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Australian Retail and the Digital Advantage
This document discusses how Australian retailers can gain a digital advantage. It finds that while Australian consumers are early adopters of digital technologies, retailers are struggling to keep up with evolving customer demands. The document advocates developing a digital maturity by balancing investments in digital capabilities ("what" an organization does digitally) with strong digital transformation management ("how" an organization approaches digital transformation). Only a few "Digirati" retailers have achieved this, demonstrating both a digital vision and measurable business results from integrated digital initiatives. The document argues all retailers should take action now to develop their own digital DNA and close the gap with digitally mature competitors.
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Australian Retail and the Digital Advantage
- 1. The All ChannelExperience DRIVING VALUE FOR YOUR CUSTOMERS AND YOUR BUSINESS Ben Gilchriest & Antoinette Ienco Digital Transformation Lead, Retail Sector Industry SME Capgemini Consulting, Australia
- 2. Transform to thepower of digital Copyright © 2013 Capgemini. All rights reserved. Australian retail sector challenges (briefly!) HowdoyourealiseaDigitalAdvantage? The danger of the “in between” Digital Maturity Matters
- 3. 62% active inmobile shopping On-Line Mobile Social Media Adoption of mobile as a payment channel growing rapidly C Smartphone adoption Growing subscriber base High household broadband coverage A A leader in internet penetration 5th highest internet penetration in the world 73% 73% Australia USA 36% 51% 9.74 10.33 11.12 9.50 10.00 10.50 11.00 11.50 Dec 2010 Jun 2011 Dec 2011 Millions 73% A major part of people’s on-line time Facebook is still the #1 social media site A significant channel for generating and finding opinions Leading the world in social media usage @7hrs / month Nearly half of all Australian’s on-line are active in social mediaA. Majority are seeking other’s opinions read reviews & discuss brands 3% 4% 8% 9% 97% Other Myspace Twi@er LinkedIn Facebook *% of Australian social media users visited LinkedIn in growing rapidly; +99% growth in 2011 d A -domestic connections., 2011 B – business & domestic broadband connections. C - PayPal figures – purchases via mobile, 2010 - 2011 % of on-line users that are active in social media 71% Mobile transactions growing at 430% year on year 20% Australians with an Internet connectionB 90% Australians >16 years active on-line 81% 48% 0% 10% 20% 30% 40% <5 min 5-‐30 min 30-‐60 min over an hour no shopping 20% 26% 11% 5% 38% Australian consumers are leaders in internet and smartphone adoption and social engagement 2011 2012
- 4. The Australian retailsector is facing several challenges § Pure play online retailers. § International retailers with efficient business models. § Traditional channels extension with online § Innovative Apps (combining online, user data, mobility. § Shrinking square footage. § Technology leveraged in-store to provide outstanding customer service and increased personalization; § Kiosks; § Mobile payments; § QR Codes. § Supply chains need to accommodate and fulfill individual customer orders. § Collaborative supply chain technology and practices like shared warehouses are critical for realizing improvements. § Production is based on predictive and actual demand from consumers. • More content is generated outside the company – unstructured. • Combination of loyalty data and unstructured data to respond to customer expectations. • Affinity analysis; • Sentiment Analysis. Changing Marketplace Supply Chain Op4misa4on New Store Formats Data Availability Retail New technology (digital) is both part of the challenge and the solution. Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved.
- 5. CUSTOMERCHANNEL MODEL INTERACTION MODEL Australian shoppers’ expecteda dramatically different experience and they are becoming more vocal in demanding it Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. Yesterday Today IN THE DARK Information poor. Limited choice. Retail store the preference. INSIDE-OUT Call centre centric. Retail store centric. “TELLING” Mass marketing. Outbound blast marketing. Reactive, inbound. INFORMED, EMPOWERED Benchmark on trust, social responsibility Constantly changing & sharing. High trust in peer review. across industries and geographies OUTSIDE-IN Integrated cross-channel. Customer experience driven design. “CONVERSING” Embrace social (P2P). Co-creation. On-line at the core.
- 6. CUSTOMERCHANNEL MODEL INTERACTION MODEL However, many companiesare struggling to catch-up with rapidly evolving customer demands Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. Yesterday Today IN THE DARK Information poor. Limited choice. Retail store the preference. INSIDE-OUT Call centre centric. Retail store centric. “TELLING” Mass marketing. Outbound blast marketing. Reactive, inbound. INFORMED, EMPOWERED Benchmark on trust, social responsibility Constantly changing & sharing. High trust in peer review. across industries and geographies OUTSIDE-IN Integrated cross-channel. Customer experience driven design. “CONVERSING” Embrace social (P2P). Co-creation. Personalisation at the core. The “in- between” “TALKING” Loyalty and reward schemes. Social media largely outbound (minimal integration into org.) MULTI-CHANNEL Multiple offerings, not integrated
- 7. Despite many attempts,Australian retailers struggle to bridge the gap to address evolving shopper behaviour Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. § ABS show $258 billion spent on retail and 9% is estimated to be on-line with overall growth of 12%. § On-line retail sales are expected to reach $18 billion in 2013 and forecasted to grow 39% to $25 billion by 2015. § 28% of goods bought by Australians online were from overseas sites. Down from 43% in 2011, § Multiple overseas companies have launched dedicated Australian sites (e.g. ASOS, Saks, TM Lewin, Nordstrom, Gap, Wiggle etc.). § Companies are introducing experiences developed in other markets to Australia (e.g. ASOS scan-to-shop) § Of the top 15 online retailers, only two have a bricks-and- mortar offering….. § In the US, 13 of the top 15 online retailers had physical retail outlets. § Only 8% of companies use mobile to transform the customer experience and 14% for operational processes § Limited functionality and basic fulfilment On-line Retail is expected to grow to $25b by 2015 Australians are benchmarking their digital experience against established overseas brands Australian retailers are struggling to respond
- 8. Digital maturity isa combination of “what” and organisation does and “how” they approach it Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. Digital Intensity (the “WHAT”) Transformation Mngt Intensity (the “HOW”) Technology-enabled initiatives in: • Customer Experience • Internal Operations Leadership capabilities including: • Vision • Governance • Engagement • IT-Business Relationships
- 9. ‘Beginners’ may becarrying out some experiments though are largely skeptical of value of digital Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. DIGITALINTENSITY WHAT is the organisa3on doing (digital investments & assets) TRANSFORMATION MANAGEMENT INTENSITY HOW is the organisa3on doing it (vision, governance & roadmap) BEGINNERS This is not for us!
- 10. ‘Conservatives’ have adigital vision and strong governance though have few advanced digital features Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. DIGITALINTENSITY WHAT is the organisa3on doing (digital investments & assets) TRANSFORMATION MANAGEMENT INTENSITY HOW is the organisa3on doing it (vision, governance & roadmap) BEGINNERS This is not for us! CONSERVATIVES Analogue focus
- 11. ‘Fashionistas’ have manyadvanced digital features though they’re run in silos and there is no over-arching vision Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. DIGITALINTENSITY WHAT is the organisa3on doing (digital investments & assets) TRANSFORMATION MANAGEMENT INTENSITY HOW is the organisa3on doing it (vision, governance & roadmap) BEGINNERS This is not for us! CONSERVATIVES Analogue focus FASHIONISTAS Digital Digital Digital Digital Digital
- 12. ‘Digirati’ have astrong vision, and governance with many digital initiatives generating business value in measurable ways Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. DIGITALINTENSITY WHAT is the organisa3on doing (digital investments & assets) TRANSFORMATION MANAGEMENT INTENSITY HOW is the organisa3on doing it (vision, governance & roadmap) BEGINNERS This is not for us! CONSERVATIVES Analogue focus FASHIONISTAS Digital Digital Digital Digital Digital DIGIRATI Growth; +9% Profit; +26% Digitally-mature companies have significantly better financial performance.
- 13. Digirati have acommon Digital DNA, they invest 100% in the “how” Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. Digital Service Unit VISION IT/ BUSINESS GOVERNANCE ENGAGEMENT • Transformative Vision • Shared Vision • Digital Tsar • Digital Units • Investment Committees • Promoting Change • Employee Participation • Investing in Skills • Shared understanding between IT and business executives on role of IT Chief Digital Officer Digital Year “The IT Team (...) now work hand in hand with the Creative Media team.”
- 14. ..and they makestrategic investments on where to excel Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. FOCUS INVESTMENTS on where they Choose to Excel Digitally COMBINE DIGITAL CAPABILITIES to Exploit Synergies + Customer Experience Social media Mobile channel In-store Online Unified Processes/ Integrated Data Process Excellence Supply-chain Integration Centralized Ordering New biz. models Customer experience Unified Processes/ Integrated Data Analytics capabilities Personalized Customer experience Unified Processes/ Integrated Data On-premise Online BURBERRY ASIAN PAINTS CAESARS ENTERTAINMENT
- 15. As a Digirati,Burberry have demonstrated how a balanced approach on the “what” and “how” drives real business results Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved.
- 16. There are ‘Digirati’in every sub-sector Transform to the power of digital Copyright © 2013 Capgemini. All rights reserved. In Australian retail the challenge is that the ‘Digirati’ is often an overseas company. * Digital maturity of 391 companies in our sample DIGITALINTENSITY TRANSFORMATION MANAGEMENT INTENSITY BEGINNERS CONSERVATIVES FASHIONISTAS DIGIRATI
- 17. Transform to thepower of digital Copyright © 2013 Capgemini. All rights reserved. DIGITAL MATURITY MATTERS IT MATTERS IN EVERY SUB-SECTOR ANY COMPANY CAN BUILD DIGITAL DNA TAKE ACTION NOW TO CREATE YOUR OWN DIGITAL ADVANTAGE
- 18. Transform to thepower of digital Copyright © 2013 Capgemini. All rights reserved. QUESTIONS? @BenGilchriest