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From Cross-Channel Management to sustainable retail innovation Retail Innovation

eRetail Europe - Benedikt Schmaus - Booz and company

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Page 1: eRetail Europe - Benedikt Schmaus - Booz and company

From Cross-Channel Management to sustainable retail innovation

Retail Innovation

Page 3: eRetail Europe - Benedikt Schmaus - Booz and company

The market will continue to shift to digital - everywhere

Cross-Channel will move from differentiator to qualifier

Building sustainable retail innovation capabilities is key

Key messages

Page 4: eRetail Europe - Benedikt Schmaus - Booz and company

There is motion in the ocean …

Chinese online auctions >800 mn items listed >500 mn registered users Gross merchandise volume >RMB 1 trillion (120 bn €)

Most popular camera: iPhone

Source: Internet Research, Booz & Company analysis; Die Welt

5.1 bn own Mobile Phone 4.2 bn own Toothbrush

Recently announced store closures: Thalia: planned 20 stores Karstadt: > 30 stores sold (total 117 left) Görtz: planned 14 stores

Share of online vs. offline book purchases

in Germany

2008 2012

Page 5: eRetail Europe - Benedikt Schmaus - Booz and company

YoY % Change of Personal Disposable Income

Source: The Economist Intelligence Unit 2013

… and consumer spending is under pressure in Europe

BRIC Countries

North America

Western Europe

15%

10%

5%

0%

-5%

2002 2004 2006 2008 2010 2012

Page 6: eRetail Europe - Benedikt Schmaus - Booz and company

Changing customer behavior leads to new desires

Behavior shifts

Regional Global

Groups Individuals

Purchase Rental

Marketing Referral

Functional Emotional

Paid Free

Zero tolerance

Price transparency

Loyalty erosion

Seamless experience

Technology Drivers

Smart Devices, Cloud

Real-time data Social Media Always on

Page 7: eRetail Europe - Benedikt Schmaus - Booz and company

6 Source: Booz & Company analysis based on Euromonitor historics and external benchmarks

Online players try to address these desires

Retail Sales Footprint 2012 vs. 2020

Page 8: eRetail Europe - Benedikt Schmaus - Booz and company

Several options exist on how to react …

PRICE

ONLINE CATEGORY KILLER

UNIQUE PRODUCT

OFFLINE SHOPPING EXPERIENCE

DIGITAL PRODUCTS & SERVICES

CUSTOMER SERVICE

CROSS-CHANNEL SHOPPING

EXPERIENCE

CUSTOMIZER

Page 9: eRetail Europe - Benedikt Schmaus - Booz and company

CUSTOMIZER

PRICE

ONLINE CATEGORY KILLER

UNIQUE PRODUCT

OFFLINE SHOPPING EXPERIENCE

DIGITAL PRODUCTS & SERVICES

CUSTOMER SERVICE

CROSS-CHANNEL SHOPPING

EXPERIENCE

… or become Amazon

Page 10: eRetail Europe - Benedikt Schmaus - Booz and company

Brick-and-mortar can offer unique customer experience

Page 11: eRetail Europe - Benedikt Schmaus - Booz and company

Customer Experience

Analytics & Customer

Insight

Product & Pricing

Brand Management

Supply Chain Mgmt. &

Logistics

Operating Model

Information Technology

Customer- Centric Strategy

Booz & Company Cross-Channel Framework

Building a true Cross-Channel model is complex

Page 12: eRetail Europe - Benedikt Schmaus - Booz and company

Company

Apple

Google

3M

Samsung

GE

Microsoft

Toyota

P&G

IBM

Amazon

1

2

3

4

5

6

7

8 Tie 8

10

Once cross-channel becomes a “qualifier”, Innovation is key to maintain differentiation

Source: Booz & Company Global Innovation Study 2012

2

3

4

5

6

7

8 Tie 8

10

Rank

53

26

86

6

30

5

1

72

17

48

2011 $US Bil.

$2.4

$5.2

$1.6

$9.0

$4.6

$9.0

$9.9

$2.0

$6.3

$2.9

R&D Spending

Actual R&D

Spend

Perceived as

innovative

Page 13: eRetail Europe - Benedikt Schmaus - Booz and company

Product

Product to Service

Insight / Big Data

Format

Supply Chain / Speed

Store Operations

Customer Service

Cost / Price

Channel

Innovation can take many faces

Page 14: eRetail Europe - Benedikt Schmaus - Booz and company

Building a sustainable innovation capability is crucial – few retailers have it

Innovation

Processes

(Ideation to

Market)

Innovation

Capabilities

(Analytics,

Online) Innovation

Operating

Model

(Central or

Decentral?)

Innovation

Network

(External

Partners)

Innovation

Funds

(Internal,

M&A)

Innovation

Mindset

(Fast, Test,

Scale)

Innovation

Strategy

(Leader,

Follower?)

Page 15: eRetail Europe - Benedikt Schmaus - Booz and company

Wrap-Up

The market will continue to shift to digital - everywhere Digital is the future in all categories, but high-street will remain relevant Unique consumer experience is crucial to differentiate

Cross-Channel will move from differentiator to qualifier Understand the role and relevance of cross-channel to differentiate If you do it, do it right!

Building sustainable retail innovation capabilities is key Embed innovation fundamentally in your retail operating model

(organization, processes, budgets, people, information) Innovation principle: Think big ! Test small ! Fail or scale fast !

Page 16: eRetail Europe - Benedikt Schmaus - Booz and company

THANK YOU

www.booz.com

www.boozdigital.com

Booz & Company GmbH

Benedikt Schmaus

Bockenheimer Anlage 44

60322 Frankfurt am Main

[email protected]

+49-170-2238-437