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© 2012 IBM Corporation
Future of Retail Shopping Delivering a “Smarter Shopping Experience”
Piotr Pietrzak Chief Technologist, IBM PL 16 October 2012
T: @piotrpietrzak E: piotr.pietrzak@pl.ibm.com
© 2012 IBM Corporation
Topic
The Smarter Consumer is Redefining Shopping
Delivering a Smarter Shopping Experience
The Path Forward
AGENDA
© 2012 IBM Corporation
Instrumented
Interconnected
Intelligent
Customer
Informed
Product Availability
Product Comparisons Reviews
Product Details
Deals
Pricing
Empowered
Engaged
Influencing
Brand Preference
Buying Decisions
The biggest challenge in Retail today is what’s happening on the other side of the counter. Consumers are becoming Smarter!
© 2012 IBM Corporation
Shopping Becomes Collaborative
§ Retailers engage consumers in retail decisions (e.g. assortment, etc.) § Consumer-to-community interactions become commonplace 3
Shopping Becomes Contextual
§ Consumers demand relevancy and personalized service § Availability of consumer information combined with real-time analytics
enables superior experience 4
Shopping Becomes Deconstructed
§ Consumers can start/stop and switch channels seamlessly § New competitors arise; disintermediating consumers from retailers 2
Shopping Becomes Real-time Aware
§ Device and communication technology converge § Consumer interactions become timely and proactive 5
Shopping Becomes Experiential
§ Physical and digital worlds converge to provide an enhance experience § Shopping becomes all about the experience; availability and fulfillment
times are greatly reduced 6
Shopping Becomes Omnipresent
§ Shopping becomes engrained in all aspects of our lives due to persistent connectivity and ubiquitous access
§ Consumer touch points continue to proliferate increasing availability 1
Consumers are redefining the shopping experience to fit their unique needs and timeframes
Source: IBM Global Retail Industry
© 2012 IBM Corporation
% of Consumers willing to use the following technologies to research and make purchases
Research In-Store
42% Proactively communicate promotions to me based on what I scan 41% Allow me to check prices from other physical and virtual locations
Service In-Store
32% Help me find the customer service desk or associate
31% Allow me to order out-of-stock items
29% identify myself in store or mobile for help
27% Provide the most efficient route through store
27% Allow me to take a picture/text to get product information
Mobile is quickly growing in importance During the in-store shopping process
The majority of consumers want to leverage an increasing number of technologies during their shopping process
29%
18%
24%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1 Technology
2Technologies
3Technologies
§ TV (using a remote control)
§ Social videos (YouTube, YouKu)
§ Electronic games
§ Website § Mobile technology § Social Network § Retailer website to
co-create products
Shopping Becomes Omnipresent 1
© 2012 IBM Corporation
Service &
Support Receive Purchase
Browse &
Research Awareness
Shopping Continuum Consumer Customer
Consumers are obtaining different value from each touch point and consequently are deconstructing the shopping process
Shopping Becomes Deconstructed 2
© 2012 IBM Corporation
Service &
Support Receive Purchase
Browse &
Research Awareness
Shopping Continuum Consumer Customer
33% of consumers who did not have enough information to purchase, the lacking information is within the retailer’s control
1. Wanted to touch, see and experience the item
2. Wanted to price compare to determine best price
3. Product information was missing (quality and product attributes)
4. Missing independent product review information
5. Could not tell if the product was in stock
Source: IBM Institute for Business Value Analysis, Retail 2012, n = 28,527, PM05 If you can’t make a purchase after you researched in (research method) what information was missing?
Shopping Becomes Collaborative 3
© 2012 IBM Corporation
Consumers now have the ability to influence others far beyond their own network, while their trust in information sources is constantly changing
Haul Video
83% of shoppers influenced by online
customer reviews
4% Retailer
Manufacturer 9%
16% Product Experts
17% Customer Reviews
53% Family/Friends
48% Family/Friends
12% Retailer
14% Manufacturer
12% Product Experts
15% Customer Reviews
Shopping Becomes Collaborative 3
Product Experts Manufacturer Retailer Family / Friends Customer Reviews
6% Retailer
11% Mfg
9% Product Experts
31% Customer Reviews
43% Family/Friends
Product Experts Manufacturer Retailer Family / Friends Customer Reviews
38% Family/Friends
7% Retailer
20% Manufacturer
10% Product Experts
25% Customer Reviews
Consumer Trust Ranking - China Consumer Trust Ranking - China 2010 2011
© 2012 IBM Corporation
Consumer demand personalized interactions and timely service no matter if the interaction is self-service or assisted-service
Personalize Promotions (#1 influence of purchase decision)
– Most likely to increase my spend – Key consideration when determining
where to shop – The area retailers need to improve most
Personalize Shopping (Most important factors)
– Recognize me in the store or online – Remember preferred payment method – Provide preferred receipt type
Personalize Assortments (Most important loyalty drivers)
– High quality/low price private label products
– New and unique products – Broad range of products regardless of
store/online
“Serve me”
Customer Service: Top area for retailer innovation
Customer Service: Most important loyalty drivers
– Allow me to return products without hassle or questions asked
– Make it feel like a pleasure to help me – Have knowledgeable employees about
products/services – Easy way to order items not in stock
Convenience: Top Priorities – Prior in-stock knowledge before going to
store – Providing the right products and
appropriate variety of brands – Education on additional items to purchase
with primary item
Shopping Becomes Contextual 4
© 2012 IBM Corporation
§ Identify shoppers presence as they enter or leave the store
§ Identify proximity to a retail store
§ Identify what aisle or department the shopper is located
§ Ability to interact with store personnel, systems and devices
Identifying presence and location will become essential in enabling timely and relevant consumer interactions
Shopping Becomes Real-time Aware 5
Source: IBM Global Retail Industry
© 2012 IBM Corporation
The convergence of the physical and digital worlds will enable shopping to become more experiential
Shopping Becomes Experiential 6
© 2012 IBM Corporation
Topic
The Smarter Consumer is Redefining Shopping
Delivering a Smarter Shopping Experience
The Path Forward
AGENDA
© 2012 IBM Corporation maturity
valu
e
Deliver a Smarter
Shopping Experience
Achieve differentiated lifetime customer relationships by consistently delivering on the brand promise
Continuous dialogue
Provide timely, tailored and seamless shopping experiences that can span multiple interactions within and across touch points
Relevant experience
Optimize marketing by channel and medium to deliver targeted consumer messages and offers
Precision marketing
Understand consumer and customer preferences, interaction history and motivations to determine the next best action
Prescriptive insight
Capture and consolidate product, inventory, order, market, and interaction data to provide a trusted view of consumer-relevant information
Integrated information
Source: “Smarter Shopping Value Quantification.” IBM Center for Applied Insights, and IBM Global Retail Industry, October 2011
Delivering a Smarter Shopping Experience will enable retailers to achieve differentiated customer relationships.
© 2012 IBM Corporation
21%
40%
21% Increase in profit from incremental revenue
Improved margins
Reduced inventory
Increased SG&A efficiency
Reduced marketing expense
9%
9% Integrated Information
Potential Economic Return
Prescriptive Insight
Precision Marketing
Relevant Experience
Continuous Dialogue
$388M $80M
$131M $51M
$27M
$99M
$388M in annual benefits by financial benefit type
Annual economic benefits by competency Illustrative $25B soft-line Retailer*
7% improvement in customer satisfaction
5% improvement in brand image
1% improvement in employee satisfaction
*Source: IBM Center For Applied Insights. October 2011. The potential benefits above are modeled using publically and privately available data. These potential benefits reflect a relative result based on a specific set of data and assumptions. Therefore, potential benefits will vary by enterprise and are not guaranteed.
Investment in capabilities to fully develop each Smarter Shopping competency will drive economic value and benefit.
© 2012 IBM Corporation
Retailers must allow consumers the choice to shop any touch-point while providing a seamless, consistent and relevant experience
Customers have the freedom to achieve their goals throughout the shopping process…
…using whichever channels and touch
points they prefer.
Advertising
Signage
Kiosks
Checkouts
Employees
Catalogs
Direct mail
Retailer sites
Mobile apps
Mobile browse
SMS/MMS
Call centers
Texting
Social media
Source: IBM Global Retail Industry
1. AWARENESS 2. RESEARCH 3. PURCHASE 4. RETRIEVAL / DELIVERY 5. SERVICE / SUPPORT
© 2012 IBM Corporation
Customer Interaction Platform
AnalyticsGlobalizationPersonalizationRelationships & Agreements
Business Context Engine
Configurable Business ProcessesBusiness Processes
Order ManagementCollaborationCatalog &
ContentMerchandize
& SellMarketing
IBM Middleware PlatformDeveloper
Tools
Admin
Business
Customer Interaction Platform
AnalyticsGlobalizationPersonalizationRelationships & Agreements
Business Context Engine
Configurable Business ProcessesBusiness Processes
Order ManagementCollaborationCatalog &
ContentMerchandize
& SellMarketing
IBM Middleware PlatformDeveloper
Tools
Admin
Business
Order Taking X-Sell / Up-Sell
Registration Offers / Promo Customer Profile
User Interface
Order Taking X-Sell / Up-Sell
Registration Offers / Promo Customer Profile
User Interface
Order Taking X-Sell / Up-Sell
Registration Offers / Promo Customer Profile
User Interface
Order Taking X-Sell / Up-Sell
Registration Offers / Promo Customer Profile
User Interface
Order Taking X-Sell / Up-Sell
Registration Offers / Promo Customer Profile
User Interface
X-Sell / Up-Sell
Order Capture Product Info
Registration
Customer Profile
Web Site Contact Center Kiosk Point-of-Sale Mobile
Mobile Interface Web Interface Kiosk Interface POS Interface CSR Interface
An enterprise “Customer Interaction Platform” provides a common set of services and business processes across all touch points
© 2012 IBM Corporation
Leading retailers also believe that an enterprise “Customer Interaction Platform” will provide the path to success
Source: “ e-Commerce 2012: Back to the Future”, RSR Research, Jan 2012
© 2012 IBM Corporation 18
Retailers usually deploy a Customer Interaction Platform on the Web first, and then leverage it as the foundation to power other channels
The Customer Interac0on Pla3orm allows you to extend your brand seamlessly and consistently in the
most cost-‐effec0ve manner
Social
POS and Mobile POS
Web Site Mobile Devices
In-‐Store Kiosks
Please change images to your client’s web site and logos
© 2012 IBM Corporation
Delivering a consistent brand promise has become more difficult as consumers demand similar services across all touch-points
Apparel ……… 65% Health/Beauty.. 69%
Grocery …….... 64% Décor/DIY….... 51%
Luxury….......... 47% Electronics....... 45%
û Manual or point-to-point processes û Brand, Channel, Product Proliferation û Information & Inventory Silos û Limited fulfillment options for customers û No single ownership of order processes
Banks
SuppliersDistributors
Carriers/3PL
Customs
DCs
Retailer
Store 3
Store 2
Store 1
Call Center
Web
Catalog
Customers
Warehouses
Banks
SuppliersDistributors
Carriers/3PL
Customs
DCs
Retailer
Store 3
Store 2
Store 1
Call Center
Web
Catalog
Customers
Warehouses
Which of the following methods would you prefer to obtain the item?
60%
13%
12%
10%
Purchase at Store and Leave Store with Item
Purchase at store and deliver to home the same day
Purchase online or in-store and delivery next day
Purchase Online and deliver on the date you specify
6%Purchase online and pick up in the store
© 2012 IBM Corporation
Cross-Channel Order Management streamlines order and fulfillment processes across all channels and the extended supplier network
Special Order
Call Center
Web Sales
Catalog Sales
DCs
Stores Kiosk
Cross-Channel Order Management
Customers
Customers
þ Order configuration – substitutions, pre-order, split shipments, drop shipments
þ Order aggregation, optimized source of supply, prioritization
þ Order visibility, monitoring, status, and exception alerts þ Global inventory visibility and available-to-promise
þ Management of supply locations with demand locations
þ Schedule, sequence, and execute service requests þ Fulfillment cost analysis, recommendation, and
orchestration þ Product returns management
© 2012 IBM Corporation
Cross-Channel Delivery & Service Scheduling
Service Partners
Delivery
Installation
Service
Support
Credit
Stores
þ Event scheduling, monitoring, and reporting
þ Exception-based rescheduling and re-sequencing
þ Cross-partner coordination/ management
© 2012 IBM Corporation
Holistic Inventory Visibility
DCs Suppliers Stores
Distributors
C Sourcing customer orders from in-transit inventory can save 3 or more days’ inventory for those item involved
C Sourcing customer orders from slow turning store stock can reduce markdowns and improve margins
þ In-Store
þ In DC
þ At Distributors
þ At Suppliers
þ In Transit
Track Inventory Anywhere
© 2012 IBM Corporation
Cross-Channel Returns Management
Customers
Customer Service Returns
Return To Stock Return To Supplier, Auth. Center, etc.
Return To Sales Floor
Catalog Sales
Records
Web Sales
Records
Destroy Returns
Destroy
Sales Floor
Returns Staging
Stage Returns Shipping
Store Stock Room
þ Global visibility into purchase transactions þ Routing rules for returned items (per item, per supplier,
per item condition) þ Historical records þ Cross-channel / cross-enterprise status visibility
© 2012 IBM Corporation
RELEVANT OFFERS REAL-TIME COMMUNICATIONS PERSONALIZED SERVICE
COLLECT MANAGE
EXECUTE ANALYZE
Data Insights
Retailers also need to make sure consumer interactions are timely and relevant with real-time offers and personalized communications
Source: IBM Global Retail Industry
Using data generated by customer interactions across channels, the retailer can produce insights about particular consumers and segments. Based on these insights, the retailer can tailor the shopping experience to the consumers and segments identified.
© 2012 IBM Corporation
An Enterprise Consumer Dialogue Engine enables the ability to create a multichannel, multi-stage process workflow that understands where the customer is at in the customer lifecycle and/or buying process
Enterprise Consumer Dialogue Engine
Customer DialogueAbility to develop a two-
way, one-to-one communication flow in an
automated manner
Relies on an event-based engine to identify,
monitor, and execute actions based on
customer events that are relevant to the retailer-to-
customer relationship.
Consumer Interaction Management
StateModels
EventTriggers
InteractionRules
Consumer Dialogues & Workflows
Consumer Insight & Action SegmentsPreferred Product
Categories Preferred Channel
Participation in Loyalty Program
Use of In-House
Credit Card
Use of Service
ProgramsReturn /
Exchange Behavior
Breadth of Categories Shopped
Length of Time as
Customer
Recency + Frequency +
Value
Response to Media
Time until Repurchase in Key Categories
Preferred Product
Categories Preferred Channel
Participation in Loyalty Program
Use of In-House
Credit Card
Use of Service
ProgramsReturn /
Exchange Behavior
Breadth of Categories Shopped
Length of Time as
Customer
Recency + Frequency +
Value
Response to Media
Time until Repurchase in Key Categories
Action
Segments
123456789101112
123456789101112
Product Categories
$Unique view of
individual consumers
§ Identifies current and changes in state of consumer
§ Triggers actions based on consumer activity/inactivity
§ Arbitration rules engine
Enables interactions to be put into context within an end-to-end process
© 2012 IBM Corporation
q Store promotion • Mother’s Day Offer: - 30% on Eau De Toilette • Sunshine Offer: 1 sunshine lipstick offered for
any solar cream purchase • 1 loyalty point for $1 spent
q Offer « all boxes » • A surprise gift for any purchase ≥ $50
q Offer Happy Hours • +5 loyalty points from 2:00PM to 4:00PM
q Offer « radio » • Say the “magic word” and get 5% discount
q Offers « Direct Marketing » • 1 moisturizer offer for any day care &
night care product purchase • 1 necklace for any purchase ≥ $35 • +3 loyalty point on any YRIA lipstick purchase
Yves Rocher provides real-time promotions, loyalty points and product recommendations at the POS
20M customers 85% identification rate
Real-time offer arbitration and recommendations
© 2012 IBM Corporation
A customer enter into the shop
The shop detects the customer The customer is
recognized as a VIP
The shop asks customer if he/she wishes to interact
Customer agrees to interact with shop
The shop informs the shop assistant that a
VIP has arrived
The shop associate is informed of
customer’s needs or decisions
All devices in shop are alerted that a specific
customer is willing to interact
A high-end luxury retail plans to offer shoppers an interactive store experience by leveraging real-time “Presence” and “Identification”
© 2012 IBM Corporation
Topic
The Smarter Consumer is Redefining Shopping
Delivering a Smarter Shopping Experience
The Path Forward
AGENDA
© 2012 IBM Corporation
Inte
grat
ed
Info
rmat
ion Potential
Economic Return
Pre
scrip
tive
Insi
ght
Pre
cisi
on
Mar
ketin
g
Rel
evan
t E
xper
ienc
e
Con
tinuo
us
Dia
logu
e
$388M $80M
$131M $51M
$27M
$99M
21%
40%
21% Increase in profit from incremental revenue
Improved margins
Reduced inventory
Increased SG&A efficiency
Reduced marketing expense
9%
9%
$388M in annual benefits by financial benefit type
Annual economic benefits by competency Illustrative $25B soft-line Retailer*
*Source: IBM Center For Applied Insights. October 2011. The potential benefits above are modeled using publically and privately available data. These potential benefits reflect a relative result based on a specific set of data and assumptions. Therefore, potential benefits will vary by enterprise and are not guaranteed.
7% improvement in customer satisfaction
5% improvement in brand image
1% improvement in employee satisfaction
Investment in capabilities to fully develop Smarter Shopping competencies will drive economic value and benefit.
© 2012 IBM Corporation
Final Thoughts
v The ‘consumerization’ of technology is changing the way consumers interact, obtain information, and purchase items
v The proliferation of consumer touch-points will continue and increasingly allow consumers to deconstruct the shopping process
v Consumers are obtaining different value from each touch point they interact; providing a huge opportunity for retailers to engage shoppers across channels
v This requires retailers to provide a consistent, continuous, and relevant shopping experience as consumers shop across multiple touch-points
v When developing the optimal shopping experience, retailers should always consider cross-channel customer interactions
v The path to success will vary from retailer to retailer based on their target customer’s expectations and how they’d like to execute their brand promise
v Creating a Smarter Shopping Experience is a transformational journey
© 2012 IBM Corporation
Thank YouMerciGrazie
GraciasObrigado
Danke
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