sunrise breakfast: cio's challenge
Post on 13-Apr-2017
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SUNRISE BREAKFAST: CIO’S CHALLENGEREFOCUSED IT BUDGETS FOR DIGITAL
GREG BUZEK, President, IHL GroupJEFF ROSTER, VP, Strategy, IHL Group
DAVID STROBELT, SVP/CIO, Modell’s Sporting GoodsSCOTT EMMONS, Director and Founder, Innovation Lab, The Neiman Marcus Group
Sunrise Breakfast The CIO’s Challenge –
Refocused IT Budgets for Digital
About IHL
Helping Retailers/Hospitality Make Better IT Decisions o Managed RFP Process, Contract ReviewsSyndicated Research and Data Serviceso Retail Benchmarkingo IT Forecasts - WorldViewo Sophia Data ServiceAdvisory Programso Retail Executive Advisory Programo Strategic Operations Exchange Custom Research
Sample Clients
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Holiday Sales
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Overall retail sales up 3.6%-4.9%o Not all segments well
o Dept. Stores and Specialty Struggledo Sporting Goods and Electronics shined. o If you extend to restaurants and entertainment, numbers even stronger
o Christmas Week Sales Up 6.5% in Stores
Online sales up 11-17% Online 21-24% of holiday spend 46-60% of sales growthAmazon 38% of all online sales for Holidays, o 49% of all online sales December 18-21o Shipped over 2 Billion items
Sources: NRF, RetailNext, Slice, First Data, Customer Growth Partners, CNBC
Online Dominance
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$3.71B of $12B
Retail’s Biggest ProblemHow To Compete With Amazon
Over 50% of US Households Have Prime Membership66 Million Households
70% of Households > $112k Income
AWS – 10% of Revenue, 60% of Net Income +58% growth
But…. Spent estimated $17B on Shipping (~Starbucks), Lost $9B (~GameStop)
7Sources: Piper Jaffray, Consumer Intelligence Research Partners, Business Insider, Statistica, IHL Group
Retail Is Being Outgunned In IT
8
Spending on Innovation
$15.1 B
More Than These Retailers - Combined
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Portion of IT Spend Beyond Just Keeping Lights On
Source: IHL Group Research Studies
According to Top Retail CIOs
87% - 237%Average IT Spend Increase required to
effectively compete with Amazon.
Avg. IT Spend Increase
4.7%
Retailers echnologynnovationapnetail
TIGIR
Amazon has a TIGIR by the Tail
Prime Growth
11
Impact on Price Comparisons
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Keeping Retailers Up At Night
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How do you solve a problem like
?
To Effectively CompeteRetailers must….
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1.Make massive investments in Unified Commerce
2.Leverage Cloud Computing for jumpstart
3.Take advantage of Mobile
4.Create the WOW customer experience
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You are either at the table of Unified Commerce
or you are on the menu!!!
You Don’t Have To Beat Amazon
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You Must Simply Out-invest and Out-execute Your Retail Competitors
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Retailers, Leading and OtherwiseRetailers are not all created equal
Average sales growth in the study was 4.1% For purposes of this study, we stratify retailers according to their financial performance in 2016. The results are as follows: o Leaders – We define a Leading Retailer as one who claimed that
their 2016 revenues would represent growth of 5% or more. This comprised 30% of the retailer pool for this study.
o Average Retailers – We define an Average Retailer as one who claimed that their 2016 revenues represented growth of between 0% and 5% from their 2015 revenues. This group consisted of 38% of the retailer pool for this study.
o Below-Average Retailer – We define a Below-Average Retailer as one who claimed that their 2016 revenues were flat or declined. This group consisted of 32% of the retailer pool for this study.
Source: 2017 RIS News/IHL Store Systems Study
Source: 2017 RIS News/IHL Store Systems Study
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Foundational TechnologiesThese are the foundational Unified Commerce technologies
Single View of the Order (OMS) across channels
Single View of the Customer across channels (loyalty works everywhere)
Up-to-date POS that can access the order, inventory, and loyalty in real time
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Study Highlights
Store counts and Remodels up 4.9% & 4.2%
Enterprise & Store IT Spend up 4.5% & 4.7%
POS spend up for 2017 (25% of retailers for HW, 32% for SW)
Cloud spend up for 2017 (34% of all software)
Unified Commerce gains momentum
For 2017…
Source: 2017 RIS News/IHL Store Systems Study
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IT Spend Growth by Retail TierHow the largest and smallest retailers plan to increase their IT spend
Tier III Tier II Tier I2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
4.6%
3.1%
4.7%4.8%
2.3%
4.8%
Enterprise IT Spend Store IT Spend
Enterprise IT SpendAvg. = 4.5%
Store IT SpendAvg. = 4.7%
Source: 2017 RIS News/IHL Store Systems Study
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2017 Spend GrowthPlanned IT Spend Growth for 2016 Leaders, Average, Below Average Performers
Enterprise IT Spend Store IT Spend0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%8.8%
7.4%
3.8%
5.0%
1.3%1.8%
Leading Retailers Average Retailers Below Average Retailers
Source: 2017 RIS News/IHL Store Systems Study
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Store Comms Upgrade
IT Transformation
Empowering Store Associates
WFM Software/Hardware
Mobile for Associates
BI/Analytics for Store Associates
Lowering Supply Chain Costs
Inventory Visibility
Single Order Management Across Channels
Single View of Customer Across Channels
Upgrading CRM Loyaly Programs
0% 10% 20% 30% 40% 50% 60% 70%23%
23%
27%
29%
30%
34%
38%
46%
46%
55%
59%
Top Retail IT PrioritiesWhat Retailers see as the most important technologies going forward
Source: 2017 RIS News/IHL Store Systems Study
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Top Retail PrioritiesRetail Leaders vs. Average Retailers
Leaders rate:
IT Transformation 135% higher priority
Lowering Supply Chain Costs 145% higher
Associate Training / Tools 194% higher
Inventory Visibility 55% higher
Clienteling / Assisted Selling 26% higher Source: 2017 RIS News/IHL Store Systems Study
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Software IT Spend in CloudOverall 34% of software budget in Cloud vs 26% in 2016
27%Store Systems
33%BI/
Analytics
47%eCom
46%Sales/Marketing
30%Core ERP
29%
Merch
25%Supply Chain
31% increase in % of software budget in cloud
Source: 2017 RIS News/IHL Store Systems Study
25
Cloud Spend by Retail TierRetailers plan to have this much of their Software Spend in the Cloud
Cloud Solution Tier I Tier II & IIIE-Commerce 39% 57%Sales / Marketing 44% 49%BI / Analytics 33% 33%Core ERP 28% 33%Merchandising 37% 22%Store Systems 20% 40%Supply Chain 28% 21%
Tier 1 Merchandising grew from 19% in 2016 to 37% in 2017 (95% growth in budget)Tier 1 Supply Chain from 18% in 2016 to 28% in 2017 (56% budget growth)1 of every 5 dollars in Store Systems now being spent on Cloud Solutions for Tier 1 (up from 13% in 2016), and 40% of Tier II and III.
Source: 2017 RIS News/IHL Store Systems Study
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Digital Signage
POS Software
POS Client - Base System
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
14%
20%
27%
15%
32%
25%
22%
16%
11%
7%
12%
11%
Up to Date/In Place Within 12 Months 12-24 Months 24-36 Months
Store Systems Purchase TimeframePOS and Digital Signage
Source: 2017 RIS News/IHL Store Systems Study
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Consumer Mobile Checkout
Mobile POS
Mobile for Associates (non-POS)
Mobile for Managers
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
5%
22%
24%
25%
24%
25%
25%
35%
18%
23%
18%
18%
7%
9%
2%
4%
Up to Date/In Place Within 12 Months 12-24 Months 24-36 Months
Store Systems Purchase TimeframeMobile Technologies
Source: 2017 RIS News/IHL Store Systems Study
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Leading Retailers – Store SystemsLeaders vs Average Retailers for Store Systems Readiness for Unified Commerce
Leaders are: 250% more likely to be using Mobile Devices for Associates150% more likely to be using Mobile POS96% more likely to have Up-To-Date POS HW/SW
Source: 2017 RIS News/IHL Store Systems Study
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Holistic Merch. Across Channels
Click & Collect
Ship from Store
Central Order Management
Return Online Purchases at Store
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
22%
21%
33%
33%
46%
25%
14%
11%
24%
5%
23%
21%
13%
20%
14%
9%
4%
9%
9%
4%
Up to Date/In Place Within 12 Months 12-24 Months 24-36 Months
Cross-Channel Commerce Timeframe
Source: 2017 RIS News/IHL Store Systems Study
30
Split ticket
Order Inventory at Other Stores
Order Online from POS
Check Inventory at Other Stores
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
24%
32%
32%
45%
25%
16%
30%
16%
18%
16%
11%
15%
2%
7%
4%
4%
Up to Date/In Place Within 12 Months 12-24 Months 24-36 Months
Cross-Channel Commerce Timeframe
Source: 2017 RIS News/IHL Store Systems Study
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Cross-Channel Commerce Leaders Leaders vs Average Retailers
By the end of 2017, Leaders are:
46% more likely to be using OMS 52% more likely to be doing Ship from Store58% more likely to be using Split Ticket
Source: 2017 RIS News/IHL Store Systems Study
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Technologies That Move The Needle 2016 Sales Growth Correlated To Investment
Sales growth increases vs those who don’t: 2.1x for retailers who Market Cross-Channel Capabilities 2.1x who can use Customer Preferences in All Channels 2.0x that do Cross-Channel Demand Planning 1.9X when using Mobile POS 1.8x who use Loyalty Profiles Available in Real Time1.7x have Integrated Marketing Across Channels 1.7x those Mobile Devices for Associates
Source: Joint NCR/IHL Study
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Vendors to Visit 2016 Sales Growth Correlated To Investment
Sales growth increases vs those who don’t: Integrated Marketing Across ChannelsOMSBI
Geospatial
Cross-Channel Demand Planning Mobile POS Loyalty Profiles Available in Real TimeIT Transformation
Thank YouJeff RosterVP Strategy, IHL Group@jeffpr
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