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Chicago Retail Analytics Summit, May 1st, 2015
This document provides an overview of omnichannel trends from the perspective of Deborah Weinswig, Executive Director and Head of Global Retail & Technology at the Fung Business Intelligence Centre. The summary is as follows: Webrooming, where customers research products online and then purchase in-store, has become more common than showrooming. Brick-and-mortar retailers are investing heavily in technology like beacons, mobile apps, and inventory tracking to improve the customer experience across channels. Emerging trends that will impact retail include the growth of mobile shopping via apps, click-and-collect services, subscriptions, and investments in security as retail becomes more digital.
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Chicago Retail Analytics Summit, May 1st, 2015
- 1. 1 CUSTOMER ENGAGEMENT AN OMNICHANNEL PERSPECTIVE DeborahWeinswig Executive Director – Head Global Retail & Technology Fung Business Intelligence Center Global
- 2. 2 DEBORAH WEINSWIG • Executive Directorand Head of Global Retail & Technology for the Fung Business Intelligence Centre • Award-winning global retail analyst and a specialist in retail innovation and technology • 12 Years at Citi Research where she served as Head of the Global Staples & Consumer Discretionary Team • #1 ranking analyst by Institutional Investor for nine years • Mentor to Silicon Valley accelerators including Alchemist Accelerator and Plug & Play • Certified Public Accountant, with a Masters of Business Administration degree from the University of Chicago
- 3. 3 FUNG BUSINESS INTELLIGENCE CENTRE (FBIC) • Establishedin 2000 and headquartered in Hong Kong • FBIC (formerly known as the Li & Fung Research Centre) has served as the knowledge bank and think tank for the Fung Group • New York–based Global Retail & Technology research team follows broader retail and technology trends
- 4. 4 AGENDA • OmnichannelTrends • Current Trends • Future Trends
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- 6. 6 THE STATE OF SHOPPING • Internet shopping is about functionality, not fun • As more shoppers move online, in-store shopping will increasingly focus on leisure shopping and the quality of experience • Online/offline division is becoming artificial as consumers browse, compare and buy across channels • More complex than simply “showrooming” • Click & collect provides the functional transaction coupled with in-store experience • Stores must be set up to deliver a quality experience
- 7. 7 OPPORTUNITY COST OF NON-OMNICHANNEL 10% Lost revenue = $110+mn in lost revenue lost for 1 billion retailer Source: RIS-‐EKN Customer Engagement Study, 2014, EKN-‐Toshiba Omni-‐Channel ExecuDon Study
- 8. 8 EVOLUTION OF CORE OMNICHANNEL EXECUTION Source: RIS-‐EKN Customer Engagement Survey, 2014 (100+ retail execuDves surveyed in the US) Figures are % of total respondents
- 9. 9 OMNICHANNEL CUSTOMERS: MORE PROFITABLE BUT UNKNOWN 76% Don’tknow how who their Omni channel customers are Source: RIS-‐EKN Customer Engagement Study, 2014,
- 10. 10 RETAILERS STILL USING OLDKEY PERFORMANCE INDICATORS Top KPI’s that retailers measure Sales/ channel 82% Customer satisfaction Average margin 57% 45% Customer Lifetime Value 22% Share of wallet Customer engagement across channels 8% Source: RIS-EKN Customer Engagement Study, 2014 KPI’s that they need to pay more attention to
- 11. 11 B&M STORE: THE OMNICHANNEL HU B 1 in 2 have deployed digital coupon reading in-store 66% of retailers have currently deployed store specific social media initiatives 46% have store specific websites 75% will use their store as a delivery hub for online orders by 2015 Sources: RIS-‐EKN Customer Engagement Study, 2014; EKN Future of Store Study, 2013
- 12. 12 AMAZON: GOLD STANDARD OF EXECUTION MobileCommerce and Engagement 1 Amazon (56%) 2 Starbucks (9%) 3 Apple (7%) Unified Commerce 1 Amazon (28%) 2 Macy’s (9%) 3 Nordstrom/Wal- Mart/Best Buy (7%) Customer Engagement 1 Amazon (33%) 2 Nordstrom (8%) 3 Best Buy/ Starbucks (5%) Source: RIS-‐EKN Customer Engagement Study, 2014
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- 14. 14 UBIQUITY OF MOBILE DEVICES • Constant connectivity enables shoppers to find product details, compare prices and buy anything anywhere • Digital devices are essential part of any shopping journey • 94% of global internet users go online to research purchases in at least one category
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- 16. 16 WEBROOMING BEATS SHOWROOMING • Webrooming, orresearching online and then buying in a store, has become the norm and more common than showrooming • 69% to 46% respectively according to Harris Poll • Amazon remains top destination for both showrooming and webrooming Millennials Prefer Webrooming
- 17. 17 WEBROOMING BEATS SHOWROOMING Why Shoppers webroom? • Don’t want to pay for shipping • Don’t want to wait for delivery • Like to touch and feel a product before they buy • Like to ask store to match better prices found online • Like the option to return to store if needed
- 18. 18 BRICK-AND-MORTAR INVESTING IN TECHNOLOGY • B&Mretailers using tech for – Delivery & pickup – Personalization – Inventory tracking – Beacons – Wearable tech • More than 40% used a smartphone or tablet for Black Friday activities (NRF)
- 19. 19 RETAILER TECH SPENDING • Capexof selected retailers was approximately 3.3% of sales in 2014, flat with 2013 • Technology capex: – CVSHealth: 37% of 2014 capex on technology and other corporate initiatives – Nordstrom: 35% of 2014 capex; plans to spend $4.3B (5% of sales) over next five years – Walmart: 29% of 2014 US capex; spending “$1.2-1.5 billion in e-commerce Web sites and mobile commerce applications” – Home Depot: “Tilting investments towards interconnected retail and technology” 0% 1% 2% 3% 4% 5% 6% 7% Nordstrom Macy's Kohl's TJX Walmart Target JCPenney Home Depot CVS Sears Capex/Sales Average 2014 Capex/Sales for Selected Retailers Average = 3.3%
- 20. 20 GAMIFICATION STIMULATES NEW CUSTOMER BEHAVIORS • Gamificationis the use of elements from computer and video games in real-world or other activities • These elements stimulate our psychological needs for desire, incentive, challenge, achievement and rewards, feedback, and mastery
- 21. 21 SOCIAL MEDIA AS NEWMARKETING PLATFORM • Internet now ruled by pictures and videos • Consistent but slowing growth in social media usage expected worldwide over the next 5 years • Most of the growth in Asia • Growth in the number of users is decelerating • Many social media experiences now on a mobile phone
- 22. 22 MOBILE APPS BURY THEBROWSER IN SHOPPING The browser is dead … BROWSER 1999-‐2014 … long live app nation! Source: Flurry AnalyDcs 88% 82% 12% 18% Smartphone Tablet Mobile App vs. Browser Split App Browser
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- 24. 24 DIGITAL ADVERTISING TO DOMINATE • Digitalreceiving new money because marketers can prove that digital works (Forrester) Sources: Forrester, PWC, and eMarketer.com 40 60 80 100 120 2012 2013 2014 2015 2016 2017 2018 2019 Radio Digital TV
- 25. 25 CLICK & COLLECT ISCOMING • Digital receiving new money because marketers can prove that digital works (Forrester) 5 13 35 0 5 10 15 20 25 30 35 Germany US UK % of shoppers saying they "currently use click & collect" Source: Planet Retail, 2014 Survey Base: 15,000 respondents across 10 countries
- 26. 26 THE LINE WITH CLICK& COLLECT IS BLURRING • More than two-thirds of UK shoppers used click & collect services in 2014 • 76% of UK shoppers will click & collect by 2017 • Amazon launched its lockers in Sept. 2011 • Only 17% of US consumers used click & collect in 2013 • Walmart started testing a drive-through grocery pick-up service in Oct. 2014 Walmart Drive-‐Through
- 27. 27 Brick-and-Mortar vs. Click& Collect A shopping facility where consumers can buy or order goods from the store’s website and then collect them from a store location convenient to them Brick-and-mortar refers to businesses that have physical stores that offer face-o-face customer experiences. Consumer can visit and enter physically to see touch and purchase merchandise
- 28. 28 E-COMMERCE OPENING BRICK-AND- MORTAR STORES • ExcludingAmazon, most online pure-plays hit a $1 billion revenue ceiling • Establishing a brick-and-mortar presence aids in brand building and growing consumer awareness • Easier to get VC funding with technology connection in the apparel/retail business model • eBay UK offers collection through Argos general merchandise stores • ASOS offers collection through Collect+, a network of 5,800 local shops such as newsagents and convenience stores serving as collection points • Amazon signed up to Doddle, a new network of collection-only stores concentrated on railway stations • More in 2015
- 29. 29 SUBSCRIPTIONS NIBBLING AWAY AT BRICK-AND-MORTAR • Consumers love the convenience and dependability of the services • Retailers love subscription models as a source of recurring revenue • Consumers find value in avoiding the drudgery of shopping for everyday commodity items • They appreciate the benefits of curation • Many consumers use subscriptions to treat themselves to a monthly gift
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- 31. 31 ONLINE GROCERY ISA NEW GROWTH AREA • Global Grocery Market: $4 Trillion • U.S. Grocery Market: $600B • Percent Online: 1.2% • Approx. 12% of Internet users have bought grocery items online
- 32. 32 TAP & PAY POISEDFOR HUGE GROWTH $3,737 $6,815 $10,451 $16,240 $23,472 $34,160 2014 2015 2016 2017 2018 2019 CAGR = 50% US Contactless Mobile Payment Market ($ Millions) % of All Mobile Payments 7% 10% 13% 16% 20% 24% Source: Forrester Research, October 2014
- 33. 33 Beacons and Location-Based Marketing • Whatis a beacon? • The best solution for improving the in-store retail experience • 2016 is expected to be the year of the Beacon • US installed base expands rapidly, but consumer response is key to further penetration $41.0 $444.0 2015 2016 Beacon-Influenced In-Store Retail Sales ($ Billion) Source: Bi Intelligence, Feb. 9, 2015
- 34. 34 MICRO-LOCATIONS IMPROVE IN-STORE EXPERIENCE They knowwhere you are!
- 35. 35 UBERFICATION ENBODYS THE SHARING ECONOMY MODEL • Uberis the most visible player (and driver) of the “sharing economy” • Changing consumer mindsets will challenge retailers • Opportunities for retailers: How much is convenience worth?
- 36. 36 CYBERSECURITY DEMANDS SMARTER INVESTMENT • Important decisionswill have to be made regarding how to address privacy and security • Retailers need to spend smarter, not necessarily more on cybersecurity • Holistic, enterprise-wide cyber-risk detection and prevention are critical first steps
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