Upgrade Your Customer Experience

!"#$%&'(%)*&&% +,-.$/$0-#12%

!"#$%&'()*+$((,+-.*/'$(01"'$2'34'((

5'64*/'(5'723%$(89'3&''-()*+$(:*;*5'723%$(89'3&''(<2'='$(2-(/%&'(*>(?("%$.-@(

AB(<2'='$(523&*=( ?B(,*3.$*6(C%3'6(

;D"'(D*+$(E+'-F*3(G'$'(

#LiveWebinar hashtag.

!"##"$%&'()%$*+(,-.%",%/$(0*.%1)(,2%&'*%(

87*+.(H'.%26(;*+4GC*23.-(

!  Launched in 2007

!  Over 20,000 subscribers

!  To provide executives with relevant,

insightful content across a variety of

digital medium

Free subscription to our weekly newsletter: www.retailtouchpoints.com/signup

C%3'62-.-(

SP

EA

KE

R

SP

EA

KE

R

Paula Rosenblum Managing Partner Retail Systems Research

Julie Huffman Senior Human Factors Engineer NCR

Debbie Hauss Editor-in-Chief Retail TouchPoints

MO

DE

RAT

OR

The 21st Century Store: The Search for Relevance A REVIEW OF REPORT FINDINGS

PAULA ROSENBLUM, MANAGING PARTNER

RETAIL SYSTEMS RESEARCH, LLC.

JUNE 2011

Agenda

•  Report Overview & Methodology •  Business Challenges •  Opportunities •  Organizational Inhibitors •  Technology Enablers

•  BOOTstrap Recommendations •  What it Means for Retailers

7

Report Overview & Methodology

8

A group of retail industry veterans providing: Insight into business and technology challenges facing the extended retail industry Thought leadership and advice on navigating these challenges for specific companies and the industry at large

Our research products include technology adoption benchmark reports, custom research, and comparative personal benchmarks.

Nikki Baird Paula Rosenblum Brian Kilcourse Steve Rowen

First: Who/what is RSR?

Our BOOT Methodology

They sell more “stuff” but! they also think and act differently than their competitors.

Retail Winners: Year-over-year comparable store sales outperform inflation.

Business Challenges Opportunities Organizational

Inhibitors

Technology Enablers

10

Top Line Findings •  The Store has to evolve – we have no choice •  Customers demand a more relevant / differentiated experience •  What is relevance?

•  Don’t try to sell me what you want to sell, offer me what I want to buy, and make it personal

•  Retailers, especially Winners understand the importance of a more convenient in-store experience

•  What is convenience? •  Educated employees •  Cross-channel consistency •  “Shoppable” layout •  Rapid check-out

•  Technology and training to drive productivity all required to facilitate the necessary change

11

Better-Educated Employees a Must

12

Source: RSR Research, June 2011

11%

22%

30%

37%

36%

57%

35%

67%

20%

26%

26%

29%

32%

39%

51%

69%

Help us keep up with the competition (avoid competitive disadvantage)

React quickly to changes in the business environment

Create competitive advantage and new sources of revenue generation

Help the company win new customers and retain current customers

Put actionable information into the hands of managers

Increase revenue while holding down operational costs

Make our employees “smarter” and better informed

Maintain and/or improve the customer experience

Top Three (3) Uses of In-store Technologies 2011 2010

The Post-Walmart World

A Stabilizing Payroll to Sales Ratio

13 Source: RSR Research, June 2011

25%

40% 36%

30% 33%

38%

24%

51%

25%

Increased Remained the same Decreased

How Have Payroll to Sales Ratios Changed? 2009 2010 2011

Technology the Key to Education


11%

8%

8%

18%

49%

5%

14%

3%

8%

70%

No plans

Project planned, not yet budgeted

Budgeted project

Less than 1 year

Longer than 1 year

How long has your company been actively involved in adding technology-enabled touch-points for employees in your

stores? 2011 2010

Getting the Store Manager Back on the Selling Floor

15


36%

15%

7%

22%

12%

32%

14%

9%

23%

14%

22%

22%

3%

28%

25%

No plans

Project planned, not yet budgeted

Budgeted project

Less than 1 year

Longer than 1 year

How long have you been actively involved in adding Mobile technology-enabled touchpoints for Store Managers within your store?

2011 2010 2009

Business Challenges RETAILERS UNDERSTAND WHAT’S IN FRONT OF THEM

16

Observations

•  Improving customer service while holding the line on costs remains a top concern, but has been joined by pressures to improve integration across channels and combatting price transparency

•  The uncertain economy remains a persistent challenge – particularly to laggards

•  Retail Winners retain the “luxury” of focusing on a better customer experience

•  Economy taking a toll on under-performers

17

Price Transparency and Integration


22%

12%

7%

27%

16%

37%

45%

49%

19%

19%

20%

26%

31%

37%

37%

43%

Store managers lack information they need on the selling floor – too much time spent in the back room

Need to reduce shrink

Customer dissatisfaction caused by lack of integration between the store and other selling channels

Price is re-emerging as an important customer concern

Consumers know competitor prices for the same products

Uncertain economic conditions

Need for more consistent store execution

Need to improve customer service while holding the line on payroll costs

Top Three (3) Business Challenges Faced in Stores 2011 2010

2010 was “the Year of Price Transparency”

As Always, Winners More Focused


58%

25%

38%

44%

27%

50%

Uncertain economic conditions

Need to improve customer service while holding the line on payroll costs

Business Challenges Vary Significantly by Performance Retail Winners Average Performers Laggards

Unrelenting pressure

Opportunities NO SHORTAGE OF WAYS TO IMPROVE

20

Observations

•  Retailers continue to see opportunity in making in-store experience more convenient

•  A growing sense that making employees better informed and more productive will help generate sense of convenience, as will reducing out-of-stocks by providing stores with the ability to locate and ship merchandise from other parts of the company

•  Retailers’ have got religion around mobile interactions with consumers

•  87% of respondents now see value in the smart phone driving traffic TO the store vs. 65% last year

•  67% now see value of using the customer’s smart phone WITHIN the store, vs. only 52% last year

21

Productivity and Technology Hold Retailers’ Interest


38%

39%

42%

49%

58%

50%

73%

28%

29%

54%

56%

57%

58%

68%

Provide more specific/localized direction to store managers

Improve performance reporting to store management

Provide ability to locate and sell merchandise from anywhere in the company

Educate and empower our in-store employees using technology

More personalized attention from our employees

Find ways to make our employees more productive

Focus on a more convenient customer experience

Opportunities with "A lot of Value" in Improving the In-store Experience

2011 2010

Mobile Engagement: Profound Uptick

23


20%

31%

45%

56%

35%

13%

2010

2011

Smartphones' Value in Driving Traffic TO the Store

Lot of Value Some Value No Value

Organizational Inhibitors FINDING THE MONEY, GETTING SPONSORSHIP FROM THE TOP

24

Observations

•  Persistent economic uncertainty deterring investment •  Overall capital requirements continue to plague retailers •  Trumps ROI as an issue

•  Positive sign: Retailers recognize there is no way back to simpler times

•  Evidence overwhelming, change must be driven from the top

•  Managed services gaining traction as an alternative

•  Absence of wireless infrastructure serious impediment to forward progress with a wireless consumer

25

Less Budget, but Better Projects


32%

12%

28%

43%

50%

66%

40%

15%

22%

32%

39%

49%

54%

61%

We are trying to simplify our in-store technology, not make it more complex

Management believes stores should be able to just “do what we tell them”

The TCO of in-store technologies makes it hard to justify many of the newer technologies

We generally don’t want to be an early adopter of new technologies

The existing technology/infrastructure is preventing us from moving forward with new solutions

Hard to quantify technology return on investment

Overall Capital Requirements – we never even get to the subject of ROI

Top Three (3) Organizational Inhibitors

2011 2010

Persistent Economic Uncertainty Taking its Toll

Positive Sign

Senior Management Driving Change


3%

11%

16%

16%

18%

30%

32%

34%

34%

45%

58%

70%

50%

65%

43%

45%

58%

57%

45%

50%

39%

39%

35%

30%

47%

24%

41%

39%

24%

14%

24%

16%

26%

16%

8%

0%

Operating leases

Managed services for hardware

Managed services for home office / store network

Managed services for roll-out and/or maintenance

Managed services for software

Start with smaller projects, buying basic system functions, and

Gain sharing programs with vendors

Merchandising vendor funding for in-store projects

Asking vendors to provide success stories and references

The customer is demanding it – we have no choice

Pilot programs in specific stores or regions

Senior management championing the project

How important are each of the following to help your company overcome the inhibitors you selected above?

Very Important Somewhat Important Not Important

Mobile Opportunities Cannot Be Realized without a Mobile Infrastructure


8%

30%

38%

25%

12%

27%

30%

30%

Wireless available for customers

Wireless available throughout the store for performance management, POS and product related

tasks

No wireless network available in store

Wireless available only for receiving and other inventory control related tasks

Which of the following statements best describes the technology your company uses to support wireless

networking in the store?

2011 2010

Along with the obvious, this constrains placement of new devices

Technology Enablers SIGNIFICANT SHIFTS IN TECHNOLOGIES HOLDING RETAILERS’ INTEREST, BUT POS STILL BREAD AND BUTTER

29

Observations

•  Perceived value of in-store technologies shifts significantly in the past year

•  “Bread and butter” applications like modern POS hardware and software, and in-store rewards and coupons important

•  New trends have emerged

•  Now see a lot of potential value in cross-channel initiatives that support the store, and in delivering information to both company- and customer-owned phones and PDAs

•  Retail Winners most apt to embrace value of newer technologies •  RSR troubled by lack of meaningful Key Performance Indicators

(KPIs) used to track value received from in-store technology investments. Better metrics needed.

30

Massive Shifts in Perception


25%

26%

42%

25%

52%

43%

21%

30%

50%

38%

43%

43%

43%

52%

55%

57%

62%

70%

KPI’s and alerts to store managers on mobile devices

Distributed Order Management (buy in one store, fulfill in another)

In-store rewards and/or coupons

Personal scanners, self-service scales, product information kiosks, employee product information training

Modern POS Hardware and Software

Employee selling tools on the sales floor

Deliver information to store-owned cell phones and PDA’s

Deliver information to customer-owned cell phones and PDA’s

Cross-channel customer and inventory synchronization through real time updates

Potentially Very Valuable Technologies to Support Opportunities

2011 2010

2010: The Year of Multi-channel and Mobility

Actual Value is ‘Bread and Butter’


18%

22%

35%

13%

32%

28%

30%

41%

38%

30%

59%

40%

48%

48%

41%

40%

35%

28%

28%

25%

22%

Deliver information to customer-owned cell phones, tablets and PDA’s

Software that schedules the right mix of labor for employees






Actual Value Achieved from Technologies

A lot of Value Somewhat Valuable Little to No Value

Growth in value

Modern POS the Linchpin


30%

39%

27%

38%

33%

38%

41%

44%

34%

52%

54%

50%

53%

60%

18%

21%

36%

29%

36%

39%

36%

32%

45%

30%

28%

36%

33%

31%

52%

41%

36%

32%

30%

24%

24%

24%

20%

18%

17%

15%

15%

9%

Self-check-out

Dual displays at POS

KPI’s and alerts to store managers on mobile devices

Deliver information to store-owned cell phones and PDA’s

Software to assign actions in response to underperforming KPIs

Personal scanners, self-service scales, product information kiosks, etc.



Deliver information to customer-owned cell phones and PDA’s

Customer facing self-service touch points in the store



Software that schedules the right mix of labor to complete all activities and tasks


Status of In-store Technologies and Future Plans Installed Budgeted/Planned No Plans

BOOTstrap Recommendations FUNDAMENTALS REDEFINED

34

What Does it Mean for Retailers?

•  Redefine / differentiate the In-Store experience •  Use Location-based social network promotions to drive

differentiation •  Look at physical design of check-out area to maximize

value of modern POS •  Make a wireless decision now

•  Don’t make promises your Employees can’t keep

•  Ensure store blends with other channels

35

Thank You!

Paula Rosenblum

[email protected]

305-757-1357

www.rsrresearch.com to download this and other reports

36

Upgrade Your Customer Experience by Fine Tuning Your Checkout

Julie Huffman Senior Human Factors Engineer

NCR Customer Experience Consulting

38 NCR Confidential

NCR Global Customer Experience Consulting

Integrating People, Process and Technology To Improve Performance and Service

Usability and Design

Baseline Transaction Operations

Self-Service Optimization and

Blueprint

Enhancing Consumer Experience Capacity

Analysis

Technology Optimization

39 NCR Confidential

Agenda

 Leverage Time in Queue

 Coupons / Promotions

 Tender Processes

40 NCR Confidential

Leverage Time in Queue

 Benefits •  Increased basket size / revenue •  Improve product awareness •  Educate and engage your customer

  Requirements for success

•  Proper design/integration of checkstand & surround •  Optimal mix and placement of impulse merchandise

41 NCR Confidential

Time in Queue Case Study

Customer Behavior While in Queue:

Did Not Notice Look Touch/

Replace Touch/ Purchase

Legacy Checkstand Design

Store A 89.0% 6.0% 4.0% 1.0%

Store B 83.0% 12.0% 2.0% 3.0%

New Checkstand Design and Impulse Layout

Store A 47.7% 29.8% 14.4% 8.0%

Store B 60.1% 17.5% 13.9% 8.5%

Store C 55.8% 28.0% 7.0% 9.2%

Newest Checkstand Design and Impulse Layout

Store A 47.3% 25.2% 13.0% 14.5%

42 NCR Confidential

Time in Queue Lessons Learned

Integrated impulse merchandise racks •  10–15% customers make an unplanned purchase

Customer behavior •  Go directly to point of sale •  Look at one impulse display •  Scan the middle to upper shelving

Customer interaction •  Impulse display parallel to queue •  Cooler integrated with impulse display and queue •  End-cap impulse display

43 NCR Confidential

Within the front end/queue •  Be consistent across lanes •  Select items based on sales and margin •  Strategic items in the mid to upper shelves

 End cap •  Vary item selection to display greater variety •  Offer small, low cost general merchandise •  Gift cards

 Counter •  Avoid excessive clutter •  Designate an impulse display area •  Differentiate the color of the counter •  Utilize a tiered display

Merchandising Display Lessons Learned

44 NCR Confidential

Time in Queue Digital Signage

Goal is to engage customer in store •  At point of transit •  At point of wait •  At point of sale

 Considerations •  Right message at right time •  Dwell time •  Placement

45 NCR Confidential

Benefits of effective coupon and promotion processing •  Enhance customer service and satisfaction

•  Improve associate productivity

•  Reduce shrink

Requirements for success •  Application and process design

•  Associate training

Coupons and Promotions

46 NCR Confidential

 In a recent survey, participants were asked how likely they would be to use coupons during a recession. The following responded as much more likely or somewhat more likely.

•  Age: •  71% ages 18-34 •  68% ages 35-54 •  63% among those 55 years and above

•  Geographic Location: •  70% of Midwesterners •  69% of Westerners •  64% of Northeasterners •  62% of Southerners

•  Income: •  68% of those earning less than $50,000 a year •  67% for those earning more than $50,000

Why are Coupons and Promotions important?

Information and Communication (ICOM) Survey of 1,529 US consumers

47 NCR Confidential

Coupons Case Studies

Retail Segment: Grocery Specialty store #1

Specialty store #2

Specialty store #3

Mass Merchandiser *

Scanning coupon (in seconds) 1.9 - 2.2 2.7 N/A 3.0 4.5

Keying in coupon (in seconds) 6.2 - 7.4 17.3 11.6 12.9 16.1 - 26.3

Manual override 4% 1.30% N/A 6.50% 24%

* Self Serv Check Out; all others were assisted checkout

48 NCR Confidential

Coupons Lessons Learned

Avoid coupon key entries

Avoid search for item price

Establish guidelines and empower associates

49 NCR Confidential

Promotions Case Study – Specialty Store

Database issue • Manual price override

• 2.1% of transactions, averaging 7.3 seconds

Application and data base issue • Manual price override and authorization code

• 1.3% of transactions, averaging 10.1 seconds

The key is that these issues: …add time to the transaction

…require associate training and intervention …jeopardize customer service

50 NCR Confidential

Promotions Lessons Learned

Ensure that database is up to date

Ensure all items that are part of a promotion, sale or clearance…

• Are processed correctly via the point-of-sale terminal

Ensure all discounts are automatically calculated

51 NCR Confidential

Tender Processes

 Benefits of effective tender processing •  Enhance customer service and satisfaction •  Reduce overall transaction time •  Reduce paper waste

 Requirements for success •  Integrated application and process design •  Associate training

52 NCR Confidential

 Cash Tender •  Dynamic Tendering

• Case Study: application and process enhancement, 0.5-2.5 seconds savings

 Credit Tender •  Eliminate signature for transaction amount

less than $25.00 • Case Study: application & process enhancement, 8-10 seconds savings

•  Customer activity: Eliminate need to verify amount

• Case Study: application and process enhancement, 2 seconds savings

Tender Case Studies and Lessons Learned

53 NCR Confidential

 Credit and Debit Tender •  Utilize signature capture & pin pad for customer to process tender

• Swipe card & respond to prompts (i.e. enter pin number or sign for credit) • Case Study: technology & app. enhancement; 13- 20 seconds savings

•  Enable swipe card during item entry and pre authorization • Case study: application enhancement, 2 second savings

•  Default the type of card & amount once customer swipes their card • Case study: application enhancement, 1.5-2.1 second savings

•  Ensure time to authorize is less than 5 seconds

 Debit Tender •  Enable consumer to enter amount of cash back and verify total

• Case study: application enhancement, 3-4 seconds improvement

Tender Case Studies and Lessons Learned

54 NCR Confidential

 Two sided thermal printing •  Less roll changes during peak periods •  Green initiative - use up to 45% less

receipt paper •  Print custom color messages, promotions

and/or coupons

 Email receipt option •  Leverage loyalty program to enable

customers to establish preference for paper or electronic receipt

•  Leverage electronic payment to link/ store email address with customer account

Tender New Customer Service Enhancement

55 NCR Confidential

Thank you

Delight

Engage

NCR Global Consulting Services

Come partner with us

Transforming your customer interactions into amazing experiences

For more information please contact:

Greg Smith, 678 808-6881

Julie Huffman, 770 623-7396

IJ8()*+$(:*;*5'723%$(89'3&''(<2'='$(2-(/%&'(*>(?("%$.-@(

AB(<2'='$(523&*=( ?B(,*3.$*6(C%3'6(

;D"'(D*+$(E+'-F*3(G'$'(

IJ8(

SP

EA

KE

R

FEAT

UR

ED

SP

EA

KE

R

K'772'(L%+--(!"#$%&'#(')*#+,-H'.%26(;*+4GC*23.-(

MO

DE

RAT

OR

Paula Rosenblum Managing Partner Retail Systems Research

Julie Huffman Senior Human Factors Engineer NCR

;G%3M()*+(>*$(30*,4(,2%&'()%5*+(,-.%

34$#5$$6%7-88%2$9$-.$%%N862#323#(O'6>PO'$Q24'((

=2.G(R+-23'--(S7T'4FQ'-U((1#%:;<%/=->$%?1@$2A%

BC"%91#%5C7#8C15%>=-6%@2$6$#>1DC#%=$2$E%%%%

G9"@VV$.*+B4GV+"#$%&'P4'(