Brian Young

Agenda

Technology innovation and process improvement is changing the way consumers

interact with the store

Consumer adoption and the right mix of technology is the key to evaluating solutions

Effective methods and best practices of front end optimization are used to deliver a

roadmap for investment

Agenda

Technology innovation and process improvement is changing the way consumers

interact with the store

Consumer adoption and the right mix of technology is the key to evaluating solutions

Effective methods and best practices of front end optimization are used to deliver a

roadmap for investment

(hidden)

• Drive higher margins by lowering

costs or by increased prices

• Keep prices competitive by

lowering costs and allowing for

lower prices

• Redeploy labor saved to drive

increased customer service vs

cutting labor

Manage costs and margins(hidden)

• Deliver faster and higher capacity

checkout

• Offer self service options to

appeal to segments of customers

• Consider cross channel shopping

such as home delivery, click and

collect, and personalization

Improve the customer experience to drive larger baskets and

increase number of shoppers

(hidden)

• Invest in solutions that

differentiate and appeal to

members

• Invest in solutions that provide

flexibility for resources

• Invest in solutions that will last

Plan for the future to anticipate consumer expectations and

protect investment

Retailers need to do more with less while providing an

experience that appeals to consumers

Retailer operational decisions support different business

requirements and create value

To manage margins, high-volume retailers are seeking to drive

transactions to lower cost-to-serve channels

20

30

50

65

45

50

50

35

15

5

00

20

10

00105

00

0%

20%

40%

60%

80%

100%

Friction-ReductionInnovation IntroductionSelf Checkout Expansion /Retool

Today

Attended Checkout Self-Checkout Automated Scanning Consumer Mobile Associate Mobile

Percentage of Front-End Transactions by Channel, US Benchmarks

The drive to lower cost transactions requires a deeper understanding

of consumers and an evolution of front end capabilities

Optimization analysis considers today and how next generation

technology could benefit the store experience for consumers…

Toshiba Confidential and Subject to Change

Frictionless, no physical

interaction required

Mobile, engaging throughout

the shopping experience

Automated, simplifying and

optimizing the checkout

process

Most retailers are not ready to immediately take these leaps of

faith, an improvement over time is usually needed

Addition of consumer mobility to traditional + SCO mix is already

forcing a rethink of physical fixtures and consumer-used devices

Self Scan

Convertible/Hybrid

These are the most heavily controverted topics/trends we are

encountering today – all are mix of process and tech issuesPurpose-optimized

Flexible/ General-Use

Large/Fixed Small/Mobile

Kiosk

Self-

checkout

Rapid

Scan Advanced

Scan

iPod/Mobile

Phone

iPad/Tablet

Personal

shopper

POS

POS+ New

Functionality

Paystation

Scan-only

station

Convertible/Hybrid

Wearable

Interactive tables /

signage

Sensors

Can process around rapid

scan ever work?

Can one device / form factor be

a scale / paystation / SCO / self-

service terminal / third-party

sales terminal?

Can my associates get

more “geared” in a

useful, economic way?

Can one device be

both mobile and

fixed?

Who provides the

device? This is a

religious war.

Can Automated Self Scan

really work and drive higher

self service adoption?

Can one device be

optimized for both associate

and consumer?

Toshiba is actively pushing boundaries in each of these areas

45%

SCO

30%

Mobile

15%

ACO

20%

Manned

Consumer Mobile

NE US supermarket seeing 20% participation rate

Industrial

Large US supermarket exploring high-velocity scanning

Self-Checkout & Hybrid

North American high-volume grocer testing item limits,

cashless, and side-by-side orientation

Manned Lanes / Mobile

Multinational high-volume retailer piloting associate

mobile tablet for line-busting, peak-POS

Agenda

Technology innovation and process improvement is changing the way consumers

interact with the store

Consumer adoption and the right mix of technology is the key to evaluating solutions

Effective methods and best practices of front end optimization are used to deliver a

roadmap for investment

To make the best decisions, retailers have to also understand

consumer desires…..frictionless shopping

Minimizing friction will drive higher adoption of technology as

well as loyalty and advocacy

• One size fits all does not meet

the spectrum of consumer

desires

• Consumers want to choose

the best shopping and

checkout solution for them

• Empower the consumer to

build loyalty and advocacy

• The value of time influences

consumers more than ever

before

• Desire to minimize time in the

shopping process

• Considering alternative forms

of shopping

• Consumers desire a positive

experience while shopping

• Want the store to “know” them

and treat them accordingly

• Desire targeted interaction that

appeals to them

Consumers value their time Consumers want optionsConsumers want an

experience

Make it Fast Make it Easy Make it Relevant

Adoption of technology depends on the quality of the experience

Tech Characteristics

•Perceived usefulness

•Perceived ease of use

•Perceived control

•Perceived risk

•Perceived fun/excitement

Customer Differences

•Demographics

•Technology anxiety

•Technology readiness

•Behavioral inertia

•Need for interaction

Situational

•Perceived wait time

•Perceived task complexity

•Companion influence

Past Tech Experience

•Service failure

•Recovery effort

•Experience with other SSTs

or alt-processes

Influence grows with repeated Tech use

(emotional/habitual)

Attitude Towards

Using Tech

Tech BehaviorUseOR

Don’t use

Consumers will not adopt if too much friction exists

Many options are in play to meet the trends for front-end

restructuring… and they differ importantly

Cu

sto

mer A

uto

no

my

Retailer Automation

Traditional/Conv

SCO

Scan Portals

ITAB

Easyflow

Consumer

Mobile

Traditional

Checkout

Making the existing

checkout process faster

ITAB Easyflow

– Manned

ITAB

TwinFlow -

Manned

Toshiba No

Touch Checkout

(Concept)

Solution Minimize Space

Increase Throughput

Larger Basket Size

Drive Adoption

Rate

OptimizeLabor

TraditionalSCO

Mobile

HybridScan/Bag

Hybrid Belted

Automated

The portfolio of solutions in conjunction with conventional lanes

solve different operational requirements

The overall front end strategy should be evaluated at the portfolio level

Key is optimizing mix versus picking “the” winner

Benefits and challenges differ for each technology

• CapEx and Space

• Staffing and adoption

• Optimal transactions

Throughput and scaling are critical factors that can be handled with faster or more devices…but labor has to be considered

Transaction profile of consumers and their baskets indicates what technology might be best to meet their needs

Benefits and challenges analysis examples

Traditional

SCO

Datalogic

Jade

Toshiba No

Touch Checkout

(Concept)

ITAB

Easyflow

Consumer

Mobile

Traditional

Checkout

Benefits Challenges

Lower labor cost

Always-on

Provides choice

Very fast scanning

Minimal interventions

Minimally attended

Compact footprint

Self-service with speed

Intuitive process

Minimal interventions

Promotion opportunity

Lower labor costs

Consumer does CAPEX

Well understood

Personal interaction

Exceptions

Slower throughput

Shrink

Significant labor required

Process complexity

Space

Only used at peak times

Proof of concept

Privacy/data protection

CAPEX & construction

Customer education

Shrink

Requires infrastructure

Payment

Labor expense

Labor/lane constrained

High spikes, low median

Throughput and scaling analysis examples

Traditional

SCO

Datalogic

Jade

ITAB

Easyflow

Consumer

Mobile

Traditional

Checkout

Throughput Scaling

Slower than cashiers

Speed mode can augment

Fastest scanning, period

Downstream bottlenecks

Theoretically fastest with total

cart scanning…

… but we’ll see

Matches attended lanes

Option of manning Lane

Slowest…

…but who cares?

Fast for large orders

Subject to mistakes, fatigue

Always-on

Fixed lane count

Some scaling with labor

Lane and bagging pods fixed

Always-on

Fixed lane count

Always-on

Fixed lane count

Theoretically limitless

Practically, device-dependent…

…and controller-limited

Great… up to lane/labor limit

Toshiba No

Touch Checkout

(Concept)

Transaction profile of consumers and their baskets analysis

examples

Traditional

SCO

Datalogic

Jade

ITAB

Easyflow

Consumer

Mobile

Traditional

Checkout

Ideal Problematic

Small baskets (<10) items – trad.

Minimal coupons, produce

Simple tenders

Large orders to leverage scan speed

Large quantity of orders to justify

system operation

Not much insight here yet

Any basket size

No observed bias on size

Non-exception items

Non-weighed items

Large orders

Best for handling exceptions,

complex tender

Weighed items

Large/bulk items

Complex tenders

Controlled items in some states (CA)

Weighted items

Produce

Items with no barcodes

Large / bulk items

Likely to be hidden or hard to distinguish

items

Some produce (organic vs regular)

Controlled items (eg, wine)

Most issues downstream (payment, auditing)

No specific “bad” types of transaction, but

variability hurts flow, queues

Toshiba No

Touch Checkout

(Concept)

Agenda

Technology innovation and process improvement is changing the way consumers

interact with the store

Consumer adoption and the right mix of technology is the key to evaluating solutions

Effective methods and best practices of front end optimization are used to deliver a

roadmap for investment

An iterative approach to improving the store begins with the

current state and moves forward in steps

User Interface

and Task Flow

Cashier-Customer

Interaction

Personal-Physical

Interaction

• Wasted/redundant motion

• Un-optimized UI

– Discrete tasks

– Flow

• Minimal compliance

• Complexity

• Delays/lags based on customer

dependencies

• Signal/cue insufficiency

• Off-scripting

• Poor device placement or spacing

• Trapping / bad flow

• Complex task space

• Space sufficiency under stress / multiple

customer conditions

It’s not just about the technology, solutions have to minimize friction as well

Understanding consumer flow and evaluating tradeoffs is key

After 3 minutes, the

perceived wait time

multiplies

Single line queue is

about 3 times faster

with the minimized

effect of line

stoppers

Men inflate the

amount of time after

2 minutes, women

after 3…and react

accordingly

Wait Time = Number

of customers in line /

Customers entering

line per minute

Younger generations and their desires also need to be

considered when evaluating investments

* Accenture Report: “Who are the Millennial Shoppers? And what do they really want?, 2013

• 57% of Millennials and 55% of Gen X

shoppers prefer self checkout, globally**

• 20% of Millennials use self service devices

to avoid interaction with cashiers***

• 26% want to be able to pay via

smartphone***

** Cisco Study: Customer Experience Research, Retail Shopping Results, 2013

** http://www.retale.com/corporate/survey-20-of-millennials-dont-like-interacting-with-cashiers-during-checkout/

Millennials are expected to represent 30% of retail sales by 2020 ($1.4 Trillion)*

Data analysis is utilized to understand the situation and to

evaluate technology solutions and process improvements

Deep immersion in data identifies meaningful trends and break points that

don’t show up in averages

1. Assess and Understand

• T Log analysis, process flow and regressions

• Business case development

2. Propose and Pilot

• Conclusions and Recommendations

• Best Practices

3. Measure Impact Versus Expectation

• Track KPI’s identified for success

ABOVE: Hybrid/SCO

recommendations for new

prototype store based on

day-level loads.

BELOW: Peak-hour,

high-water mark hour-

level analysis

confirming

recommendations.

Deep data analysis enables the prediction of future front-end

capacity and optimization

It’s not just the process, staff needs to be considered as well for

effective deployment of new technology

The key is to have the right person assigned

• Associates trained to look for shrinkage concerns

• Using experienced associates with good

customer skills is important

• Associates should be trained to work with

members, engage them to try the device, and

explain as they assist members

Toshiba can help with a front end optimization approach and

planning for the future

Objective

– Analyze and recommend changes to shopping process, front-end technology and design, and

the customer experience by improving the relationship between people, technology, and the

shopping environment

Process

– Assess and understand current-state shopping processes

– Evaluate and understand the consumer perspective (demographics, generations, payment

choice)

– Identify opportunities for improvements based on industry insight and best practices

– Incorporate next generation technology to position for the future of retail

Final Outcome

– Provide findings/observations, recommendations and roadmap to the recommended state

Toshiba has the capability to evaluate and recommend how to

optimize the shopping process

Increase capacity and provide always-open front-end

in areas with labor shortage/retention vulnerability for

Canadian HVR

Rebalance portfolio of in-store transactional

technology while laying groundwork for future

experimentation with / adoption of self-service, line-

busting, and mobility for NA home wares retailer

Improve customer experience and flow through

front-end during peak and off-peak hours across

multiple physical setups and store maturities /

locations for larger format athletic retailer

Optimize store technology configuration across 7

different formats both for today’s concerns as well

as for the future for large pharmacy retailer

Selected case studies