Customer Centric Retail Innovation - Bucharest May 29, 2008

RETAIL INNOVATION: A STRATEGIC PERSPECTIVE

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GO TO WORK

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1. GET ON A PLANE TO LEARN AND NETWORK

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2. IMPORT – SKILLS, IDEAS, FORMATS

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3. SECURE AND TRAIN THE BEST PEOPLE

4. INNOVATE LIKE ONLY ROMANIANS CAN

COPY MODIFY CREATE

Introduce global

formats that already

exist

Modify existing

concepts to better

match local needs

Develop new

concepts, targeting

specific local

segments and needs

DEGREE OF

INNOVATION

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POP Systems Online

RETAIL INNOVATION, ACCORDING TO MANY

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BRANDS

Be the first to become friendly with your

new customers

Help your existing distribution to

« make the jump »

Pro-actively say goodbye to those who

can‟t or won‟t innovate.

RETAILERS/INVESTORS

Be first to bring a (modified) format into the

market

Come with something « unique » which

internationals can’t offer

Get out of the way and sell as expensive as

possible.

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THEN, GO TO WORK

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Source: IBM Business Consulting Services – The Retail Divide, 2004

BUT WE WILL START WITH INNOVATION FROM A STRATEGIC PERSPECTIVE

And to be more precise:

« customer centric retail innovation »

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Broaden Your Innovation Horizon

Think Beyond the Store

• Traditional Innovation is Broken

• Competition is Changing

• There‟s not much to be done at retail anyway

Why Customer Centric?

Quiz: Which % of innovations fail?

97%FUTURELAB


WHO COMPETES WITH MARS?

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CONSUMER PERSPECTIVE


WHY CUSTOMER-CENTRIC?

FORMAT INNOVATION IS LIMITED

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• Traditional Innovation is Broken

• Competition is Changing

• There‟s not much to be done at retail anyway


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CUSTOMER CENTRIC RETAIL INNOVATION

Customer Centric Retail Innovation

WHAT ABOUT THE CUSTOMER?

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REMARKABLE

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Apple Retail 2001

Sorry Steve, Apple Stores Won‟t Work

(Business Week)

Apple Retail 2004:

Fastest retailer ever to reach the

$1 billion mark a year

Apple Retail 2006

Fastest retailer ever to reach

$1 billion/quarter mark

Apple Retail 2007

Sales per sq.meter = $ 30,176

(as comparison: BestBuy = $10,643)

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HOW DID THEY DO IT?

Watch video on

http://www.youtube.com/watch?v=

m-Y7vZMEPrU

DRIVERS FOR RECOMMENDATION IN ICT

Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008 FUTURELAB

• Careful segmentation and focus on students, educators and

creative professionals (even now consumer appeal broadens)

• A retail experience differentiated by service before, during and

after sales (Genius bar)

• Scenario or lifestyle Marketing & Sales vs. Product « What do

you want to do ? »

• Style & design

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THE RESPONSE

Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008

• No commissions

• Team bonuses

• Focus on experience

• Fashion & design people to run computer retail

• Hire for personality, attitude and customer fit

… train the rest

• High identification: Tshirts, iPod, discounts, …

• 3 week immersion at start of job ONLY on

customer relationship skills and understanding

customer needs/lifestyle

• All product training is online (except

geniuses)

• Training on store computers or borrowed

laptop

Ron Johnson

Target

MickeyDrexler

The Gap

BREAKING ALL THE RULES

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Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008

Apple: 2007 Net Promoter Performance and 5 Year Trend vs. Overall

B2C High Tech Computer Hardware Manufacturers

RESULTS

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Total Customer Value of an Apple advocate is almost twice that

of the industry average

Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008FUTURELAB

RESULTS

13,8

6,5

24,3

8,46,2

0,8

5,5

HP Dell Apple Xerox Sun NCR Pitney Bowes

Revenue Growth % 2007 vs 2008Source: Fortune Magazine, May 5,2008

RESULTSFUTURELAB

HOW ABOUT YOU?

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5steps

To Customer

Centric Retail

Innovation

Image b

y : Z

om

bie

facto

ry, C

C-lic

ense 2

.0

#1 TAKE THE CUSTOMER PERSPECTIVE

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THE CUSTOMER JOURNEY – BRAND/RETAIL PERSPECTIVE

AwarenessBuilding

PreferencePurchase

Use & Service

Repurchase Loyalty Advocacy

HOTSPOT HOTSPOT

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CUSTOMER PERSPECTIVE

Flipchart Time

Which are the steps in the

customer journey when

booking a holiday?

How could you innovate

on them?

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THE CUSTOMER JOURNEY

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1. I dream of going on holiday

2. I research my holiday

3. I plan my holiday

4. I select my holiday

5. I purchase my holiday

6. I receive travel documents & tickets

7. I anticipate departure

8. I prepare my trip

9. I travel to my destination

10. I discover my destination

11. I experience my destination

12. I record my memories

13. I share my experience

14. I travel back home

15. I share my memories

LVMH - AOL Time Warner

UBS - Richemont



How Can You Innovate Now?

TRAVEL

Photo Nils Bremer, cc. 2.0

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BANKINGCARS FOOD

How About You?



#2 GET THE CUSTOMER HEARTBEAT

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Photo

: Joeannenah,

cc: 2.0

WHICH EMOTIONS ?

ARE ALL EMOTIONS

EQUALLY STRONG?

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WHAT DO YOUR CUSTOMERS

REALLY CARE ABOUT?







7. I anticipate departure









BUT DON’T JUMP TO CONCLUSIONS … THINK SCENARIOS

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#3 FOCUS YOUR EFFORTS

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WHERE SHOULD YOU FOCUS?

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WHICH IS THE EASIEST PATH TO WALK?

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Photo: StuSeeger, cc 2.0

PROCESSED FOODPHARMA

INNOVATORS SEEM TO DISAGREE

AIRLINES BANKS

COMPUTERS

UTILITIES

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THIS ALSO APPLIES TO CUSTOMER CENTRIC INNOVATION

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Observation

Most of the travel

industry focuses on

those areas which have

least or most negative

emotional involvement

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DEBATE: ARE YOU A PENGUIN?

Opportunities for

meaningful

differentiation

Areas to keep up

or stay ahead

Look at the niches

Copy when

proven only

High

Low

Low High

Custo

mer

Engagem

ent

Innovation Intensity

CROSS YOUR INNOVATION LANDSCAPE WITH THE CUSTOMER ENGAGEMENT

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#4 MAKE SURE YOUR PEOPLE ARE WITH YOU

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perception

80% of CEO‟s believe of believe their brand provides a superior customer experience

8 % of their customers agree

(Bain & Company)

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We show that we value our

customers by serving them

well, putting their needs and interests

at the center of everything we do.

(from the AOL mission statement)

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Watch video on:

http://www.youtube.com/watch?v=xa

aAYVUWP0I

BAD EMPLOYEE?

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Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005

ONLY 5% OF THE WORKFORCE UNDERSTANDS THE

STRATEGY (when innovating this gets even worse).

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WHILE THEY NEED TO DELIVER THE

RETAIL (INNOVATION) PROMISE.

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76% of consumers don‟t believe that

companies tell the truth in advertisementsYankelowich,2006

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BUT PEOPLE TYPICALLY DON‟T HAVE “EMOTION

MANAGEMENT” IN THEIR JOB DESCRIPTION

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WHEN YOU INNOVATE, TRANSLATE INTO 6 DIRECTIONS

Remarkable Practice: Gemalto

Remarkable Practice: Gemalto

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#5 START SWIMMING

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YOU

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5steps

To Customer

Centric Retail

Innovation

1. Take the Customer Perspective

2. Get the Customer Heartbeat

3. Focus Your Efforts

4. Make Sure your People Are With You

5. Start Swimming

AND DON’T FORGET TO STEAL WITH PRIDE

POP Systems Online

AND THEN WE WERE GOING TO HAVE A WORD ABOUT

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THOUGHTS ON DIGITALLY AUGMENTED RETAIL

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Mobile

THREE PRACTICAL OPPORTUNITIES

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Internet In-store

Digitally Augmented Retail

INTERNET

IF YOU PLAY, GET THE BASICS RIGHT

“Out of 35 European

premium brand dealers

only 1 responded to an

email enquiry from their

own website … after 2

weeks”

2007 Retail Study for Customer Focused Excellence(N = 300 large online retailers)

• 61% do not offer any information on the product page regarding

in-stock availability

• 38% of sites have difficult to read fonts

• Only 58% correctly answer an e-mail question within 24 hours

• Only 33% offer customer reviews.

• 24% do not allow customers to enlarge the product image

Source: FutureNow, 2007

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INTERNET

LISTEN AND REACTFUTURELAB

Category %

Restaurant 79%

Hotels 87%

Travel 84%

Automotive 78%

Home 73%

Medical 76%

Legal 79%

US Online Review Users Identifying Review as

Having Significant Influence on their Purchase

Source: Comscore Inc., the Kelsey Group, Oct. 2007

Hi Joel,

Sorry if we weirded you or your friend out by

following you on twitter. @JetBlue isn‟t a bot, it‟s

merely me and my team keeping our ears to the

ground and listening to our customers talk in open

forums so we can improve our service to them. It‟s

not marketing, it‟s trying to engage on a level other

than mass broadcast, something I personally

believe more companies should try to do.

Because corporate involvement in social media is a

new and evolving discipline, I also take a specific

interest on conversations revolving around our role

here. I‟d have DMd you and Lisa directly if you

allowed DMs, so please also forgive me for following

the link on your twitter page here to send you this

note.

You and Lisa are no longer being „followed‟ as you

seem to indicate.

Again, my apologies

Morgan Johnston

Corporate Communications

JetBlue Airways

KEEP IT SIMPLE ON THE

MOBILE FRONT

On-Demand

SMS push

Location Based Push

INFORMATIONAL

(PART OF EXPERIENCE) PROMOTIONAL

!RELEVANCE

PERMISSION

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IN-STORE INSPIRATION

Watch video on

http://www.youtube.com/watch?v=gQBFaVfBi9w&feature=related#

Queen‟s Arcade (Cardiff)

WATCH THE CONTENT

LESSONS IN NARROWCASTING

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McDonalds Amsterdam Veritas Antwerp

INSTORE

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COPY MODIFY CREATE DEGREE OF

INNOVATION

Turnover of Retail Trade in Romania 2001-2007, 2010(€ billions)

ROMANIA IS ON THE VERGE OF SOMETHING BIG

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THOSE WHO INNOVATE WIN

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GO !!

For more information

contact Alain Thys via

[email protected]

Or read up on the

Futurelab blog at:

http://blog.futurelab.net

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mailto:[email protected]

http://blog.futurelab.net/

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