less than a year group is everybody recessionary spending behaviour 58 % trust family & friends first, while only Know me Personalisation remains top priority % 21 Customer reviews % 18 trust retailers and manufacturers Empower me Consumers leverage mobility to control the experience 9 Source: IBM Institute for Business Value Analysis, Retail 2010
  9. 9. Agenda 1. Research methodology 2. The future is digital: Smarter Consumers use of technology 3. What you see is not what you get: the Smarter Consumer changes  Profile  Shopping process 4. Smarter Consumer demand smarter retailers: how smarter retailers will respond
  10. 10. Executive summary & research methodologyIBM’s Institute for Business Value (IBV) studied this new consumer takinginto account 13 countries in both the mature and emerging markets… Total Surveyed Population = 30,624 Mature Emerging Australia (2274) Italy (2200) France (2200) Brazil (2200) Argentina (2200) Canada (2221) Germany (2200) Chile (2200) Colombia (2200) United States (4121) UK (2200) Mexico (2200) China (2200)11
  11. 11. Executive summary & research methodology…and to understand what trends transcend income,generations and product categories Income brackets Ages surveyed Product categories Upper Bracket n= 3,585 Generation (15-19) n=1,544 Adult Apparel n=4,350 Generation (20-29) n= 6,505 Kids Apparel n= 4,287 Upper Middle n= 10,080 Luxury Brands n= 1,344 Generation (30-39) n= 7,865 Shoe/Accessories n= 3,395 Lower Middle n= 7,878 Generation (40-49) n= 6,264 Grocery n= 4.961 Generation (50-59) n= 5,011 Personal Care n= 3,933 Lower Bracket n= 4,736 Generation (60+) n= 3,446 Electronics n= 2,828 Entertainment n= 2,805 Home Merchandise n= 2.72112 Source: Institute for Business Value Retail 2011 Global = 30624
  12. 12. Agenda 1. Research methodology 2. The future is digital: Smarter Consumers use of technology 3. What you see is not what you get: the Smarter Consumer changes  Profile  Shopping process 4. Smarter Consumer demand smarter retailers: how smarter retailers will respond
  13. 13. Smarter Consumer Profile > TechnologyIn 2010, ‘Instrumented consumers‟, those willing to use two or moretechnologies for purchasing products, is 86% Number of Australian instrumented consumers 100% 86% 80% INSTRUMENTED = 80% 2 or more technologies 1 technology 60% 36% 49% No technology 40% 20% 20% 14% 44% 37% 0% 2009: No 2010: No 2009: One or 2010: One or technology technology more more technologies technologies14
  14. 14. Smarter Consumer Profile > TechnologyInstrumentation has increased year to year and mobility hasincreased 92% globally 13% 17% 25% 24% Mobile technologies has increased 92% and is Willingness to use TVs to make purchases is still more widely accepted in the growth markets growing as a preferred technology like mobile. 68% 36% 75% 39% Websites have increased 9 % Kiosks are popular across all counrties Apr 2010 Oct 201015
  15. 15. Smarter Consumer Profile > TechnologyThe number of instrumented consumers has increased the most in 40+ agegroup Percentage of ‘instrumented consumers’ by age group Generation 60+ 20% 32% Generation 50 - 59 29% 45% 35% 49% Generation 40 - 49 Age group Generation 30 - 39 44% 53% Generation 20 - 29 48% 55% Generation 15 - 19 38% 52% Percent of instrumented consumers Instrumentation is not correlated to April 2009 Instrument % higher income brackets, except for Australia, Canada, China and Colombia16 Source: Institute for Business Value Retail 2011 Australia = 2274
  16. 16. Smarter Consumer Profile > TechnologyEmerging market consumers continue to be the most instrumented Percentage of ‘instrumented consumers’ by country Brazil 68% Chile 62% China 62% Mexico 60% Colombia 59% Argentina 53% United Kingdom 48% Australia 45% Emerging United States 43% Italy 40% Mature Canada 38% Germany 35% France 30%17
  17. 17. Smarter Consumer Profile > SummaryThe smarter consumer is willing to use two or more technologies in theshopping process…what are the implications for your business? Findings Implications  Consumer are instrumented: Allow the  Are you leveraging technology to reinforce consumers to use preferred technology your brand strategy?  Do you know which technologies your customers prefer to use?  What is your approach to evaluating new technologies?  What is your organisation‟s ability to rapidly introduce the new capabilities relevant for your customer?1818
  18. 18. Agenda 1. Research methodology 2. The future is digital: Smarter Consumers use of technology 3. What you see is not what you get: the Smarter Consumer changes  Profile  Shopping process 4. Smarter Consumer demand smarter retailers: how smarter retailers will respond
  19. 19. Agenda 1. Research methodology 2. The future is digital: Smarter Consumers use of technology 3. What you see is not what you get: the Smarter Consumer changes  Profile  Shopping process 4. Smarter Consumer demand smarter retailers: how smarter retailers will respond
  20. 20. Smarter Consumer Profile > AttitudesConsumers attitudes are optimistic but they are not going back to pre-recession spending levels Attitude Toward Income Attitude Toward Shopping • 70% of consumers are optimistic about the future of their income Spending only on needs 20% • 46% believe their income will stay Searching out sale items 19% the same • 24% believe their income will Waiting longer to increase by 20% in the next 5 years 16% purchase • Optimism was not limited to the higher Buying more online 12% income brackets Purchasing items to reward yourself 11% Trading up/down in some 10% categories Spending more on 8% travel/entertainment Eating out more 5%21
  21. 21. Smarter Consumer Profile > InfluencersOnly 18% of consumers are influenced by retailers and manufacturers Who do you trust to provide honest feedback on product information and product reviews? Trust Ranking Product experts 16% 18% 21% Retail/Manufacturer Customer Reviews 45% Family/Friends22
  22. 22. Smarter Consumer Profile > InfluencersWhile retailers and manufacturers have influence, consumers‟ opinionsare formed predominately by their social network Grocery 48% 19% 15% 7% 11% Apparel 47% 22% 13% 7% 11% Personal Care Products 46% 19% 16% 6% 12%Home Décor, appliances and 42% 24% 18% 5% 10% products Consumer Electronics 38% 25% 19% 7% 11% Luxury Brands 33% 27% 17% 9% 15% 0% 20% 40% 60% 80% 100% Family / Friends Customer Reviews Product Experts Manufacturer Retailer23 Source: Institute for Business Value Retail 2011 Global = 30624
  23. 23. Smarter Consumer Profile > Household DemographicsPurchasing decisions extend beyond the four walls of atraditional household • Globally, over 31% are buying in the following categories for their parents: – Adult Apparel (23%) – Grocery (15%) – Personal Care (13%) – Consumer Electronics (13%) – Entertainment (DVD, Games) (12%) – Home Décor (10%) – Other Categories (14%) • 25% of the population are now living in multi- generational households, which is a change that has occurred within the last 2 years • Services desired for 60+ year old individuals: 17% - groceries/prepared meals delivered 18 16% - home cleaning 13% - weekly calls/errands 12% - technical services2424 Source: Institute for Business Value Retail 2011 Global (US, UK, Australia, China, Mexico Germany only) = Cater Buying = 8680, household changes=2328, services - 949
  24. 24. Smarter Consumer Profile > SummaryToday‟s smarter consumer buys for a virtual household and trusts family,friends and strangers first…is your organisation able to listen and respond? Findings Implications  Family and friends rule: Consumers trust  Do you have a way to monitor what is being family/friends and strangers before the retailer said about you? or manufacturer  Do you have a single view of your customers  The household is “virtual”: Consumers are across channels? buying for more than their traditional  Can you tell how your customers are household influenced and do you know if your advertising is effective?  Does your organisation have a view of what constitutes “customer data” and what can be collected and analysed to make better/timely decisions?25
  25. 25. Agenda 1. Research methodology 2. The future is digital: Smarter Consumers use of technology 3. What you see is not what you get: the Smarter Consumer changes  Profile  Shopping process 4. Smarter Consumer demand smarter retailers: how smarter retailers will respond
  26. 26. Shopping experience > MomentThe shopping process has fundamentally changed as consumers usetechnology anytime, anywhere Aware Research Purchase Take Advocate Possession Consumers Moment27
  27. 27. Shopping experience > Awareness and ResearchFrom awareness to research, consumers are influenced bynumerous consumer media that they control Greatest Influences During Product Awareness and Research Product Awareness Product Research TV/Radio/Billboard Friends / Family Top 5 Influences Retailer Store TV/Radio/Billboard Friends / Family Retailer Store Mobile Apps Search Engine Emails Retailer Website Online Streaming Mobile Apps Social Media Emails Search Engine Social Media Magazines Online Streaming Retailer-Controlled Retailer Website Magazines Consumer-Controlled Shopping Portal Shopping Portal28 Source: Institute for Business Value Retail 2011 Global = 30624
  28. 28. Shopping experience > PurchaseWhen they are ready to purchase, consumers are influencedby a variety factors • The item was in a smaller package size or unique packaging • It was an item that you currently own and it is very comfortable or easy to use and you wanted another one Product • The item was unique and different from competitors‟ products • You saw a new item and thought it might not be available later • You wanted to try something different than what you regularly purchase (add some variety in your life) • It was a new item or flavor that you wanted to try Awareness • You saw an item and it gave you an idea (e.g. dinner or how to match it with something you own) • Represented your lifestyle (either a clothing style or foods - healthy living; country cooking, ethnic) Style / Lifestyle • It was an item that you needed based on an upcoming event or occasion • It was an item influenced by a celebrity, either designed, worn or advertised as the latest trend Price / • It was an item that you regularly buy that was on discount Promotion • Provides a gift with purchase (free installation, batteries, complimentary item) • You purchased an item because your family/grandchildren/children/friends would like it • The item made you feel better or happier Fun • You purchased the item for a special occasion • Your child/grandchildren/family member influenced you to buy it Customer • A sales associate assisted or provided you great service in coordinating (e.g. dinner idea, outfits that would go with the item you chose, showed you how to solve you home problem) Service Convenience • The item was located next to one that you considered purchasing29 Source: Institute for Business Value Retail 2011 Global = 30624
  29. 29. Shopping experience > PurchaseConsumers buy when regularly-purchased items are discounted,a new product is introduced or there is a special event Category Area Impact Score Price / Promotion An item that I regular purchase is on discount 119.69 An item needed based on an upcoming Style / Lifestyle 110.94 event/occasion Awareness It was a new item/flavor that you wanted to try 109.27 Item currently owned was easy to use/comfortable Product and wanted another 106.18 Price / Provide a gift with purchase 105.24 Promotion Product Try a new product (add variety to life) 104.02 Product Item is unique and different than competitors 103.82 Consumers are least influenced by celebrities or a sales associate30 Source: Institute for Business Value Retail 2011 Global = 30624
  30. 30. Shopping experience > AbandonConsumers abandon purchases primarily due to financial reservationsor not enough product information Top Reasons Globally Why Consumers Abandon Items: Store • Did not want to spend the money • Just did not want it Top Reasons Globally Why Consumers Abandon Items: Online • Did not want to spend the money • There was not enough product information and decided to wait31 Source: Institute for Business Value Retail 2011 Global = 30624
  31. 31. Shopping experience > Take possessionAllowing the customer to specify how to take possession of theproduct is important Which of the following methods would you prefer to obtain the item? 60% Purchase at store and leave store with item 13% Purchase online and deliver on the date you specify Purchase at store and deliver to home the same day 12% Purchase online/in store and delivery next day 10% Purchase online and pick up in the store 6% Emerging markets differ in that delivery to home the same day is ranked second32 Source: Institute for Business Value Retail 2011 Global = 30624
  32. 32. Shopping experience > Product pick-upWhen its time to check out and obtain products, consumers werespecific on how they wanted to use mobile technologies Mobile Device Check Out PreferenceScan while shopping and checkout at self service 34% 24% Scan while shopping and checkout with mobile 23% Scan sample and retrieve at pick up area 19% Scan sample and deliver to home33 Source: Institute for Business Value Retail 2011 Global = 30624
  33. 33. Shopping experience > SummaryConsumers want an integrated retail experience across multiplechannels…can you deliver? Findings Implications  The channels are integrated: The customer  Can I enable my customer to start a sees you as one retailer not multiple transaction on one technology and continue channels. all through the shopping process?  Profit from the information explosion:  Can I understand my customers‟ behaviour Customers are leaving a trail behind as they through the vast amount of data? interact with you in multiple channels.  Am I segmenting my customers based on  Behavioural analytics: It‟s more than just behaviour? recency, frequency, and monetary value. Consumers are behaving differently than they  Can I optimise my marketing and media have in the past. spend, my promotions and my assortment?  Am I delivering relevant interactions to the customer at the appropriate time in the shopping process?34
  34. 34. Agenda 1. Research methodology 2. The future is digital: Smarter Consumers use of technology 3. What you see is not what you get: the Smarter Consumer changes  Profile  Shopping process 4. Smarter Consumer demand smarter retailers: how smarter retailers will respond
  35. 35. Responding > Serve meA personalised interaction remains the top demand “Serve me” Serve me Convenience: (Most Important loyalty drivers) • Providing the right products and appropriate variety of brands • Allows you to determine if the item is in stock prior to going to the store Service: (Most important loyalty drivers) • Make it feel like a pleasure to help me • Allow me to return products without hassle or questions asked • Have knowledgeable employees about products/services • Easy way to order items not in stock36
  36. 36. Responding > Listen to meExecutives have it backwards when it comes to consumers reasons forinteracting Listen to me Which social networking sites do you have an account? (select all that apply) • 45% of consumers have media sharing sites • 33% of consumers belong to a social network How often do you frequent social media sites? • 5% frequent social media daily / weekly to post comments • 75% of respondents casually participate monthly by responding to posts or writing reviews • 37% of consumers are influenced by external reviews More than half of “connected” consumers state social media interactions influence spend37
  37. 37. Responding > Know meA personalised interaction remains the top demand Personalise Promotions (#1 purchase influencer) Know me • Most likely to increase my spend • Top consideration when determining where to shop • The area retailers need to improve most Personalise Shopping (Most important factors) • Provide preferred receipt type • Recognize me in the store or online • Remember preferred payment method Personalise Assortments (Most important loyalty drivers) • Manufactured or grown in my country • High quality/low price private label products • Environmentally friendly or sustainable products • New and unique products38
  38. 38. Responding > Empower meRetailers have a vested interested in enabling mobile commerce “Empower me” I control the Promotions in the Service In The Store Store identification 32% Help me find the 42% Proactively closest customer communicate service desk/associate promotions to me based on what I scan 31% Allow me to order out-of-stock items 41% Allow me to check prices from other 29% use mobile to physical and virtual identify they need help locations 27% Provide the most efficient route through store 27% Allow me to take a picture/text to get product information39
  39. 39. ConclusionResponding as a smarter retailer involves listening to the customer,making changes to the organisation and improving the shopping experience Empowering the 1 Listening and Learning 1 Enabling and Executing 1 Consumer Single View of Analytics to listen to Consumer self Consumer across consumers select interaction channels Actionable analytics Consumers choice of Learn from consumer the interaction controlled content around merchandising and marketing channel Key factors of influence Make the interaction Consumers providing and motivation personalised across feedback channels Change sales to service associates40
  40. 40. Chris Maclean
  41. 41. SMARTER ITChris Maclean - CEO
  42. 42. Quick Quiz
  43. 43. Question 1A 1MB email comes into your organisation.What is the eventual size of its digitalfootprint? A : 2MB B : 5MB C : 10MB D : 50MB
  44. 44. Question 2Typically, servers are busy what percent ofthe time? A : 8% B : 16% C : 48% D : 96%
  45. 45. Question 3For every dollar you spend on hardware,how much is typically spent powering itper year? A : 1c B : 10c C : 25c D : 50c
  46. 46. Question 4In what year was the first bar codescanned commercially? A : 1952 B : 1963 C : 1974 D : 1982
  47. 47. All about the experience It’s not about the Rugby!
  48. 48. Technologies Importance Role of Technology Customer experience 1950 1970 Today
  49. 49. Cool
  50. 50. Empowering
  51. 51. Extend the boundaries
  52. 52. Intelligent
  53. 53. Integrated
  54. 54. Retail Store Reality  Bottleneck syndrome  Point solutions deployed individually  Expensive to run and maintain  IHL Group reports that most retail stores have become mini data centres. 78% budget on support and maintenance
  55. 55. Smarter Retail IT1. Virtualisation2. Cloud – Data Centre3. Unified Platform4. Managed IT Support
  56. 56. 1. Virtualise CRM Finance File Print ERP Backup Shared
  57. 57. Tangible Outcomes Reduction in Capex Reduction in Opex Reduction in Risk Before After Before After Before AfterInfrastructure Cost per App Sys Admin per App Business Downtime
  58. 58. 2. Cloud - Data Centre
  59. 59. 3. Unified Platform
  60. 60. 4.Outsource the Boring Stuff
  61. 61. Technologies Importance
  62. 62. Takeaways
  63. 63. End.
  64. 64. Market ForecastGrow from $6B in 2008 to $18.9B in 2015
  65. 65.  Russian Architecture firm, St Petersberg
  66. 66. Question 4What is the rate of annual data growth inmost organisations? A : 15% B : 25% C : 60% D : 75%
  67. 67.  First UPC bar code scan in Ohio,1974
  68. 68. Extreme Barcodes Bar codes on bees to track behaviour
  69. 69. Barcode Evolution QR or 2D bar codes
  70. 70. Amplify Experience1. Personalised2. Empowering3. Extend4. Intelligent5. Integrated
  71. 71. Today’s IT ChallengeFinding the balance between customer demandsand business requirements
  72. 72. Additional challenges  Stretch the time it takes to launch new functionality  Makes it more difficult to make strategic decisions..  At a time when it is critical for retailers to respond, most simply cannot
  73. 73. 1. Virtualise
  74. 74. Responsiveness “Since outsourcing our infrastructure to Maclean we no longer have to worry about the day to day demands IT made on our time, this has allowed us to improve our service to the franchises.” Warrick Kemeys, Ops Manager
  75. 75. Is technology leading your thinkingor an afterthought?