Embed Size (px)
Citation preview
Total RetailProfitable growth in the digital age
www.pwc.co.uk
June 2013
Total Retail – Profitable growth in the digital agePwC
June 2013Slide 2
Total Retail – Profitable growth in the digital agePwC
Flat sales across the industry but a continuing trend in channel shift defines current and future trading
June 2013Slide 3
2006 2007 2008 2009 2010 2011 2012 2013£0
£20,000
£40,000
£60,000
£80,000
£100,000
£120,000
£140,000
Online retail market versus In-store sales up to 2013, UK
Non Digital - Non Grocery In-store Sales Online Sales
Source: Verdict Research. This excludes Grocery and Media sectors
Expect much greater competition as this is the sole source of growth
Total Sales
PwC
Decade of change
20002002
20042006
20082010
20122014
20162018
20202022
2024
0
20
40
60
80
100
120
The changing mix of consumers in the UK, and the rising influence of the Digital Natives
Traditional Consumer Transitionals Digital Natives
% U
K A
ctiv
e A
du
lt P
op
ula
tio
n
Up to 2010Traditional consumer behaviour is the majority
2010–2018Transitional behaviour is
the majority
2019 and beyondDigital native
behaviour dominates
New and different types of customer behaviours are emerging – A decade of disruption is underway
The changing face of retail marketing – discussion document • Asda
Total Retail – Profitable growth in the digital agePwC
The influence of digital will become even more widely felt as consumer behaviour continues to evolve
June 2013Slide 5
Consumer electronics
Household appliances
Clothing and
footwear
Furniture and
homeware
Toys Sports equipment
DIY Jewellery / watches
Health & Beauty
0%
10%
20%
30%
40%
50%
60%
70%
80%
Preference for online research and purchase, by category
e66e4f26e04c4c3fb4607a20f7fce5f3
56b0ea2e08794717af-fa54473d8cef06
HiLo
Purchasepreference
Research Preference
Total Retail – Profitable growth in the digital agePwC
It all comes down to the customer
June 2013Slide 6
People expect a connected experience
Consumers compare experiences across industries and think “if I can do that on Amazon, why can’t I do this with you?”
People expect to participate
Consumers expect to be able to find reviews and give feedback, have their views taken into account and collaborate with their favourite brands
People make smarter decisions
Consumers are better informed than ever, which means they make smarter decisions that lead to better personal outcomes
People have an innovation appetite
The rapid evolution of personal technology has created consumer thirst for innovative new services and products
Total Retail – Profitable growth in the digital agePwC
The challenge of delivering profitable growth to the ‘connected shopper’
June 2013Slide 7
Ap
ps
Stores and in-store
technology
Kiosks a
nd
in-st
ore
orderin
g
Call Centre
Website(s) O
nline
Mar
ketp
lace
s
Smart Marketing
Video and
Smart TV
Social
Network
s
Hom
e D
eliv
ery
Coll
ecti
on
an
d R
etu
rns
Catalog
ue
and fl
yers
Total Retail – Profitable growth in the digital agePwC
Recent results show online drives growth but not profit
June 2013Slide 8
Sainsbury’s M&S Halfords Tesco(25)%
(20)%
(15)%
(10)%
(5)%
0%
5%
10%
15%
20%
25%
5%3%
2% 1%
20%17%
13% 13%
6%
(3)%
(22)%
(14)%
Overall Growth Online Growth Profit Growth
Source: Published investor information
Total Retail – Profitable growth in the digital agePwC
We believe Multi-channel is not the answer to delivering profitable growth in the digital age
June 2013Slide 9
Multi
Multiple channels are leading to a multiplication of cost, and retailers cannot afford it.
Channel
Organising around channel puts a retailer at odds with their consumers who are not channel-centric.
Total Retail – Profitable growth in the digital agePwC
We believe a holistic strategy Total Retail – is required
June 2013Slide 10
Total Retail acknowledges that customer, experience and product are at heart of the business; and channels are simply the way customers prefer to buy a specific purchase, at a given point in time.
Total Retail – Profitable growth in the digital agePwC
1. Time to change the DNA of the business
June 2013Slide 11
Actively using data as ‘secret sauce’ to generate competitive advantage across multiple dimensions.
Creating and building a customer-centric strategy, propositions and a renewed business model.
Monitor all potential points of failure.
Assess and manage cyber/ brand/reputational risks.
Rapidly invest in agile, innovative, IT.
Update the operating model to support better integration.
Introducing ‘test and learn’ approaches.
Develop new ways of creating consumer value.
Aligning the business around the consumer. Embed digital right through the company.
Total Retail – Profitable growth in the digital agePwC
2. Time for a new total retail business model
June 2013Slide 12
Spend Category Trend Drivers
IT Spend (1-2%) • Technology-driven innovation to drive customer experience
Property (15-30%) • Reduced retail portfolio, increasing warehouse capacity
People (20-25%) ? • Store staff reductions offset increases in skilled ‘Total Retailers’
Cost of Sales (35-55%)
• Pricing, promotion and assortment optimisation
Marketing (1-2%) • Off-setting declining store fronts
Profit before tax (2-8%)
?
Total Retail – Profitable growth in the digital agePwC
3. Time to replace or amend traditional metrics
June 2013Slide 13
Customer profitabilityChannel profitability
Regional growthStore like-for-like sales
Total marketing ROISingle-channel marketing ROI
Overall satisfaction with the total retail experience
Channel experience
‘Value-added’ rent‘Turnover-based’ rents
Total Retail – Profitable growth in the digital agePwC
4. Time to work out the new role of the 21st century store
June 2013Slide 14
Acts as a collection point for online
Reserve, Click and Collect, check stock
Amazon lockers: Easy collection point
Click and collect for other retailers
Serves as a warehouse
Stores fulfil online orders
Single transparent stock
Enhances the experiencewith ‘theatre’
‘Theatre’: Selfridges Project Ocean
Flagship store in Regent Street
Enhancing the customerjourney with digital
Digital racks
iPad ordering fromchanging rooms
Magic mirrors for sharing
New store formats
Showroom for online sales
Augmented reality windows
Pop-up at festivals
Prospect acquisition via store
Engaging with the community
Thursday night rides/ Show major events live at ‘cycle clubs’
Evening yoga classes in store
Total Retail – Profitable growth in the digital agePwC
So what do you need to be thinking about?
• A holistic business centred around consumers not channels
• Working out how money will be made
• Listening and responding to the digital natives
• Getting ‘Data savvy’ – it really is the key
• Seizing the opportunity today!
Thank you.
June 2013Slide 15
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
130611-155835-EM-OS
