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Retail Trends 2014: Research for a Transformational Year
NIKKI BAIRD, PAULA ROSENBLUM, BRIAN KILCOURSE AND STEVE ROWEN, MANAGING PARTNERS
OCTOBER 23, 2013
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Agenda • About RSR • 2014 Research Calendar:
• Q&A
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• Analytics • Mobile • SMB • Pricing • Supply Chain • Store
• Cross-channel • Marketing • Merchandising • eCommerce • Mobile 2015 • Custom Research
About RSR Founded in 2007. Quickly became the leading source of insights for
trends in retail technology, and retail ecosystem in general. Mission: To elevate the conversation about retail technology to a strategic level within the retail enterprise by:
• Providing objective, pragmatic advice to both retailers and solution providers
• Leveraging our extensive retail industry experience • Providing a deep bed of research into retailers' technology investment
plans and the business opportunities and challenges that drive those investments.
We help retailers keep their IT strategies aligned with corporate objectives. We help solution providers align their products and messages with retailers’ needs.
Advanced Analytics in Retail Survey Launch: October 2013 Report Release: January 2014 Presented by: Brian Kilcourse
MANAGING BOTH ‘SENSE AND RESPOND’ AND PREDICTIVE DATA
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This Year’s Key Takeaways • Retailers moving from “product-centric” analytics to really understanding the
customer • Under-performers hope to find “magic bullet” to store profitability, all others moving to
channel neutrality • A missed opportunity: Far too few gather data from the “edges” of the enterprise:
• Supply chain partners • Customers • Stores
• The death of spreadsheets for BI (maybe?) • Delivering BI to web and mobile (small screen real estate) basically impossible with
spreadsheets • Simplified BI delivery tools makes it possible to cut the cord
• Analytics capabilities require strong executive sponsorship from the top to be successful
• Executive Mandate is most effective way to move forward with an enterprise-wide strategy
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Next Year’s Focus • Are retailers using the Customer Dimension of information?
• In product management • In Customer-focused Brand & Marketing efforts
• What are retailers’ attitudes about “must have” baseline information and highly prized “new” data?
• Compare attitudes to what retailers actually have in place today
• What’s the right blend of reactive and historical BI & Analytics capabilities vs. predictive analytics?
• Are retailers using visual and location analytics to make strategic and operational decisions
• Are retailers using non-transactional information, such as consumer “path to purchase” data from social networks, and other 3rd party data, to gain fresher insights?
• How close to real-time is “real enough”?
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Mobile Survey Launch: November 2013 Report Release: February 2014 Presented by: Steve Rowen
THE GREAT DISRUPTOR
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This Year’s Key Takeaways • Though retailers overwhelmingly want to enhance the overall value of the
brand via mobile solutions, their top-rated technology is to extend already-existing eCommerce functionality to the mobile channel. For now, avoidance of price and product conflicts across channels seems a lofty-enough goal.
• Retailers underestimate just how much consumers have already integrated mobile devices into their current lifestyles: 52% of retailers believe that mobile devices are used – at any point along the myriad paths-to-purchase modern consumers travel – less than 25% of the time.
• Even if budget is available, retailers are having an increasingly difficult time finding the resources needed to manage all of the available mobile opportunities. For the best performers, project prioritization and manpower have rapidly become the #1 enemy within.
• While almost one-quarter of retailers are preparing to deal with the complexity of mobile application deployment, most retailers fear that devices and platforms are destined to change too quickly. This is what is keeping retailers on the sidelines from enacting more exciting mobile projects.
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Next Year’s Focus • If more Winners already see mobile as a way to better
understand consumers’ new paths to purchase, are retailers ready for the “harmonization” of digital marketing with more traditional marketing in the omni-channel retail model?
• How will 12 more months of the consumer-mobile love affair affect retailer’s in-store priorities? And what about employees?
• Is the business case for in-store Wi-Fi finally at hand?
• What new technologies are most exciting to retailers?
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SMB Spotlight Survey Launch: December 2013 Report Release: March 2014 Presented by: Nikki Baird
THE WELLSPRING OF GROWTH
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Why Focus on the Small and Mid-market Retail Space
1. About a third of our overall survey respondents
2. Unique problems
• The small retailer pressured on all sides, in surprising ways • Mid-market growing pains, apparently under-served and under-
educated 3. Opportunity to inform, educate and elevate the level of
conversation
4. The breeding ground for the next generation of Retail Winners
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Next Year’s Focus • All of the business challenges and technology appetites of the largest
retailers, but none of the budget or tech skills
• Hypothesis: Cloud transforms small retailers’ ability to get the best of both worlds: an intimate relationship with consumers, powered by enterprise-level insights & optimization
• What are the areas of priority?
• Customer relationships • Analytics • Pricing? • Supply chain? • Merchandising?
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Pricing Survey Launch: January 2014 Report Release: April 2014 Presented by: Paula Rosenblum
WHEN WILL WE EVER HAVE “ENOUGH” PRICE CHANGES?
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This Year’s Key Takeaways • A majority of retailers continue to increase # of price changes
• Those who underperform in Y-O-Y sales leading the charge • 90% report at least some increase over the past three years • Only 15% get GM benefit for the holiday season
• Business challenges come from customers, competitors and shareholders
• Consumer price sensitivity, increased pricing aggressiveness from competitor and the need to get a better return on inventory investment through pricing
• Learning to live with “showrooming” and price transparency. With a few high profile exceptions, have opted to “be competitive” rather than price match (38% vs. 17%).
• Need cleaner data (42%), end resistance to change from stores (42%), new skill sets in home office (40%)
• Need Information: A plurality report they can neither predict the impact of price changes they make, nor truly analyze the effectiveness of those price changes after the fact
• Top technologies in evaluation: markdown forecasting and planning (24%), promotion optimization (23%), regular price optimization (20%), inventory management/availability as a price driver (23%), and price intelligence (18%) 15
Next Year’s Focus • Hypotheses:
• More price matching • Continued increase in price changes • Less variation in price across channels
• Have retailers got better at predicting, determining, analyzing impact of changes?
• Evolving skillsets • Maturing tools and techniques • Continued implementation • Some technology refresh to newer tools • A movement to the cloud?
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Next Generation Supply Chain Survey Launch: February 2014 Report Release: May 2014 Presented by: Brian Kilcourse
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THE BIG PICTURE
This Year’s Key Takeaways • Preliminary Findings from RSR’s in-flight Cross-Channel Fulfillment and the
Future of Supply Chain study (December 2013):
• E-Commerce and M-Commerce will be the most heavily invested-in selling channels for the next 3 years, superseding even technology investments in stores and international expansion
• Retailers report that the current warehouse flow is not designed for current or future volumes of direct to consumer shipments
• The top 3 opportunities to address these challenges are: • To redesign the supply chain / distribution network to be more cross-channel • Optimize fulfillment based on the most profitable inventory opportunity • Improve cross-channel forecasts
• The top inhibitor to progress is that “Our supply chain is not designed to support omni-channel fulfillment”
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Next Year’s Focus The New Supply Chain (TBD May 2014) • General themes that the 2014 study will explore include:
• How big of a challenge the new supply chain really is and needs to be • How far down the road of optimized, profitable fulfillment retailers have gone?
• We will examine the scope of retailers’ supply chain re-design, including the roles of 3rd party logistics, Drop ship strategies, Contract compliance, Inbound logistics, Assortment assigned to distribution locations, and Distribution methods inside the DC
• We will explore the roles and use of small package logistics - both forward and
reverse for “Endless aisle” and for Drop ship • We will uncover how retailers are addressing Assignment of the cost to fulfill/
cost to serve, and who gets credit for the sale? This will include an examination of if/how retailers are tracking labor and shipping costs for ship from store, and the impact of returns
• We will learn how well retailers are optimizing sourcing decisions to fulfill “omni-
channel” customer orders
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The 2014 Store Survey Launch: March 2014 Report Release: June 2014 Presented by: Steve Rowen
A TALE OF TWO STORE FUTURES
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This Year’s Key Takeaways • The store isn’t going away, but retailers’ slow pace of store
change could kill it
• Retailers don’t know how to use the “hottest” technologies as part of the store experience
• Store employees aren’t spending enough time on the things that help secure the future of the store
• And part of the reason why is because store compensation needs to change
• But any changes are dependent on a modern store infrastructure – which retailers don’t have
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Next Year’s Focus • Rethinking The Store!
• If people can get products anywhere, why would they come to the store? Why would they come to your store?
• If retailers are letting their thinking about in-store digital opportunities be constrained by their current infrastructure capabilities, what does this do for their existing workload and for maintaining their current capabilities?
• What is the ROI for in-store public WiFi? • Which technologies are retailers investing in to get consumers
“off the screen”?
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Cross-Channel Strategy Survey Launch: April 2014 Report Release: August 2014 Presented by: Paula Rosenblum
MERGING DIGITAL AND PHYSICAL WORLDS INTO A SEAMLESS, COMPELLING EXPERIENCE
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This Year’s Key Takeaways • A shift in retailers’ attitudes about digital channels from “selling more stuff” to
providing consumers “everything they need to know to buy” products and services
• Creating a consistent customer experience most valued, biggest inhibitor is that they do not have a single view of the customer across channels;
• Focused on fulfillment execution, but many say inventory and order management are not integrated across channels;
• Perceived best opportunity for technology enablement is in creating enterprise-wide visibility, but “customer visibility”, “customer insights”, and “a single customer interaction platform that crosses channels”, also present huge opportunities
• Favor mobile-optimized web access for e-Commerce capabilities over mobile applications. Hoping to shift to HTML5 vs. apps
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Next Year’s Focus • Progress made
• Technology maturity • Process efficiency • Organizational alignment
• We worry about lack of visibility across the supply chain and hope to see improvements
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New Generation Marketing Survey Launch: May 2014 Report Release: September 2014 Presented by: Nikki Baird
CROSS-CHANNEL ORG’S CANARY IN THE COAL MINE
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This Year’s Key Takeaways • Retailers are turning the corner on uncertainty about the
economy and uncertainty about what to do about marketing
• Laggards appear to be on the cusp of ditching price competition and focusing on differentiation – big implications for marketing
• Marketing already has more on its plate than it can handle – consolidation makes it worse
• Marketing tools gain in perceived value, but are constrained by organizational inhibitors that limit available budget
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Next Year’s Focus • Have retailers’ marketing priorities shifted? Are they focused
on customer acquisition or customer relationship?
• The rise of digital in marketing – how far have retailers come?
• How much is digital marketing transforming marketing & eCommerce organizations?
• Are retailers getting better at targeting and personalization? Good enough that it is diminishing their spend on traditional channels?
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Merchandising Survey Launch: August 2014 Report Release: October 2014 Presented by: Paula Rosenblum
WE KNOW TECHNOLOGY IS IMPORTANT, BUT AREN’T REALLY SURE WHY
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This Year’s Key Takeaways • Inventory productivity is most frequently cited business
challenge (trumping OOS)
• The new Holy Grail: Infusing customer information into the entire merchandising process, from planning through distribution
• Commitment across the board to eradicating home grown systems
• Existing technology a real roadblock, and the culture must change
• Cross-channel merchandising becoming very complex
• A surprising amount of headroom for implementing “standard” technologies, and real interest in new ones
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Next Year’s Focus • Looking for Progress
• Understanding what tech can really do (and what it can’t) • Incorporation of customer data • Filling out old portfolio
• Investigating technology refresh
• Inverted value/implementation data tells us it might be time for some refreshing
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eCommerce Survey Launch: September 2014 Report Release: December 2014 Presented by: Brian Kilcourse
NO CHANNEL IS AN ISLAND….
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Last Year’s Key Takeaways • Retailers recognizing eCommerce is part of a strategic whole
• Recent news: Saks re-organizes around “omni-channel”, Gap re-organizes by brand across channels
• Double-digit winners use different URLs, social networks and brands as
a proxy for selling channels. • In that context, Zappo’s is a selling channel for Amazon and vise versa
• Mobile matters – 71% of double-digit winners operating mobile sites vs. half of average performers and 30% of all others.
• Consumers evolving quickly, shopping patterns change
• eCommerce: The one part of the company that “gets what it wants”
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This Year’s Focus • Analysis just beginning
• Key themes
• Managing and maintaining growth • Integrating with other channels • Understanding how customers interact • Creating a richer experience for customers • Recognition that the future of online commerce lies more with cross-
channel or merged channel capabilities
Next Year’s Focus will be driven from these results
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Mobile 2015 Survey Launch: October 2014 Report Release: January 2015 Presented by: Nikki Baird
WILL RETAILERS FINALLY INVEST?
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Next Year’s Focus • Since the 2013-4 report has not been published yet...
• A new look at retailer investments in supporting consumer mobile
• Apps vs. sites – getting a clear picture of the debate
• The consumer take: are retailers aligned with what consumers expect?
• Our hypothesis: No.
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TBD! Survey Launch: November 2014 Report Release: February 2015 Presented by: Steve Rowen
WHAT ARE WE MISSING?
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Bespoke Research
CUSTOM PROJECTS ALWAYS EXCITING
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Questions?
Topic Survey Launch Report Release
Advanced Analytics in Retail Oct-13 Jan-14
Mobile Nov-13 Feb-14
SMB Spotlight: Profitable Differentiation Dec-13 Mar-14
Pricing Jan-14 Apr-14
New/Next Generation Supply Chain Feb-14 May-14
Store Mar-14 Jun-14
Cross-Channel Strategy Apr-14 Aug-14
New/Next Generation Marketing May-14 Sep-14
Merchandising Aug-14 Oct-14
eCommerce Sep-14 Dec-14
Mobile Oct-14 Jan-15
TBD Nov-14 Feb-15
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