Customer Centric Retail Innovation - Bucharest May 29, 2008

RETAIL INNOVATION: A STRATEGIC PERSPECTIVE

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GO TO WORK

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1. GET ON A PLANE TO LEARN AND NETWORK

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2. IMPORT – SKILLS, IDEAS, FORMATS

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3. SECURE AND TRAIN THE BEST PEOPLE

4. INNOVATE LIKE ONLY ROMANIANS CAN

COPY MODIFY CREATE

Introduce global formats that already exist

Modify existing concepts to better match local needs

Develop new concepts, targeting specific local segments and needs

DEGREE OF INNOVATION

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POP Systems Online

RETAIL INNOVATION, ACCORDING TO MANY

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BRANDS

Be the first to become friendly with your new customers

Help your existing distribution to « make the jump »

Pro-actively say goodbye to those who can’t or won’t innovate.

RETAILERS/INVESTORS

Be first to bring a (modified) format into the market

Come with something « unique » which internationals can’t offer

Get out of the way and sell as expensive as possible.

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THEN, GO TO WORK

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Source: IBM Business Consulting Services – The Retail Divide, 2004

BUT WE WILL START WITH INNOVATION FROM A STRATEGIC PERSPECTIVE

And to be more precise:

« customer centric retail innovation »

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Broaden Your Innovation HorizonThink Beyond the Store

• Traditional Innovation is Broken

• Competition is Changing

• There’s not much to be done at retail anyway

Why Customer Centric?

Quiz: Which % of innovations fail?

97%FUTURELAB


WHO COMPETES WITH MARS?

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CONSUMER PERSPECTIVE


WHY CUSTOMER-CENTRIC?FORMAT INNOVATION IS LIMITED

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• Traditional Innovation is Broken

• Competition is Changing

• There’s not much to be done at retail anyway


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CUSTOMER CENTRIC RETAIL INNOVATION

Customer Centric Retail Innovation

WHAT ABOUT THE CUSTOMER?

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REMARKABLE

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Apple Retail 2001Sorry Steve, Apple Stores Won’t Work

(Business Week)

Apple Retail 2004: Fastest retailer ever to reach the

$1 billion mark a year

Apple Retail 2006Fastest retailer ever to reach

$1 billion/quarter mark

Apple Retail 2007Sales per sq.meter = $ 30,176

(as comparison: BestBuy = $10,643)

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HOW DID THEY DO IT?

Watch video on http://www.youtube.com/watch?

v=m-Y7vZMEPrU

DRIVERS FOR RECOMMENDATION IN ICT

Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008 FUTURELAB

• Careful segmentation and focus on students, educators and creative professionals (even now consumer appeal broadens)

• A retail experience differentiated by service before, during and after sales (Genius bar)

• Scenario or lifestyle Marketing & Sales vs. Product « What do you want to do ? »

• Style & design

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THE RESPONSE

Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008

•No commissions

•Team bonuses

•Focus on experience

•Fashion & design people to run computer retail

•Hire for personality, attitude and customer fit … train the rest

•High identification: Tshirts, iPod, discounts, …

•3 week immersion at start of job ONLY on customer relationship skills and understanding customer needs/lifestyle

• All product training is online (except geniuses)

• Training on store computers or borrowed laptop

Ron JohnsonTarget

MickeyDrexlerThe Gap

BREAKING ALL THE RULES

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Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008

Apple: 2007 Net Promoter Performance and 5 Year Trend vs. Overall B2C High Tech Computer Hardware Manufacturers

RESULTS

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Total Customer Value of an Apple advocate is almost twice that of the industry average

Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008FUTURELAB

RESULTS

13,8

6,5

24,3

8,46,2

0,8

5,5

HP Dell Apple Xerox Sun NCR Pitney Bowes

Revenue Growth % 2007 vs 2008Source: Fortune Magazine, May 5,2008

RESULTSFUTURELAB

HOW ABOUT YOU?

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5steps

To Customer Centric Retail Innovation

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#1 TAKE THE CUSTOMER PERSPECTIVEFUTURELAB

THE CUSTOMER JOURNEY – BRAND/RETAIL PERSPECTIVE

HOTSPOT HOTSPOT

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CUSTOMER PERSPECTIVE

Flipchart TimeWhich are the steps in the customer journey when booking a holiday?

How could you innovate on them?

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THE CUSTOMER JOURNEY

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1. I dream of going on holiday2. I research my holiday3. I plan my holiday4. I select my holiday5. I purchase my holiday6. I receive travel documents & tickets7. I anticipate departure8. I prepare my trip9. I travel to my destination10. I discover my destination11. I experience my destination12. I record my memories13. I share my experience14. I travel back home15. I share my memories

LVMH - AOL Time Warner UBS - Richemont



How Can You Innovate Now?

TRAVEL

Photo Nils Bremer, cc. 2.0

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BANKINGCARS FOOD

How About You?



#2 GET THE CUSTOMER HEARTBEAT

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WHICH EMOTIONS ?

ARE ALL EMOTIONS EQUALLY STRONG?

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WHAT DO YOUR CUSTOMERS REALLY CARE ABOUT?

1. I dream of going on holiday2. I research my holiday3. I plan my holiday4. I select my holiday5. I purchase my holiday6. I receive travel documents & tickets7. I anticipate departure8. I prepare my trip9. I travel to my destination10. I discover my destination11. I experience my destination12. I record my memories13. I share my experience14. I travel back home15. I share my memories

BUT DON’T JUMP TO CONCLUSIONS … THINK SCENARIOS

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#3 FOCUS YOUR EFFORTS

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WHERE SHOULD YOU FOCUS?

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WHICH IS THE EASIEST PATH TO WALK?

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Photo: StuSeeger, cc 2.0

PROCESSED FOODPHARMA

INNOVATORS SEEM TO DISAGREE

AIRLINES BANKS

COMPUTERS

UTILITIES

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1. I dream of going on holiday2. I research my holiday3. I plan my holiday4. I select my holiday5. I purchase my holiday6. I receive travel documents & tickets7. I prepare my trip8. I travel to my destination9. I discover my destination10. I experience my destination11. I record my memories12. I share my experience13. I travel back home14. I share my memories

THIS ALSO APPLIES TO CUSTOMER CENTRIC INNOVATION

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ObservationMost of the travel industry focuses on those areas which have least or most negative emotional involvement

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DEBATE: ARE YOU A PENGUIN?

Opportunities for meaningful

differentiation

Areas to keep up or stay ahead

Look at the nichesCopy when proven only

High

Low

Low High

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Innovation Intensity

CROSS YOUR INNOVATION LANDSCAPE WITH THE CUSTOMER ENGAGEMENT

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#4 MAKE SURE YOUR PEOPLE ARE WITH YOU

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perception

80% of CEO’s believe of believe their brand provides a superior customer experience

8 % of their customers agree

(Bain & Company)

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We show that we value our customers by serving them well, putting their needs and interests at the center of everything we do.

(from the AOL mission statement)

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Watch video on:

http://www.youtube.com/watch?v=xaaAYVUWP0I

BAD EMPLOYEE?

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Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005

ONLY 5% OF THE WORKFORCE UNDERSTANDS THE STRATEGY (when innovating this gets even worse).

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WHILE THEY NEED TO DELIVER THE RETAIL (INNOVATION) PROMISE.

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76% of consumers don’t believe that companies tell the truth in advertisements

Yankelowich,2006

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BUT PEOPLE TYPICALLY DON’T HAVE “EMOTION MANAGEMENT” IN THEIR JOB DESCRIPTION

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WHEN YOU INNOVATE, TRANSLATE INTO 6 DIRECTIONS

Remarkable Practice: Gemalto

Remarkable Practice: Gemalto

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#5 START SWIMMING

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YOU

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5steps

To Customer Centric Retail Innovation

1. Take the Customer Perspective2. Get the Customer Heartbeat3. Focus Your Efforts4. Make Sure your People Are With You5. Start Swimming

AND DON’T FORGET TO STEAL WITH PRIDE

POP Systems Online

AND THEN WE WERE GOING TO HAVE A WORD ABOUT

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THOUGHTS ON DIGITALLY AUGMENTED RETAIL

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Mobile

THREE PRACTICAL OPPORTUNITIES

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Internet In-store

Digitally Augmented Retail

INTERNET

IF YOU PLAY, GET THE BASICS RIGHT

“Out of 35 European premium brand dealers only 1 responded to an email enquiry from their own website … after 2 weeks”

2007 Retail Study for Customer Focused Excellence(N = 300 large online retailers)

•61% do not offer any information on the product page regarding in-stock availability

•38% of sites have difficult to read fonts

•Only 58% correctly answer an e-mail question within 24 hours

•Only 33% offer customer reviews.

•24% do not allow customers to enlarge the product image

Source: FutureNow, 2007

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INTERNET

LISTEN AND REACTFUTURELAB

Category %

Restaurant 79%

Hotels 87%

Travel 84%

Automotive 78%

Home 73%

Medical 76%

Legal 79%

US Online Review Users Identifying Review as Having Significant Influence on their Purchase

Source: Comscore Inc., the Kelsey Group, Oct. 2007

Hi Joel,Sorry if we weirded you or your friend out by following you on twitter. @JetBlue isn’t a bot, it’s merely me and my team keeping our ears to the ground and listening to our customers talk in open forums so we can improve our service to them. It’s not marketing, it’s trying to engage on a level other than mass broadcast, something I personally believe more companies should try to do.

Because corporate involvement in social media is a new and evolving discipline, I also take a specific interest on conversations revolving around our role here. I’d have DMd you and Lisa directly if you allowed DMs, so please also forgive me for following the link on your twitter page here to send you this note.You and Lisa are no longer being ‘followed’ as you seem to indicate.Again, my apologies

Morgan JohnstonCorporate CommunicationsJetBlue Airways

KEEP IT SIMPLE ON THE MOBILE FRONT

On-DemandSMS pushLocation Based Push

INFORMATIONAL(PART OF EXPERIENCE) PROMOTIONAL

!RELEVANCEPERMISSION

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IN-STORE INSPIRATION

Watch video onhttp://www.youtube.com/watch?v=gQBFaVfBi9w&feature=related#

Queen’s Arcade (Cardiff)

WATCH THE CONTENT

LESSONS IN NARROWCASTING

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McDonalds Amsterdam Veritas Antwerp

INSTORE

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COPY MODIFY CREATE DEGREE OF INNOVATION

Turnover of Retail Trade in Romania 2001-2007, 2010(€ billions)

ROMANIA IS ON THE VERGE OF SOMETHING BIG

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THOSE WHO INNOVATE WIN

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GO !!

For more information contact Alain Thys via [email protected]

Or read up on the Futurelab blog at:

http://blog.futurelab.net

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mailto:[email protected]

http://blog.futurelab.net/