The future of retail in a digital world

A Strategic Vision for a Retail Future // September 2012

© Matt Butterworth 2012

A Strategic Vision for a Retail Future




Context

1.  Retail + Commerce 2.  Digital context + Implications 3.  Connected everything 4.  Strategic framework 5.  Conceptual execution 6.  Strategic Roadmap 7.  Questions and answers

AGENDA FOR TODAY



Many traditional retailers have not effectively adopted multi-channel retail experiences and remain exposed to the significant risk of being left behind by more agile, digitally-savvy competitors. And yet there is another reality that of the shopper. One might use words like “empowerment, transparency, ease-of-use and convenience” to describe the evolving experience for the digitally-savvy-shopper, "This presentation will provide a snapshot of both these realities, it will showcase trends that are driving change within retail and can be leveraged by retailers to compete in the modern retail marketplace.

BACKGROUND


© Matt Butterworth 2012 © Matt Butterworth 2012



The current market place

WHAT IS COMMERCE

Walk down any High Street and you can see the biggest forces revolutionising shopping habits as the meteoric rise of Google, Amazon, Apple and Facebook (or the Gang of Four as they are known) have fast become a normal part of our day-to-day lives.""These and other innovative companies have changed our expectations about shopping and are forcing regular High Street retailers to up their game in response.""The future offers shoppers the best of both worlds, with smart retailers adopting the digital innovations from these companies to create an even more compelling experience for customers."""We're standing on the edge of a new digital era"Those retailers that can effectively harness the power of digital will find that their high street stores go from strength to strength” """

!

!



Commerce is at the heart of everything, otherwise there is no point in being a retailer….

WHAT IS COMMERCE

Ecommerce is everything from personalised recommendations to full transactions"Include instore and point of sale"Online - pervasive and consistent customer experiences Why should an in-store experience differ from an on-line experience""

!

!



“empowerment, transparency, ease-of-use and convenience” describe the evolving experience for the “digitally”-savvy-shopper….

So it got me thinking…..!



Convenience for consumers

CASE STUDY

The ground-breaking mail order operation, next directory catalogue launched in 1988 with a hardback book containing 350 pages, creating the blueprint for catalogue retailing.""Its changed the industry overnight""Cutting edge design (Why not Associates)""This year this sales at its online and catalogue business have smashed through the £1bn barrier for the first time. the group's 25-year-old Next Directory is also set to deliver a 16 per cent rise in operating profit to £257m over the year to 28 January. This means the FTSE 100 company's catalogue unit made more money than the John Lewis Partnership's eponymous department store and nearly as much as the JLP-owned grocery chain, Waitrose, over the same period""

!

!



CASE STUDY

Convenience for consumers



Tesco QR Code Subway Store Subway / billboards walls are plastered with posters that resemble the aisles and shelves of a supermarket. "They’re lined from top to bottom with the products you’d normally see while grocery shopping. "The only difference is that you can’t just grab the product and check out. "The groceries each have a QR code which the shopper scans with a smartphone camera and adds to a shopping list. "When the shopper has scanned all the codes for all the groceries needed, he pays using his phone and the groceries are then delivered to his home. """

!



Digital Context




Context

Fragmentation will get worse"before it gets better…

DIGITAL CONTEXT



Context

We are moving towards the ‘always on’ digital age…

DIGITAL CONTEXT

Microsoft predicts that by 2014 mobile internet access will overtake PC internet access"

Tablet sales are forecast to outstrip PC sales by 2015*"

We have moved from stationary to ubiquitous computing



Context

Fragmentation and the always on consumer present brands with serious challenges

DIGITAL CONTEXT

- Multi- Platform / Format Content"

- Attention"

- Speed"

- Understanding



Context

Understanding context will become paramount

DIGITAL CONTEXT



Context

Real time marketing requires an end to siloed thinking

DIGITAL CONTEXT

“Marketers’ long-standing challenges — such as siloed measurement, disjointed customer experiences, and flawed attribution — are still serious problems, and the convergence of several market factors puts the online marketing suite back on the table” "Forrester 2011!!

!!!

!

“Management of digital strategy and communications remains siloed...”

Forrester 2011



Context

The near future…enterprise organisations will manage communications through an interconnected digital hub

DIGITAL CONTEXT



Digital implications




Context

Develop a deeper understanding of the"retail audience

DIGITAL IMPLICATIONS

Depth interviews/ethnography"

Tap into private communities to gain a deeper understanding of the impact of digital technologies on behaviours and expectations"

Understand purchase path behaviours through attribution modelling"

!

!



Use insight to develop core personas and intelligence that inform digital strategy





Use this insight to develop touch-point models for each persona "(or segment depending on your preference)



Context

One size doesn’t fit all….


Different territories have different requirements"

Perception of brands"

Channel Behaviour"

Cultural differentiation"

"

"

"

!

!



Begin to plan for the age of real-time marketing - remove channel silos, focus on data integration and mining and begin to develop a digital nerve centre for retailers


Retail and the future of (e)commerce…


Context Ideas Utility Inspiration Curation

RETAIL AND THE FUTURE IN A DIGITAL WORLD




Disruption has become the norm



Amazon Kindle"revolutionised "

publishing"(Age: 2yrs 3 months)"

iPad"1st successful tablet"

(Age: 2 years)"iPlayer"

Mainstream online "Viewing"

(Age: 3 yrs 3 months) "

App store"Transformed mobile"

(Age: 4 years)"

Facebook"Social "

communication"(Age: 5 ¾ years)"

YouTube"Online video"

(Age: 6 years)"

And its about to accelerate…



We are moving into the age of the digital eye…first with our phones…




But soon with very trendy eyewear




The world will be augmented by a wealth of virtual data…introducing us to new experiences (and total strangers!)…



“Sonar is a mobile application that helps you learn about and connect with likeminded people nearby." ""It works by geotracking your current location à la Foursquare check-ins and aggregating public information from your social networks (Facebook, Twitter, Foursquare, etc)""

!

Context

Our phone and glasses will know everything about us

DIGITAL CONTEXT



Context

In time…. DIGITAL CONTEXT




Payment will be contactless…///



NFC is a short-range wireless technology that enables devices to exchange data without an internet connection"


Retailers products and marketing collateral will act as a gateway to a wealth of product and brand information



Connected everything



Over 1/3 of Europeans will have a connected TV by 2014



In the eyes of the viewer content simply becomes content, accelerating the move towards rich, high quality branded experiences"(think Audi TV, BMW TV)"""""


We will soon be buying from our favourite shows



The contents of shows will become searchable. The metadata will include everything about the show but also about the clothes, products, and locations…"

BUY NOW


And when in the real world, we will share our shopping experiences with our social group in real time




And retailers will provide realtime instore CRM



Real time CRM with"personalised…""-  Guides"-  Content "- Offers"-  Discounts"

Based upon cross-channel behaviours, previous responses, browsing behaviour, social network""



From e-Commerce to Social Commerce


“social commerce is the next area to really blow up”"Mark Zuckerburg



SOCIAL COMMERCE

Trickle of brands selling through Facebook is threatening to become a deluge Social shopping is gathering momentum Mobile sharing apps will soon become commonplace

SOCIAL COMMERCE

Revenue forecasts support the hype around social commerce & the audience (particularly young adults) are open to influence and sharing…



Source: emarketer 2011!

Source: JWT 2012!

So why don’t Retailers just dive in…..?


SOCIAL COMMERCE

Social networks are primarily about communication, not shopping…..



Source: Forrester 2011!

SOCIAL COMMERCE

Results from social commerce initiatives are poor & unsurprisingly social has not proved a great acquisition tool



SOCIAL COMMERCE

And privacy remains a huge concern



When asked about personalised recommendations based upon Facebook profiles (US and UK)"

72% said “it feels like big brother is watching me”"

56% “feel violated”"

76% “prefer to find things on my own”"

Source: JWT!

So what role should digital play for Retailers?



Create brand differentiation & preference for Retailers




CURRENT STATE OF PLAY


For retailers, it is critical to differentiate your products at the moment of truth



Even Google accept that the original FMOT is still often critical to the buying decision"




FMOT: " ZMOT: A consumer would get to the shelf, pick up a bag of Chocolate Chip Cookie Mix and follow the recipe on the back of the bag, possibly keeping the physical bag to keep a record of the recipe."

Consumers are going to the internet and researching the cookie recipe in advance of buying a bag of Chocolate Chip Cookie Mix from a store shelf.

Consumers found out about a retail promotional event (like 20% off all Autograph selection)) via stumbling upon it, or by seeing a flier posted in the paper

Consumers become aware of these events in advance either through e-mail newsletters, becoming fans on networking sites, or following brands on sites like Twitter. Not only that, but they can tell hundreds of their friends and family all about it in real time with one quick social networking status post."."

Consumers waited for their monthly Retail magazine issue to arrive, to learn about the next season's hot looks"

Consumers are going online to find inspiration for their own looks, and to get tips and tricks from experts -- or to take their cues from a favourite celebrity or friend.

Some initial ideas….




A PROPOSED ROADMAP FOR Retailers

1. Service with an opt in… Give me personal attention and better service…""Retailers ask shoppers to trade personal data to receive a better service"



A PROPOSED ROADMAP FOR M&S

Neiman Marcus Location aware app provides sales-staff with customer preferences to create heightened level of personalization to its in-store shopping experience""Program the app’s preferences to automatically alert sales staff when they enter a store."Provide staff with instant access to their shopping history and Facebook profile image."“Check-in” whenever they are ready for assistance. ""The app also allows shoppers to see which sales associates are in-store, message and make appointments with an associate of their choice, scan QR codes to unlock product information and trends as well as mark their favorite products – all of which, can automatically be made available to staff, helping associates make smarter recommendations about which products are right for each of their customers."




2. Auto Curated shopping Let me shop for what I like""Retailers leveraging shoppers social data and purchase history to create customized browsing experiences""Glimpse by find"A Facebook shopping discovery app that is built on top of Facebook “like” data. The app curates shopping pages for users based on their likes, as well the stuff their friends like.""When a Glimpse user likes a page, the service can determine what product the URL is referring to, can pull up the most recent availability and pricing data and also fit it into different styles and trends"""


3. Group power is being harnessed with crowd led product ranges



“Let me help decide what’s being sold”"

"New affordable clothing range"

Launched at New York Fashion week with a cat walk parade"

Designs voted on by the eBay community"

Most popular designs go into production"


4. Mass customisation & personalization



NIKEiD allows customers to design their own trainers, specifying every aspect of the design""Moving forward, consumers will expect higher levels of personal design choices""Positives and negatives""Pricing done what people will pay for it""

!




Modcloth Stylists look to your past purchases to tailor advice to make more personalized product recommendations""Integrated a live-chat feature on its Facebook page which allows customers to submit personal data and receive recommendations based on their unique preferences and spending habits""Shoppers to submit information around their interactions with the brand, including past purchase history, ‘loved’ items and current wishlists""Recently launched a Make the Cut Contest, where customers submitted their sketches, went through a social media voting process, and the actual garments were brought to life and sold on the site.


5. Virtual Sampling



Help me choose the perfect fit""Upcload is a webcam enabled Algorithim ensuring customers find the right fit online"""

!

Strategic Roadmap….





Insight - where is the store in the conversation? Today bricks & mortar stores still generate the lion share of revenues for most retailers…""Yet the store gets little attention in the cross channel discussion ….why?""Store systems are too old and too inflexible to add much value to the cross channel discussion.""Today, old, clunky, POS & store systems force you to treat everyone the same - one size fits all…""Meaning you can’t react quickly to changing customer or business needs""




Phase One Providing the tools and content that meet the expectations of today’s digital consumer and providing a solid digital platform for future development."

Phase Two Providing a demonstrably differentiated and superior customer experience that delivers on the brand proposition across each and every digital interaction."

So in conclusion!!


CONCLUSION // STRATEGIC TAKEOUTS

1. Don’t remain exposed to the significant risk of being left behind by more agile, digitally-savvy competitors.

2. Fragmentation will get worse before it gets better

3. Real time marketing requires an end to siloed thinking

4. Develop a deeper understanding of the retail audience

5. Develop a rigorous governance model

6. Prepare for a world that will become interconnected

7. Don’t run before you can walk

8. Data, Data, Data



Matt Butterworth Email [email protected]"Mobile +44 (0) 7842 632 341"Twitter:- @silverdog72


Technology

The future of retail in a digital world