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Transcript of The_Disruptive_Future_of_Retail_Mayl_(final)
Tony D‘OnofrioMay 2016
The DisruptiveFuture of Retail
© 2016 Tyco. All Rights Reserved.
Agenda
2
© 2016 Tyco. All Rights Reserved. 3
Tony D‘OnofrioMay 2016
4© 2016 Tyco. All Rights Reserved.
The Global Retail Market in 2019
Source: Euromonitor
5© 2016 Tyco. All Rights Reserved.
Global Retail Market Data
Store CountRetail Market Growth Sales Volume
Source: Euromonitor
6© 2016 Tyco. All Rights Reserved.
Global Retail Sales – The World is Flat
Best and worst performers: retail sales volume in 2016 (% change)
Russia
Hungary
Ukraine
Azerbaijan
Venezuela
India
China
Algeria
Romania
Vietnam
Worst performers Best performers
-30 -25 -20 -15 -10 -5 0 0 2 4 6 8 10
Up 2.7% in 2016same as 2015
Sources: The Economist Intelligence Unit, Planet Retail.
20152016 forecast2017 forecast
Retail sales volumes by regions (% change)
Asia-PacificLatin
AmericaWestern Europe
Middle East & Africa
North America World
543210
-1-2-3-4
543210
-1-2-3-4
7© 2016 Tyco. All Rights Reserved.
GR
DI
Cou
ntry
A
ttrac
tiven
ess
Tyco ConfidentialSource: AT Kearney 2015 Global Retail Development Index
8© 2016 Tyco. All Rights Reserved.
2015 Global Retail Development Index
Source: AT Kearney 2015 Global Retail Development Index
Level of globalization by product sector, FY2014Product sector profiles, FY2014
The Global Top 250 Retailers
Source: 2016 Deloitte Global Powers of Retailing
10© 2016 Tyco. All Rights Reserved.
Q Ratio LeadersFastest Growing
Source: 2016 Deloitte Global Powers of Retailing
Top 10 Fastest Growing / Q Ratio Retailers
Retailer Country FY2009 - 2014 retailRevenue CAGR¹ RANK Retailer Country Q Ratio
Vipshop Holdings Limited China 320.8% 1 Hermès International SCA France 6.422
JD.com Inc. China 106.3% 2 Tractor Supply Company US 6.113
Axel Johnson AB/ Axfood,Axstores Sweden 49.3% 3
H & M Hennes & Mauritz AB Sweden 5.811
AB Acquisition LLC (nowAlbertsons Companies Inc.) US 45.3% 4 Inditex S.A. Spain 5.792
Steinhoff InternationalHoldings Ltd. S. Africa 41.6% 5 Amazon.com Inc. US 5.307
Southeastern Grocers LLC(formerly BI-LO Holding LLC)
US 36.0% 6Nike Inc./Direct to Consumer US 5.180
Yonghui Superstores Co.Ltd.
China 33.7% 7 Next plc UK 4.952
OJSC Dixy Group Russia 33.3% 8 The TJX Companies Inc. US 4.438
Chongqing Department StoreCo. Ltd.
China 32.5% 9 Vipshop Holdings Limited China 4.400
Jumbo Groep Holding B.V. Netherlands 30.1% 10 Ross Stores Inc. US 4.369
© 2016 Tyco. All Rights Reserved. 11
Make WiseTechnology
Choices
Make WiseTechnology
ChoicesTony D‘Onofrio
May 2016
12© 2016 Tyco. All Rights Reserved.
Retailer LossesShrinkage Inventory Distortion Returns
Return$642.6
Overstock$471.9
Out‐of‐Stocks$634.1
Source: Global Theft Retail Barometer, IHL Group
13© 2016 Tyco. All Rights Reserved.
Global Retail Shrink Highest Global Shrink Countries 2014 -2015
Cost of Retail Crime as % of Total Sales
39%
16%7%
38%
Shoplifting Dishonest Employee Theft
Admin/non-crime LossSupplier Fraud
Source: Global Theft Barometer, 2014-2015
MEXICO FINLANDNETHERLANDS
FINLAND HONG KONGMEXICO
1.68%1.48% 1.38%
4.48%2.80% 1.38%
14© 2016 Tyco. All Rights Reserved. 14
The Evolution of Loss Prevention
Item Intelligence
Store Intelligence
Item Security
Data & Video Analytics
EAS Video RFID
Traffic & ShopperAnalytics
15© 2016 Tyco. All Rights Reserved.
Store Systems Priorities
Top Store System Priorities for 2016
15%
16%
16%
19%
21%
29%
32%
35%
42%
52%
Assisted Selling
Ship-from-Store
Workforce Management
Improved Training Tools
Single Transaction Engine
WAN/WiFi Upgrade
Inventory Visibility
BI/Analytics
Mobile for Associates
Advanced CRM/Loyality
3.9% Average increase
in-store technology spending in 2016
Source: 2016 IHL / RIS Store Systems Study
6.5%5.0% 4.7%
2.8% 2.4%
PredictiveAnalytics
ProximityMarketing
DataVisualization
RFID Internet ofThings
Emerging Tech
16© 2016 Tyco. All Rights Reserved.
Status of In-Store Technology Deployments
Source: RIS / Gartner Retail Technology Study 2016
6%
7%
11%
13%
16%
19%
25%
27%
29%
31%
19%
15%
18%
20%
20%
22%
21%
20%
20%
12%
15%
16%
12%
19%
19%
17%
21%
17%
10%
11%
13%
8%
15%
12%
12%
14%
6%
12%
9%
9%
Location-based sensing for MarComm
In-store video analytics
Clienteling/guided selling
Shopper tracking capability
Digital devices (signage, kiosks, magic mirrors, etc.)
Real-time store monitoring / KPIs
Mobile devices for associates / manager
In-store pickup / return of web goods
WiFi for customers
In-store shipping
Up-to-date tech in place Started major upgradeWill start within 12 months Will start within 12-24 months
17© 2016 Tyco. All Rights Reserved. 17
Omnichannel / Multi-Sensored / Mobile Future
SCREEN TIME(Per Day)
30 Country Millward Brown study of 16-45 year olds
Source: Transparency Research
Deloitte Digital
Frost & Sullivan
Frost & Sullivan
Global Theft Barometer
IHL GroupIHL Group
$1.5 TrillionMobile & Digital
Influence on in‐storesales in 2014, up
from $334B in 2012
$5,409MillionRetail RFID MarketBy 2020, up from$542M in 2013
$5.8 BillionGlobal Wearables
Tech market by 2018,Up from $750M in 2012
$162 BillionGlobal Retail Shrink
$4.3 TrillionGlobal Online Retail Sales
By 2025, up from$0.55T in 2011
$1.1 TrillionGlobal Inventory Distortion
$634 Billion From Out‐Of‐Stocks
63%Global Retailers
Maintaining / ExpandingGlobal Source Tagging
Phones147
minutes
TVs113
minutes
PCs108
minutes
18© 2016 Tyco. All Rights Reserved.
Age of Amazon:Challenges & Opportunities
Source: RIS / Gartner Retail Technology Study 2016
1. Developing personalized marketing capabilities 51%
2. Network and IT systems security 47%
3.Leveraging social media (for sales, CRM, hiring, customer service, etc.)
46%
4.New payment technologies(EMV, contactless, mobile, etc.)
45%
5.Expanding unified commerce (omnichannel) initiatives
44%
Top 5 major strategies over the next 18 months
Top 5 challengesover the next 3 years
1. Customer data security 49%
2. Retiring legacy systems 46%
3.Optimizing digital commerce as growth channels
39%
4. Application integration 35%
5. Optimizing stores as a growing channel 29%
Investments in technologies that improve the retailer’s ability to meet customer
expectations, exploit innate strengths, overcome weakness and disintermediate
others, will move the needle. Make wise choices.
© 2016 Tyco. All Rights Reserved. 19
TheDisruptiveFuture of
Retail
TheDisruptiveFuture of
RetailTony D‘Onofrio
May 2016
20© 2016 Tyco. All Rights Reserved. 20
Technology Driving Shifts in Retail Power
21© 2016 Tyco. All Rights Reserved. 21
Evol
ving
Tec
hnol
ogy
Syst
ems
Impa
ctin
g R
etai
l
22© 2016 Tyco. All Rights Reserved. 22
Top Retail TrendsMultichannel consumers
more profitable than single channel*
shoppers to refrain purchasing from store if desired brand not available*
*Sources: RIS 2015 Shopper Experience Study; RSR 2015 Omnichannel Report; RSR 2015 Mobile Study
retailers believe consumers are using mobile as part their shopping experience*
50%
69% 90%
23© 2016 Tyco. All Rights Reserved. 23
Relevancy of the Store
Educate & empower in-store employees using technology
#1
Brick & mortar stores account retailer revenues*85%
Sources: PSFK and RSR Research; RSR 2015 Store Report
Opportunity for improving in-store experience*
© 2016 Tyco. All Rights Reserved.. 24
The Retailer’s OpportunitiesMandates for Omnichannel Shopper Satisfaction in Digital Retailing
CONSISTENCY - Product, Price and Service
CONVENIENCE - Where / When / How
ACCESSIBILITY – All Channels & Locations
SERVICE - Balancing Operations, Service & Costs The Digital Future Retail Store
25© 2016 Tyco. All Rights Reserved. 25
The Consumer Power
What Consumers
Want
How are Retailers Addressing it?
26© 2016 Tyco. All Rights Reserved.
The Consumer / Retailer Information Dichotomy
Retailers
Consumers
How do consumers in general feel about disclosing information about themselves?
0% 20% 40% 60% 80% 100%
RetailersConsumers
Store employees welcome the customer by name when he or she enters the store
Source: HUI Research (2015)
27© 2015 Tyco. All Rights Reserved. Company Confidential.© 2015 Tyco. All Rights Reserved. Company Confidential. 27
Global Source Tagging & The Future of RetailFuture Plans of Using Source Tagging Across Regions Future Plans of Using Source Tagging Across Product Categories
The Future of Retail• Less Store Labor / Improved Customer Experience• Interactive Retail Stores with Employees as Brand Ambassadors• Item Level Intelligence Driven by Source Tagging / Out of Stocks FOCUS• A Focus on “Value” Integration• A Sustainable Retail Future
28© 2016 Tyco. All Rights Reserved. 28
Technology Will Continue to Disrupt the Store
29© 2016 Tyco. All Rights Reserved.
Tony D’OnofrioEmail: [email protected]
Phone: +41 791 508 208
Thank You
© 2016 Tyco. All Rights Reserved.
Store Reinvented - The Future of the Store
“Retailers reported 16.5%YOY improvement in KPI’s related to sales, customer engagement and satisfaction as a result of empowered sales associates”
Source: EKN Modern Labor for Omnichannel Success Report
31© 2016 Tyco. All Rights Reserved.
The Smart Store
Shopper Analytics
Staff Allocation
Loyalty/ Abandonment
Zone Performance
Market Benchmarks
Customer Engagement
Draw Rate
Foot Traffic
Inventory Intelligence
Omni-Channel Fulfillment
Inventory Visibility
Track & Trace Authentication
Stock-out Reduction
Loss Prevention
Loss Pattern Recognition
Employee Theft
Protection
Shrink Reduction
Smart Storefronts
Multi-Sensored Immersive Shopping Experiences
32© 2016 Tyco. All Rights Reserved.
RFID Market in Retail: 2010-2020 Revenue
Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan
By Products By Region
33© 2016 Tyco. All Rights Reserved.
Benefits from RFID in Retail
Revenue Customer Sat
Product availability and merchandizing
Reduced OOS
Better display execution
Better omni-channel execution
Inventory IntelligenceInventory Accuracy
Margin OpEx
Planning and allocation
Reduced markdowns
Reduced inventory carrying costs
Better omni-channel execution
OpEx
Laborefficiency
Counting
Replenishment
Receiving
Stocking
COGS
Loss prevention
Shrink pattern recognition
34© 2016 Tyco. All Rights Reserved.
Macy’s RFID Journey
• Inventory count 1x / year
• Inventory accuracy deteriorates 2-3% per month
• Inventory accuracy 60-70%
BEFORE RFID
• 1x / year & can cycle count up to 24x / year
• Achieve nearly 99% accuracy w/annual inventory
• Annual inventory accuracy 95%
• RFID categories out performed non-RFID categories with avg. 10% sales lift
WITH RFID
• B2F – Back to Front, Sales Floor Replenishment
• Increased sales and margins, reducing MDs
• 1/3 reduction in basic stock required on-hand
• Improved display compliance from avg. 65-70% to nearly 100%
• P2LU – Pick to the Last Unit
• Leverage 15-20% of store inventory that exits in single units
• Omni-channel readiness enabling $1B reduction in store inventory
• Sales lift on regular & 1st MD merchandise
BEYOND REPLENISHMENT
Peter LongoMacy’s, President, Operations and Logistics -January 2015
RFID is your foundational ‘air supply’
to deliver an omni‐channel promise.
Source: GS1 panel discussion ‐‐ January 13, 2015 at NRF Big Show