ecr europe forum '08. window on the world of retail
TRANSCRIPT
“Window on the World of Retail”
29th May, 2008
Agenda• A Global Tour of the world of retail
- Rodney Fitch, Fitch Global
• The Collaborative Experience in Virtual Worlds – - Rick Brindle, Kraft Foods
• Panel: World’s Collide!
Window on the World of Retail• Exploration of what is happening in the real world of
retail– mature to emerging markets – global players adapting to local markets– local retailers reinventing formats– changing consumer drivers (eg luxury vs value)– technology changing our world
• Learnings from emerging and enabling eCommerce technologies– virtual worlds of social networking and 2nd life– challenges of convergence between ‘real’ and ‘virtual’– changes to business models required for future success
Panel Discussion: World’s collide
• What are the implications for the future? • How can we use the experience of the
convergence between real and 'virtual' worlds to change our business models?
Agenda• A Global Tour of the world of retail
- Rodney Fitch, Fitch Global
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FOUR PROPOSITIONS…
“…SHOPPING IS THE PURPOSE OF LIFE…..”
“…SUCCESSFUL RETAILING WILL ALWAYS MIRROR THE SOCIETY IT SERVES…..”
“…THE TECTONIC PLATES OF WORLD RETAILING ARE SHIFTING…..”
“…INNOVATION AND THE CUSTOMER SHOPPING EXPERIENCE ARE PARAMOUNT…..”
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GLOBAL…THE WORLD’S TOP 5 RETAILERS HAVE A COMBINED REVENUE OF $600 BILLION…. MORE THAN THE ENTIRE ECONOMIES OF SWEDEN, THAILAND AND KUWAIT COMBINED
…THE IKEA CATALOGUE HAS A CIRCULATION OF 110 MILLION - FOUR TIMES GREATER THAN THE BIBLE
…ONLINE SHOPPING IN THE UK GREW BY 50% IN 2006
…THERE ARE MORE AVON LADIES IN BRAZIL THAN PERSONNEL IN THE ARMED FORCES (GFK)
SHOPPING IS THE PURPOSE OF LIFE… AND DRIVER OF CHANGE…
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WHICH DO YOU PERSONALLY DO TO IMPROVE YOUR SENSE OF WELLBEING?
CONSISTENTLY RANKED AS ONE OF THE TOP FOUR ACTIVITIES THAT IMPROVES CONSUMERS SENSE OF WELLBEING
2007: AVERAGE LEVEL OF IMPORTANCE OF ACTIVITY IN MATURE MARKETS 40% AND 42% IN EMERGING MARKETS
A INCREASE OF IMPORTANCE OF 5% IN MATURE MARKETS AND 9% IN EMERGING SINCE 2003
BRAZIL IN THE TOP QUARTILE
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USA MORE CONSERVATIVE, LESS INNOVATIVE, MORE LIFESTYLE DRIVEN
DUBAI A VISION TO BECOME THE WORLD’S TOURISM AND SHOPPING DESTINATION, WITH MORE AND BIGGER MALLS
UK BECOMING A NATION OF ‘ARMCHAIR SHOPPERS’ WITH ONLINE GROWTH TWICE THAT OF EUROPE
RUSSIA SHIFT FROM COMMAND TO DEMAND ECONOMY
INDIA BURGEONING SPENDING CLASS,WITH THE WORLD’S LARGEST AND YOUNGEST MIDDLE CLASS
BRAZIL YOUNGER, MORE ASPIRATIONAL CUSTOMERS WILL NEED MODERN AND COMPELLING RETAIL
BUT SUCCESSFUL RETAILING MUST ALWAYS MIRROR THE SOCIETY IT SERVES….
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…A HISTORY OF RETAILING IN SIX IMAGES
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“…THE TECTONIC PLATES OF WORLD RETAILING ARE SHIFTING…”
MATURE MARKETS
REAL
VIRTUAL
EMERGING MARKETS
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THERE IS NO WINDOW…THERE IS NO WORLD.
RATHER THERE ARE
MANY WINDOWS AND MANY WORLDS…
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MATURE MARKETS
CONSOLIDATIONTECHNOLOGYNEW FORMATSSUSTAINABILITYPRO-ACTIVE CONSUMERSTRANSFER BRAND EQUITYLUXURY (EXCLUSIVITY)
EMERGING MARKETS
CHOICEORGANISED SECTOR
GLOBALISATIONTRAINED STAFF
ASPIRATIONAL CONSUMERSLOCAL PLAYERS
LUXURY (STATUS)
“…THE TECTONIC PLATES OF WORLD RETAILING ARE SHIFTING…”
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MATURE
CONSOLIDATION…EMERGING
CHOICE…
“RETAIL PIONEER AMAZON EUROPE IS PLANNING TO AQUIRE A MAJORITY STAKE IN LOVEFILM - WHO ITSELF CONTROLS 70% OF THE INTERNET RENTAL MARKET” (MINTEL 2008)
“THE MALL IS FULL OF ENERGY. IT’S FULL OF LIFE…THERE YOU CAN DO ANYTHING YOU WANT…AT HOME IT’S RESTRICTED AND BORING” (TECHNOPAK, INDIA 2007)
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MATURE
TECHNOLOGY…EMERGING
ORGANISED RETAIL…
“BY 2011 70% OF THE UK SHOPPING POPULATION WILL REGULARLY BE BUYING GOODS ONLINE COMPARED TO JUST OVER 50% OF CONSUMERS TODAY (PRICE WATERHOUSE COOPER LLP 2008)
“…WITH 95% OF INDIA’S RETAIL SALES HELD BY THE TRADITIONAL SECTOR THINGS HAVE TO CHANGE...”
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MATURE
NEW FORMATS…EMERGING
GLOBALISATION…
“TO INCREASE MARKET SHARE AND ATTRACT NEW CUSTOMERS BEST BUY CONSTANTLY EXPLORE NEW IDEAS AND RECENTLY DEVELOPED THREE NEW FORMATS - STUDIO D, ESCAPE AND EQ LIFE” (BEST BUY)
“IN RUSSIA TOTAL RETAIL SALES ARE EXPECTED TO DOUBLE BY 2010 FROM $245BN TO $526BN - MAKING IT THE 9TH LARGEST RETAIL MARKET IN THE WORLD” (MINTEL 2007)
Qa
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MATURE
SUSTAINABILITY…EMERGING
TRAINED STAFF…
“88% OF UK CONSUMERS MENTIONED AT LEAST ONE ENVIRONMENTAL ISSUE OF CONCERN AND 60% AT LEAST ONEETHICAL ISSUE”(MINTEL GREEN & ETHICAL CONSUMERS 2007)
“INDIA: 45M GRADUATE POPULATION YET 700M DEPEND ON AGRICULTURE”(DEMOS 2007)
“THE GROWING ORGANISED SECTOR WILL NEED 10M TRAINED STAFF BY 2010” (TECHNOPAK, INDIA 2007)
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MATURE
PRO-ACTIVE CONSUMERS…
EMERGING
ASPIRATIONAL CONSUMERS…
“H&M’S FACEBOOK GROUP PROMOTING ITS RECENT FASHION AGAINST AIDS CAMPAIGN BOASTS 27,568 FRIENDS WORLDWIDE”
“I DON’T THINK THERE IS A SINGLE PERSON WHO DOESN’T LIKE SHOPPING…” (TECHNOPAK 2007)
1 IN 10 PEOPLE ON THE PLANET ARE UNDER 25 AND LIVING IN INDIA (CNN)
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MATURE
TRANSFER OF BRAND EQUITY…
EMERGING
EMERGENCE OF LOCAL PLAYERS…
“OWN LABEL BRANDS ARE FUELLING THE GROWTH OF THE EU FOOD RETAIL MARKET, EXPECTED TO RISE 36% IN A DECADE TO €1,063BN BY 2010” (MINTEL, 2008)
“OF THE US $30 BN TO BE INVESTED IN ORGANISED INDIAN RETAIL OVER THE NEXT 4-5 YEARS, US $20 BN WILL COME FROM INDIAN BUSINESSES” (TECHNOPAK, INDIA 2007)
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MATURE
RETURN TO EXCLUSIVE LUXURY…
EMERGING
EXPLOSION OF LUXURY STATUS…
“£135K THE COST OF A PRIVATE SPACE FLIGHT IN 2012 ” (THE TIMES)
“THE GLOBAL NUMBER OF THOSE CLASSED AS WEALTHY (WITH PORTFOLIOS OVER €1M), HAS DOUBLED OVER A DECADE” (WORLD WEALTH REPORT 07)
“A PRADA HANDBAG IS EQUAL TO ABOUT HALF THE ANNUAL INCOME OF THE AVERAGE BRAZILIAN HOUSEHOLD”
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VIRTUAL
INNOVATION AND THE CUSTOMER SHOPPING EXPERIENCE ARE PARAMOUNT…
REAL
MATURE EMERGING
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THE CUSTOMER SHOPPING EXPERIENCENEW FORMATS - POPUP
WINDOWONTHEWORLD ILLY, VENICE
WINDOWONTHEWORLD STARBUCKS SALON, NEW YORK
WINDOWONTHEWORLD MOTOROLA RED, CHICAGO
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THE CUSTOMER SHOPPING EXPERIENCENEW FORMATS - TARGETTED OFFERS
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PLASTIC SURGERY - SINCE 500 AD
TRIGONOMETRY - SINCE 700 AD SPACE OBSERVATORY - 1727 BC
TESCO, LONDON CARREFOUR, BUENOS AIRES
WINDOWONTHEWORLD CARNIVAL, DALLAS
WINDOWONTHEWORLD COS, LONDON
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THE CUSTOMER SHOPPING EXPERIENCENEW LUXURY
WINDOWONTHEWORLD HARVEY NICHOLS, ISTANBUL
WINDOWONTHEWORLD PAUL SMITH, LONDON
WINDOWONTHEWORLD PAUL&JOE/TARGET, MELROSE AVE LA
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THE CUSTOMER SHOPPING EXPERIENCEONLINE
WINDOWONTHEWORLD NET-A-PORTER WEBSITE
WINDOWONTHEWORLD AMAZON WEBSITE
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PLASTIC SURGERY - SINCE 500 AD
TRIGONOMETRY - SINCE 700 AD SPACE OBSERVATORY - 1727 BC
DELL WEBSITE COURTS, SINGAPORE
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FOUR THOUGHTS…
NEW RETAIL RITUALS
GENEROUS BRANDS
THE C2C COMMUNITY
FREE’TAIL
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RITUALSCONSUMERS ARE SEARCHING FOR A MORE STRUCTURED SHOPPING EXPERIENCE AND EQUALLY RETAILERS AND BRANDS ARE LOOKING FOR WAYS OF CREATING MARKERS IN PEOPLES LIVES THAT HELP TO BUILD LOYALTY AND A REASON TO RETURN.
EXPLORING NEW RETAIL RITUALS CAN BEGIN TO ESTABLISH A COUNTER POINT TO THE INCREASING NUMBER OF SALES BEING MADE ON LINE, PROMPTING A VISIT VERSUS WAITNG FOR CONSUMERS TO ARRIVE.
™
WINDOWONTHEWORLD SELFRIDGES - EAT MY CITY
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™GENEROUSBRANDSIN A WORLD WHERE CONSUMERS ARE BECOMING INCREASINGLY AWARE OF‘MEAN’ BRANDS FITCH HAS BEGUN RESEARCHING THE CONCEPT OF GENEROSITY. GENEROUS BRANDS ARE THE ONES WHO SHOW MORE OF A HEARTBEAT, TAKE THE FIRST STEP AND DISPLAY A GENUINE UNDERSTANDING OF THEIR CUSTOMERS NEEDS.
THIS IS A LONG WAY FROM 2 FOR 1 DEALS AND BONUS POINTS, BUT RATHER A TONE OF VOICE AND GENERAL PERSONALITY THAT ENCOURAGES CONSUMERS TO WARM TO THEIR OFFER.
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Subject: The Commoditization of the Starbucks Experience
As you prepare for the FY 08 strategic planning process, I want to share some of my thoughts with you.
Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience,
and, what some might call the commoditization of our brand.
HEARTFELT MEMO FROM HOWARD SHULTZ FEB 14 2007
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C2CCOMMUNITY
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FROM ‘AVON LADIES’ TO FRIEND AS SHOPKEEPER
A NEW RETAIL LANDSCAPE
REFERRAL AND SHARING TRANSACTIONS
FROM FARMERS MARKETS TO PEOPLE MARKETS
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FREETAILWHYPAY?THE ‘PENNY GAP’Zero Market versus The Rest
ECOSYSTEM MARKETS
THE ‘ATTENTION’ ECONOMY
THE ‘REPUTATION’ECONOMY
‘FREEMIUM’
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VIRTUAL
INNOVATION AND THE CUSTOMER SHOPPING EXPERIENCE ARE PARAMOUNT…
REAL
MATURE EMERGING
Agenda• A Global Tour of the world of retail
- Rodney Fitch, Fitch Global
• The Collaborative Experience in Virtual Worlds• - Rick Brindle, Kraft Foods
The Collaborative Experience in Virtual Worlds
The Collaborative Experience in Virtual Worlds
Rick Brindle, Kraft Foods
AgendaAgenda
• Kraft.
• Emerging technologies changing OUR world.– Recent, Current, Future
• How our industry should participate.
One of Best Brand Portfolios in F&B IndustryOne of Best Brand Portfolios in F&B Industry
40+ Brands over 100 years old
50+ Brands over $100 million
9 Brands over $1 billion
Health & Wellness Snacking
Quick MealsPremium
Kraft’s Key Growth Platforms
Kraft eSalesKraft eSales
Serving Two Major Constituencies
eTAILERS GROCERY&
RETAILERS eCOMMERCE
(since 1997)
In the U.S., “Grocery Shopping”
ranks 24th out of 25 in terms of “Desirability”
of weekly household tasks…
…lower than “going to the dentist”!
Source: Supermarketguru.com
View Shopping as a ChoreView Shopping as a Chore
Source: Verdict
EU – “Shopping is a chore”
43.6
34.5
By the first half of last year, sales were £748 million…
…up 35% versus 2006…
…profit up 62%!
Receives over 300,000 orders each week.
Internet sales contributes ~ 4.2% of Tesco's group profits and 3.1% of sales.
Customer base of more than one million active users and up 20%!
Busy Suburban Families Connected to the InternetBusy Suburban Families Connected to the InternetBusy Suburban Families Connected to the Internet
e-Grocery Consumer is Too Important to Ignore!e-Grocery Consumer is Too Important to Ignore!
Spend ~$5k/yr on food (+25% vs. avg. U.S. HH)
Highly loyal to the home delivery channel (~80% share of wallet)
Presence of children is the single biggest driver of order size
Source: eMarketer.com
Before I go any further, a question…
Are our children going to buy their
groceries the
same way we
do?
Communications? Relationships? Current Events? Entertainment?
Electronics? Clothes? Cars? Pictures? Yard Sales? Directions? Information
Gathering? Real Estate? Investments? …
Mall Shopping
is an EVENT
Grocery Shopping
is a CHORE
Some Learning’s…
• eBusiness is Business. Forget this and fail.
• Success in eBusiness is defined by measurable business results
increased sales/reduced costsimproved productivity enhanced consumer satisfaction/loyalty
• Three Major Factors have Accelerated Growth in Online Grocery:
1. BROADBAND2. DEMOGRAPHICS3. MOBILITY
Source: Pew Internet & American Life Project, Feb. 2006
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2001-Home2002-Home
2003-Home2004-Home
2005-Home
Home & Work
Rural Suburban Urban
Broadband Penetration – U.S.Broadband Penetration Broadband Penetration –– U.S.U.S.
10
2/3 of US Web Users are 2/3 of US Web Users are now on Broadband now on Broadband
Broadband Penetration – EUBroadband Penetration Broadband Penetration –– EUEU
> > ¾¾ of EU Web of EU Web Users are now on Users are now on
Broadband Broadband
Netherlands, Netherlands, Denmark and UK Denmark and UK leading the way leading the way
Source: Forrester
Broadband Penetration – EUBroadband Penetration Broadband Penetration –– EUEU
The correlation The correlation between broadband between broadband adoption and online adoption and online
shopping is 0.86.shopping is 0.86.
US – Women Dominate!US – Women Dominate!
In 2006, Women became the largest user of the Internet.
Our best customer!
The Internet Generation is Growing up!
Source: eMarketer.com
EU – Woman are closing in!EU – Woman are closing in!
Shop.
Research future purchases.
Create Community.
Self-Expression.
Share their experiences with YOUR stores and brands!
Women use the Internet to…Women use the Internet to…
Mobility
“The device formerly known as the cell phone.”
Today, you follow the Internet…
…In the next ten years, the Internet will follow you.
The 4th
Screen
Mobility
In 2006, 25% of the world’s 2B mobile phones are 2.5-3G…
…This means they are broadband enabled.
60% of EU will have 3G phones by 2010.
OBSERVATION
GPS enabled POP!
POP Incentives…– Short Codes– Mobile Couponing
POP Advertising…– Video Clips
POP information…– Amazon’s “textbuyit”.
R U READY?
Social revolution meets Technology evolutionSocial revolution meets Technology evolution
The Social Web
Web 1.0
Web 2.0
Leve
l of I
nter
actio
n
Time
3D Interaction
What is a “Virtual World”What is a “Virtual World”
Also known as "digital worlds," "simulated worlds“, “MUVE’s” and "MMOG's“, an interactive simulated environment accessed by multiple users through an online interface.
Five Common Features:
1. Shared Space
2. Graphical User Interface
3. Immediacy
4. Interactivity
5. Socialization/Community
Virtual Worlds are here to stay Virtual Worlds are here to stay
CollaborationPrototypingMarketingCommerceInnovation
Population: >13,000,000
… Tripled since 2/07!
Gender:Male: 59%Female: 41%
Second Life – Fast FactsSecond Life – Fast Facts
Source: Linden Labs Monthly Data Report
1. USA 36%
2. Germany 8%
3. UK 8%
4. France 5%
5. Japan 5%
6. Italy 4%
7. Brazil 4%
8. Canada 3%
9. Netherlands 3%
10.Spain 3%
Total 80%
Second Life – Top 10 CountriesSecond Life – Top 10 Countries
Source: Linden Labs Monthly Data Report
Source: Linden Labs Monthly Data Report
Age Bucket Num (%) Time (%)
13 – 17 1% .5%
18 – 24 23% 15%
25 – 34 35% 35%
35 – 44 24% 28%
45 Plus 17% 21%
59% between 25-44 yrs.35+…49% of Time
Second Life – Fast FactsSecond Life – Fast Facts
Introducing!Introducing!
For the Consumer:Education, celebration, connection
For the Retailer:Marketing research, path to future
For Kraft Foods:Leadership, consumer branding
• A supermarket – all Brands invited!
• Interactive CPG packages: nutritional information, recipes and promotional opportunities
• Virtual samplings
• Kraft Kitchens Cooking Institute
• The Food Forum
• Consumer focus group discussions
• Phil’s Food Club redeem points for rewards
• Monthly e-newsletter builds relationship in community (events and new products)
Why? Why?
1. Build brand equity
2. Provide share and relationship building services for our valued retailers
3. Generate consumer learning’s via this emerging media
4. Create an open innovation learning environment for our customers, the industry and Kraft
Results to DateResults to Date
1. Build Brand Equity. – 293mm media impressions in week one. – Created the “New Product Showcase”– Created the Maxwell House Coffee Café– Created the Kraft Kitchen’s Cooking Institute
w/cooking videos on demand.– Rick’s Wine Cellar -- launched wine pairings list. – Over 27m visitors since launch.– Joined “Second Life Residents” face book group
Results to DateResults to Date
1. Build Brand Equity.
2. Provide share and relationship building services for our valued Customers.
– Created a confidential password driven conference room for focus group and strategy sessions.
– Created a stadium for open forum discussions food and grocery retailing.
– Conducted 35 store tours with customer partners – Exposure to several thousand retailers and
wholesalers via keynote presentations
Results to DateResults to Date
1. Build Brand Equity.
2. Provide share and relationship building services for our valued Customers.
3. Generate consumer learning’s via this emerging media– Provided a forum for over 20 confidential focus
groups and/or associate meetings.
Results to DateResults to Date
1. Build Brand Equity.
2. Provide share and relationship building services for our valued Customers.
3. Generate consumer learning’s via this emerging media
4. Create an open innovation learning environment for our customers, the industry and Kraft – Several other cpg manufacturers are involved!– Kwikee product images is providing 3-D product
imaging to Kraft Foods and other cpg manufacturers’ participating in Phil’s.
Observations & Best PracticesObservations & Best PracticesThe community is real.
Social responsibility is appreciated and rewarded.
A different environment is welcome.
Being too “corporate” is a risk.
Variety is key.
People will come to the store if there is an event happening.
There is something dynamic and important germinating here. It is smart to keep a close eye and participate where practical.
It is the future and worth learning more about.
ConclusionConclusion
LET’S LEARN TOGETHER!
Agenda• A Global Tour of the world of retail
- Rodney Fitch, Fitch Global
• The Collaborative Experience in Virtual Worlds - Rick Brindle, Kraft Foods
• Panel: World’s Collide!
WINDOWONTHEWORLD
VIRTUAL
INNOVATION AND THE CUSTOMER SHOPPING EXPERIENCE ARE PARAMOUNT…
REAL
MATURE EMERGING