2011 presentation ibm users groupv3

Tools to Captivate the Connected Customer

IBM Retail User Group ConferenceMay 15-18

2011Orlando, FL

How Standards Will Enable Retailers to Compete in a Consumer Controlled World

Jim Nadler Principal

[email protected]

34th Annual Conference

IBM RETAIL USER GROUP Tools to Captivate the Connected Customer

Today’s Agenda

Today’s Retail Challenge

The New Consumer Dynamic

What it Means for Retailers

The Project Prioritization Dilemma

The Move to “Real Time” Retailing

The Role of Supplier Collaboration

How Standards Help

“A Retailer Example”

What About the CLOUD?

Conclusion



Today’s Retail Challenge

Attract, Build and Retain a PROFITABLE Customer Base

Drive Operational Efficiencies.

Improve Marketing Effectiveness

Differentiate with Customer Service Offerings.

Meet or BEAT Wall Street Expectations

Change the Paradigm on FINANCIAL Performance Metrics

Drive Increased Performance through Operational Execution across all Channels

Increase the Level of Supplier Collaboration as part of DRIVE to Execute Strategy

Eliminate Practices and Processes that do not provide increased focus on CUSTOMER CENTRIC programs

Define and Implement Replicatible BU$INE$$ PROCE$$ Change



The Retail Challenge

The emerging “Consumer in Control” requires new strategies to COMPETE and WIN

Industry MUST Move to a Consumer Focused Data Reporting Model

i.e. Integration of Category Management and CRM – “Shopper Marketing”

The emergence of the “digital native” and the advance of mobile commerce will forever change the retail landscape

What Role will Social Networks Play in the evolution of retail branding

ANYWHERE, ANYTIME Information Access is changing the GAME

Google Price by UPC

Research Digital Camera Cost/Features on AMAZON while standing in a Best BUY

Automating the service process will enable retailers to provide added benefits without increased costs.



The New Consumer Dynamic

The FRUGAL Consumer IS HERE TO STAY

The “New Consumer” has shifted to pragmatic consumption

Consumers ARE Educated About Their Preferences

Social Networks are changing the Branding Game

Online Shopping Continues to Grow

Mobile Commerce is Emerging

New Consumer Technology Tools are available every 6 months

The New Shopper ROI – “Return on Involvement”



The New Consumer – Key Trends

Boomers will not lead the recovery

Gen X will lead and retailers will have to better understand this group

Digital Natives (Gen Y) will emerge as a key force

Increased Private Label Brand Purchases*

Continue to Seek Best “Deals”

Limit Purchases to Need vs. Want

Shopping Less Often

Limits on “Stock-up”



The New Consumer – “Return on Involvement”

Consumer LIKE the tools Retailers began to offer pre-recession

Shopping Lists, Recipes, e-Coupons, Digital Receipts and other service oriented applications designed for their convenience

Expansion of Customer Touch Points brings new complexity and each must link to the other

Many Current eMail Marketing tools are SPAM

Approach to Integrated Messaging must link to individuals needs and not generic market

Building and Maintaining a connection with the “omni channel” consumer requires new approaches

Web/Store/Phone/Social Networks



Loyalty Programs: Not Effective Enough

Retailers

Pursue loyalty with loyalty programs

Recognize programs rarely deliver on their promises (have not inspired loyalty)

Acknowledge they are challenged to derive insights from the data they collect

Consumers

Generally underwhelmed to date

Good prices drive loyalty

Product selection drives loyalty

Don’t believe retailers have demonstrated that they know them

8

Source: RSR Research, April 2011



Loyalty for Loyalty’s Sake Doesn’t Work

9

18% of SA say yes vs. 5% of NA




Have We Lost Sight of the Basics?

10




What Does It Mean For Retailers?

New Ways to Connect with and Support The Consumer are Critical

Exceptional Customer Service is CRITICAL

Price is FLAT

Traditional Theories Behind Store Layout Need A New Look

The deployment of New Technology Platforms play a Key Role in future success

It is ALL about SPEED to Market




CONNECT INFORM PERSUADE SERVICE

Store Product Details

Pricing Payment

Web Value Statements

Promotion Return Policy

Call Center Service Options

Freshness Pick up Options

Mobile Location Based

Service Recall Notification

An Integrated Infrastructure is Required to Align

Operationally to All Consumer Touch Points




Merchandising & Merchandise Planning - buy the right product, at the right cost, maximize selling space and sell the product at the right price

Marketing - stimulate the brand via various mediums, drive recency, frequency and spend, leverage loyalty and customer service initiatives while measuring effectiveness of our efforts

Operations - Provide tools to the front lines to improve our customers experience , reduce OOS, keep costs low

Other (Accounting, R/E, Admin) account for business activities, report on results, provide adequate e-mail and other infrastructure functions to our business units

eCommerce - maximize virtual transaction opportunities and utilize the most cost-efficient e-marketing platforms to improve brand performance

Store

Web Call

Center

Connect

The DOTS

Mobile



Current Systems Infrastructure

Call Center

Web

Store

Mobile A Confused Consumer



The Project Prioritization Dilemma Current Processes are often not the result of an Integrated S&OP Exercise

Legacy Systems have “stunted” retailers ability to react quickly

Innovation is limited as retailers attempt to keep up with regulatory and competitive pressures

Budgets are quickly slashed as a response to uneven results

The Business Process you are trying to correct must lead the way – tie to ROI Model and get the User Community involved EARLY



Point of Service

Store, Web,

Kiosk, Phone, etc…

The Need For A Real Time Retailing Architecture

Web Services

ANYWHERE, ANYTIME ACCESS

Driving Business Process

Improvements

Alert Messaging

Exception Workbench

Figure 1 VOIDS ZERO MOVERS

District % change % change

1 1.0% 1.0% 3.8% 2.9% 12.4% 10.0% 9.5% -0.5%2 1.3% 2.1% 5.0% 2.9% 17.1% 13.3% 15.0% 1.7%3 1.8% 1.8% 3.1% 1.3% 16.4% 12.9% 13.3% 0.4%4 0.0% 1.1% 3.3% 2.2% 6.1% 8.9% 8.9% 0.0%5 2.9% 2.9% 3.8% 0.8% 15.4% 10.0% 11.3% 1.3%6 1.0% 1.5% 2.6% 1.0% 12.8% 12.8% 9.7% -3.1%7 1.9% 1.9% 4.8% 2.9% 13.3% 16.2% 14.3% -1.9%8 1.3% 1.3% 2.7% 1.3% 13.3% 13.3% 9.3% -4.0%9 1.0% 2.9% 5.7% 2.9% 19.0% 13.8% 15.2% 1.4%

10 3.9% 2.8% 6.1% 3.3% 20.0% 16.7% 17.8% 1.1%11 1.1% 1.7% 3.3% 1.7% 12.8% 11.7% 8.9% -2.8%12 4.9% 5.3% 6.7% 1.3% 25.3% 16.9% 16.9% 0.0%13 4.1% 2.6% 3.6% 1.0% 19.5% 9.7% 11.8% 2.1%16 7.4% 6.7% 7.4% 0.7% 28.1% 20.7% 20.7% 0.0%

MIN 0.0% 1.0% 2.6% 0.7% 6.1% 8.9% 8.9% -4.0%MAX 7.4% 6.7% 7.4% 3.3% 28.1% 20.7% 20.7% 2.1%AVG 2.4% 2.5% 4.4% 16.6% 13.4% 13.0% -0.3%

Sales ReportingData

Repository

Mobile Connectivity

The

CLOUD



Retailers

Transaction Data

Digital Electronic Receipts

PCI Compliant

Integrated Data Repository

Summary Data

Sales, OH,OO by Product

Sales, OH,OO by Location

Purchases by Consumer

/ Customer Segment

Store Location Table

Product Table/Catalog

Customers and Users

Application Interfaces

Retailer Websites

Supplier Websites

Social Networks

Mobile Networks

Hosted Applications

Syndicated Data

Forecasting

Analytics

Repository Functions

Access Control and Security

Community Management

Retailers / Vendors / Third Parties

Real Time Connectors

Consumers

Real Time Connection

Application Interfaces

Transaction DB

POS Transactions

Web Transactions

Mobile Transactions

Customers/Accounts

File Transfer

User Views/Alerts

Marketing ViewsOperational Views

Supplier Collaboration

Web Services

• Marketing

Operations

Finance

Customer Services

Retail Checkout Systems

Real Time Feed to

Operational

Data Store

Integrated Purchase History

Digital Receipts

Shopping Lists

Money Mgmt Integration

Relevant Messaging

Support & Service

Audited POS

Sales OH, OO

SKU/ Channel



Benefits of Retailer/Supplier Collaboration

Inventory Management

Reduces purchasing and order management time; less administrative timeneeded to create and receive product orders, expedite shipments, and respond to problems

Improves demand management thus reducing overtime production labor costs.

Reduces out-of-stocks for both manufacturer and retailer, thereby increasingsales and add to gross margin. An added benefit: improved customerservice.

Reduces buffer stocks; possible reduction in warehouse facilities.

Improves transportation efficiencies (truckload capacity)

The Role of Enhanced Retailer/Supplier Collaboration



Marketing and Sales

Sales and Marketing

Equips marketing managers with marketing management tools

Reduces the complexity of marketing by providing new insights

Allows you to develop programs that truly serve the needs and wantsof your customers

Improves ROI on Trade and Consumer promotions

Facilitates a shift from “function control” to “enterprise management” of your marketing strategy (focus on MROI”)

Aids in coordination of advertising, consumer promotion, and trade promotion activities

Creates a more unified message that can touch both the head and heart (appeal to both logic and emotion)

Promotion compliance tracking (FASB and EITF acctg guidelines)

The Role of Enhanced Retailer/Supplier Collaboration



How Standards Help?

Standards allow for a framework to move forward quickly while driving down costs

Standards insure that initial development is reusable

Standards based solutions enable faster adaption / alignment with your business vision

Standards enable fast efficient integration of BEST in BREED Solutions



Key Standards

POS Log

e-Commerce

Payments & PCI

Digital Receipt

Data Warehouse

Product Database

Mobile Commerce

Cloud Computing



A Retailer Example – BevMo! March 2010 Creates IT’sMo! – a plan based on desire to explore new ways of

delivery – step outside traditional thinking – take huge strides to enable rapid deployment of new concepts

Use of STANDARDS introduce architectures that conform to NRF/ART’s standards proposed benefits lower initial investment

Demonstrate “proof of concept‟ “plug & play‟ thanks to NRF/ART‟s standards rapid delivery lower CapEx somewhat higher OpEx

Systems “on demand” as a utility IT Team growth is minimized - maximum leverage of current resources systems - scalable on demand – tied to company performance with the right partners

SOX-compliance concerns diminish (SAS 70)

SOFTWARE-AS-A-SERVICE (SaaS) effective software license model

CLOUD COMPUTING – fast deployment - eliminate hardware acquisition costs



What About The Cloud?

Lower cost to engage - minimal infrastructure

Utilization is metered on an “as needed” basis “Pay by The Drink Model”

IT as a Strategic Tool

Initial investment = a foundation – Can be leveraged as you move forward

Access – Anywhere / Anytime

Best of All: Cloud = low cost Pilots – minimal risk – parallel approach – current world intact



“ cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage,

applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider

interaction. “ 2009 National Institute of Standards and Technology

Why The Cloud?



Conclusion

Does your Systems Infrastructure provide ANYWHERE ANYTIME Access to Customer Demand Signals

How do you quantify the consumer experience and the investments needed to understand customer vs. product metrics?

What service initiatives you offer will provide a meaningful connection to the consumer

Data Analysis Tools for Channel Demand Signals – Touch points are Digital

Retail 3.0 Will Require a CHANGE IN THINKING and the Consumer will DEMAND that change

A Flexible ARCHITECTURE will be a REQUIREMENT

2011 presentation ibm users groupv3

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