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CUSTOMER ENGAGEMENT AN OMNICHANNEL
PERSPECTIVE
Deborah Weinswig Executive Director – Head Global Retail & Technology Fung Business Intelligence Center Global
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DEBORAH WEINSWIG
• Executive Director and Head of Global Retail & Technology for the Fung Business Intelligence Centre
• Award-winning global retail analyst and a specialist in retail innovation and technology
• 12 Years at Citi Research where she served as Head of the Global Staples & Consumer Discretionary Team
• #1 ranking analyst by Institutional Investor for nine years
• Mentor to Silicon Valley accelerators including Alchemist Accelerator and Plug & Play
• Certified Public Accountant, with a Masters of Business Administration degree from the University of Chicago
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FUNG BUSINESS
INTELLIGENCE CENTRE (FBIC)
• Established in 2000 and headquartered in Hong Kong
• FBIC (formerly known as the Li & Fung Research Centre) has served as the knowledge bank and think tank for the Fung Group
• New York–based Global Retail & Technology research team follows broader retail and technology trends
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AGENDA • Omnichannel Trends
• Current Trends
• Future Trends
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OMNICHANNEL TRENDS
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THE STATE OF SHOPPING
• Internet shopping is about functionality, not fun
• As more shoppers move online, in-store shopping will increasingly focus on leisure shopping and the quality of experience
• Online/offline division is becoming artificial as consumers browse, compare and buy across channels
• More complex than simply “showrooming”
• Click & collect provides the functional transaction coupled with in-store experience
• Stores must be set up to deliver a quality experience
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OPPORTUNITY COST OF
NON-OMNICHANNEL
10% Lost revenue
= $110+ mn
in lost revenue lost for 1 billion retailer
Source: RIS-‐EKN Customer Engagement Study, 2014, EKN-‐Toshiba Omni-‐Channel ExecuDon Study
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EVOLUTION OF CORE OMNICHANNEL
EXECUTION
Source: RIS-‐EKN Customer Engagement Survey, 2014 (100+ retail execuDves surveyed in the US) Figures are % of total respondents
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OMNICHANNEL CUSTOMERS:
MORE PROFITABLE BUT UNKNOWN
76%
Don’t know how who their Omni channel customers are
Source: RIS-‐EKN Customer Engagement Study, 2014,
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RETAILERS STILL USING OLD KEY PERFORMANCE
INDICATORS
Top KPI’s that retailers measure
Sales/ channel 82%
Customer satisfaction
Average margin
57%
45%
Customer Lifetime Value
22%
Share of wallet
Customer engagement across channels
8%
Source: RIS-EKN Customer Engagement Study, 2014
KPI’s that they need to pay more attention to
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B&M STORE: THE OMNICHANNEL
H U B
1 in 2
have deployed digital coupon reading in-store
66%
of retailers have currently deployed store specific social
media initiatives
46%
have store specific websites
75%
will use their store as a delivery hub for online orders by 2015
Sources: RIS-‐EKN Customer Engagement Study, 2014; EKN Future of Store Study, 2013
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AMAZON: GOLD STANDARD
OF EXECUTION
Mobile Commerce and Engagement
1 Amazon (56%)
2 Starbucks (9%)
3 Apple (7%)
Unified Commerce
1 Amazon (28%)
2 Macy’s (9%)
3 Nordstrom/Wal-Mart/Best Buy (7%)
Customer Engagement
1 Amazon (33%)
2 Nordstrom (8%)
3 Best Buy/ Starbucks (5%)
Source: RIS-‐EKN Customer Engagement Study, 2014
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CURRENT TRENDS
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UBIQUITY OF MOBILE DEVICES
• Constant connectivity enables shoppers to find product details, compare prices and buy anything anywhere
• Digital devices are essential part of any shopping journey
• 94% of global internet users go online to research purchases in at least one category
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UBIQUITY OF MOBILE DEVICES
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WEBROOMING BEATS
SHOWROOMING
• Webrooming, or researching online and then buying in a store, has become the norm and more common than showrooming
• 69% to 46% respectively according to Harris Poll
• Amazon remains top destination for both showrooming and webrooming
Millennials Prefer
Webrooming
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WEBROOMING BEATS
SHOWROOMING
Why Shoppers webroom?
• Don’t want to pay for shipping
• Don’t want to wait for delivery
• Like to touch and feel a product before they buy
• Like to ask store to match better prices found online
• Like the option to return to store if needed
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BRICK-AND-MORTAR INVESTING IN
TECHNOLOGY
• B&M retailers using tech for
– Delivery & pickup
– Personalization
– Inventory tracking
– Beacons
– Wearable tech
• More than 40% used a smartphone or tablet for Black Friday activities (NRF)
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RETAILER TECH SPENDING
• Capex of selected retailers was approximately 3.3% of sales in 2014, flat with 2013
• Technology capex:
– CVSHealth: 37% of 2014 capex on technology and other corporate initiatives
– Nordstrom: 35% of 2014 capex; plans to spend $4.3B (5% of sales) over next five years
– Walmart: 29% of 2014 US capex; spending “$1.2-1.5 billion in e-commerce Web sites and mobile commerce applications”
– Home Depot: “Tilting investments towards interconnected retail and technology”
0%
1%
2%
3%
4%
5%
6%
7%
Nordstrom
Macy's
Kohl's
TJX
Walmart
Target
JCPe
nney
Home De
pot
CVS
Sears
Capex/Sales Average
2014 Capex/Sales for Selected Retailers
Average = 3.3%
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GAMIFICATION STIMULATES
NEW CUSTOMER BEHAVIORS
• Gamification is the use of elements from computer and video games in real-world or other activities
• These elements stimulate our psychological needs for desire, incentive, challenge, achievement and rewards, feedback, and mastery
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SOCIAL MEDIA AS NEW MARKETING
PLATFORM
• Internet now ruled by pictures and videos
• Consistent but slowing growth in social media usage expected worldwide over the next 5 years
• Most of the growth in Asia
• Growth in the number of users is decelerating
• Many social media experiences now on a mobile phone
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MOBILE APPS BURY THE BROWSER IN
SHOPPING
The browser is dead …
BROWSER
1999-‐2014
… long live app nation!
Source: Flurry AnalyDcs
88% 82%
12% 18%
Smartphone Tablet
Mobile App vs. Browser Split
App Browser
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FUTURE TRENDS
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DIGITAL ADVERTISING
TO DOMINATE
• Digital receiving new money because marketers can prove that digital works (Forrester)
Sources: Forrester, PWC, and eMarketer.com
40
60
80
100
120
2012 2013 2014 2015 2016 2017 2018 2019
Radio Digital TV
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CLICK & COLLECT IS COMING
• Digital receiving new money because marketers can prove that digital works (Forrester)
5
13
35
0 5 10 15 20 25 30 35
Germany
US
UK
% of shoppers saying they "currently use click & collect"
Source: Planet Retail, 2014
Survey Base: 15,000 respondents across 10 countries
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THE LINE WITH CLICK & COLLECT
IS BLURRING
• More than two-thirds of UK shoppers used click & collect services in 2014
• 76% of UK shoppers will click & collect by 2017
• Amazon launched its lockers in Sept. 2011
• Only 17% of US consumers used click & collect in 2013
• Walmart started testing a drive-through grocery pick-up service in Oct. 2014
Walmart Drive-‐Through
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Brick-and-Mortar vs. Click & Collect
A shopping facility where consumers can buy or order goods from the store’s website and then collect them from a store location convenient to them
Brick-and-mortar refers to businesses that have physical
stores that offer face-o-face customer experiences.
Consumer can visit and enter physically to see touch and
purchase merchandise
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E-COMMERCE OPENING
BRICK-AND-MORTAR STORES
• Excluding Amazon, most online pure-plays hit a $1 billion revenue ceiling
• Establishing a brick-and-mortar presence aids in brand building and growing consumer awareness
• Easier to get VC funding with technology connection in the apparel/retail business model
• eBay UK offers collection through Argos general merchandise stores
• ASOS offers collection through Collect+, a network of 5,800 local shops such as newsagents and convenience stores serving as collection points
• Amazon signed up to Doddle, a new network of collection-only stores concentrated on railway stations
• More in 2015
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SUBSCRIPTIONS NIBBLING AWAY AT
BRICK-AND-MORTAR
• Consumers love the convenience and dependability of the services
• Retailers love subscription models as a source of recurring revenue
• Consumers find value in avoiding the drudgery of shopping for everyday commodity items
• They appreciate the benefits of curation
• Many consumers use subscriptions to treat themselves to a monthly gift
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SUBSCRIPTIONS NIBBLING AWAY AT
BRICK-AND-MORTAR
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ONLINE GROCERY IS A NEW GROWTH AREA
• Global Grocery Market: $4 Trillion
• U.S. Grocery Market: $600B
• Percent Online: 1.2%
• Approx. 12% of Internet users have bought grocery items online
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TAP & PAY POISED FOR
HUGE GROWTH
$3,737
$6,815
$10,451
$16,240
$23,472
$34,160
2014 2015 2016 2017 2018 2019
CAGR = 50%
US Contactless Mobile Payment Market ($ Millions)
% of All Mobile Payments
7% 10% 13% 16% 20% 24%
Source: Forrester Research, October 2014
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Beacons and Location-Based
Marketing
• What is a beacon?
• The best solution for improving the in-store retail experience
• 2016 is expected to be the year of the Beacon
• US installed base expands rapidly, but consumer response is key to further penetration
$41.0
$444.0
2015 2016
Beacon-Influenced In-Store Retail Sales ($ Billion)
Source: Bi Intelligence, Feb. 9, 2015
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MICRO-LOCATIONS IMPROVE IN-STORE
EXPERIENCE
They know where you are!
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UBERFICATION ENBODYS THE
SHARING ECONOMY
MODEL
• Uber is the most visible player (and driver) of the “sharing economy”
• Changing consumer mindsets will challenge retailers
• Opportunities for retailers: How much is convenience worth?
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CYBERSECURITY DEMANDS
SMARTER INVESTMENT
• Important decisions will have to be made regarding how to address privacy and security
• Retailers need to spend smarter, not necessarily more on cybersecurity
• Holistic, enterprise-wide cyber-risk detection and prevention are critical first steps
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THANK YOU
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