Boston, March 25th, 2014
Oracle RPAS Planning: How Luxottica is tailoring its offering to customers
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Ø Luxottica, The Company
Ø Sunglass Hut, A Tailored Product Offering
Ø Retail Merchandise Planning, The Background
Ø Oracle RPAS, The Program Journey
Ø Sunglass Hut, Main Achievements
Ø What’s Next
Ø Q&A
Agenda
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2007 2012
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2003 1999 1995
1988
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2013
2011
2009 2006
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1996
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1981
1961
Luxottica, Over 50 years of carefully planned growth
The first Luxottica optical eyewear collection debuts at the MIDO international trade fair in Milan.
Is launched. The foundation provides free vision care and eyewear around the world to those in need.
One of the largest optical retail chains in North America.
A major retailer of premium sunglasses.
Leonardo Del Vecchio founds Luxottica. Enters the group e C.S.A.S., which in 1964 was transformed into a joint-stock company named Luxottica S.p.A.
Luxottica Group is listed on the NYSE. Luxottica Group is listed on
the Milan Stock Exchange
Enters the group Enters the group
Acquisition of the license
Acquisition of the license Enters the group
Enters the group
Among the leading optical retailers in Australia and NewZealand.
Acquisition of the license
Acquisition of the license
A leading retail chain in North America.
Acquisition of the license
Acquisition of the license
Acquisition of the license
Acquisition of the license
Acquisition of the license
Acquisition of the license
Acquisition of Tecnol, Brazil
Acquisition of the license
Acquisition of the license
Acquisition of the license
Enters the group. Includes Oliver Peoples, Paul Smith and a retail network of 160 stores.
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OPTICAL
EUROPE 430+
SUN
SUN
S. AFRICA 120+
SUN OPTICAL
CHINA & HONG KONG 200+
SUN OPTICAL
AUSTRALIA & NZ 800+
SUN OPTICAL
NORTH AMERICA 4,730+
SUN OPTICAL
LATAM 650+
Luxottica Retail, 7,000 Store Network
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Luxottica, A vertical integrated business model
PRODUCT DEVELOPMENT
MANUFACTURING
LOGISTICS
WHOLESALE DISTRIBUTION
RETAIL NETWORK
LENS FINISHING
MANAGED VISION CARE
STARS (VMI)
CUSTOMER
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Ø Luxottica, The Company
Ø Sunglass Hut, A Tailored Product Offering
Ø Retail Merchandise Planning, The Background
Ø Oracle RPAS, The Program Journey
Ø Sunglass Hut, Main Achievements
Ø What’s Next
Ø Q&A
Agenda
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Sunglass Hut: Tailoring product offering to customers
Strong Product Portfolio
Powerful Store Segmentation
Fresh Flower Product Model
360 Story Telling
Approach
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ü The most significant brands ü The hottest trends
Sunglass Hut: A Strong Product Portfolio
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Build Sunglass Hut Brand Equity Showcase Luxury/Premium Brands
Deliver consistent experience across high store count base to
build Sunglass Hut loyalty
Platinum Gold & Silver
Outlet
Sunglass Hut: A Powerful Store Segmentation Strategy
Department Store
Capture new customer through Host Broader access to Luxury
Brands
Exit strategy with opAmized margin and offering of great brands at a great value
ecommerce
Infinite assortment
sunglasshut.com macys.com amazon.com
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Sunglass Hut: A “Fresh Flowers” Product Model
Product Flow
360 Story Telling
Product Briefing
Product Development
Technical Design
Assortment Planning
Lifecycle Mgmt
Production Planning
Virtuous cycle to efficiently design, manufacture, deliver & communicate more consumer-relevant & engaging products
Exit Strategy
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Sunglass Hut: A 360 Story Telling Approach
Enhanced story-telling enables
ü More frequent, tailored-made stories
ü Maximizes story-telling potential of the store
Results
ü Lift in consumer engagement
ü Increased frequency of store visits
ü Increased conversion
Associate
PR
SGH.com
Digital Media
CRM DM & EMAIL Social
Front Door
TSQ Billboard
Macy Books & Window
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Ø Luxottica, The Company
Ø Sunglass Hut, A Tailored Product Offering
Ø Retail Merchandise Planning, The Background
Ø Oracle RPAS, The Program Journey
Ø Sunglass Hut, Main Achievements
Ø What’s Next
Ø Q&A
Agenda
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Why A New Planning Program?
ü Manage large store count with tailored assortments
ü Leverage newness for compeAAve edge
ü Modernize our planning process
ü Life-‐cycle management
ü Balance integrated lead Ame planning with short term needs
ü Supply chain integraAon to opAmize inventory and service levels
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Ø Luxottica, The Company
Ø Sunglass Hut, A Tailored Product Offering
Ø Retail Merchandise Planning, The Background
Ø Oracle RPAS, The Program Journey
Ø Sunglass Hut, Main Achievements
Ø What’s Next
Ø Q&A
Agenda
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In 2009 Luxottica launched a new Planning Program selecting Oracle RPAS as the application
1. Leading Planning Application 2. End to end coverage of Integrated Planning Processes 3. Optimization engines and mining capabilities available for future enhancements 4. Minimize Total Cost of Ownership
I. Configurable application II. Community of Partners
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LENSES & CONTACTS
ALOE
FRAMES
Luxottica RPAS Global Templates: Frames and Lenses
Frames, Lenses & Contacts Planning Modules
The Global & Local Domain structure enables a roll out of the solution at different extents of complexity
! Strategic Targets
! Merchandise Planning
! Location Planning
! Assortment & Item Planning
! Optimization engine (ALOE)
! DC Planning
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RPAS Global journey started in April 2010
Frames + Lenses: LENSCRAFTERS
Business Blue Print
Frames SUNGLASS HUT: US + UK
Implementa?on Streams
Global template finaliza?on and Project Approach review
Program Management
Apr ‘10 Aug ‘10 Aug ‘12 May ‘13
Global model defini?on considering sun and op?cal divisions:
Jun ‘12 Aug ‘’11
Frames: MEXICO
Aug ‘13
Blue Print Lenses
Change Management
Nov ‘13
Frames IBERIA
May ‘14
Frames: STARS
Feb ‘14
Frames SOUTH AFRICA
Frames + Lenses PEARLE, SEARS, TARGET
Frames + Lenses AUSTRALIA & NZ
Frames ITALY, GERMANY
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Sales org already live Next streams
Brazil, Chile & Latin America
Turkey Spain
Luxottica RPAS: Current and future footprint
SEA
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Luxottica RPAS: Support Team and Change Control Board
RPAS Support Team Change Control Board For all global RPAS issues, Luxottica developed a support team to support the business.
As a result of a global template approach for the RPAS roll-out, a Change Control Board (CCB) has been identified to govern and check all the Change Requests (CRs) and their consistency with the global strategy. The CCB is representative of the different businesses and geographies.
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Ø Luxottica, The Company
Ø Sunglass Hut, A Tailored Product Offering
Ø Retail Merchandise Planning, The Background
Ø Oracle RPAS, The Program Journey
Ø Sunglass Hut, Main Achievements
Ø What’s Next
Ø Q&A
Agenda
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2009-2013 Sunglass Hut Global Growth
• ~2,000 stores
• 4 Countries
• €665 Million Sales
• YOY Comp: ~ -7%
• ~3,000 stores • 9 Countries • €1.1 Billion Sales
• YOY Comp: +11.5% ü Mature Markets growing at 7% ü Emerging Markets doubling at 105% growth
+42%
+65%
2009 2013
SGH Ambition for the next 3-5 years: ~4000 stores and 2B€!
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Sunglass Hut NA: RPAS Drives Results
SALES
ü POLARIZED
SERVICE
ü IN STOCK
INVENTORY
ü UNIT TURN
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Sunglass Hut NA: Attribute Strategy Drives Sales
38% 40% 42% 44% 46% 48% 50%
2010 2011 2012 2013
SUN UNIT POLAR PENETRATION
POLAR
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
2010 2011 2012 2013
SALES GROWTH
POLAR TTL SUN
ü Strategic polar attribute planning provided clear roadmap to 48% polar penetration and four years of 15% to 25% polar sales growth per year
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Sunglass Hut NA: Increase In Inventory Productivity
90.0% 92.0% 94.0% 96.0% 98.0% 100.0%
10 Q2
10 Q3
10 Q4
11 Q1
11 Q2
11 Q3
11 Q4
12 Q1
12 Q2
12 Q3
12 Q4
13 Q1
13 Q2
13 Q3
13 Q4
KEY ITEM IN STOCK (GOAL >97%)
QTR
2.5 2.6 2.7 2.8 2.9 3.0
10 Q4
11 Q1
11 Q2
11 Q3
11 Q4
12 Q1
12 Q2
12 Q3
12 Q4
13 Q1
13 Q2
13 Q3
13 Q4
P12M UNIT TURN
QTR
ü Strategic RPAS parameter planning drove 17% unit turn increase, while maintaining in >97% in-stock service level on key items
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New Storytelling • ~120MM visits with ~7% conversion • ~40 Front Door campaigns, an average of 2 per segment per month
New Product Flow balanced with Key Items • ~1,000 new skus represent 65% of product offering • Still, 60 UPC’s, 7% of store display, generate 25% of sales, with service level >97%
Sunglass Hut NA: Fresh Flowers from Idea to Reality
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Ø Luxottica, The Company
Ø Sunglass Hut, A Tailored Product Offering
Ø Retail Merchandise Planning, The Background
Ø Oracle RPAS, The Program Journey
Ø Sunglass Hut, Main Achievements
Ø What’s Next
Ø Q&A
Agenda
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Luxottica is fully focused on global consistency
Frames + Lenses:•LC
Business Blue Print
FramesSGH: US + UK
Implementation Streams
Global template finalization and Project Approach review
Program Management
Apr ‘10 Aug ‘10 Jun ‘11 Mar ‘11
Frames + Lenses• LLB
Aug ‘12 Jan ‘13 May ‘12
Global model definition considering sun and optical divisions:
Jun ‘12Aug ‘’11
Frames •RSA
Frames:•MEX
Frames + Lenses• LLB
Aug ‘12
Frames•DC UK
Blue Print Lenses
Change Management
Complete the Retail roll out
Launch STARS, wholesale model
Fully leverage Customer Data within Store Clustering
Bolt on Optimization Engines
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Q&A