Investing For Success In Omnichannel Retailing

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Investing For Success In �Omnichannel Retailing�

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Panelists Debbie Hauss Editor-in-Chief

Retail TouchPoints

MODERATOR

Brion Reusche Industry Principal, Retail

Junction Solutions

Paula Rosenblum Managing Partner

RSR Research

April 2014


Retail Systems Research, LLC

Satisfying Customers in a Post-channel World

Agenda About RSR & The BOOT MethodologySM

Retail’s RESET Moment

Satisfying Channel Agnostic Customers •  Next Generation Fulfillment

•  eCommerce Technologies Come to the Store

•  Managing the new “customer dimension of data”

•  Impact on Merchandising

•  Bringing Advanced Analytics to the Masses

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About RSR Founded in 2007 to quickly become the leading source of insights for trends in retail technology, and retail 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.

RSR’s BOOT MethodologySM

9

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

Retail’s Reset Moment

10

Consumer Behaviors Are Fundamentally Changing … From This …(very orderly)

Investigate Select Pay For Fulfill




Store!

Web!

Catalog!

Direct Sales!

…To This (Many Paths To Purchase / Chaotic Patterns)

Web!

Investigate! Select! Pay for ! Fulfill!

Store! Store! Store! Store!

Call Center!

Call Center!

Call Center!

Direct Delivery!

Web! Web!

Mobile!

Anything!

…and !

Direct Sales!

Direct Sales!

Direct Sales!

This is the Omni-channel Phenomenon

This Chaos Brings Profit

13

17%

10%

7%

28%

38%

18%

3%

3%

29%

47%

Don't Know/Can't Tell

Less Profitable Than Single Channel Customers

Equally Profitable

Slightly More Profitable Than Single Channel Customers

Significantly More Profitable Than Single Channel Customers

Multi-Channel Customers Are: 2013 2012

RSR Research, June 2013

But you have to execute differently

Satisfying Channel Agnostic Customers

14

•  Optimize Consumers’ Paths To Purchase

•  Define One Brand

•  Re-Integrate The Store

•  Solidify Marketing’s New Role

•  Re-align The Supply Chain

Retailers Know They Need To…

15 “Bathe” Everything In Analytics

This Changes Everything

16

RSR Research LLC, June 2013

13%

33%

42%

44%

46%

50%

52%

53%

64%

73%

75%

80%

84%

54%

48%

55%

49%

44%

47%

41%

43%

36%

21%

19%

16%

16%

33%

19%

3%

7%

10%

3%

7%

4%

6%

5%

4%

Traditional advertising

Customer call center

Procurement/Assortment

Demand Forecasting

Customer segmentation

Store Operations

Loyalty management

Pricing strategies

Digital marketing (E-commerce, Mobile, Social Media)

Customer Order visibility across all channels

Fulfillment

Inventory visibility across all channels

Consistent customer experience across all channels

Value of Processes to Your Company’s Omni-channel Strategy

Very Important Some Importance Little to no Importance

Consumer Expectations Are Driving The Change

17


20%

18%

27%

33%

41%

37%

53%

51%

15%

19%

32%

41%

42%

44%

48%

51%

Need to control labor costs while integrating new cross-channel processes into our operations

Consumers know more about products and prices than our employees do

Digital channels are creating increasingly global competition for consumers’ “share of pocket”

The way consumers use channels to make purchase decisions is unpredictable, but important

A good customer experience in one channel is not enough to maintain customer loyalty

We are not doing enough to leverage our assets (digital, inventory, or otherwise) across channels

We struggle to effectively integrate new processes driven by cross-channel strategies into the store

Consumer expectations outpace our ability to deliver cross-channel experiences

Top Three (3) Business Challenges Faced In Cross-channel Strategy

2013 2012

Retailers’ Vision of the Future

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29% 39% 21% 6% 5% The future of online commerce lies more with cross-channel or merged channel capabilities

Agree/Disagree

Strongly Agree Agree Neutral Disagree Strongly Disagree

Source: RSR Research, November 2013

7%

13%

21%

21%

12%

15%

13%

18%

6%

5%

12%

8%

21%

13%

27%

17%

54%

55%

27%

36%

eCommerce as in-store employee-facing handheld application

eCommerce as in-store kiosk

eCommerce as mobile platform

eCommerce as Point of Sale

Plans for Extending eCommerce Platform to Other Parts of the Retail Organization

Implemented Current Project Budgeted Project Planned, Not Yet Budgeted No Plans

The Supply Chain Must Support New Fulfillment Strategies

19


10%

10%

70%

30%

60%

60%

70%

5%

25%

35%

45%

63%

65%

73%

Buy via TV

Buy via social commerce site

Buy online/direct, pick-up in store

Buy online/direct, fulfill through any store

Buy via mobile device

Buy in-store, fulfill through online/direct

Buy online, return in-store

Which Cross Channel Activities Does Your Company Engage in Today?

Retail Winners Laggards

The Question That Is Only Beginning To Be Asked Is…

“How Do We Meet These Fulfillment Requirements Profitably?”

20

In The Next 18-24 Months, Retail Will Move To Address How To Profitably Serve Anytime/Anywhere Shopping

2010-13 2013 2014 2015-16

The Impact of the massive adoption of

consumer technologies

(mobile, social) on the Retail selling

environment

The harmonization of the digital and physical selling

environments

Next Generation Marketing

Next Generation Supply Chain

21

So Far…A Sorry State of Affairs

22

RSR Research, September 2013

11%

26%

47%

16%

6%

26%

40%

28%

6%

22%

31%

41%

Advanced: We are ahead of most of our peers and have executed on most of our strategy.

Moderate: We have identified our strategy and are executing on it.

In Process: We are developing our strategy and beginning to execute the plan.

Lagging: We are exploring our omni-channel options and haven’t yet set our long-term strategy.

Omni-Channel Strategy & Execution: Current Progress

Retailers Vendors LSPs

Retailers lag…likely needing a champion (as marketing was for sell-side)

A Harmonized Omni-Channel Environment: Wishes vs. The Budget

Source: RSR Research, June 2013

20%

30%

40%

50%

60%

70%

80%

90%

Omni-Technology: Current Status vs. Perceived Value

Implemented "Very Valuable"

#1 #2 #3 #4 #5

23

Work-In-Progress

24 7%

7%

8%

8%

10%

11%

11%

11%

14%

14%

15%

15%

17%

28%

36%

28%

31%

18%

32%

22%

33%

17%

29%

23%

25%

20%

52%

51%

44%

58%

60%

57%

67%

49%

53%

46%

58%

54%

58%

13%

6%

20%

3%

13%

7%

17%

11%

4%

6%

6%

Customer segmentation

Demand Forecasting

Customer call center

Store Operations

Loyalty management

Digital marketing (E-commerce, Mobile, Social Media)

Consistent customer experience across all channels

Inventory visibility across all channels

Traditional advertising

Customer Order visibility across all channels

Procurement/Assortment

Pricing strategies

Fulfillment

What Is the Current State of Channel Synchronization According to an “Omni channel” Strategy?

Fully Synchronized Full Synchronization in Progress Some Synchronization in Progress No Plans


Why Does Visibility Matter?

If retailers can promise availability, they can save the sale

• Show it online even when online is out of stock • Promise it in the store if it’s in-stock online

Some retailers have reported significant sales improvement when they can connect online inventory visibility to stores (“endless aisle”)

25

Advanced Analytics: Why They Matter

FUELING BUSINESS PROCESSES

26

Big Data and Advanced Analytics

A definition for “big data” in retail seems to be coming into focus •  Enhanced and improved demand forecasting •  Incorporation of customer data into all aspects of the business •  Truly becoming a more data-driven enterprise

•  Pro-active vs. reactive •  Responsive vs. reactive

•  New and improved KPI’s

The next generation retail operator has grown up in a tech-enabled world. An easier sell than times gone by An expectation for visually-oriented data

27

Using Data to be Proactive

28

12%

21%

22%

25%

35%

37%

44%

47%

57%

To help us manage our relationships with trading partners

To get out the word about our Brand Value

To uncover new opportunities we can exploit for competitive advantage

To put actionable information into the hands of operators

To help us to optimize our operations

To uncover trends that impact future objectives

To report the results of our business activities

To help us manage our relationships with consumers

To help us to plan and execute more effectively

The Three Most Important Uses of Data

RSR Research, January 21014

A More Scientific Enterprise

29

37%

42%

43%

53%

66%

52%

47%

51%

37%

30%

11%

10%

7%

10%

4%

Lifecycle price optimization

Localized assortments

An optimized, end--to--end merchandising lifecycle

Unified pricing, promotion and assortment modeling

Retail Forecasting (demand forecasting, forecasting for replenishment, etc.)

Importance to Your Retail Success Extremely Important Somewhat Important Not Very Important

Source: RSR Research, September 2013

You can’t get any of these things without sophisticated analytics

Improve and Transform Merchandising Processes

30

19%

22%

24%

24%

28%

38%

40%

42%

46%

Merchant--oriented workflows and automation

Localized promotions to better match demand against available inventory

Shifting to a holistic pricing, assortment and promotion decision--making process

Consistent, accurate and detailed demand forecasting platform

Improving our ability to adjust to deviations from sales forecasts

Tailoring assortment to customer preferences

Price and markdown optimization to boost sell-through

Integrating planning with cross--functional teams

Better incorporation of customer segmentations & preferences into the planning process

Top Three (3) Opportunties to Improve Merchandising Processes

Source: RSR Research, September 2013

Simplifying Data Presentation

31

55%

40%

55%

73%

63%

65%

For data discovery

For prototyping

For presentation to business users

Plans for presenting data in a visual, graphical form (Data Visualization)

Winners (Have/Implementing) Laggards (Have/Implementing)

RSR Research, January 21014

A majority of survey respondents want/need simpler tools. •  A shortage of “analyst” talent •  A pre-requisite to democratization across the enterprise

Thank You!

Paula Rosenblum RSR Research

[email protected]

Further Information on Products & Services:

[email protected]

www.rsrresearch.com

Presenter

Brion Reusche Industry Principal Junction Solutions [email protected]

JUNCTION SOLUTIONS FOR THE RETAIL INDUSTRY


Omnichannel Customer Success

BRION REUSCHE, PRINCIPAL, RETAIL INDUSTRY, JUNCTION SOLUTIONS

Agenda

§ About Junction Solutions § Strategies to Achieve Omnichannel Success § Simon Pearce Case Study § Path Forward to Omnichannel Retail Success


About Junction Solutions


§  Founded in 2002

§  Provides solutions supporting Microsoft® Dynamics AX platform

§  Implementation Services

§  IT and Operational Consulting

§  Flexible Delivery Options: On-premise, Cloud, Hybrid deployments

§  Hundreds of successful ERP implementations

§  90% of Junction Solutions customers would recommend us to a friend or colleague

Strategies to Achieve Omnichannel Success


§ Develop a long-term plan to promote omnichannel

§  Invest in technology to connect customers via multiple channels

§ Optimize integration to enable end-to-end visibility required for an omnichannel business model

Develop a Long-Term Plan


§ Gather input from managers involved in each touch point of customer experience

§ Evaluate current strategies, operations, supply chain, technology assets and processes

§  Identify opportunities for improvement & growth

§ Adapt a business model to support evolving needs of customer

Why New Technology Investments are Needed


§ Are your systems more than 7 to 10 years old?

§ Does your system lack integration capabilities that promote organizational silos?

§ Are there numerous customized applications to compensate for substandard performance from your legacy systems?

Why New Technology Investments are Needed


§ Do you lack total visibility from the register to the warehouse?

§ Do you trust the accuracy and timeliness of your data?

§ Are you relying on numerous time-consuming manual processes and Excel spreadsheets?

Prioritizing Technology Investments-ERP


§ Replace outdated legacy systems with a flexible and scalable retail ERP system to support customer-centric processes

Prioritizing Technology Investments - BI


§ BI integrated with ERP can harness Big Data into actionable intelligence

§ BI integrated with ERP enables faster information access than BI used alone*

§  Improving data analytics was leading technology initiative for companies in 2013**

*Aberdeen Group, “ERP Plus BI,” June 2012 **Forrester Research, “Best Practices: Maximize your Changes of BI Success,” July 24, 2013

Benefits of BI


§ Analyze customer data to incorporate into channel operations

§ Make better predictions, decisions and adjustments in real time

§  Integrate with personalization tools to ensure customers see available products and content that is relevant in real time

Prioritizing Technology Investments-mobile, ecommerce, and social media


§ Disruptive technologies that transform how retailers interact with customers

§ Consumers increasingly rely on ecommerce sites to research products, price and availability

§ Mobile devices revolutionizing how retail staff deliver service at point of sale

§ Social Media offers key outlet to promote products and analyze consumer opinions

Optimize Integration


§ Unify operations to one open enterprise platform to minimize number of integration points

§ Reduce number of disparate legacy applications

§ Select a system with comprehensive functionality to minimize customizations


If You Do What You’ve Always Done…

Challenging the Status Quo-ERP is costly and Monolithic


Reality:

§ Some ERP systems are specifically designed for multichannel retailers requiring virtually no costly customization

§ A single comprehensive ERP costs less and is more secure than numerous disparate systems

Challenging the Status Quo-Fear of Failure and Business Disruption


Reality:

§ Experienced IT partners can implement change management and technologies in months not years

§ Consultants’ expertise can assure virtually no disruption to business

§ Ease of use facilitates training and speeds time-to-benefit

Case Study


Simon Pearce


§ Specialty retailer and manufacturer of beautiful hand crafted glass and pottery.

§ Produces more than 450,000 pieces of pottery and glassware each year.

§ Operates five different channels including retail stores, catalogue, online store, a corporate award business for personalized merchandise and a wholesale business.

Simon Pearce: Business Challenges


§ Lack of visibility throughout its channels

§ Numerous time-consuming manual processes

§ Unable to access real-time product information

§  Inefficient shipping processes

§ Manual processes in special orders led to inaccuracy and delays in information access

Simon Pearce: Solution


§  Junction Solutions provided implementation services and business consulting

§  Implemented Microsoft Dynamics AX for Retail, Dynamics AX for POS and related retail applications

§  Integrated Dynamics with their key point solutions

Simon Pearce: Benefits


§  Improved order turn time

§ Customers now can view product availability in real-time, increasing customer satisfaction

§ Order taking and order fulfillment is seamless in every channel

§ Eliminated manual processes

§  Improved efficiency in shipping

Path Forward to Omnichannel Success


§ Work with an experienced IT or Consulting Partner

§  Incorporate change management to fully exploit new technologies and promote channel transparency

§ Focus on Integration in selecting technology and implementing

§ Continue to identify opportunities for growth


Omnichannel Customer Success

BRION REUSCHE, PRINCIPAL, RETAIL INDUSTRY, JUNCTION SOLUTIONS

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Q & A // Panelists Debbie Hauss Editor-in-Chief

Retail TouchPoints

MODERATOR

Brion Reusche Industry Principal, Retail

Junction Solutions


RSR Research

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Investing For Success In Omnichannel Retailing

Marketing

retails reset

investigate

omnichannel

chief retail

consistent

single channel

customer order

prioritizing