Understanding your Customer - Presentation Hardlines... · E-commerce Penetration (Q4-2016) 25...

© J.C. Williams Group 1

INSIGHTS INTO DISTRUPTION

Understanding your Customer

November 2017

2


Traders Fairs Towns Stores

Catalogues

NOW3

NEW Shopping Patterns

NEW Technology

NEW Operating Models

BIGGEST Single Business

Disrupter … EVER!

New Distribution Channel Has Been Created

4


New Channel is at a Tipping Point

• Select commodities are at 20% online

• Same size of market…different distribution!

The pie has notgrownother channels

impacted!

2%

Stores

20%

Stores

Online

BEFORE

PRESENT5

THE CHANGING CONSUMER

6


DEMOGRAPHICS

Changing Population

Ethnic Diversity

Changing Households

IncomePolarization

7

24.4%25.6% 26.0% 25.8% 25.5% 26.0%

27.6%29.8%

31.5%

34.6%35.9% 36.7% 37.3% 38.1% 39.0% 39.9% 40.4% 40.9% 41.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Percent of Population over 50

Source: U.S. Census Bureau 8


Changing Diversity of the Canadian Population

Distribution of Foreign‐born Population, by place of birth

British Isles

United States

Caribbean

Central/South America

Middle East

South Asia Africa9

Percent of Women Ages 20 to 64 in the Workforce

10


Haves & Have Nots Mean Household Income(adjusted dollars)

11

Consumer Spending by Generation 2016

12


CUSTOMERBEHAVIOUR

13

14

Success Has Been In Catering To The Extremes…


Trading Up

Trading Up and Trading Down

Trading Down

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Shifting PrioritiesCustomer BehaviorAdding shopping requirements beyond the initial selection of a product or service.

Over eight in 10 women prefer to “do something for themselves” rather than “buy

something for themselves,”

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Shifting Priorities

ITEM

SOLUTION

17

MASS

INDIVIDUALIZATION

Shifting Priorities

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The New Sharing Economy

Millennials are…Reluctant to BuyInclined to Share

• Cars• Music • Luxury Goods • Real Estate

.Want to own without the

burdens of ownership

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So, the NEW consumer …

SAVE

FAST

NOW

DISTRUPTIVE

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Pulse of the Canadian Retail Market

RetailWATCH

• Canadian E‐tail Report –tracks 5,000 Canadian consumers’ digital shopping

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Omni‐Channel = RetailPhysical Stores

Online Catalogues22


Facts You Need

Of Canadians have bought a product

online

85 %Of Canadians researched information online last quarter before making a purchase

27%

%54

Of Canadiansmade a return

during the second quarter of 2017

29%

Of all Canadians purchased cross‐border in the second quarter of 2017

Of Canadians are Amazon Prime subscribers

91%

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E‐commerce – $38B Industry

Source: eMarketer

Penetration: 6–7%

Growth rate: +14%/year (CAGR)

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E‐commerce Penetration Spend(by Category)

J.C. Williams Group RetailWATCH - Canadian E-tail Report

5%

10%

12%

14%

15%

17%

17%

20%

22%

24%

26%

29%

35%

Food & Grocery

Gardening Goods & Suppliers

Auto Parts & Accessories

Health & Beauty Products

Furniture & Large Appliances

Footwear

Kitchen, Home & Related Accessories

Clothing

Sports & Leisure Equipment

Children/Baby Toys & Games

Jewellery & Watches

Electronics

Entertainment

E-commerce Penetration (Q4-2016)

25

Shopping Location Visit Frequency

21% 22%11% 13% 9%

51%

26%

35%36%

26%

21%

30%25%

29%

41%

7%

23%29%

21% 26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

ShoppingCentre/Enclosed

Mall

Main Street/Townor City Centre

Online Retail Siteor Marketplace

Power Centre Outlet CentreStore

Never

More than 3 months

At least monthly

At least weekly

Q: How frequently did you visit the following locations AND make a non‐grocery related purchase through this location, in the past 3 months?

72% 48%

46% 49%35%

J.C. Williams Group RetailWATCH ‐ Canadian E‐tail Report26


Non‐traditional Influencers

14%

18%

20%

21%

21%

27%

34%

Online articles, editorials and blogs

Social platform

Review sites

Coupon sites

Shopping centre websites, emails/onlinenewsletter and online flyer

Retailer/brand websites, email/onlinenewsletter and online flyer

Online ratings and reviews on retailers' sitesand marketplaces

Influence of Non-traditional Factors in Making Purchasing Decisions (% Influential /Very Influential)

Q: Please rate on a scale of 1–7 the influence of these factors when deciding where to shop or what products/brands to purchase; % shows respondents who chose 6–7 rating;

J.C. Williams Group RetailWATCH - Canadian E-tail Report27

Plotting Two Paths to Purchase

Necessity Based…

• On time, replacement, price

• Edited assortments

• Easy to buy

• Low price

• Branded – or not

Expression/Ego Based…

• Multiple options for product and environment

• Joy of product and search

• For ego/status

• Multi‐dimension experience

Simple Solution:Shop Online

Complex Optionsand Context:Shop Multi‐Channel

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EmergingTechnologies

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Virtual/AugmentedReality (VR/AR)

Retailers are introducing consumers to unique, interactive and immersive experiences enabled by VR and AR technologies

Drones

Using artificial intelligence to capture items and source the retailer selling in seconds

Amazon has been testing drones for Prime Air Services and aims to deliver packages in 30minutes

Visual Search

30


Uber Everything

31

Autonomous Vehicles

Assumption:

90% of the driving population will utilize AV for all car‐travel

• Only 10% will want to own a car for specialty‐purpose reasons.

• Urban will be affected more than rural.

• This will take 5–10 years to happen.

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New Operating Models

Activity Old Now (Fast Fashion)

Create/buy 2–3 months 13 days

Delivered 4 weeks/3 days 1–2 days, 2 hours

Advertised 4 weeks/2 days 1 week, instantly

Sold In stores Anywhere

“NOW POWER” Drives GrowthMetrics Old New

Growth 0–3% 20%

Time to market 2–3 months 13 days

Margin % ‐40% ±60%

Turnover 4 20

Result $160 $1,20033

NEW Lower Expenses—for Some

Old Now (Fast Fashion)

Distribution Centre

Some handlingAutomated

Random locationDronesMultiple DCs

In‐storeSemi‐selfFull service cash(Some self serve)

RobotsSame 30% payroll

Payroll 17–20%10–15%5% if club

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In Summary…

SPEED

MARGINS

COSTS

GROWTH

Save 2 Months

Add 10‐20%

Save 5‐10%

High Velocity 5‐20%

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New Competition

• No rules

• Most liked

• Fastest

• 450 million SKUs

• Now Whole Foods

… More to come

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Amazon Disrupts!• Prime members: 60% USA; 30% Canada

• Impacts national brands

• Now 50% of E‐commerce

• Driving all innovation ($15 billion per year)

• Alexa and Echo voice enabled speakers

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Surviving the Perfect Storm of Channel Creation

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The Retail Shop.Toronto Chicago Montreal www.jcwg.com(416) 921-4181John [email protected] [email protected]

Understanding your Customer - Presentation Hardlines... · E-commerce Penetration (Q4-2016) 25...

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