Oracle RPAS Planning: How Luxottica is tailoring its …...chains in North America. A major retailer...

Boston, March 25th, 2014

Oracle RPAS Planning: How Luxottica is tailoring its offering to customers

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Ø  Luxottica, The Company

Ø  Sunglass Hut, A Tailored Product Offering

Ø  Retail Merchandise Planning, The Background

Ø  Oracle RPAS, The Program Journey

Ø  Sunglass Hut, Main Achievements

Ø  What’s Next

Ø  Q&A

Agenda

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2007 2012

2008

2005

2003 1999 1995

1988

1971

2013

2011

2009 2006

2004

2001

2000

1996

1990

1981

1961

Luxottica, Over 50 years of carefully planned growth

The first Luxottica optical eyewear collection debuts at the MIDO international trade fair in Milan.

Is launched. The foundation provides free vision care and eyewear around the world to those in need.

One of the largest optical retail chains in North America.

A major retailer of premium sunglasses.

Leonardo Del Vecchio founds Luxottica. Enters the group e C.S.A.S., which in 1964 was transformed into a joint-stock company named Luxottica S.p.A.

Luxottica Group is listed on the NYSE. Luxottica Group is listed on

the Milan Stock Exchange

Enters the group Enters the group

Acquisition of the license

Acquisition of the license Enters the group

Enters the group

Among the leading optical retailers in Australia and NewZealand.

Acquisition of the license

Acquisition of the license

A leading retail chain in North America.

Acquisition of the license

Acquisition of the license

Acquisition of the license

Acquisition of the license

Acquisition of the license

Acquisition of the license

Acquisition of Tecnol, Brazil

Acquisition of the license

Acquisition of the license

Acquisition of the license

Enters the group. Includes Oliver Peoples, Paul Smith and a retail network of 160 stores.

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OPTICAL

EUROPE 430+

SUN

SUN

S. AFRICA 120+

SUN OPTICAL

CHINA & HONG KONG 200+

SUN OPTICAL

AUSTRALIA & NZ 800+

SUN OPTICAL

NORTH AMERICA 4,730+

SUN OPTICAL

LATAM 650+

Luxottica Retail, 7,000 Store Network

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Luxottica, A vertical integrated business model

PRODUCT DEVELOPMENT

MANUFACTURING

LOGISTICS

WHOLESALE DISTRIBUTION

RETAIL NETWORK

LENS FINISHING

MANAGED VISION CARE

STARS (VMI)

CUSTOMER

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Ø  Luxottica, The Company

Ø  Sunglass Hut, A Tailored Product Offering

Ø  Retail Merchandise Planning, The Background

Ø  Oracle RPAS, The Program Journey

Ø  Sunglass Hut, Main Achievements

Ø  What’s Next

Ø  Q&A

Agenda

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Sunglass Hut: Tailoring product offering to customers

Strong Product Portfolio

Powerful Store Segmentation

Fresh Flower Product Model

360 Story Telling

Approach

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ü  The most significant brands ü  The hottest trends

Sunglass Hut: A Strong Product Portfolio

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Build  Sunglass  Hut  Brand  Equity  Showcase  Luxury/Premium  Brands

Deliver  consistent  experience  across  high  store  count  base  to  

build  Sunglass  Hut  loyalty

Platinum Gold & Silver

Outlet

Sunglass Hut: A Powerful Store Segmentation Strategy

Department Store

Capture  new  customer  through  Host  Broader  access  to  Luxury  

Brands  

Exit  strategy  with  opAmized  margin  and  offering  of  great  brands  at  a  great  value  

ecommerce

Infinite  assortment  

sunglasshut.com macys.com amazon.com

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Sunglass Hut: A “Fresh Flowers” Product Model

Product Flow

360 Story Telling

Product Briefing

Product Development

Technical Design

Assortment Planning

Lifecycle Mgmt

Production Planning

Virtuous cycle to efficiently design, manufacture, deliver & communicate more consumer-relevant & engaging products

Exit Strategy

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Sunglass Hut: A 360 Story Telling Approach

Enhanced story-telling enables

ü  More frequent, tailored-made stories

ü  Maximizes story-telling potential of the store

Results

ü  Lift in consumer engagement

ü  Increased frequency of store visits

ü  Increased conversion

Associate

PR

SGH.com

Digital Media

CRM DM & EMAIL Social

Front Door

TSQ Billboard

Macy Books & Window

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Ø  Luxottica, The Company

Ø  Sunglass Hut, A Tailored Product Offering

Ø  Retail Merchandise Planning, The Background

Ø  Oracle RPAS, The Program Journey

Ø  Sunglass Hut, Main Achievements

Ø  What’s Next

Ø  Q&A

Agenda

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Why A New Planning Program?

ü Manage  large  store  count  with  tailored  assortments  

ü Leverage  newness  for  compeAAve  edge  

ü Modernize  our  planning  process  

ü Life-­‐cycle  management  

ü Balance  integrated  lead  Ame  planning  with  short  term  needs  

ü Supply  chain  integraAon  to  opAmize  inventory  and  service  levels

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Ø  Luxottica, The Company

Ø  Sunglass Hut, A Tailored Product Offering

Ø  Retail Merchandise Planning, The Background

Ø  Oracle RPAS, The Program Journey

Ø  Sunglass Hut, Main Achievements

Ø  What’s Next

Ø  Q&A

Agenda

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In 2009 Luxottica launched a new Planning Program selecting Oracle RPAS as the application

1.  Leading Planning Application 2.  End to end coverage of Integrated Planning Processes 3.  Optimization engines and mining capabilities available for future enhancements 4.  Minimize Total Cost of Ownership

I.  Configurable application II.  Community of Partners

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LENSES & CONTACTS

ALOE

FRAMES

Luxottica RPAS Global Templates: Frames and Lenses

Frames, Lenses & Contacts Planning Modules

The Global & Local Domain structure enables a roll out of the solution at different extents of complexity

!  Strategic Targets

!  Merchandise Planning

!  Location Planning

!  Assortment & Item Planning

!  Optimization engine (ALOE)

!  DC Planning

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RPAS Global journey started in April 2010

Frames  +  Lenses:  LENSCRAFTERS  

Business    Blue  Print  

Frames  SUNGLASS  HUT:    US  +  UK  

Implementa?on  Streams  

Global  template  finaliza?on  and  Project  Approach  review  

Program  Management  

Apr  ‘10   Aug    ‘10   Aug    ‘12   May    ‘13  

Global  model  defini?on  considering  sun  and  op?cal  divisions:  

Jun    ‘12  Aug    ‘’11  

Frames:  MEXICO  

Aug    ‘13  

Blue  Print  Lenses  

Change  Management  

Nov    ‘13  

Frames    IBERIA  

May    ‘14  

Frames:  STARS  

Feb    ‘14  

Frames  SOUTH  AFRICA  

Frames  +  Lenses  PEARLE,  SEARS,  TARGET  

Frames  +  Lenses  AUSTRALIA  &  NZ  

Frames    ITALY,  GERMANY  

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Sales org already live Next streams

Brazil, Chile & Latin America

Turkey Spain

Luxottica RPAS: Current and future footprint

SEA

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Luxottica RPAS: Support Team and Change Control Board

RPAS  Support  Team   Change  Control  Board  For all global RPAS issues, Luxottica developed a support team to support the business.

As a result of a global template approach for the RPAS roll-out, a Change Control Board (CCB) has been identified to govern and check all the Change Requests (CRs) and their consistency with the global strategy. The CCB is representative of the different businesses and geographies.

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Ø  Luxottica, The Company

Ø  Sunglass Hut, A Tailored Product Offering

Ø  Retail Merchandise Planning, The Background

Ø  Oracle RPAS, The Program Journey

Ø  Sunglass Hut, Main Achievements

Ø  What’s Next

Ø  Q&A

Agenda

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2009-2013 Sunglass Hut Global Growth

•  ~2,000 stores

•  4 Countries

•  €665 Million Sales

•  YOY Comp: ~ -7%

•  ~3,000 stores •  9 Countries •  €1.1 Billion Sales

•  YOY Comp: +11.5% ü  Mature Markets growing at 7% ü  Emerging Markets doubling at 105% growth

+42%

+65%

2009 2013

SGH Ambition for the next 3-5 years: ~4000 stores and 2B€!

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Sunglass Hut NA: RPAS Drives Results

SALES

ü  POLARIZED

SERVICE

ü  IN STOCK

INVENTORY

ü  UNIT TURN

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Sunglass Hut NA: Attribute Strategy Drives Sales

38%  40%  42%  44%  46%  48%  50%  

2010   2011   2012   2013  

SUN UNIT POLAR PENETRATION

POLAR  

0.0%  5.0%  10.0%  15.0%  20.0%  25.0%  30.0%  

2010   2011   2012   2013  

SALES GROWTH

POLAR   TTL  SUN  

ü  Strategic polar attribute planning provided clear roadmap to 48% polar penetration and four years of 15% to 25% polar sales growth per year

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Sunglass Hut NA: Increase In Inventory Productivity

90.0%  92.0%  94.0%  96.0%  98.0%  100.0%  

10  Q2  

10  Q3  

10  Q4  

11  Q1  

11  Q2  

11  Q3  

11  Q4  

12  Q1  

12  Q2  

12  Q3  

12  Q4  

13  Q1  

13  Q2  

13  Q3  

13  Q4  

KEY ITEM IN STOCK (GOAL >97%)

QTR  

2.5  2.6  2.7  2.8  2.9  3.0  

10  Q4  

11  Q1  

11  Q2  

11  Q3  

11  Q4  

12  Q1  

12  Q2  

12  Q3  

12  Q4  

13  Q1  

13  Q2  

13  Q3  

13  Q4  

P12M UNIT TURN

QTR  

ü  Strategic RPAS parameter planning drove 17% unit turn increase, while maintaining in >97% in-stock service level on key items

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New Storytelling •  ~120MM visits with ~7% conversion •  ~40 Front Door campaigns, an average of 2 per segment per month

New Product Flow balanced with Key Items •  ~1,000 new skus represent 65% of product offering •  Still, 60 UPC’s, 7% of store display, generate 25% of sales, with service level >97%

Sunglass Hut NA: Fresh Flowers from Idea to Reality

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Ø  Luxottica, The Company

Ø  Sunglass Hut, A Tailored Product Offering

Ø  Retail Merchandise Planning, The Background

Ø  Oracle RPAS, The Program Journey

Ø  Sunglass Hut, Main Achievements

Ø  What’s Next

Ø  Q&A

Agenda

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Luxottica is fully focused on global consistency

Frames  +  Lenses:•LC

Business  Blue  Print

FramesSGH:    US  +  UK

Implementation  Streams

Global  template  finalization  and  Project  Approach  review

Program  Management

Apr  ‘10 Aug    ‘10 Jun    ‘11 Mar    ‘11

Frames  +  Lenses• LLB

Aug    ‘12 Jan    ‘13 May    ‘12

Global  model  definition  considering  sun  and  optical  divisions:

Jun    ‘12Aug    ‘’11

Frames  •RSA

Frames:•MEX

Frames  +  Lenses• LLB

Aug    ‘12

Frames•DC  UK

Blue  Print  Lenses

Change  Management

Complete the Retail roll out

Launch STARS, wholesale model

Fully leverage Customer Data within Store Clustering

Bolt on Optimization Engines

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Q&A