ibm retail omni-channel pov

PowerPoint Presentation

Shoppers Disrupted: Retailing Through the Noise

An Omnichannel Point of ViewApril 2015

2Thinking OmnichannelA Disrupted IndustryThe Shoppers PerspectiveThe Retailers ImperativesHow IBM Can Help

Agenda

2015 IBM Corporation

What is Omnichannel?

3.Omnichannel IS NOT:A software or hardware solutionA marketing or CRM initiativeA new app or websiteOmnichannel IS:A commitment to delivering a seamless, compelling and personalized shopper experience, regardless of where or how your customer is engaged with youA mindset; a cultural transformation that permeates every facet of the retail enterprise and associated ecosystemA catalyst for endless innovation, demanding agilityUnwavering and becomes embedded in your brands DNA

Where are you on the Omnichannel spectrum?

4.

Single ChannelMulti-ChannelCross-ChannelOmni-Channel

Consumers experience a single type of touch-point

Retailer has a single type of touch-pointConsumers see multiple touch-points acting independently

Retailers channel knowledge and operations exist in technical & functional silosConsumers see multiple touch-points as part of the same brand

Retailer has a single view of the consumer but operates in functional silosConsumers experience a brand, not a channel within a brand

Retailer leverages its single view of the consumer in coordinated and strategic ways across the enterpriseThe LegacyThe Nirvana


Agenda


The biggest trend in retail today is DISRUPTION

6.


Mobile is at the epicenter of change

7.The average mobile phone user checks their phone 150 times a day80% of apps are used once then deletedIn 2015, 2/3 of the workforce will own a smartphone and 40% of the workforce will be mobile5 petabytes of data are generated every day by mobile phone subscribers around the worldBy 2020, 90% of new passenger cars will have some form of vehicle mobile platform, up from 10% in 2012

8.

Social media has become the great influencer

Influencers of purchase behaviorSource: IBM IBV 2013 survey, n= 30,554. Q40 decision influencers

9.

Do you recognize these faces? You shouldtheyre Millennials

Ages 13-32Over 80 million strong25% of the US populationOver $200 billion in annual spending power

They are the future of everything and they are changing the face of the Retail industry

Thinking about purchasing [category assigned] items, by which of the following methods would you prefer to obtain the item? 9

Data is overwhelming and even crippling some Retailers

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32%30%15%12%12%Its a whole new way of thinking about the value in data that requires new analytics and leverages some new technologiesIts an extension of existing analytics and BI practices suited for data that is larger or faster than we are used to The term big data is very confusing; not sure what it means Its a bunch of hype with little substance and few new ideas Its about new technologies that allow us to handle more data More than a quarter of Retailers and CPG brands are confused by, or dismissive of Big DataSource: Forresters Business Technographics Global Data And Analytics Survey, 2014 Base: 65 retail IT decision makers

Cyber crime has become the largest security challenge for Retailers

11.50% drop in retail cyber attacks since 201261 million records stolen from retailers in 2014; a 43% increase since 2013Hackers are becoming more pointed and sophisticated, using new techniques to obtain massive amounts of confidential information

Perpetrators are able to impact a far greater number of victims with fewer attacks

Source: IBM MSS Research and Intelligence Report January 6, 2015

Meet the biggest disruptor

12.

Dear Amazon Shareholder, Look inside a current textbook on software architecture, and youll find few patterns that we dont apply at Amazon. We use high-performance transactions systems, complex rendering and object caching, workflow and queuing systems, business intelligence and data analytics, machine learning and pattern recognition, neural networks and probabilistic decision making, and a wide variety of other techniques.In 2012, when asked if Amazon would develop brick-and-mortar stores, Jeff Bezos said he would love to, but only if Amazon had a "truly differentiated idea.

The model for customer experience now transcends Retail

13.The last, best experience that anyone has anywhere becomes the minimum expectation for the experiences they want everywhere.

Paul Papas,IBMiX Global Lead


Agenda


From years of disruption, shoppers have emerged with clear, new messages for retailers

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Anticipate and service my shopping needsUse what you know about me to deliver a seamless and interconnected engagement regardless of where I am shoppingMake it convenient and easy to interact with youConsistently capture my history and profile and deliver relevant information and services to me through my preferred channelBe there when I need you, in real timeEmpower me with real-time updates, proactive communications and choices before, during and after I shopRemember all of our interactionsUnderstand me and my preferences through our past interactions

Shoppers have little interest in retailers that dont meet their expectations

Source: IBM IBV surveys 2013- 2015, n= 78,163 Q:21: Last Purchase Channel

% Last purchase by channel across examined categories

14%86%

28%72%20132014Store

29%71%2015Digital

Affection for online shopping is still growing

1

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Does Not Describe MeNeutralDescribes Me2014201532%30%28%27%40%43%% of respondents agreeing I prefer to shop online

Preferred Fulfillment Method20112015Purchase at store and leave store with the item60%49%Purchase online, have delivered23%36%Purchase online and pick up in the store6%6%Purchase at store and have it delivered to my home (same day)12%8%

Online shopping is changing the perception of convenience

Source: IBM IBV surveys 2011 & 2015, n= 59,124 Q:32: Preferred fulfillment method

18.

Thinking about purchasing [category assigned] items, by which of the following methods would you prefer to obtain the item? 18

Shoppers are more open to communicating with preferred retailers

24%LocationSource: IBM IBV surveys 2014- 2015, n= 59,054 Q:14 Willingness to share with trusted retailer

28%

32%Social Handle

38%

38%Mobile for Text

42%

64%Email

64%2014

2015

% of respondents indicating they would share contact information with a trusted retailer

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Shoppers are willing to do the initial work as long as they get something in return

20.Average time willing to spend in set up = 20 minutes

are willing to put in time with a retailer to set up preferences, with the expectation that offers and communications will be personalized9out of 10Use my prior purchasing to offer me promotions59%51%Use my prior purchasing to recommend new productsInvite me to special events49%Involve me in new product ideas44%Source: From Transactions to Relationships: Connecting with a Transitioning Shopper Study (n = 2598, US Non-Grocery shoppers). IBM IBV Retail (2013).

Shoppers want to be able to control how and when they receive personalized communicationsOffers personalized promotions to me while I am in the storeSource: IBM IBV surveys 2014- 2015, n= 59,054 Q:41OTH_8,10,11 NonGrocery Capabilities

Provides me the option for on demand personalized promotions when I am in the storeProvides me the option for on demand personalized promotions when I am online

30%

30%

40%

44%

45%

48%2014

2015

21.% of respondents indicating the ability is important in the selection of a retailer

Shoppers expect digital benefits to cross over into the physical storeSource: IBM IBV surveys 2014- 2015, n= 59,054 Q:41OTH_8,10,11 NonGrocery Capabilities

60% say being able to see whether or not an item is in stock before going to the store is important in the selection of a retailer

22.46% say the ability of a sales associate to solve an out-of-stock issue via a mobile device is important in selecting a retailer 41% say a sales associates ability to access purchase history/preferences to offer personalized promotions is important in the selection of a retailer

Shoppers are looking past the sales associate to get product informationSource: IBM IBV surveys 2011 & 2015, n= 59,124 Q07: Trust ranking, product info

20112015Friends/Family11Reviews on independent sites24Product Experts32Reviews on retailer websites43Manufacturers 55Sales Associates66

Trust rank, source for product information

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There is great divide between companies perceptions of themselves and what customers actually experience

24.69%of companies say they offer a superior online experience,81%of companies say they are close to having a holistic view of their customers,47%of brands say they have a strong capability for providing relevant communications,89%of brands are satisfied with their ability to resolve conflicts with customers,but 51%of customers who left a company that failed them, blamed their exits on bad online experiencesbut only 37%of consumers say their favorite retailer understands themwhile only 35%of consumers say communications from their favorite retailers are usually relevantbut only 28%of consumers who had a significant customer service issue in the last twelve months say the company resolved their conflict very effectively

Source: Listening to the Customer; 7 New Research Findings, IBM and Econsultancy Study


Agenda


Retailers need to re-imagine everything about the way they do business to engage shoppers and create omnichannel brand value

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Aware - engage, listen, and nurture open relationships with customers Analytical - gain insight, assess, and adjust to attract and maintain customersAligned - engineer an organization that stays in step with growing expectations of the empowered consumerAgile - embrace emerging innovation ahead of consumer needsRequired characteristicsCurrent view of the customer is based on past transactions rather than interactionsAn inability to effectively integrate analytics to run the businessSiloed organizations are aligned around channels rather than the customer

A formulaic approach to the business inhibits opportunities to be innovative Common Gaps

88%of marketers agree that their companys growth depends on personalizing the customer experience,37%believe they have the tools they need to deliver exceptional customer experienceswhile onlySource: Listening to the Customer; 7 New Research Findings, IBM and Econsultancy Study

Innovative retailers will need to invest in 5 strategic imperatives to become truly omnichannel and thrive in their markets

27.Embed data & analytics throughout the enterprise to become essential to shoppersLeveraging Intelligence

Building the Right TeamCreate an organization willing to break down silos and dedicate itself to building an authentic brand experience

Merging Physical & Digital ExperiencesAdd features, benefits and processes to the front and back office that leverage the best of both worlds

Drive out costs to enable investment in customer experience and expansionExecuting With Ruthless Efficiency

Embrace and enable long term disruption and new ways of solving short term critical issues

Innovating Continuously

Every area of the enterprise must put the customer first and ask some tough questions

28.Master Data ManagementAre we bringing the pieces of the customer puzzle together as a single point of reference with accuracy and strict governance?Customer Insight/EngagementAre we leveraging insights to approach customers with messages and offers at any point in time that reflect the fact we really know them?Assortment PlanningAre we creating frequently refreshed, local market and micro-site assortments that tailor merchandise offerings to consumer and local market demands?Financial/Unit PlanningAre we creating top down and bottom up financial plans that ensure the right level of inventory is purchased based on customer demand?MerchandisingAre we quickly identifying shifting trends and consumer sentiments and helping buyers make the right choices in response?Supplier/Vendor EcosystemAre we driving agility across the supply chain to ensure the right products and services are moving from the source to the customer?Pricing & PromotionAre we providing customers with accurate and consistent pricing across all channels based on relevant data from the merchandising system as well as ever-changing market conditions?Point of SaleAre we creating a shopping environment that is consistent with how customers liveconnected, with real time information?Order ManagementAre we making the best decisions about how to promise and fulfil customer orders, resulting in improved profitability and customer satisfaction?Inventory & ReplenishmentAre we meeting customers expectations to be able to buy, receive and return practically anywhere through connected front-office and back-office processes?Human ResourcesAre we leveraging our talent in the right places and hiring the right people so our workforce truly understands how to deliver for our customers?

Apply the Strategic Imperatives to every area of the organization

Game Changers

29.

Zappos builds customer relationships like no other

Why it's revolutionary: Zappos has made massive strides in "relationship marketing," building an incredible reputation for customer service. With the rise of social, Zappos continues to set the standard and find ways to augment its loyal customer base.

Flickr / kedjadlen

ShoeDazzle takes buying shoes to a whole new level through a personalized "showroom.

Why it's revolutionary: Every month, the ShoeDazzle system reviews its new inventory and selects a collection of shoes into the user's personal "Showroom." The selections are based, initially, on a survey the user fills out to establish their taste profile. Over time, the recommendation algorithm gets more sophisticated as it takes into account the user's actual purchases. The approach is working - the retailer went from 3 to 13 million customers in 2012. Fast Company, March 2012

Converse is enabling fans to let their creativity flow and be rewarded for their work

Why it's revolutionary: Converses Made by Facebook app allows Facebook fans to design their own Converse tennis shoe, sell them to friends and even open their own storefronts. In return the creators are rewarded with free shoes. Fans are in essence becoming Converses salesforce.

Social Commerce Today, December 2011Leveraging Intelligence

Game Changers

30.Building the Right Team

Macys hires Chief Omnichannel Officer and restructures around OmnichannelWhy it's revolutionary: has made massive strides in "relationship marketing," building an incredible reputation for customer service. With the rise of social, continues to set the standard and find ways to augment its loyal customer base.Finish Line hires Chief Omnichannel Officer.

Why it's revolutionary: Every month, the ShoeDazzle system reviews its new inventory and selects a collection of shoes into the user's personal "Showroom." The selections are based, initially, on a survey the user fills out to establish their taste profile. Over time, the recommendation algorithm gets more sophisticated as it takes into account the user's actual purchases. The approach is working - the retailer went from 3 to 13 million customers in 2012.

Game Changers

31.Merging Physical & Digital Experiences

Threadless' crowd-sourcing merchandising caught the attention of America's largest retailers

Why it's revolutionary: Threadless is an apparel company that lets artists submit designs for t-shirts, housewares and more. The designs with the most votes become available for purchase. The company recently got the attention of Gap, which started carrying Threadless t-shirts.

Pinterest is changing how companies present their products

Why it's revolutionary: Pinterest is a platform where people share things they like. It's proven to be a boon for retailers including Etsy and Whole Foods. Retailers from Saks and Gap to Target have altered their marketing campaigns to include the platform.

David Jones developed a multi-channel platform generating new revenue streams and cross-channel spend optimization

Why it's revolutionary: 12 month implementation from vision to launch of first release drove a 288% increase to online sales making David Jones the first major Australian retailer to provide a true cross-channel shopping experience. They were the first to market with same day delivery, ship from store and reserve online pick up from store

Game Changers

32.

Executing With Ruthless Efficiency

Bonobos embraces showrooming by creating a store front

Why it's revolutionary: Bonobos was an online-only mens clothing shop. As much as CEO and co-founder Andy Dunn wanted to remain online only, he realized that about half of would-be customers would not order online because they wanted to feel the merchandise. The solution? Guideshop, a store front that delivers personalized service to those wanting to experience the brand in-person. Make an appointment, try on what you want, place the order online while in the shop, and it shows up at your home. The space has minimal inventory and uses the website as a virtual back room.

Zara replenishes twice a week with totally new products

Why it's revolutionary: Zara's revolutionary strategy includes stocking light and replenishing the store twice a week with totally new products. This encourages customers to come back to the store often and it creates a sense of urgency to buy since it may not be available for long. Zara is creating brand-right content on YouTube, Facebook, Pinterest and using Twitter for talking to customers directly and for customer support. Zara's fast-fashion outlook is appropriate for the short attention span of today's consumer.

Business Insider, November 2012

Game Changers

33.

Innovating ContinuouslyHointer is taking humans out of stores

Why it's revolutionary: Led by former head of supply chain and fulfillment tech for Amazon, Nadia Shouraboura, Hointer is changing the way you shop for clothes by using a robotic sales staff. You download an app, go to the showroom, and scan the QR codes of the clothing you'd like to try. The clothes are delivered automatically right to the fitting room, customers swipe their card on the tablet, and walk out.

Kroger wages war against long lines with infrared cameras

Why it's revolutionary: Long used by the military and law-enforcement to track people, these cameras, which detect body heat, now sit at the entrances and above cash registers at most of Kroger's roughly 2,400 stores. The technology, which is paired with in-house software, determines the number of lanes that need to be open. Kroger has reduced the customer's average wait time to 26 seconds - compared to an average of four minutes before Kroger used the cameras in 2010.


Agenda


IBMs omnnichannel solutions help retailers deliver world class shopper experiences

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Leveraging IntelligenceBuilding the Right TeamMerging Physical & Digital ExperiencesExecuting With Ruthless EfficiencyInnovating Continuously

Advanced Customer Insights and AnalyticsMarketing and Consumer AnalyticsDigital Analytics and BenchmarkingHuman Resources Solution Design & DeliveryInteractive Experience and DesignIBM Mobile FirstFuture State Roadmap development and implementationIBM Presence ZonesIBM WebSphere CommerceSterling Order ManagementPayment SystemsCommerce as ServiceInnovations as as ServiceEnterprise TransformationNext-Generation e-commerceSoftware Solutions

Process Improvement & Implementation Services

Managed Services

Technology Platforms

Our end-to-end approach is built on strategy and supported by operations

36.

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Customer Insight & AnalyticsConsumer Driven StrategyCustomer EngagementOperate & OptimizeDefine Your Customers ExperienceDeliver OutcomesManage all customer interactions to maximize effectiveness and grow customer intimacy and advocacyApply advanced analytical tools and techniques to dynamically understand customers' needs and expectationsLeverage digital, mobile and social consumer insights to identify growth opportunities and new paths to valueManage the solution in house, through outsourcing, or through an outcomes-based modelOmni-channel TransformationEnvisionEvaluateEnableDefine Roadmap for Change

Understand Your Customers Behavior & Expectations

IBM is consistently atop analysts rankings

37.

Magic Quadrant for Digital Commerce, Sept 2014MarketScape Worldwide Digital Commerce Applications, 2014B2C Wave, Q1 15Web Analytics, Q2 14OM Wave, Q3 14IBMIBMIBM

IBM

IBM has one of the largest and most widely recognized retail practices in the world

38.

170 countriesNumber of countries where IBM operates. We are a global company that understands global retail.

70 out of Global Top 100Number of retailers that are IBM GBS clients.

$6B

IBMs annual research budget. IBM has the worlds largest retail industry research group.

10+ years

Average experience of 900+ retail specialists in IBM USA.

10,000

Number of retail consultants in IBM globally.

#1

IBMs Retail Consulting Practice rank in IDCs MarketScape Vendor Analysis Report.

IBM keeps good company

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Data and Customer list from 2014 Internet Retailer Top 500 Report

Chart10.590.570.520.510.440.41

2013

Sheet12013Friends post/pins about items purchased59%Friends post/pins about retailers shopped57%Retailers emailed sales announcements52%Retailers sales announcements via social51%Retailers recommendations on own website44%Retailers recommendation on social sites41%