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How you can join
the Omnichannel
Shopper in
transforming
Australian retail




                    1
Executive summary	                                                             4
    Bricks v. bytes: the changing face of retail	                                  5
    Shopping Without Boundaries: the Omnichannel Shopper’s world		                 6
    Case Study: John Lewis – an early Omnichannel adopter profits	                 8
    Telstra’s research: Omnichannels in Australia	                                10
    How new technologies are changing the way in which Australians shop 	         11
    What the research shows: Internet usage and shopping patterns	                12
    Social Media and the new shopping experience – what it means for retailers	   25
    Segmenting your customers in an Omnichannel marketplace – Deloitte’s View 	   27
    Vital Omnichannel lessons for Australian retailers 	                          28
    Case Study: Coca-Cola Amatil goes Omnichannel in Australia (sidebar) 	        30
    Conclusion 	                                                                  32
    ABOUT THE AUTHORS 	                                                           34



2                                                                                      3
EXECUTIVE                                                                                                                                       Bricks v. bytes:
    SUMMARY                                                                                                                                         the changing face
                                                                                                                                                    of retail

    With the ongoing evolution of technologies such as                                                                                              For many years, Australian retailers saw the
    the Internet, Wi-Fi and Smartphones, retailers today                                                                                            decision to trade online as an alternative to
    are faced with a plethora of choices for engaging                                                                                               trading in a physical store.
    with customers, and thus driving sales.

    Traditionally, retailers have segmented the    This whitepaper also explores how                 Preference for online or physical channels     Retailers judged their decision to trade        Overseas, traditional retailers embraced
    market into those who shop online and those    technology continues to drive the evolution       varies by product category but overall the     online in the same way they assessed the        online trading much more readily. In the
    who shop in a physical store. Increasingly,    of retail, the many possibilities now             research shows that consumers are looking      viability of adding an extra site to their      UK, where online now represents 12% of
    however, the boundaries are blurring and a     available to Australian retailers, and critical   for a blended online/offline experience when   bricks and mortar network. If online could      retail sales1, traditional bricks and mortar
    new consumer paradigm is fast emerging:        considerations for those who wish to build        they shop. The things they like about bricks   not stand-alone and make a profit, it was       operators dominate the list of top online
    the Omnichannel Shopper.                       an Omnichannel retail experience for their        and mortar stores are sensory (touch, feel,    dropped like any other loss making venture.     retailers. High street chains like Tesco, Next,
                                                   customers.                                        service) whereas they value the anywhere,      Thus, a number of high profile Australian       Debenhams, John Lewis, Currys, Topshop
    Equally comfortable to research and shop                                                         anytime convenience of shopping online.        retailers entered the online world then         and B+Q all feature in the top 202 and there
    on the Internet or in a store, depending on    Our findings show that the Omnichannel
                                                                                                     Combining the two delivers the best of both    exited again when they didn’t see profitable    are six bricks and mortar chains in the top
    circumstances, the Omnichannel Shopper         customer does indeed exist in Australia. They
                                                                                                     worlds.                                        results.                                        10. In the USA, traditional bricks and mortar
    has much to offer Australian retailers,        are as well, if not better, equipped than their
                                                                                                                                                                                                    retailers also dominate the list of top online
    including a rich source of data on consumer    overseas peers to search and shop in an                                                          Other Australian retailers resisted trading
                                                                                                                                                                                                    retailers. Internet Retailers 2012 Top 500 list
    behaviour and buying patterns, and scope to    Omnichannel world and they are shopping                                                          online altogether. They feared that trading
                                                                                                                                                                                                    of online retailers in the USA has Staples,
    target shoppers more precisely with offers     the Omnichannel way already. In some                                                             online would cannabilise their existing
                                                                                                                                                                                                    Apple, Wal-Mart, Office Depot, Sears and
    relating to their individual preferences.      product categories more than 80% of online                                                       bricks and mortar businesses. For these
                                                                                                                                                                                                    CDW in the top 10.
                                                   buyers also shop for the same goods they                                                         retailers, trading online would be like
    A lot has been said about the Omnichannel      buy online in bricks and mortar stores.                                                          opening a store next door to one that had
    shopper in Australia over the last 12
                                                                                                                                                    already been fitted out and a lease signed.
    months but most of it is based on overseas
                                                                                                                                                    They felt that the customer would choose
    experience and research. To discover how
                                                                                                                                                    one outlet or the other, but that there would
    best Australian retailers can both reach and
                                                                                                                                                    not be enough extra business to justify the
    harness the power of this new consumer,
                                                                                                                                                    additional investment.
    Telstra commissioned a unique research
    study to identify the prevalence of the
    Omnichannel customer in the Australian
    marketplace, their drivers and behaviours.
    Contrasted here against case studies from
    domestic and international experience, the
    results make for fascinating reading.




                                                                                                                                                    1	 Centre for Retail Research 2011 Study
                                                                                                                                                    2	 IMRG Experian Hitwise Hot Shops Feb 2012

4                                                                                                                                                                                                                                                     5
Shopping Without Boundaries:
    the Omnichannel Shopper’s
    world

    The success of traditional retailers online has given
    birth to the idea of the Omnichannel shopper, a new
    concept in retail that has critical implications for
    distribution channel design.

    In traditional distribution channel design,     The Omnichannel hypothesis is that
    a market is segmented into groups of            traditional channel design is not effective
    customers that are maximally similar by         for retailers. The customer who’s browsing
    group and maximally different between           the online channel for clothes is the same
    groups. Channels of distribution are then       customer who visits the store looking for
    designed to suit the needs of these groups of   clothes. The customer who’s looking online
    customers. For example, your bank probably      for a holiday is the same customer who visits
    has separate channels for large corporate,      a store to buy a holiday. Online and physical
    small business and consumer customers.          stores are not separate channels in the
    Likewise, at Telstra, we operate Enterprise     traditional sense because the one person
    and Government, Business and Consumer           may use both channels. In fact, online and
    channels. Underlying this model is the belief   physical more rightly should be considered
    that each customer buys only from one           an Omnichannel.
    channel, and thus that the profitability of
    each channel should be judged separately.
    When a business is designed this way,
    management spends a lot of time on their
    channel P&Ls, wondering whether one
    channel is cannabilising another.




6                                                                                                   7
CASE STUDY: John Lewis
    an early Omnichannel adopter profits




    John Lewis entered the online retail market in 2001.


    Like many other bricks and mortar retailers                     2. Click and connect                           The results have been impressive:
    of the time, they did so through the
                                                                    Introduced in 2008, “Click and Collect”        •	 Online sales have increased as a
    acquisition of an established online only
                                                                    gave customers the ability to order online        proportion of total sales every year since
    operator. (In John Lewis’ case, the online
                                                                    and pick up their purchase in a store of          the launch of the online site. Online sales
    operator was the UK arm of “Buy.com.”)
                                                                    their choice. Or they could order in a store      now represent 22% of total sales at John
    Rather than run the online operation as a
                                                                    and have the goods delivered home. This           Lewis3.
    separate entity, John Lewis soon recognised
                                                                    strategy delivered a tangible benefit to the   •	 Overall, John Lewis sales have continued
    the value of integrating the online
                                                                    Omnichannel shopper. For the first time,          to increase on a like-for-like basis over the
    experience with the in-store experience. To
                                                                    the shopper could combine the benefits            last 10 years4.
    achieve this, John Lewis implemented three
                                                                    of a physical distribution channel with the
    key strategies:                                                                                                •	 John Lewis customers are Omnichannel
                                                                    convenience of an online channel. To the
                                                                    customer, online and in-store became part         shoppers. According to the IDC Retail
    1. Collaborate, don’t compete                                   of the same shopping experience. They             Insights Report “
                                                                                                                                      John Lewis: The Path to
                                                                    ceased to be separate channels.                   Omnichannel”, published in May 20125:
    The first strategy aimed to ensure that
    the online operation did not cannibalise                                                                         −− 27% of John Lewis customers research
    the bricks and mortar stores, and involved                                                                          what they want in store and then
                                                                    3. Online, while in store                           purchase it online
    rewarding physical stores for online
                                                                    John Lewis’ third key strategy was to bring
    sales that were made in their trade area.                                                                        −− Over 60% of customers research online
                                                                    online in to the physical in-store shopping
    Store employees (partners) were given an                                                                            before going to the store
                                                                    experience. Terminals were installed in
    incentive to encourage shoppers to use the                                                                       −− More than 20% of John Lewis
                                                                    John Lewis stores so that partners could
    John Lewis online site, and because staff                                                                           customers buy online and collect
                                                                    assist shoppers with online purchases
    were rewarded for the desired behaviour,                                                                            in store
                                                                    in what was known as the PACT (Partner
    there was a very real reason for them to
                                                                    Assisted Customer Transaction) program.          −− 40% use their phones to interact with
    collaborate and not compete.
                                                                    In addition shoppers in John Lewis stores           the brand when in a store.
                                                                    were encouraged through signage and            •	 The Omnichannel shopper is John Lewis’s
                                                                    later through QR code links to go online          most valuable customer. On average, the
                                                                    for information on extra product ranges,          Omnichannel customer spends 3.5 times
                                                                    stock availability, finance terms and other       more than the customer who shops in
                                                                    information that might assist them in their       store or online exclusively. Quite simply,
                                                                    shopping mission.                                 access to an Omnichannel shopping
                                                                                                                      experience encourages more spending.




    3	 John Lewis Annual Report 2012
    4	 John Lewis Annual Reports, 2002-2012
    5	 IDC Retail Insights, John Lewis: “The Path to Omnichannel” Doc #GRRS03U, May 2012

8                                                                                                                                                                     9
Telstra’s research:                                                                           How new technologies
     Omnichannels                                                                                  are changing the way in
     in Australia                                                                                  which Australians shop

     A number of dedicated research studies into the                                               Before looking at the results of our research, it’s
     Omnichannel customer have been conducted overseas,                                            worth considering the technological environment that
     although none – until now – in Australia.                                                     exists in Australia to support the Omnichannel shopper.


     Given the relative immaturity of online        respondents across Australia. Quotas           In particular, what technologies are                           •	 Consumers are increasingly using their
     among traditional retailers in Australia,      were applied to provide for adequate           Australian shoppers equipped with? And                            mobile devices to access the Internet
     Telstra was interested to find out if the      representations in each age group and          how does the Australian technological                             while commuting or travelling. According
     Omnichannel customer exists in the             both genders. Quotas were also applied         environment compare with that available to                        to Nielsen, the proportion increased from
     Australian market. And, if so, we wanted to    on location to ensure coverage across          shoppers in Europe and North America?                             42% in 2010 to 55% in 2011. Of these,
     find out who they are and what merchandise     metropolitan and regional areas in each                                                                          31% report using their mobile devices to
                                                                                                   •	 The Australian consumer is
     categories they favoured. We also wanted       State and Territory. The interview fieldwork                                                                     research products.
                                                                                                      overwhelmingly an online consumer.
     to discover the critical considerations for    was conducted in March/early April
                                                                                                      Ranked by Internet users as a percentage                    •	 Consumers are growing accustomed to
     Australian retailers wishing to build an       2012. The data was weighted by age and
                                                                                                      of total population, Australia has the 5th                     a multiple screen life. Six in 10 online
     Omnichannel retail experience for their        gender within location so that the results
                                                                                                      highest level of Internet penetration in the                   Australians have used the Internet while
     customers.                                     are reflective of the actual Australian
                                                                                                      world. Total penetration in Australia, as at                   watching TV while more than one third
                                                    population. Sample sizes by age and gender
     The research consisted of a telephone                                                            December 2011, lies at 90% – just ahead                        do it on a daily basis. Of these, two thirds
                                                    are shown below.
     survey of 813 randomly selected                                                                  of Netherlands and Denmark. Australia is                       have used the Internet to shop while
                                                                                                      the only non-European nation amongst                           simultaneously watching TV.
                                                                                                      the top five countries ranked by Internet
                                                   total          male            female                                                                          •	 According to Nielsen’s Social Media
                                                                                                      penetration6.
                                                                                                                                                                     Report: Q3 2011 Australians use social
      14 to 19 years of age                        95             44              51               •	 According to the Nielsen 2012 Australian                       media more than any other developed
      20 to 29 years of age                        97             47              50                  Online Consumer Report, Australians                            country. What’s interesting for retailers
                                                                                                      now spend an average of almost 22                              is that social media is increasingly being
      30 to 39 years of age                        126            55              71                  hours per week online. In terms of media                       used to interact with brands. One of
                                                                                                      consumption, this is 40% more time than                        the key areas of growth in Australians’
      40 to 49 years of age                        141            70              71
                                                                                                      they spend in front of a TV.                                   participation with social media in 2011
      50 to 64 years of age                        196            96              100                                                                                was in ‘Liking’ brands (now 57%, up from
                                                                                                   •	 Time spent online is increasingly                              46% in 2010) and interacting with brands
      65+ years of age                             158            79              79                  facilitated by a proliferation of mobile                       on social media platforms (now 47%,
                                                                                                      devices. Nielsen say that 51% of all                           up from 41% in 2010). 71% read other
      Total                                        813            391             422                 online Australians aged 16+ owned a                            consumers’ opinions and discussions
                                                                                                      Smartphone in 2011, up from 36% in                             about brands online. Cisco’s IBSG group
                                                                                                      2010 (and they forecast Smartphone                             in the U.S. found that online reviews are
                                                                                                      penetration to be at 64% by 2013). This                        now five times more influential than in-
                                                                                                      compares to penetration rates of 45% in                        store assistants in influencing shopper
                                                                                                      the UK and 38% in the USA7. Time spent                         choice8.
                                                                                                      accessing the Internet from Smartphones
                                                                                                      increased by 20% in 2011 to an average
                                                                                                      of 4.2 hours per week, in addition 18%
                                                                                                      of Australian households now own a
                                                                                                      tablet computer, up from 8% in 2010 and
                                                                                                      forecast to be 39% by 2013.




                                                                                                   6	 Internet World Stats: www.internetworldstats.com
                                                                                                   7	 Google Mobile Internet and Smartphone Adoption Report January 2012
                                                                                                   8	 Cisco ISBG “Catch ‘em and keep ‘em 2011”

10                                                                                                                                                                                                                  11
What the research shows:
     Internet usage and
     shopping patterns


     Internet usage is now almost ubiquitous in   Proportion who access the internet                                                                    Australians are very frequent users of the   Frequency of accessing the internet
     Australia across all demographic groups                                                                                                            Internet. Over 50% of consumers access
     and is still increasing.                                                                                                                           the Internet every day and almost a third
                                                                                                                                                        access the Internet more than five times
                                                   TOTAL                                                                                   98%                                                       MORE THAN FIVE TIMES A DAY                               32%
                                                                                                                                                        per day.

                                                   MALE                                                                                        99%                                                                     EVERYDAY                                                  52%


                                                  FEMALE                                                                                 97%                                                                          MOST DAYS           6%

                                                   14-19                                                                                         100%                                                         A FEW TIMES A WEEK         5%

                                                   20-29                                                                                         100%                                                         ABOUT ONCE A WEEK          2%

                                                   30-39                                                                                         100%                                                                                1%
                                                                                                                                                                                                        LESS OFTEN THAN WEEKLY

                                                   40-49                                                                                       99%
                                                                                                                                                                                                                          NEVER          2%

                                                   50-64                                                                                       99%


                                                     65+                                                                     93%




                                                  Proportion who access the internet – trends                                                           The Internet is being used for shopping      Proportion who purchased online in the past 12 months
                                                                                                                                                        by two thirds of consumers. Men are
                                                                                                                                                        somewhat more likely to shop on the
                                                                                                                                   98%                  Internet than women, while Internet
                                                                                                                                                                                                      TOTAL                                                  66%
                                                                                                                                                        shopping is most popular among 30-39
                                                                                                                                                        year olds. Almost four in five consumers
                                                                                                               92%                                      have shopped on the Internet in the last       MALE                                                                71%
                                                                                                                      91%
                                                                                                        90%                                             12 months in this age group.
                                                                                             89%                                                                                                                                                     61%
                                                                                                                                                                                                     FEMALE
                                                                        86%       86%
                                                                                                                                                                                                      14-19                        50%
                                                              83%

                                                                                                                                                                                                      20-29                                                          69%


                                                             2005      2006       2007      2008        2009   2010   2011         2012                                                               30-39                                                                      78%

                                                  Source: Sensis® e-Business Report, Sweeney Research
                                                                                                                                                                                                      40-49                                                              70%


                                                                                                                                                                                                      50-64                                                        68%


                                                                                                                                                                                                        65+                                    55%




12                                                                                                                                                                                                                                                                                     13
What the research shows:
     Internet usage and
     shopping patterns (cont.)




     Online shoppers each spent an average of      Amount spent online in the past year                                                                More than two thirds of online shopping     Proportion of online purchases from overseas
     $2,218 last year. On average, men spent                                                                                                           takes place in Australia – i.e. goods are
     more than double online than women.                                                                                                               bought from Australian-based retailers.
     This is likely to be due to men having                                                                                                            This finding is consistent with the
                                                    UP TO $200                                            22%                                                                                            NONE                                         21%
     a higher average income. The spend                                                                                                                Australian Government’s Productivity
     amount increased dramatically for those                                                                                                           Commission Report, “Economic Structure
     on higher incomes, rising from $1,159          $201-$1000                                                                                 37%     and Performance of the Australian Retail     UP TO 20%                                                 34%
     per online shopper with an income up                                                                                                              Industry,” published in November 2011.
     to $55k per annum, to $1,171 per online       $1001-$5000                                                             27%                                                                       21%-50%                                          21%
     shopper with an income between $56k
     and $85k per annum and $3,820 per             OVER $5000                  9%                                                                                                                   OVER 50%                                            22%
     online shopper with an income above
     $85k. Only 28% of females had incomes                                                AVERAGE = 31%
                                                   DON’T KNOW             5%                                                                                                                       DON’T KNOW         4%              AVERAGE = 31%
     over $85k per annum, compared with
     38% of males.
     Regional shoppers spend more online           Base – purchased online                                                                                                                         Base – purchased online
     than metropolitan shoppers, but the
     difference is relatively small (around 7%).
                                                   Average spend online in the past year



                                                    TOTAL                                                       $2,218


                                                     MALE                                                                         $2,959


                                                   FEMALE                             $1,388


                                                    14-19          $475


                                                    20-29                                                                $2,449


                                                    30-39                                                                                     $3,330


                                                    40-49                                                                            $3,073


                                                    50-64                             $1,396


                                                      65+                                      $1,633




14                                                                                                                                                                                                                                                                  15
What the research shows:
     Internet usage and
     shopping patterns (cont.)




     The most popular categories for online        Types of products/services purchased online                                                          The online shopper is overwhelmingly an        Online purchasers who had also purchased the same
     purchasing are clothing/accessories and                                                                                                            Omnichannel shopper. The most popular          product offline in the past 12 months
     books while the least popular are cosmetics                                                                                                        Omnichannel category is clothing/
     and sporting goods.                                                                                                                                accessories, with 89% of online buyers
                                                         CLOTHING/ACCESSORIES/SHOES                                                               39%
                                                                                                                                                        also shopping in-store. The least popular                                                                                                          89%
                                                                                                                                                                                                             CLOTHING/ACCESSORIES/SHOES
                                                                                                                                                        Omnichannel category is airline tickets, but
                                                                              BOOKS                                                         35%
                                                                                                                                                        even here 31% of online buyers also buy in                                 BOOKS                                                             82%
                                                         APPLIANCES AND ELECTRONIC                                        26%                           bricks and mortar stores.
                                                   EQUIPMENT (OTHER THAN COMPUTERS)                                                                                                                          APPLIANCES AND ELECTRONIC                                                   69%
                                                                                                                                                                                                       EQUIPMENT (OTHER THAN COMPUTERS)
                                                                  VIDEOS/DVDS/GAMES                             18%
                                                                                                                                                                                                                      VIDEOS/DVDS/GAMES                                                        75%
                                                                      AIRLINE TICKETS                           18%
                                                                                                                                                                                                                          AIRLINE TICKETS                      31%
                                                                 HOTEL RESERVATIONS                           17%
                                                                                                                                                                                                                     HOTEL RESERVATIONS                         33%
                                                                               MUSIC                      16%
                                                                                                                                                                                                                                   MUSIC                              48%
                                                                COMPUTER HARDWARE                       14%
                                                                                                                                                                                                                    COMPUTER HARDWARE                                                   66%
                                                                GROCERIES & ALCOHOL                13%
                                                                                                                                                                                                                    GROCERIES & ALCOHOL                                                              83%
                                                                 COMPUTER SOFTWARE                12%
                                                                                                                                                                                                                     COMPUTER SOFTWARE                                      55%
                                                                           COSMETICS         9%                       ALL OTHER RESPONSES
                                                                                                                      LESS THAN 5%                                                                                                                                                            72%
                                                                                                                                                                                                                               COSMETICS
                                                             SPORTING GOODS/FITNESS     6%
                                                             EQUIPMENT/FISHING GEAR                                                                                                                              SPORTING GOODS/FITNESS                                           61%
                                                                                                                                                                                                                 EQUIPMENT/FISHING GEAR

                                                   Base – purchases online (66%)
                                                                                                                                                                                                       Base – had purchased product online in past 12 months




16                                                                                                                                                                                                                                                                                                               17
What the research shows:
     Internet usage and
     shopping patterns (cont.)




     Consumers vary in their preference for           Preferred shopping method                                                                                        Consumers gave their top reasons for            Benefits of shopping online
     online or in store shopping by category.                                                                                                                          preferring to shop online as being price
     Overall, they’re fairly evenly divided between                                                                                                                    and the convenience of being able to shop
     those who prefer shopping online, those who                                                                                                                       from anywhere. The top reasons given
     prefer shopping in store and those who have                     HOTEL RESERVATIONS 84%                                                                 14%   2%   for preferring to shop in a physical store                                CHEAPER PRICES                                        41%
     no preference. A full analysis of individual                                                                                                                      were sensory (feel, touch, the ability to try
                                                                     COMPUTER SOFTWARE 61%                                                  23%             15%                                                            CAN SHOP AT ANY TIME OF DAY/AT HOME                                   32%
     consumers (where each consumer was                                                                                                                                on clothes, etc.) as well as face-to-face
     assigned a preference, depending on their                                                                                                                         customer service.                                                   IT IS EASY/CONVENIENT                           23%
                                                                                   MUSIC 59%                                            16%          25%
     overall preferences across the full range of
     goods, and with each preference assigned a                                                                                                                                                                                CAN RESEARCH MANY PRODUCTS AT                         17%
                                                                          AIRLINE TICKETS 54%                                         25%                 21%                                                                     THE SAME TIME/COMPARE PRICES
     value of “1”) showed that 42% of consumers
                                                                                                                                                                                                                                         CAN FIND PRODUCTS NOT
     favour bricks and mortar, compared with                                       BOOKS 37%                          28%                     35%                                                                                           AVAILABLE IN STORES                      17%
     29% preferring online and 29% having
                                                                                                                                                                                                                              BETTER RANGE/VARIETY OF PRODUCTS            7%
     balanced preferences across the different                       VIDEOS/DVDS/GAMES 36%                            28%                     36%                                                                                               /FROM OVERSEAS
     channels.
                                                                    GROCERIES & ALCOHOL 35%                           6% 59%                                                                                                         IT IS FAST/QUICK/TIME SAVING        6%

                                                                                                                                                                                                                                    CONVENIENT DELIVERY/POSTAGE          6%
                                                                    COMPUTER HARDWARE 33%                           40%                             27%                                                                                & HANDLING/FREE POSTAGE
                                                            APPLIANCES AND ELECTRONIC                                                                                                                                    DO NOT NEED TO DEAL WITH SALES PEOPLE      4%
                                                      EQUIPMENT (OTHER THAN COMPUTERS) 29%                      32%                         38%
                                                                                                                                                                                                                                         CAN GET BETTER PRODUCT     4%
                                                                               COSMETICS 25%                  22%               53%                                                                                                          INFORMATION ONLINE

                                                            CLOTHING/ACCESSORIES/SHOES 19%              21%               61%
                                                                                                                                                                                                                       Base – purchased online (66%)


                                                         Prefer online        No preference          Prefer physical store

                                                      Base – had purchased products both online and in a physical store in                                                                                             Benefits of shopping in a physical store
                                                      past 12 months


                                                                                                                                                                                                                       PREFER TO PHYSICALLY SEE/TRY THE PRODUCT                                        80%
                                                                                                                                                                                                                       BEFORE I BUY/BE ABLE TO TOUCH IT/TRY IT ON
                                                                                                                                                                                                                                    PREFER A FACE-TO-FACE SALES                20%
                                                                                                                                                                                                                                       PERSON/PERSONAL SERVICE
                                                                                                                                                                                                                                 DON’T HAVE TO WAIT FOR DELIVERY     9%

                                                                                                                                                                                                                                                MORE CONVENIENT      4%

                                                                                                                                                                                                                        ENJOY THE EXPERIENCE/RETAIL EXPERIENCE      2%

                                                                                                                                                                                                                                       LIKE THE SOCIAL ASPECT OF    2%
                                                                                                                                                                                                                                       SHOPPING/A GOOD DAY OUT



                                                                                                                                                                                                                         Base – purchased online (66%)




18                                                                                                                                                                                                                                                                                                           19
What the research shows:
     Internet usage and
     shopping patterns (cont.)




     The online world has given birth to            Have you researched goods in a physical store then bought them online?   Consumers value Omnichannel shopping           How consumers rate different Omnichannel benefits
     “showrooming.” Showrooming occurs when                                                                                  for the way it combines the strength of
     a consumer uses a bricks and mortar store                                                                               in-store and online to create an anytime,
     to touch, feel and try a product but then                                                                               anywhere shopping experience. For                ABILITY TO RETURN PRODUCTS THROUGH A PHYSICAL 71%
     buys online. Our research shows that the                                                                                example, they see benefit in being able                          STORE EVEN IF PURCHASED ONLINE                                            23%         3% 2%
     showrooming phenomenon is real. Half of                                                                                 to order in-store or online and then take
                                                                                                                                                                                               ABILITY TO TRACK ORDER STATUS 50%                                 35%                8% 6%
     the population has researched a product in                                                                              delivery somewhere else, to check stock                             EITHER AT A STORE OR ONLINE
     a physical store then bought it online, but                                                                             availability across various locations, or to
     of these about a quarter made the online                                                                                check out extended ranges online while                        NOTIFICATION OF DELAYS IN DELIVERY 46%                             38%               11% 6%
     purchase from the same retailer with                                                                                    visiting a store.                              NOTIFICATION WHEN FAVOURITE PRODUCTS ARE ON SALE 43%
     whom they did the research. In other words,                    NO        YES                                                                                                                                                                          36%                10%    11%
                                                                    51%       49%                                                                                                 REGARDLESS OF WHETHER AT A STORE OR ONLINE
     showrooming results in an online sale for
                                                                                                                                                                                             ABILITY TO CHECK STOCK LEVELS AT 42%                         36%                 14%         7%
     the physical retailer in about 25% of cases.                                                                                                                                                       VARIOUS STORES ONLINE
                                                                                                                                                                                     ABILITY TO MODIFY AN ORDER MADE ONLINE 38%                         36%              17%          8%
                                                                                                                                                                                                   THROUGH A PHYSICAL STORE
                                                                                                                                                                                             ABILITY TO SEARCH FOR EXTENDED 30%                   39%                  15%          13%
                                                                                                                                                                                              RANGES ONLINE WHILE IN-STORE
                                                                                                                                                                                         PROVISION OF WIFI HOTSPOT TO ALLOW 22%             24%               22%      29%
                                                                                                                                                                                             FREE ONLINE BROWSING IN-STORE
                                                    Base – purchases online
                                                                                                                                                                              PROVISION OF EXTRA PRODUCT INFORMATION ONLINE 12%       39%                        21%     28%
                                                                                                                                                                                THROUGH LINKS PROVIDED ON DISPLAYS IN-STORE
                                                    Was the online purchase made from the same retailer?                                                                                     PERSONALISED OFFERS DELIVERED 8% 14%           26%                49%
                                                                                                                                                                                              TO YOUR MOBILE WHILE IN-STORE




                                                                                                                                                                                                                            89%
                                                                                                                                                                               Extremely valuable       Somewhat valuable           Valuable            Not valuable

                                                                                                                                                                            Base – purchases online

                                                                              YES
                                                                              24%
                                                                    NO
                                                                    76%




                                                    Base – researched in a store then purchased online




20                                                                                                                                                                                                                                                                                             21
What the research shows:
     Internet usage and
     shopping patterns (cont.)




     A large proportion of Multichannel shoppers    Proportion who purchased from the same retailer both                                   The Omnichannel shopper values                Why purchased at retailer’s physical location
     – those who shop both online and in physical   in their stores and online in the past year                                            convenience. While the benefits of online
     stores – are already Omnichannel shoppers.                                                                                            shopping centre around comparison-
     More than a third of the population who                                                                                               shopping, and the benefits of shopping
     bought online and in-store in the last                                                                                                in-store centre around the senses, both       I HAPPENED TO BE THERE/CHANCE PURCHASE/IMPULSE BUY                                                 35%
                                                     TOTAL                                                       36%
     12 months did so from the same retailer.                                                                                              online and physical shoppers rate spatial
     The Multichannel customer is most                                                                                                     convenience as their top reason for                            CONVENIENCE/EASY/CAN STAY AT HOME                                     29%
                                                     MALE                                                  34%
     likely to be Omnichannel in the younger                                                                                               shopping. For retailers, this means the
     demographics (14-49) and less likely in the                                                                                           best Omnichannel prospects are those                       LIKE TO SEE THE ITEM/LIKE TO TRY ITEM ON/                                28%
                                                    FEMALE                                                              39%                                                                                                     QUALITY OF ITEM
     over 65 age group.                                                                                                                    who live in the trade area of your physical
                                                                                                                                           store location.                                          IMMEDIACY/GET THE PRODUCT STRAIGHT AWAY                              21%
                                                     14-19                                                                    41%
                                                                                                                                           Examining the sales that businesses                     YOU CAN BROWSE IN-STORE/SEE OTHER ITEMS/                  10%
                                                                                                                                           make online reinforces this. The Sensis®                                         BUY OTHER ITEMS
                                                     20-29                                                        37%
                                                                                                                                           e-Business Report is a large scale                    BETTER DEAL/BETTER VALUE/DIDN’T WANT TO PAY           5%
                                                                                                                                           survey of 1,800 small and medium                      SHIPPING/POSTAGE/BETTER PRICE/FREE DELIVERY
                                                     30-39                                                                     42%
                                                                                                                                           businesses that has been tracking the
                                                                                                                                           online behaviour of small and medium
                                                     40-49                                                                           44%   businesses since 1995. Over this time, it     Base – purchased at same retailer online and in-store (36%)
                                                                                                                                           has consistently been found that the main
                                                     50-64                                                 34%                             customer base for SMEs that sell online
                                                                                                                                           comes from those who live locally. Indeed,
                                                       65+                              19%                                                60% of SMEs mainly make their sales
                                                                                                                                           locally.                                      Why purchased at retailer’s online site



                                                                                                                                                                                                       CONVENIENCE/EASY/CAN STAY AT HOME                                                    29%

                                                                                                                                                                                                                               IT’S CHEAPER                                           27%

                                                                                                                                                                                           IT WASN’T AVAILABLE IN-STORE/DIFFICULT TO FIND/                         13%
                                                                                                                                                                                                                    ONLINE PURCHASE ONLY
                                                                                                                                                                                             BETTER DEAL/BETTER VALUE/DIDN’T WANT TO PAY                     9%
                                                                                                                                                                                             SHIPPING/POSTAGE/BETTER PRICE/FREE DELIVERY
                                                                                                                                                                                                        CAN SHOP AT ANYTIME THAT SUITS ME                   8%
                                                                                                                                                                                                                    OUTSIDE TRADING HOURS
                                                                                                                                                                                                        AVAILABILITY/WIDER RANGE/VARIETY/               7%
                                                                                                                                                                                                                    ONLY AVAILABLE ONLINE
                                                                                                                                                                                          COULDN’T GET TO THE STORE/LIVE TOO FAR FROM THE               7%
                                                                                                                                                                                                  STORE/STORE ITEM NOT AVAILABLE LOCALLY

                                                                                                                                                                                                                               IT’S QUICKER       5%



                                                                                                                                                                                         Base – purchased at same retailer online and in store (36%)




22                                                                                                                                                                                                                                                                                                23
What the research shows:
     Internet usage and                                                                             Social Media and the new
     shopping patterns (cont.)
                                                                                                    shopping experience – what
                                                                                                    it means for retailers

                                                                                                    In Australia, the consumer social media
                                                                                                    market already displays a degree of maturity.


     Types of customers SME’s sold to:                                                              Only 38% of online Australians do not use       Products or services researched on social networking sites
                                                                                                    social media – a figure that has not changed
                                                                                                    in the past year. But those who do use it are
                                  MAINLY TO     TOTAL TO       TOTAL SELL TO:                       using it more frequently, with 36% of online
                                  SELL          SELL                                                Australians using social media at least                       CLOTHING/FASHION                                               53%
                                                               SMALL              MEDIUM            once a day in 2012, up from 30% in 2011.
                                                               BUSINESS           BUSINESS          An enthusiastic 10% of online Australians                                                                              32%
                                                                                                                                                                               MUSIC
      Local – same city or town   60%           87%            87%                86%               report using social media more than five
                                                                                                    times a day.                                                  ELECTRICAL GOODS                                         31%
      Elsewhere in state          13%           48%            48%                56%
                                                                                                    Social media has been playing a growing           COSMETICS/BEAUTY/FRAGRANCE                                     22%
      Interstate                  16%           45%            44%                61%               influence on consumers’ purchasing
      Overseas                    3%            27%            27%                35%               behaviour in recent years. Social media                   COMPUTERS/SOFTWARE                                   20%
                                                                                                    users are more likely to report purchasing
                                                                                                    online than non-users. While 66% of             FURNITURE/THINGS FOR THE HOME                            17%
                                                                                                    Australians reported having made
                                                                                                    purchases online, 71% of social media users                               VIDEOS                   14%
       Meet the Omnichannel Shopper                                                                 reported online purchasing, increasing to
                                                                                                    74% of Australians who used social media                               SOFTWARE                    14%
       a. The Omnichannel Shopper                     to feel and touch things I go to a bricks     every day.
       Jane (not her real name) is in her 50’s        and mortar store but if I want something                                                                     COMPUTER GAMES               10%
                                                                                                    On the other hand, while business use of
       and lives in Tasmania. She accesses the        specific I like the convenience of buying     social media has been increasing (27%
       Internet more than five times a day but        online.” Her favourite bricks and mortar                                                                           CARS/PARTS        6%
                                                                                                    of small businesses have a social media
       does not use social media. In the past 12      store is Myer because of its product range.   presence in 2012, up from 14% in 2011),                                    BOOKS      5%
       months she has bought books, clothing,         Her favourite online store                    it still lags consumer usage. However, by
       airline tickets and hotel reservations         is Ezibuy. It’s interesting to note that      examining the consumer data, it is evident
       online but has also bought all of these        Ezibuy acquired Myer Direct in 2002. If not                                                            ENTERTAINMENT/EVENTS          3%
                                                                                                    that the opportunities that social media
       categories in a physical store. She uses       for this acquisition Jane would have had a    provides for businesses are considerable.        SPORTS/RECREATION EQUIPMENT          2%
       in-store and online for different purposes.    classic Omnichannel relationship with the     For example, some 16% of social media
       “When I need traditional service or need       Myer brand.                                   users reported that they used social media                                 OTHER             11%
                                                                                                    to research products and services that
                                                                                                    they might want to buy. The opportunity for
                                                                                                    Omnichannel retail is clear, with the types
                                                                                                    of products most suited to the Omnichannel      Base – users of social media to research products or services
                                                                                                    model also being the types of products that     Source: Sensis® e-Business Report, Sweeney Research
                                                                                                    consumers are most likely to be researching
                                                                                                    on social media.
                                                                                                    Of those social media users who researched
                                                                                                    products and services, 40% reported that
                                                                                                    their last search had resulted in a purchase.
                                                                                                    While 72% of those purchases were
                                                                                                    conducted online, some 28% resulted in an
                                                                                                    “offline” purchase in a physical store.




24                                                                                                                                                                                                                                     25
Social Media and the new shopping
     experience – what it means for                                                                                                                         Segmenting your customers in
     retailers (cont.)
                                                                                                                                                            an Omnichannel marketplace
                                                                                                                                                            –Deloitte’s View


     The benefits of the Omnichannel model          How social media users rate different Omnichannel benefits                                              The Omnichannel consumer is making faster, more accurate                   data is at the fingertips of retailers today; making good use of
     resonated strongly with regular social media                                                                                                           and more sophisticated purchasing decisions than ever before.              it – irrespective of where it sits in the organisation – is achievable
     users, who rated them equal or higher than                                                                                                             Traditional consumer behaviours are being replaced by Omnichannel          within a short timeframe.
     online shoppers in general. In particular,                                                                                                             consumer behaviours.
                                                                 ABILITY TO RETURN PRODUCTS THROUGH A                                                 96%                                                                            2.	Advanced analytics tell the story
     social media users rated access to Wi-Fi
                                                              PHYSICAL STORE EVEN IF PURCHASED ONLINE                                                 96%                                                                            	 Through their actions and transactions, Omnichannel consumers
     hotspots and links to additional product                                                                                                                Traditional consumer                Omnichannel consumer                   offer up data that provides a behavioural and then granular
     information in-store more highly than                                                                                                        90%        behavioUr                           behavioUr
                                                                           ABILITY TO TRACK ORDER STATUS                                                                                                                                view of what they are doing. Much like the innovations in
     regular online shoppers.                                                EITHER AT A STORE OR ONLINE                                        85%          Research by reading printed         Scan the Internet to “comparison       technology available to consumers in an Omnichannel world,
     Social media users were slightly more                                                                                                                   media or watching a TV advert,      shop” based on the value of one        so too retailers today can avail themselves of many advanced
                                                                                                                                                86%
     likely to report researching online and then                     NOTIFICATION OF DELAYS IN DELIVERY                                                     often with a local focus            offer against another offer.           analytic tools. These tools are not cost prohibitive, and search the
     purchasing in a physical store than the                                                                                                83%                                                  Refer to peer opinions via their       traces of data a consumer leaves with retailers to unveil stories
     general population (75% compared with                                                                                                                                                       social media networks – even           of behaviour. Similar to a social networking environment, the
                                                    NOTIFICATION WHEN FAVOURITE PRODUCTS ARE ON SALE                                            85%                                              while in a physical store
     73%). They were also significantly more                                                                                                                                                                                            resulting behavioural segments act like communities of likeness
                                                          REGARDLESS OF WHETHER AT A STORE OR ONLINE                                      78%
     likely to report researching in a physical                                                                                                              Make an early decision on where     Keep purchase options open right       – consumers effectively self-select where they best reside within
     store and then purchasing online (59%                                                                                                 82%               to purchase                         up to the point of sale                the segmentation model based on how similar their shopping
                                                                           ABILITY TO CHECK STOCK LEVELS
     compared to 49%).                                                         AT VARIOUS STORES ONLINE                                                                                                                                 behaviours and preferences are to a particular community.
                                                                                                                                          78%                Shop based on the opening hours     Browse and purchase when               They are not assigned into a group because they fit a pre-
                                                                                                                                                             of a physical store                 convenient                             configured persona.
                                                                       ABILITY TO MODIFY AN ORDER MADE                                    80%
                                                                       ONLINE THROUGH A PHYSICAL STORE                               74%                     Constrain themselves to what is     Find the product that is best       3.	Constant evolution, to reflect a constantly changing market
                                                                                                                                                             available in the physical store     suited to their needs – globally    	 The segmentation model becomes a living breathing asset that
                                                                         ABILITY TO SEARCH FOR EXTENDED                              74%                                                         or locally. Geography is often
                                                                                                                                                                                                                                        can be refreshed to monitor changes in behaviour, evolves over
                                                                          RANGES ONLINE WHILE IN-STORE                              70%                                                          irrelevant
                                                                                                                                                                                                                                        time, and allows the retailer to respond with agility to meet
                                                                                                                                                                                                                                        customers where they are now in their own shopping experience.
                                                                     PROVISION OF WIFI HOTSPOT TO ALLOW                       59%                           So how can retailers build in the agility to recognise this change in
                                                                         FREE ONLINE BROWSING IN-STORE                46%                                   the market, respond to or even pre-empt further changes? How can         Imagine the ability to identify those customers who are similar
                                                                                                                                                            you make the right offer, at the right time, through the right channel   – firstly, because they buy running gear; secondly, because they
                                                       PROVISION OF EXTRA PRODUCT INFORMATION ONLINE                          61%                           to win the customer’s attention – in a way that entices them with a      like the same brand; and thirdly, because they’re prepared to pay
                                                         THROUGH LINKS PROVIDED ON DISPLAYS IN-STORE                    50%                                 value proposition that speaks directly to their desires and needs?       a slightly higher price to get the latest product – especially after
                                                                                                                                                                                                                                     payday. Then imagine that they are also similar because they prefer
                                                                         PERSONALISED OFFERS DELIVERED          28%                                         More than ever, segmentation is the key to answering these
                                                                                                                                                                                                                                     to make their first purchase in-store, but will then repeat purchase
                                                                          TO YOUR MOBILE WHILE IN-STORE       22%                                           questions. Traditional segmentation approaches are not designed
                                                                                                                                                                                                                                     online – except for weekends, when again they will revert to browsing
                                                                                                                                                            for the Omnichannel consumer – they are often too high level, based
                                                                                                                                                                                                                                     and buying in-store. What does this tell us about how, where and
                                                                                                                                                            on attributes like demographic, life-stage and socioeconomic status,
                                                       Daily social media users        Online shoppers                                                                                                                               when we can influence these customers?
                                                                                                                                                            and undertaken as a point-in-time, survey-based, research exercise.
                                                    Proportion that rated feature as very or quite valuable                                                 The result is a simplified matrix that assumes a customer resides        On a given day, imagine having the opportunity to recognise these
                                                    Base – purchases online                                                                                 only in one segment and can only be managed as a single persona.         shoppers are online, call up prior purchases and present them
                                                                                                                                                                                                                                     with the products that are most appealing to them. You can entice
                                                                                                                                                            So what does segmentation look like in an Omnichannel world?
                                                                                                                                                                                                                                     them, not by offering price discounts, but instead by giving them
                                                                                                                                                            1.	Amazingly granular data, used smartly                                 an incentive to bundle, cross-selling to them, based on the choices
                                                                                                                                                            	 Omnichannel segmentation makes smart use of the amazing                they’ve made in the past. What’s more, you’re not just campaigning
                                                                                                                                                               data that the Omnichannel consumer is providing retailers at          to them, but also to all those within their community of likeness,
                                                                                                                                                               every touch-point, across each channel, with every decision and       reaching out to them through their most prevalent channel of
                                                                                                                                                               transaction they make. In this new world, a distinction must be       interaction at the most relevant time of day. This is the power that
                                                                                                                                                               drawn between aggregate customer data that gives no insight in        segmentation in an Omnichannel world can provide.
                                                                                                                                                               how an individual’s behaviour changes over time, and rich granular
                                                                                                                                                               data that provides insight into every customer interaction. Having
                                                                                                                                                               a strategy that recognises how this data is going to be gathered
                                                                                                                                                               and sourced across these touch-points is the first step in re-
                                                                                                                                                               thinking the role of segmentation. Surprisingly, most of this




26                                                                                                                                                                                                                                                                                                              27
Omni Channel - Telstra WhitePaper
Omni Channel - Telstra WhitePaper
Omni Channel - Telstra WhitePaper
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Omni Channel - Telstra WhitePaper

  • 1. How you can join the Omnichannel Shopper in transforming Australian retail 1
  • 2. Executive summary 4 Bricks v. bytes: the changing face of retail 5 Shopping Without Boundaries: the Omnichannel Shopper’s world 6 Case Study: John Lewis – an early Omnichannel adopter profits 8 Telstra’s research: Omnichannels in Australia 10 How new technologies are changing the way in which Australians shop 11 What the research shows: Internet usage and shopping patterns 12 Social Media and the new shopping experience – what it means for retailers 25 Segmenting your customers in an Omnichannel marketplace – Deloitte’s View 27 Vital Omnichannel lessons for Australian retailers 28 Case Study: Coca-Cola Amatil goes Omnichannel in Australia (sidebar) 30 Conclusion 32 ABOUT THE AUTHORS 34 2 3
  • 3. EXECUTIVE Bricks v. bytes: SUMMARY the changing face of retail With the ongoing evolution of technologies such as For many years, Australian retailers saw the the Internet, Wi-Fi and Smartphones, retailers today decision to trade online as an alternative to are faced with a plethora of choices for engaging trading in a physical store. with customers, and thus driving sales. Traditionally, retailers have segmented the This whitepaper also explores how Preference for online or physical channels Retailers judged their decision to trade Overseas, traditional retailers embraced market into those who shop online and those technology continues to drive the evolution varies by product category but overall the online in the same way they assessed the online trading much more readily. In the who shop in a physical store. Increasingly, of retail, the many possibilities now research shows that consumers are looking viability of adding an extra site to their UK, where online now represents 12% of however, the boundaries are blurring and a available to Australian retailers, and critical for a blended online/offline experience when bricks and mortar network. If online could retail sales1, traditional bricks and mortar new consumer paradigm is fast emerging: considerations for those who wish to build they shop. The things they like about bricks not stand-alone and make a profit, it was operators dominate the list of top online the Omnichannel Shopper. an Omnichannel retail experience for their and mortar stores are sensory (touch, feel, dropped like any other loss making venture. retailers. High street chains like Tesco, Next, customers. service) whereas they value the anywhere, Thus, a number of high profile Australian Debenhams, John Lewis, Currys, Topshop Equally comfortable to research and shop anytime convenience of shopping online. retailers entered the online world then and B+Q all feature in the top 202 and there on the Internet or in a store, depending on Our findings show that the Omnichannel Combining the two delivers the best of both exited again when they didn’t see profitable are six bricks and mortar chains in the top circumstances, the Omnichannel Shopper customer does indeed exist in Australia. They worlds. results. 10. In the USA, traditional bricks and mortar has much to offer Australian retailers, are as well, if not better, equipped than their retailers also dominate the list of top online including a rich source of data on consumer overseas peers to search and shop in an Other Australian retailers resisted trading retailers. Internet Retailers 2012 Top 500 list behaviour and buying patterns, and scope to Omnichannel world and they are shopping online altogether. They feared that trading of online retailers in the USA has Staples, target shoppers more precisely with offers the Omnichannel way already. In some online would cannabilise their existing Apple, Wal-Mart, Office Depot, Sears and relating to their individual preferences. product categories more than 80% of online bricks and mortar businesses. For these CDW in the top 10. buyers also shop for the same goods they retailers, trading online would be like A lot has been said about the Omnichannel buy online in bricks and mortar stores. opening a store next door to one that had shopper in Australia over the last 12 already been fitted out and a lease signed. months but most of it is based on overseas They felt that the customer would choose experience and research. To discover how one outlet or the other, but that there would best Australian retailers can both reach and not be enough extra business to justify the harness the power of this new consumer, additional investment. Telstra commissioned a unique research study to identify the prevalence of the Omnichannel customer in the Australian marketplace, their drivers and behaviours. Contrasted here against case studies from domestic and international experience, the results make for fascinating reading. 1 Centre for Retail Research 2011 Study 2 IMRG Experian Hitwise Hot Shops Feb 2012 4 5
  • 4. Shopping Without Boundaries: the Omnichannel Shopper’s world The success of traditional retailers online has given birth to the idea of the Omnichannel shopper, a new concept in retail that has critical implications for distribution channel design. In traditional distribution channel design, The Omnichannel hypothesis is that a market is segmented into groups of traditional channel design is not effective customers that are maximally similar by for retailers. The customer who’s browsing group and maximally different between the online channel for clothes is the same groups. Channels of distribution are then customer who visits the store looking for designed to suit the needs of these groups of clothes. The customer who’s looking online customers. For example, your bank probably for a holiday is the same customer who visits has separate channels for large corporate, a store to buy a holiday. Online and physical small business and consumer customers. stores are not separate channels in the Likewise, at Telstra, we operate Enterprise traditional sense because the one person and Government, Business and Consumer may use both channels. In fact, online and channels. Underlying this model is the belief physical more rightly should be considered that each customer buys only from one an Omnichannel. channel, and thus that the profitability of each channel should be judged separately. When a business is designed this way, management spends a lot of time on their channel P&Ls, wondering whether one channel is cannabilising another. 6 7
  • 5. CASE STUDY: John Lewis an early Omnichannel adopter profits John Lewis entered the online retail market in 2001. Like many other bricks and mortar retailers 2. Click and connect The results have been impressive: of the time, they did so through the Introduced in 2008, “Click and Collect” • Online sales have increased as a acquisition of an established online only gave customers the ability to order online proportion of total sales every year since operator. (In John Lewis’ case, the online and pick up their purchase in a store of the launch of the online site. Online sales operator was the UK arm of “Buy.com.”) their choice. Or they could order in a store now represent 22% of total sales at John Rather than run the online operation as a and have the goods delivered home. This Lewis3. separate entity, John Lewis soon recognised strategy delivered a tangible benefit to the • Overall, John Lewis sales have continued the value of integrating the online Omnichannel shopper. For the first time, to increase on a like-for-like basis over the experience with the in-store experience. To the shopper could combine the benefits last 10 years4. achieve this, John Lewis implemented three of a physical distribution channel with the key strategies: • John Lewis customers are Omnichannel convenience of an online channel. To the customer, online and in-store became part shoppers. According to the IDC Retail 1. Collaborate, don’t compete of the same shopping experience. They Insights Report “ John Lewis: The Path to ceased to be separate channels. Omnichannel”, published in May 20125: The first strategy aimed to ensure that the online operation did not cannibalise −− 27% of John Lewis customers research the bricks and mortar stores, and involved what they want in store and then 3. Online, while in store purchase it online rewarding physical stores for online John Lewis’ third key strategy was to bring sales that were made in their trade area. −− Over 60% of customers research online online in to the physical in-store shopping Store employees (partners) were given an before going to the store experience. Terminals were installed in incentive to encourage shoppers to use the −− More than 20% of John Lewis John Lewis stores so that partners could John Lewis online site, and because staff customers buy online and collect assist shoppers with online purchases were rewarded for the desired behaviour, in store in what was known as the PACT (Partner there was a very real reason for them to Assisted Customer Transaction) program. −− 40% use their phones to interact with collaborate and not compete. In addition shoppers in John Lewis stores the brand when in a store. were encouraged through signage and • The Omnichannel shopper is John Lewis’s later through QR code links to go online most valuable customer. On average, the for information on extra product ranges, Omnichannel customer spends 3.5 times stock availability, finance terms and other more than the customer who shops in information that might assist them in their store or online exclusively. Quite simply, shopping mission. access to an Omnichannel shopping experience encourages more spending. 3 John Lewis Annual Report 2012 4 John Lewis Annual Reports, 2002-2012 5 IDC Retail Insights, John Lewis: “The Path to Omnichannel” Doc #GRRS03U, May 2012 8 9
  • 6. Telstra’s research: How new technologies Omnichannels are changing the way in in Australia which Australians shop A number of dedicated research studies into the Before looking at the results of our research, it’s Omnichannel customer have been conducted overseas, worth considering the technological environment that although none – until now – in Australia. exists in Australia to support the Omnichannel shopper. Given the relative immaturity of online respondents across Australia. Quotas In particular, what technologies are • Consumers are increasingly using their among traditional retailers in Australia, were applied to provide for adequate Australian shoppers equipped with? And mobile devices to access the Internet Telstra was interested to find out if the representations in each age group and how does the Australian technological while commuting or travelling. According Omnichannel customer exists in the both genders. Quotas were also applied environment compare with that available to to Nielsen, the proportion increased from Australian market. And, if so, we wanted to on location to ensure coverage across shoppers in Europe and North America? 42% in 2010 to 55% in 2011. Of these, find out who they are and what merchandise metropolitan and regional areas in each 31% report using their mobile devices to • The Australian consumer is categories they favoured. We also wanted State and Territory. The interview fieldwork research products. overwhelmingly an online consumer. to discover the critical considerations for was conducted in March/early April Ranked by Internet users as a percentage • Consumers are growing accustomed to Australian retailers wishing to build an 2012. The data was weighted by age and of total population, Australia has the 5th a multiple screen life. Six in 10 online Omnichannel retail experience for their gender within location so that the results highest level of Internet penetration in the Australians have used the Internet while customers. are reflective of the actual Australian world. Total penetration in Australia, as at watching TV while more than one third population. Sample sizes by age and gender The research consisted of a telephone December 2011, lies at 90% – just ahead do it on a daily basis. Of these, two thirds are shown below. survey of 813 randomly selected of Netherlands and Denmark. Australia is have used the Internet to shop while the only non-European nation amongst simultaneously watching TV. the top five countries ranked by Internet total male female • According to Nielsen’s Social Media penetration6. Report: Q3 2011 Australians use social 14 to 19 years of age 95 44 51 • According to the Nielsen 2012 Australian media more than any other developed 20 to 29 years of age 97 47 50 Online Consumer Report, Australians country. What’s interesting for retailers now spend an average of almost 22 is that social media is increasingly being 30 to 39 years of age 126 55 71 hours per week online. In terms of media used to interact with brands. One of consumption, this is 40% more time than the key areas of growth in Australians’ 40 to 49 years of age 141 70 71 they spend in front of a TV. participation with social media in 2011 50 to 64 years of age 196 96 100 was in ‘Liking’ brands (now 57%, up from • Time spent online is increasingly 46% in 2010) and interacting with brands 65+ years of age 158 79 79 facilitated by a proliferation of mobile on social media platforms (now 47%, devices. Nielsen say that 51% of all up from 41% in 2010). 71% read other Total 813 391 422 online Australians aged 16+ owned a consumers’ opinions and discussions Smartphone in 2011, up from 36% in about brands online. Cisco’s IBSG group 2010 (and they forecast Smartphone in the U.S. found that online reviews are penetration to be at 64% by 2013). This now five times more influential than in- compares to penetration rates of 45% in store assistants in influencing shopper the UK and 38% in the USA7. Time spent choice8. accessing the Internet from Smartphones increased by 20% in 2011 to an average of 4.2 hours per week, in addition 18% of Australian households now own a tablet computer, up from 8% in 2010 and forecast to be 39% by 2013. 6 Internet World Stats: www.internetworldstats.com 7 Google Mobile Internet and Smartphone Adoption Report January 2012 8 Cisco ISBG “Catch ‘em and keep ‘em 2011” 10 11
  • 7. What the research shows: Internet usage and shopping patterns Internet usage is now almost ubiquitous in Proportion who access the internet Australians are very frequent users of the Frequency of accessing the internet Australia across all demographic groups Internet. Over 50% of consumers access and is still increasing. the Internet every day and almost a third access the Internet more than five times TOTAL 98% MORE THAN FIVE TIMES A DAY 32% per day. MALE 99% EVERYDAY 52% FEMALE 97% MOST DAYS 6% 14-19 100% A FEW TIMES A WEEK 5% 20-29 100% ABOUT ONCE A WEEK 2% 30-39 100% 1% LESS OFTEN THAN WEEKLY 40-49 99% NEVER 2% 50-64 99% 65+ 93% Proportion who access the internet – trends The Internet is being used for shopping Proportion who purchased online in the past 12 months by two thirds of consumers. Men are somewhat more likely to shop on the 98% Internet than women, while Internet TOTAL 66% shopping is most popular among 30-39 year olds. Almost four in five consumers 92% have shopped on the Internet in the last MALE 71% 91% 90% 12 months in this age group. 89% 61% FEMALE 86% 86% 14-19 50% 83% 20-29 69% 2005 2006 2007 2008 2009 2010 2011 2012 30-39 78% Source: Sensis® e-Business Report, Sweeney Research 40-49 70% 50-64 68% 65+ 55% 12 13
  • 8. What the research shows: Internet usage and shopping patterns (cont.) Online shoppers each spent an average of Amount spent online in the past year More than two thirds of online shopping Proportion of online purchases from overseas $2,218 last year. On average, men spent takes place in Australia – i.e. goods are more than double online than women. bought from Australian-based retailers. This is likely to be due to men having This finding is consistent with the UP TO $200 22% NONE 21% a higher average income. The spend Australian Government’s Productivity amount increased dramatically for those Commission Report, “Economic Structure on higher incomes, rising from $1,159 $201-$1000 37% and Performance of the Australian Retail UP TO 20% 34% per online shopper with an income up Industry,” published in November 2011. to $55k per annum, to $1,171 per online $1001-$5000 27% 21%-50% 21% shopper with an income between $56k and $85k per annum and $3,820 per OVER $5000 9% OVER 50% 22% online shopper with an income above $85k. Only 28% of females had incomes AVERAGE = 31% DON’T KNOW 5% DON’T KNOW 4% AVERAGE = 31% over $85k per annum, compared with 38% of males. Regional shoppers spend more online Base – purchased online Base – purchased online than metropolitan shoppers, but the difference is relatively small (around 7%). Average spend online in the past year TOTAL $2,218 MALE $2,959 FEMALE $1,388 14-19 $475 20-29 $2,449 30-39 $3,330 40-49 $3,073 50-64 $1,396 65+ $1,633 14 15
  • 9. What the research shows: Internet usage and shopping patterns (cont.) The most popular categories for online Types of products/services purchased online The online shopper is overwhelmingly an Online purchasers who had also purchased the same purchasing are clothing/accessories and Omnichannel shopper. The most popular product offline in the past 12 months books while the least popular are cosmetics Omnichannel category is clothing/ and sporting goods. accessories, with 89% of online buyers CLOTHING/ACCESSORIES/SHOES 39% also shopping in-store. The least popular 89% CLOTHING/ACCESSORIES/SHOES Omnichannel category is airline tickets, but BOOKS 35% even here 31% of online buyers also buy in BOOKS 82% APPLIANCES AND ELECTRONIC 26% bricks and mortar stores. EQUIPMENT (OTHER THAN COMPUTERS) APPLIANCES AND ELECTRONIC 69% EQUIPMENT (OTHER THAN COMPUTERS) VIDEOS/DVDS/GAMES 18% VIDEOS/DVDS/GAMES 75% AIRLINE TICKETS 18% AIRLINE TICKETS 31% HOTEL RESERVATIONS 17% HOTEL RESERVATIONS 33% MUSIC 16% MUSIC 48% COMPUTER HARDWARE 14% COMPUTER HARDWARE 66% GROCERIES & ALCOHOL 13% GROCERIES & ALCOHOL 83% COMPUTER SOFTWARE 12% COMPUTER SOFTWARE 55% COSMETICS 9% ALL OTHER RESPONSES LESS THAN 5% 72% COSMETICS SPORTING GOODS/FITNESS 6% EQUIPMENT/FISHING GEAR SPORTING GOODS/FITNESS 61% EQUIPMENT/FISHING GEAR Base – purchases online (66%) Base – had purchased product online in past 12 months 16 17
  • 10. What the research shows: Internet usage and shopping patterns (cont.) Consumers vary in their preference for Preferred shopping method Consumers gave their top reasons for Benefits of shopping online online or in store shopping by category. preferring to shop online as being price Overall, they’re fairly evenly divided between and the convenience of being able to shop those who prefer shopping online, those who from anywhere. The top reasons given prefer shopping in store and those who have HOTEL RESERVATIONS 84% 14% 2% for preferring to shop in a physical store CHEAPER PRICES 41% no preference. A full analysis of individual were sensory (feel, touch, the ability to try COMPUTER SOFTWARE 61% 23% 15% CAN SHOP AT ANY TIME OF DAY/AT HOME 32% consumers (where each consumer was on clothes, etc.) as well as face-to-face assigned a preference, depending on their customer service. IT IS EASY/CONVENIENT 23% MUSIC 59% 16% 25% overall preferences across the full range of goods, and with each preference assigned a CAN RESEARCH MANY PRODUCTS AT 17% AIRLINE TICKETS 54% 25% 21% THE SAME TIME/COMPARE PRICES value of “1”) showed that 42% of consumers CAN FIND PRODUCTS NOT favour bricks and mortar, compared with BOOKS 37% 28% 35% AVAILABLE IN STORES 17% 29% preferring online and 29% having BETTER RANGE/VARIETY OF PRODUCTS 7% balanced preferences across the different VIDEOS/DVDS/GAMES 36% 28% 36% /FROM OVERSEAS channels. GROCERIES & ALCOHOL 35% 6% 59% IT IS FAST/QUICK/TIME SAVING 6% CONVENIENT DELIVERY/POSTAGE 6% COMPUTER HARDWARE 33% 40% 27% & HANDLING/FREE POSTAGE APPLIANCES AND ELECTRONIC DO NOT NEED TO DEAL WITH SALES PEOPLE 4% EQUIPMENT (OTHER THAN COMPUTERS) 29% 32% 38% CAN GET BETTER PRODUCT 4% COSMETICS 25% 22% 53% INFORMATION ONLINE CLOTHING/ACCESSORIES/SHOES 19% 21% 61% Base – purchased online (66%) Prefer online No preference Prefer physical store Base – had purchased products both online and in a physical store in Benefits of shopping in a physical store past 12 months PREFER TO PHYSICALLY SEE/TRY THE PRODUCT 80% BEFORE I BUY/BE ABLE TO TOUCH IT/TRY IT ON PREFER A FACE-TO-FACE SALES 20% PERSON/PERSONAL SERVICE DON’T HAVE TO WAIT FOR DELIVERY 9% MORE CONVENIENT 4% ENJOY THE EXPERIENCE/RETAIL EXPERIENCE 2% LIKE THE SOCIAL ASPECT OF 2% SHOPPING/A GOOD DAY OUT Base – purchased online (66%) 18 19
  • 11. What the research shows: Internet usage and shopping patterns (cont.) The online world has given birth to Have you researched goods in a physical store then bought them online? Consumers value Omnichannel shopping How consumers rate different Omnichannel benefits “showrooming.” Showrooming occurs when for the way it combines the strength of a consumer uses a bricks and mortar store in-store and online to create an anytime, to touch, feel and try a product but then anywhere shopping experience. For ABILITY TO RETURN PRODUCTS THROUGH A PHYSICAL 71% buys online. Our research shows that the example, they see benefit in being able STORE EVEN IF PURCHASED ONLINE 23% 3% 2% showrooming phenomenon is real. Half of to order in-store or online and then take ABILITY TO TRACK ORDER STATUS 50% 35% 8% 6% the population has researched a product in delivery somewhere else, to check stock EITHER AT A STORE OR ONLINE a physical store then bought it online, but availability across various locations, or to of these about a quarter made the online check out extended ranges online while NOTIFICATION OF DELAYS IN DELIVERY 46% 38% 11% 6% purchase from the same retailer with visiting a store. NOTIFICATION WHEN FAVOURITE PRODUCTS ARE ON SALE 43% whom they did the research. In other words, NO YES 36% 10% 11% 51% 49% REGARDLESS OF WHETHER AT A STORE OR ONLINE showrooming results in an online sale for ABILITY TO CHECK STOCK LEVELS AT 42% 36% 14% 7% the physical retailer in about 25% of cases. VARIOUS STORES ONLINE ABILITY TO MODIFY AN ORDER MADE ONLINE 38% 36% 17% 8% THROUGH A PHYSICAL STORE ABILITY TO SEARCH FOR EXTENDED 30% 39% 15% 13% RANGES ONLINE WHILE IN-STORE PROVISION OF WIFI HOTSPOT TO ALLOW 22% 24% 22% 29% FREE ONLINE BROWSING IN-STORE Base – purchases online PROVISION OF EXTRA PRODUCT INFORMATION ONLINE 12% 39% 21% 28% THROUGH LINKS PROVIDED ON DISPLAYS IN-STORE Was the online purchase made from the same retailer? PERSONALISED OFFERS DELIVERED 8% 14% 26% 49% TO YOUR MOBILE WHILE IN-STORE 89% Extremely valuable Somewhat valuable Valuable Not valuable Base – purchases online YES 24% NO 76% Base – researched in a store then purchased online 20 21
  • 12. What the research shows: Internet usage and shopping patterns (cont.) A large proportion of Multichannel shoppers Proportion who purchased from the same retailer both The Omnichannel shopper values Why purchased at retailer’s physical location – those who shop both online and in physical in their stores and online in the past year convenience. While the benefits of online stores – are already Omnichannel shoppers. shopping centre around comparison- More than a third of the population who shopping, and the benefits of shopping bought online and in-store in the last in-store centre around the senses, both I HAPPENED TO BE THERE/CHANCE PURCHASE/IMPULSE BUY 35% TOTAL 36% 12 months did so from the same retailer. online and physical shoppers rate spatial The Multichannel customer is most convenience as their top reason for CONVENIENCE/EASY/CAN STAY AT HOME 29% MALE 34% likely to be Omnichannel in the younger shopping. For retailers, this means the demographics (14-49) and less likely in the best Omnichannel prospects are those LIKE TO SEE THE ITEM/LIKE TO TRY ITEM ON/ 28% FEMALE 39% QUALITY OF ITEM over 65 age group. who live in the trade area of your physical store location. IMMEDIACY/GET THE PRODUCT STRAIGHT AWAY 21% 14-19 41% Examining the sales that businesses YOU CAN BROWSE IN-STORE/SEE OTHER ITEMS/ 10% make online reinforces this. The Sensis® BUY OTHER ITEMS 20-29 37% e-Business Report is a large scale BETTER DEAL/BETTER VALUE/DIDN’T WANT TO PAY 5% survey of 1,800 small and medium SHIPPING/POSTAGE/BETTER PRICE/FREE DELIVERY 30-39 42% businesses that has been tracking the online behaviour of small and medium 40-49 44% businesses since 1995. Over this time, it Base – purchased at same retailer online and in-store (36%) has consistently been found that the main 50-64 34% customer base for SMEs that sell online comes from those who live locally. Indeed, 65+ 19% 60% of SMEs mainly make their sales locally. Why purchased at retailer’s online site CONVENIENCE/EASY/CAN STAY AT HOME 29% IT’S CHEAPER 27% IT WASN’T AVAILABLE IN-STORE/DIFFICULT TO FIND/ 13% ONLINE PURCHASE ONLY BETTER DEAL/BETTER VALUE/DIDN’T WANT TO PAY 9% SHIPPING/POSTAGE/BETTER PRICE/FREE DELIVERY CAN SHOP AT ANYTIME THAT SUITS ME 8% OUTSIDE TRADING HOURS AVAILABILITY/WIDER RANGE/VARIETY/ 7% ONLY AVAILABLE ONLINE COULDN’T GET TO THE STORE/LIVE TOO FAR FROM THE 7% STORE/STORE ITEM NOT AVAILABLE LOCALLY IT’S QUICKER 5% Base – purchased at same retailer online and in store (36%) 22 23
  • 13. What the research shows: Internet usage and Social Media and the new shopping patterns (cont.) shopping experience – what it means for retailers In Australia, the consumer social media market already displays a degree of maturity. Types of customers SME’s sold to: Only 38% of online Australians do not use Products or services researched on social networking sites social media – a figure that has not changed in the past year. But those who do use it are MAINLY TO TOTAL TO TOTAL SELL TO: using it more frequently, with 36% of online SELL SELL Australians using social media at least CLOTHING/FASHION 53% SMALL MEDIUM once a day in 2012, up from 30% in 2011. BUSINESS BUSINESS An enthusiastic 10% of online Australians 32% MUSIC Local – same city or town 60% 87% 87% 86% report using social media more than five times a day. ELECTRICAL GOODS 31% Elsewhere in state 13% 48% 48% 56% Social media has been playing a growing COSMETICS/BEAUTY/FRAGRANCE 22% Interstate 16% 45% 44% 61% influence on consumers’ purchasing Overseas 3% 27% 27% 35% behaviour in recent years. Social media COMPUTERS/SOFTWARE 20% users are more likely to report purchasing online than non-users. While 66% of FURNITURE/THINGS FOR THE HOME 17% Australians reported having made purchases online, 71% of social media users VIDEOS 14% Meet the Omnichannel Shopper reported online purchasing, increasing to 74% of Australians who used social media SOFTWARE 14% a. The Omnichannel Shopper to feel and touch things I go to a bricks every day. Jane (not her real name) is in her 50’s and mortar store but if I want something COMPUTER GAMES 10% On the other hand, while business use of and lives in Tasmania. She accesses the specific I like the convenience of buying social media has been increasing (27% Internet more than five times a day but online.” Her favourite bricks and mortar CARS/PARTS 6% of small businesses have a social media does not use social media. In the past 12 store is Myer because of its product range. presence in 2012, up from 14% in 2011), BOOKS 5% months she has bought books, clothing, Her favourite online store it still lags consumer usage. However, by airline tickets and hotel reservations is Ezibuy. It’s interesting to note that examining the consumer data, it is evident online but has also bought all of these Ezibuy acquired Myer Direct in 2002. If not ENTERTAINMENT/EVENTS 3% that the opportunities that social media categories in a physical store. She uses for this acquisition Jane would have had a provides for businesses are considerable. SPORTS/RECREATION EQUIPMENT 2% in-store and online for different purposes. classic Omnichannel relationship with the For example, some 16% of social media “When I need traditional service or need Myer brand. users reported that they used social media OTHER 11% to research products and services that they might want to buy. The opportunity for Omnichannel retail is clear, with the types of products most suited to the Omnichannel Base – users of social media to research products or services model also being the types of products that Source: Sensis® e-Business Report, Sweeney Research consumers are most likely to be researching on social media. Of those social media users who researched products and services, 40% reported that their last search had resulted in a purchase. While 72% of those purchases were conducted online, some 28% resulted in an “offline” purchase in a physical store. 24 25
  • 14. Social Media and the new shopping experience – what it means for Segmenting your customers in retailers (cont.) an Omnichannel marketplace –Deloitte’s View The benefits of the Omnichannel model How social media users rate different Omnichannel benefits The Omnichannel consumer is making faster, more accurate data is at the fingertips of retailers today; making good use of resonated strongly with regular social media and more sophisticated purchasing decisions than ever before. it – irrespective of where it sits in the organisation – is achievable users, who rated them equal or higher than Traditional consumer behaviours are being replaced by Omnichannel within a short timeframe. online shoppers in general. In particular, consumer behaviours. ABILITY TO RETURN PRODUCTS THROUGH A 96% 2. Advanced analytics tell the story social media users rated access to Wi-Fi PHYSICAL STORE EVEN IF PURCHASED ONLINE 96% Through their actions and transactions, Omnichannel consumers hotspots and links to additional product Traditional consumer Omnichannel consumer offer up data that provides a behavioural and then granular information in-store more highly than 90% behavioUr behavioUr ABILITY TO TRACK ORDER STATUS view of what they are doing. Much like the innovations in regular online shoppers. EITHER AT A STORE OR ONLINE 85% Research by reading printed Scan the Internet to “comparison technology available to consumers in an Omnichannel world, Social media users were slightly more media or watching a TV advert, shop” based on the value of one so too retailers today can avail themselves of many advanced 86% likely to report researching online and then NOTIFICATION OF DELAYS IN DELIVERY often with a local focus offer against another offer. analytic tools. These tools are not cost prohibitive, and search the purchasing in a physical store than the 83% Refer to peer opinions via their traces of data a consumer leaves with retailers to unveil stories general population (75% compared with social media networks – even of behaviour. Similar to a social networking environment, the NOTIFICATION WHEN FAVOURITE PRODUCTS ARE ON SALE 85% while in a physical store 73%). They were also significantly more resulting behavioural segments act like communities of likeness REGARDLESS OF WHETHER AT A STORE OR ONLINE 78% likely to report researching in a physical Make an early decision on where Keep purchase options open right – consumers effectively self-select where they best reside within store and then purchasing online (59% 82% to purchase up to the point of sale the segmentation model based on how similar their shopping ABILITY TO CHECK STOCK LEVELS compared to 49%). AT VARIOUS STORES ONLINE behaviours and preferences are to a particular community. 78% Shop based on the opening hours Browse and purchase when They are not assigned into a group because they fit a pre- of a physical store convenient configured persona. ABILITY TO MODIFY AN ORDER MADE 80% ONLINE THROUGH A PHYSICAL STORE 74% Constrain themselves to what is Find the product that is best 3. Constant evolution, to reflect a constantly changing market available in the physical store suited to their needs – globally The segmentation model becomes a living breathing asset that ABILITY TO SEARCH FOR EXTENDED 74% or locally. Geography is often can be refreshed to monitor changes in behaviour, evolves over RANGES ONLINE WHILE IN-STORE 70% irrelevant time, and allows the retailer to respond with agility to meet customers where they are now in their own shopping experience. PROVISION OF WIFI HOTSPOT TO ALLOW 59% So how can retailers build in the agility to recognise this change in FREE ONLINE BROWSING IN-STORE 46% the market, respond to or even pre-empt further changes? How can Imagine the ability to identify those customers who are similar you make the right offer, at the right time, through the right channel – firstly, because they buy running gear; secondly, because they PROVISION OF EXTRA PRODUCT INFORMATION ONLINE 61% to win the customer’s attention – in a way that entices them with a like the same brand; and thirdly, because they’re prepared to pay THROUGH LINKS PROVIDED ON DISPLAYS IN-STORE 50% value proposition that speaks directly to their desires and needs? a slightly higher price to get the latest product – especially after payday. Then imagine that they are also similar because they prefer PERSONALISED OFFERS DELIVERED 28% More than ever, segmentation is the key to answering these to make their first purchase in-store, but will then repeat purchase TO YOUR MOBILE WHILE IN-STORE 22% questions. Traditional segmentation approaches are not designed online – except for weekends, when again they will revert to browsing for the Omnichannel consumer – they are often too high level, based and buying in-store. What does this tell us about how, where and on attributes like demographic, life-stage and socioeconomic status, Daily social media users Online shoppers when we can influence these customers? and undertaken as a point-in-time, survey-based, research exercise. Proportion that rated feature as very or quite valuable The result is a simplified matrix that assumes a customer resides On a given day, imagine having the opportunity to recognise these Base – purchases online only in one segment and can only be managed as a single persona. shoppers are online, call up prior purchases and present them with the products that are most appealing to them. You can entice So what does segmentation look like in an Omnichannel world? them, not by offering price discounts, but instead by giving them 1. Amazingly granular data, used smartly an incentive to bundle, cross-selling to them, based on the choices Omnichannel segmentation makes smart use of the amazing they’ve made in the past. What’s more, you’re not just campaigning data that the Omnichannel consumer is providing retailers at to them, but also to all those within their community of likeness, every touch-point, across each channel, with every decision and reaching out to them through their most prevalent channel of transaction they make. In this new world, a distinction must be interaction at the most relevant time of day. This is the power that drawn between aggregate customer data that gives no insight in segmentation in an Omnichannel world can provide. how an individual’s behaviour changes over time, and rich granular data that provides insight into every customer interaction. Having a strategy that recognises how this data is going to be gathered and sourced across these touch-points is the first step in re- thinking the role of segmentation. Surprisingly, most of this 26 27