National Retail Federation Competition

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This is my presentation for a retail competition team I was on. My team won the competition and was chosen to present this at the National Retail Federation conference in New York City.

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National Retail Federation Competition

  1. 1. Mobile Retailing New Technology &New Opportunities
  2. 2. Mobile Retailing – New Technology & NewOpportunitiesToday„s Agenda I. Current State II. Trends favoring Mobile Retailing III. Marketing Strategy Proposals IV. Technological Impact V. Financial Impact VI. Conclusion2 All rights reserved by Clements Inhouse Consulting
  3. 3. Clements is a general merchandise retailer with afocus on female customersClements Company Profile  Clements provides the best possible customer service, Vision & products, and customer experience in the market Values  Clements gives back to the society, the community and the environment  20 – 45 year old suburban and ex-urban women with a Core family income of $45k-80k Customer Profile  Buys branded, stylish, high quality products at reasonable prices in a convenient shopping experience Product Groups Clothing & Beauty Personal Care Jewelry Products Electronics3 All rights reserved by Clements Inhouse Consulting
  4. 4. Financial crisis had a significant impact onClements‟ expansion and growthFinancial Highlights Sales and Store Development Financial Highlights in 2009 $ 18 bn 1200 Net Sales $ 16,921 m $ 16 bn 1000 Net Income $ 892 m $ 14 bn 800 $ 12 bn 600 # of Stores 1006 $ 10 bn 400 Gross Square Footage 88 m Revenues # of Stores Average Store Size 8,125 m² ► Clements business model is based on strong expansion ► Financial crisis hit the company‟s growth hard4 All rights reserved by Clements Inhouse Consulting
  5. 5. Customer service has been one of Clements majordifferentiators and success factorsCurrent state Customer Service “We aim to treat every customer fairly and equally with the respect they Service deserve and make every attempt to provide them with a memorable Proposition experience.” Customer  Continuous measurement and evaluation of customer satisfaction based on Satisfaction post purchase surveys, call center and CRM data  “No hassle” Return Policy  Continuous employee training on customer engagement, new initiatives, Service and fashion trends Policies  Clements Card – Loyalty Program  Clements in the Community5 All rights reserved by Clements Inhouse Consulting
  6. 6. Although E-Commerce accounts only for 2% ofsales, its impact is constantly increasingE-Commerce – Key Performance Indicators ClementsSales 2009 $ 360 mTotal Users 2009 300 mUnique User 2009 60 mØ Basket Size $ 80Conversion Rate 1.5 %6 All rights reserved by Clements Inhouse Consulting
  7. 7. Clements faces certain internal and externaldevelopments favoring mobile retailingDevelopments favoring Mobile Retailing Mobile Retailing Trends in Customer Economic Downturn Change in Customer Behavior & and Impact of Focus Preferences Customer Loyalty7 All rights reserved by Clements Inhouse Consulting
  8. 8. Changing environments supported areassessment of the customer focusChange in Customer Focus  Strong commitment to family & community The modern  Increasing interest in fashion, lifestyle and technologies to leverage family Customer Focus Home Maker recognition and social contacts  Buying patterns influenced by family & friends Current  Chief breadwinner and decision-maker both at home and at workThe Business-  High affluence to technology due to strong usage at work Mother  Willing to spend the earned money in her spare time  Increasing wealth and desire for social recognition Customer Focus The Latina Additional  Increasing interest in adapting American standardsThe University  Early influence on young customer groups as an essential factor to ensure Student future business8 Source: Clements Visioning Proposal All rights reserved by Clements Inhouse Consulting
  9. 9. Latinas and college student will furtherstrenghten Clement‟s customer basisAdditional Customer Focus Backup The Latina The College Student Purchasing Power Growth “Reaching college students is a investment into the future. 2008-2013 If you don‟t win them 2000-2008 now, they are gone.” Matt Stautberg, Macy’s 0% 50% 100% Non-Hispanic Hispanic Hispanics currently account for 15.3% of the  Nationally, students spend more than $5 population billion a year on clothes and shoes. Their purchasing power is the strongest  By the time they reach college, full-time increasing of all groups in the US which students represent over sixty billion dollars in provides great opportunities for Clements buying power future9 Source: Selig Center for Economic Growth, University of Georgia; Expert Interviews All rights reserved by Clements Inhouse Consulting
  10. 10. Technology and the demand for valueadded services changes the marketTrends in Customer Behaviour and Preferences Spread of Mobile Phones Technology Driven Innovation Mobile Social Media Information as a Service Evolution of Social Media Self-Service is better Customer Service Customer advice Customer Value Added Customer Service Geo-Tagging10 All rights reserved by Clements Inhouse Consulting
  11. 11. Increase of loyal customer base as keystrategy to mitigate economic downturnEconomic Downturn and Impact of Customer Loyalty Non-grocery retail sales development Basket Size 6,00% Illustrative 4,00% 2,00% 0,00% 2005-06 2006-07 2007-08 2008-09 -2,00% -4,00% Loyal Customers New Customers ► Financial crisis hit the non-grocery retailing market hard ► Increasing competition makes differentiation a key success factor ► Value added services to increase loyal customer base allows turnaround11 Source: Euromonitor – Non-grocery retailing USA All rights reserved by Clements Inhouse Consulting
  12. 12. Clements needs to react on recent developmentsby integrating mobile and C2C servicesAdjusted Marketing Strategy Retail & Marketing Channels Marketing Methods Store B2C Consistent Strategy Internet C2C Mobile  Clements must include the growing mobile channel in its portfolio  Customer 2 Customer contact is increasingly important and needs to be considered12 All rights reserved by Clements Inhouse Consulting
  13. 13. Mobile retailing offers diverseopportunities for value adding servicesMobile Retailing – The 4th Distribution Channel Mobile Retailing Mobile Marketing Mobile Commerce Mobile Operations I. Advertisement & Payment I. Mobile POS II. Customer Service II. Workforce III. Product Management Information III. Internal IV. Loyalty Programs Communications V. Promotion & IV. Mobile Approvals Coupons Focus of this strategic evaluation13 All rights reserved by Clements Inhouse Consulting
  14. 14. Development of a mobile application is akey success factorClements Mobile App - Overview Value added services to increase shopping experience and thereby basket size and shopping frequency Clements Home Increased customer information and thus future CRM Stores & Clements More In-Store Coupons C-Card & More Partnerships with GoogleMaps, FourSquare & Wildcard14 All rights reserved by Clements Inhouse Consulting
  15. 15. Decreasing information asymmetries drivesmore customers to Clements POSClements Mobile App – Stores & More C C Home Stores & More  Check availability and reserve products Shopping List  Store inventory synchronization Clements In-Store C-Card Store Infos  Locations and store hours Coupons & More  Finds store nearby via address or geolocation Directions C  Opens directions via GoogleMaps Home Stores In-Store C-Card More Drives more customers to POS15 All rights reserved by Clements Inhouse Consulting
  16. 16. Diverse product information allow increasein basket size and shopping experienceClements Mobile App – Clements In-Store a) Check availability & order possibility b) Product Matching i. Outfit Idea incl. customized coupons QR Product Info ii. Color Identification Home c) Clements Runway & Closet Stores & More d) Additional Pictures, Runway videos & Infos Clements In-Store  Up-Selling  Customer experience  Increase of non-stock sales  High-fashion branding C-Card Coupons & More  Locates items in the store regarding the Spirit Shop chosen/closest university C  Includes Clothing & Accessories Home Stores In-Store C-Card More Attracts university students16 All rights reserved by Clements Inhouse Consulting
  17. 17. An integrated loyalty program is a keymeasure to reach a turnaroundClements Mobile App – Clements-Card a) Mobile registration, identification, points redemption and customer profile management Loyalty Program b) Wish Lists and Gift registries (social network Home integration) Stores & More c) Wildcard app integration Clements In-Store  Increased participation  Customer decision data  Increased customer satisfaction  Increased redemption Clements-Card  No wallet share Coupons & More Home C Stores In-Store C-Card More Clements Card Anna Beautiful17 All rights reserved by Clements Inhouse Consulting
  18. 18. Mobile coupons are cheaper, morecustomized and highly successfulClements Mobile App – Coupons & More Home Use data tracking and CRM to create customized Stores & More Coupons coupons depending on buying habits, time, weather and other influence factors Clements In-Store Clements-Card  Increased coupon redemption Coupons & More  Increased impulse buying C Home Stores In-Store C-Card More18 All rights reserved by Clements Inhouse Consulting
  19. 19. Social media allows the controlled leverageof customer to customer marketingUse of Social Media  Clements Fan Page with daily status about exclusive discounts and “what‟s hot”  Monitor customer feedback and respond to negative postings immediately  Gain fans by advertising in store and including Facebook logo on all print/electronic publications  “Tweet” daily (gradually more often) about deals/items in stock  Hashtag (#) with Clements name to become a “trending topic”  Gain followers by advertising in store and including Twitter logo on all print/electronic publications  Add Geolocation Tags for Clements  Encourage shoppers to check in through their Foursquare account  Rewards for the “mayor”  Shop-Alerts – Delivers SMS when customer reaches shop “geo-fence”19 All rights reserved by Clements Inhouse Consulting
  20. 20. Research indicates increasing influence ofsocial media on buying habitsRecent research results Backup“If you had to choose one information source Facebook and Twitter Addicts for a purchase decision, what would it be?  Almost 40% of women aged 18 to 34 admit they Mail from a company are “Facebook addicts” Reasons for moms following business on Twitter: TV commercial To get deals for cheaper products Print advertisement Because they are Consumer review or already customers of the rating business To find out about the Recommendation from companys products or friends/family services 0% 10% 20% 30% 40% 0% 20% 40% 60% 80%20 Source: North American Technographics; Lightspeed Research All rights reserved by Clements Inhouse Consulting
  21. 21. Redesigning its stores allows Clements to leverage sales by customer experience Store Layout Redesign 2 In-Store Music1 3 New Colors Use different styles and Announcements speeds of music to leverage shopping experience Use speaker system to promote deals, social networking events and other initiatives4 5 Window Displays Boutique Design Use large windows at each Create a personal,  Use dividing walls and low entrance filled with mixed exciting store ceilings to create different media and art to inspire environment boutiques customers and create  Design boutiques excitement individually reflecting the products for sale 21 All rights reserved by Clements Inhouse Consulting
  22. 22. 22 All rights reserved by Clements Inhouse Consulting
  23. 23. Limited significance of mobile commercedue to high cannibalization rateM-Commerce Non-store & catalogue retail sales 100% 1% 8% 80% 60% 100% 92% M-Commerce 40% Mobile commerce with E-Commerce increasing influence on 20% retailers 0% 2009 2015f However market growth currently mainly caused by cannibalization of E- Commerce offers “Establishing mobile commerce Later reassessment creates high upfront and maintenance recommended costs, however, sales are mainly a cannibalization of the retailers own E-Commerce Matt Stautberg, Macy’s23 All rights reserved by Clements Inhouse Consulting
  24. 24. Mobile payment is a significant future trendClements has to be aware ofMobile Payment Benefits Costs The mobile payments market for physical goods  Upgrade of current systems will cost at least is forecasted to be worth $100 billion by 2014 $200 per check-out 50% of the smartphone owners have strong  High functionality only with NFC phones given – interest in having mobile phones replace the however by 2014 only 1/6 of the smartphones in functionality of their credit cards use will have NFC technology Mobile payment significantly decreases check- out time and might reduce check-out personnel Higher security for customer as she does not need to carry credit cards anymore ► Mobile payment will offer more convenience to the customers ► Technology still improving ► Considering a first-mover advantage Clements should reassess mobile payment with its next technology upgrade24 Source: Juniper Research; Marconi Pacific All rights reserved by Clements Inhouse Consulting
  25. 25. Cross-channel advertisement supports spread ofnew value added customer servicesAdvertisement Television Advertisement  Nationwide TV commercials to introduce Clements new value added service approach  Adapt change in customer base to commercial design Internet & Mobile Advertisement Test the new Clements Mobile App  Announcements and advertisements for new mobile application on the Clements website  Direct mobile customer advertisement to increase spread of new mobile service platform  Place target group customized ads on social networks Consistent cross-channel advertisement to increase penetration and to spread innovativeness and customer service approach of Clements25 All rights reserved by Clements Inhouse Consulting
  26. 26. A strong and consistent cross channel approachenables broad customer penetrationCross Channel Integration  Stands with info about promotions and “QR QR Code codes” or other new ventures located Stands strategically throughout the store Store  Posters within the dressing rooms Dressing Room announcing mobile and social media initiatives and provide QR codes E-Commerce  Buying or reserving products on the internet Special Check- or mobile allows customer to pick up their Outs products at special check-outs in the store Mobile  All mobile features have to be adopted on E-Commerce the website and social media entries have to Adjustment be linked26 All rights reserved by Clements Inhouse Consulting
  27. 27. Mobile application should be based ontechnological circumstances in the marketCustomer Technology and mobile IT strategy Customer Technology Special purpose mobile software US Smartphone Spread Smartphones Thin-Client 21% Architecture with adapted Apps for 79% Non- Apple OS and Smartphones Android Smartphone OS in the US Use of ARTS XML RIM OS and OpenID Apple OS standard Windows Mobile Android Other Integration of QR Code Reader27 Source: comScore, Tech Crunchies All rights reserved by Clements Inhouse Consulting
  28. 28. High IT integration allows a maximal leverage ofthe benefits of new servicesIT-System Map Backup Management E-Commerce CRM Information Infrastructure System Supply Chain Mobile ERP Management Infrastructure Enterprise Service Bus ► Mobile Infrastructure becomes the 6th IT area in the organization ► IT systems throughout the organization have to be increasingly integrated to fully leverage the benefits of the technology28 All rights reserved by Clements Inhouse Consulting
  29. 29. Despite significant upfront investments the projectalready has a one year NPV of $4 millionFinancial Impact Estimate Benefits CostsAdded value services and an Programming and design of the $ 5.0 mincrease in Clements loyal mobile appcustomer base lead to an $ 56.6 mestimated store sales increaseof 0.9% Technology $ 8.0 m Store Layout Redesign $ 40.2 mIncrease in non-store serviceand penetration increases $ 15.5 monline conversion rate by 0.2% Advertisement and other costs $ 10.0 mTotal Benefits $ 72.1 m Total Costs $ 63.2 m The one-year NPV of this project is $ 1.18 m (WACC = 12%)29 All rights reserved by Clements Inhouse Consulting
  30. 30. Associated risks can be mitigated by severalmeasures across the developmentRisk Assessment and Mitigation Strategies Risks Mitigation Strategies Rental of smartphones in-store to Lack of customer technology enable customer experience Keep it simple Lack of customer understanding of Employee training and workshops new services Hotlines, help-pages & In-store explanation posters30 All rights reserved by Clements Inhouse Consulting
  31. 31. Mobile retailing offers great opportunities forClementsThe Big Picture Marketing Measures Technology Clements Mobile App Social Media Initiative Financials $80 m $60 m Store Layout $40 m NPV Redesign $20 m $ 1.18 m $m Benefits Costs31 All rights reserved by Clements Inhouse Consulting
  32. 32. Thank you all for providing this amazingopportunity to compete!Acknowledgement Jerry O‟Brien, University of Wisconsin-Madison T H Angie Badura, University of Wisconsin-Madison A Sarah Conrad, NRF Foundation N K Matt Stautberg, Macy‟s John Kubo, Wetseal Y Kristen Malavolta, Toys R Us O U Amy Parker, Sears32 All rights reserved by Clements Inhouse Consulting
  33. 33. Clements Inhouse Consulting employs expertsacross all functionsConsulting Team Lisa Duckrow Caitlin Clements Michael Stallsmith IT Expert Store Operations Expert Customer Service Expert Sara Beth Sullivan Timo Trumpp Trevor Hinske Marketing & Sales Expert Finance Expert E-Commerce Expert33 All rights reserved by Clements Inhouse Consulting

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