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Transcript of Accenture Retail Edge New Opportunities Customers Retailers
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Retail@ the EdgeNew Opportunities orCustomers and Retailers
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We are surrounded by sweeping trends
and volatile swings in customer behavior,
technology, and the economic and political
environment. Customers are adopting
new technologies and communication
channels aster than ever. Governments
are changing overnightsuccumbing
to the power o connected people. And
new competitors are popping up at every
corner, and at rapid rates.
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Customers have moved ahead. They expect tointeract with retailers in new ways. They areshopping around or the right retailers to meettheir needs. They are not interested in the methods
o yesterday.
Amid the whirlwind o ever-shiting trends,predicting where the customer will land is nearlyimpossible. So, what can a retailer do? Now is thetime to be at the edge, looking out at the digitalworld, nding opportunities to adapt aster and
ratchet up appeal to customers.
Retailers are oten hampered by the burdens
o inrastructure, capital and dated operating
models. They are not stepping up to meet the
needs o customers who long or new ways o
doing business. Right now, retailers have the
opportunity to push the boundaries to create
new experiences or their customers and tap new
value streams or their companies.
This shit means out with the old and in with the
newlegacy is over. Leaders will have to rethink
the next dollar o investment, integrate more
tightly within and across organizations, andopen their minds to unconventional approaches
o engaging with customers and employees.
Companies will need shrewd strategies to gain
insight quicker and turn it into actions that truly
impact the customer. Companies also will need to
reconsider platorms, technologies and operating
procedures. And they will need to be prompt and
disciplined about execution.
To envision the right opportunities to seize
in retail, look no urther than the extreme
customers who are setting tomorrows trends.
Who are these customers? They are the ones
ueling the growth o new, small entrants by
fexing the power o their social network. They
are using technology to overturn traditional
modes o shopping. They keep a constant eye onthe digital landscape, looking or new providers
who can meet their needs better than traditional
retailers can.
Pushing the boundaries o the retail experience
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Opportunities at the edge. Why not?
Through deep research into retail trends, Accenture identied examples o these extreme customers and envisioned the opportunities that they create or
retailers. When exploring these opportunities, ask yoursel the same question your customers are askingwhy not? Why cant I get it the way I want it?
Why cant you oer the same products in store as online? Why cant you provide me access anywhere and at any time? Why cant I be rewarded or the
infuence I have on your brands? You can choose to stand still and observe the changes or ask, why not create new experiences and new value?
And why not now?
Accenture sees three distinct opportunities at the edge o retail:
The Inuence Marketplace
Context Retailing
The Streaming Environment
1
2
3
A world where the cost o building awareness is negligible
and a companys success is predicated on whether its
products and services are noteworthy enough or people
to spread the word. Infuence is the currency in this mode
The context or customer interaction shits rom stores/
channels/our tur to their tur: their home, car or social
setting. Companies present products and oers within a
dynamic kaleidoscope o demand pockets, wherever the
customer is at that moment o need. The challenge is to
deliver tangible relevance in distributed, varied contexts.
Retailers become the Netfix o solutions, streaming
bundled solutions to meet customers specic needs.
Delivered through a variety o ownership models,
goods and services are relevant or the customer across
channel, across time and across company.
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Keeping up with the customerNew technologies, new buying habits and newcomers to retail make keeping
up with the customer an ever-changing playing eld. Trends include:
Interconnectivity.
Threat o new entrants.
Digital living.
Connected empowerment.
Loyalty is gone.
Redefning stereotypes.
Changing media channels.
New paths to purchase.
In just 20 minutes on Facebook, more than 1 million links are shared, 2 million
riend requests are accepted and almost 3 million messages are sent.
TV is no longer the primary viewing option or those under the age o 35.
Pinterest drives more reerral trac than Google Plus, LinkedIn
and YouTube combined.2
By 2015, South Korean school children will have access to only digitized
textbooks.
Occupy Wall Street donations increased by 301 percent in a 17-day period,
growing at an average o 17.72 percent per day.4
Eighty-our percent o US employees plan to change jobs within a year.1
Internet users over the age o 55 are driving the growth o social
networking through the mobile Internet.5
Eighty-three percent o shoppers make their purchase decisions beore
even entering a store.3
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The customer experience includes
The role o the retailer is
Loyalty is dened
Investment shits
Successul companies use
Dramatic change is required
social infuence that can be expressed
and accessed at every stage o the buying
decision and in every channel.
to lter eedback and make connections to
relevant infuencers that the customer nds
credible.
by network value, the degree o infuence
on others purchases.
rom building awareness to creating credible
products and services that generate social
endorsement.
insight rom infuencers to manage the
business and enable a broad distribution o
social infuence.
in retailers ability to integrate infuence
actors into operations and into marketing
and merchandising decisions, such as
assortment optimization, store locations,
private labels, service oerings and pricing.
1
67% of shoppers spend more
when they have received a
recommendation from their online
community of friends.6
Recommendation
Good Bad
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Infuence is the currency in this new world
Signals that customers are at the edge
What does loyalty mean to you? Its time to
rethink the denition. Rather than ocus on
loyalty through total number o purchases,
look at the total value o a customers infuence
network. The customers with the highest network
value will be rewarded through discounts, ree
goods and incentives. Retailers might also oer
incentives within the broader circle o infuence.
In act, its happening already. The Palms Hotel
and Casino in Las Vegas is creating the Klout Klub,
which will use social media metrics to measure
the infuence o each patron. The Klout Score will
allow visitors to experience certain amenities,
not based only on their spending/betting/playing
but depending on the het o their social media
ootprint.7
Infuence reigned king when the Dutch airline
KLM was challenged by a duo o lmmakers,
who wagered they could solicit enough Twitter
ollowers to ully book a KLM direct fight rom
Amsterdam to Miami. In exchange, the airline
would comply and oer this never-beore,
nonstop route. Forty hours post-challenge, the
airline conceded and 426 tweeters got their seats.
Infuence ratings can be used as a key metric in
assortment and space optimization, and even
to drive inventory levels and replenishment.
Based on buzz, retailers can reallocate product
distribution in real time based on what
infuencers deem to be the hot item.
Customers themselves can use infuence in
making decisions about products. Imagine that
as a customer stands in ront o a store shel,
through augmented reality, that person is able
to see the ratings o infuencers (including
acquaintances and experts) whom he or she
trusts. I your most trusted riends think a
product is great, likely so will you.
Cautious consumers are thirsty or credibility in products and services. Whether it is credibility in products (such as nutrition and usage inormation) or
credibility in communication (saying the right thing at the right time based on consumer needs). In short, customers want to believe in what they are buying.
A number o wild fuctuations are compelling todays consumer to be more discriminating:
Consumers are oten mistrusting and want to
know a retailer is doing right by them. These
customers may lean on eedback rom infuencers
to identiy the retailers who are delivering
credible solutions. In act, according to ndings
by Reevoo, more than two-thirds o consumers
(68 percent) trust reviews more when they see a
mix o both good and bad eedback. Furthermore
95 percent o consumers become suspicious
when no bad reviews are evident, believing the
site to be censored or aked.8
With consumers remaining cautious amid high
unemployment rates in Western countries and
with growth remaining weak globally, retailers
are struggling to pass on cost price infation.
Defation also aects consumer spending,
as there is a risk in buying today what may
be cheaper tomorrow. According to the 2011
Accenture Global Consumer Survey, with
uncertainty and lack o predictability becoming
the norm, connecting consumers with sources
and inormation that they can trust can help to
overcome realities like the high rates o switching
and price comparing that we are seeing in so
many markets today.
Social networking and digital media can build
awareness or ewer bucks. Social networking
continues to dominate. Across a snapshot o 10
major global markets, social networks and blogs
reach more than three-quarters o active Internet
users.9 The ease with which consumers can share
their views online means that i retailers have
a credible product or service, consumers will
advocate and market it. In act, social networking
is becoming so ingrained in our daily lives that
even media consumption is becoming social. For
example, Get Glue lets participants check in to
their avorite shows or other media orms to let
the world know what they are watching.
Nonbelievers are not buyers.
Volatility is the norm.
The people have a podium.
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Moving to the edge o the Infuence Marketplace
Retailers tend to dump dollars into consumer and trade promotion. But theres a better way. The cost o creating brand awareness and generating demand
generation is shiting due to alternative and lower-cost avenues. Its time to ask, where can I get the biggest bang or my marketing buck? Pioneering
companies are looking or ways to capture more value rom the infuencers that are out there advocating or the brand. They ask, can we generate greater
return i we identiy top infuencers, treat them dierently and give them something to buzz about?
Create an infuence exchange.
Measure social infuence.
Get a return on infuence.
How can retailers take steps closer to the edge?
Retailers will need to use sophisticated analytics
enterprise-wide to understand who is the most
infuential. Then they can tantalize infuencers
by delivering more customized, credible and
relevant messages, promotions and products.
In this marketplace, companies will incentivize
infuencers to create buzz about their oerings
call it an infuence exchangeand will reward
those making the most noise.
Social Q&A tools, Like buttons and reer-a-
riend discounts are modern-day tactics that
can drive value in the Infuence Marketplace. Butyou cant manage what you cant measure. At
the edge, retailers will measure infuence actors
and incorporate social infuence measurements
into a holistic infuence management approach
that connects back into the organization acrossall relevant areas, rom merchandising to supply
chain and even to areas like human resources.
To ensure a return on their investment in
infuence as retailers tap new channels, they must
have a clear strategy and an operating model
that supports tighter integration o marketing,
supply chain and merchandising unctions, and
metrics. Furthermore, as the cost o creating
awareness goes down, spending will shit away
rom capturing attention and will be reinvested in
improving the oering itsel.
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The customer experience includes
The role o the retailer is
Loyalty is dened
Investment shits
Successul companies are able
Dramatic change is required
selecting tangible products with the
option to add intangible elements that are
personalized, based on context.
to use insight into the consumers needs
to deliver the most relevant products and
services, based on the consumers context.
by the number and requency o points o
interaction the customer has with the retailer.
rom creating environments or sales to
creating insight into the customers context
and ways to communicate with the customer
outside o the channel, rom distributing to
consultative selling.
to derive value by adding intangible
elements such as ndability, verication or
personalization, based on the context o the
decision to buy.
in developing communication with customers
that engenders trust and helps to capture or
receive inormation about their environment.
2
Of the 40 percent of consumerswho own smartphones, 70 percent
use their smartphones while
shopping in stores.10
40 %
70 %use their smartphoneswhile shopping in stores
US consumers whoown smartphones
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Innovation in context
Customers observe, interact with and decide on
products and services in a variety o contexts
at home, in the car, on the street and in the
oce. At the edge o retail, there is a symbiotic
relationship between customer and retailer: I
scratch your back, you scratch mine. Customers
share inormation and preerences with retailers,
and retailers respond by delivering a more
authentic, personalized and thereore richer
experience to the customer.
What does your customer care about, and how
can you respond in context? For example, your
diabetic customers may want to use their mobile
phone to certiy that product ingredients comply
with their dietary restrictions. Your socially aware
customer may want to preview a live eed o the
actory conditions where an article o clothing
was made. Your soccer mom may want to see
whether the rug she is considering will hold up to
her amilys oot trac or whether the makeup
will last throughout her busy day. Its all about the
context o daily lie. Can your customer see him
or hersel usingand enjoyingyour products?
Signals that customers are at the edge
Several trends are infuencing the rise o context retailing:
Digitization has skyrocketed as tech-savvy
consumers have come to expect inormationat their ngertips. The appeal o paperless is
apparent in the popularity o e-readers, such as
the Kindle and NOOK. Furthermore, books are
moving o the shelves in national libraries and
in schools. Look at South Korea. They plan to
digitize all textbooks by 2015. Digital interactionsare becoming second nature or customers who
are hungry or more engaging, interactive and
dierentiated shopping experiences.
Consumers reality is becoming more blended
with virtual reality as they spend more time
connected to digital devices, playing on
gaming systems and interacting via virtual
communication media. The popularity o Wii and
Kinect is evidence that this trend will continueto be a part o our daily lives. In act, in its rst
60 days on the market, Kinect sold 8 million
units, making it the astest selling consumer
electronics device, according to Guinness World
Records. The Cratsman Experience Store creates
a branded experience accessible across social and
digital channels by combining hands-on work
stations, a live social media studio and project
demonstrations that showcase the innovation
and perormance o Cratsman tools. And newmobile applications like uDecore, String and
Blipper let users view and manipulate products
in 3-D, such as a replica o a shoe or a couch
they are interested in buying.
The online experience is being replicated ofine
and vice versa. Even while shopping in stores,
customers are going digital. O the 40 percent o
US consumers who own smartphones, 70 percent
use their smartphones while shopping in stores.10
A budding trend is being able to replicate theofine world more eectively via digital means
to create new and innovative experiences or
shoppers. One example, Google Streetview, is a
project that allows people to explore a store just
as they would i they were physically in the store,
yet do it all online. Another example, Turnhills.
com, uses crowd-sourced photography to enable
consumers anywhere to window shop in New
York. Yet another, Meijer Find-It app, is using
online and ofine by knowing what store youare located in and providing the optimal route to
purchase your shopping list.
Go digital or bust.
Very virtual.
Online and ofine collide.
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Moving to the edge o Context Retailing
In their marketing and merchandising plans, retailers will need to look beyond traditional digital tactics as levers or merchandising and selling. Instead,
they will need to thoughtully outline in their plans how to maniest the intangible attributes o an oering in ways that are individualized, interactive and
tangible to consumers diering needs and preerences. The talent devising the marketing and merchandising plans will need expertise in the innovative
technologies and tactics that can drive value through context.
Understand the tactics.
Take the retail and productexperience virtual.
Invest in the technologies.
How can retailers take steps closer to the edge?
Retailers will need to understand the tactics and
methods used in Context Retailing and will have
to train employees in how to integrate these
practices into interactions with shoppers. Also
critical will be educating consumers in how to use
various emerging applications to examine and
compare an oering in various contexts.
By overlaying data in a simulated world, retailers
will gain speed, coordination and the ability to
operate and make decisions within the context
o real market conditions and operating realities.
Companies will increase their visibility into real-
time supply chain occurrences, store conditions
and new market realities. With that insight,
retailers will be able to develop products and
services with a view into how, when and where
they will be used.
Context retailing requires both an investment
in ever-evolving virtualization/visualization
technologies and a test-and-learn model.
Tailoring merchandising and communication
according to an individual shoppers context
will require advanced intelligence engines that
connect to marketing and selling channels and
that can be maniested easily as the inormation
or experience appropriate to the shopper.
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The customer experience includes
The role o the retailer is
Loyalty is dened
Investment shits
Successul companies provide
Dramatic change is required
on-demand access to streaming products
and services that are accessed and bundled
as solutions.
to be the connector and access point between
the consumer and entities that provide the
products and services to ll a need.
by the requency and margin mix o what a
customer accesses and by aliation with a
specic retailer.
rom buying, stocking and selling inventory
to providing visibility and access based on
consumers needs.
the easiest access to the most relevant goods
and services, earning income not only rom
the margin on goods, but also rom the value
o access.
in developing a multidirectional fow o
goods, deriving value rom the access
model and presenting relevant solutions in
innovative ways to the customer.
3
Grocery retailers in the US have
reduced the rate at which they are
adding square footage by 56 percent.
56 %
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Moving to the edge o the Streaming Environment
For retailers to make this opportunity a reality, they must undamentally rethink the model by which they supply goods across their markets and invent
a model that thrives on ragmentation. Fragmentation will exist in multiple ormscustomers, channels, mode o distribution and acquisition type (buy,
rent, exchange, etc.). Managing supply and demand will be core to dierentiation and will require leading-class insights, inrastructure and collaboration
capabilities.
Apply customer insights.
Rightsize.
Create multidirectional fow.
How can retailers take steps closer to the edge?
Do you know what your customers are doing?
Retailers must track, capture and interpret
customers behavior across every available
channel and in their lie stages. The ability to
bridge structured and unstructured data, and
integrate it across the organization to apply the
insights toward sales o solutions, will become
more critical. To truly stay in tune with demand
patterns and appropriately manage supply,
retailersgoing beyond the traditional sources
or customer insightswill need to tap into social
buzz and collaborate with suppliers and maybe
even competitors.
Successul companies will shit investments rom
buying and storing inventory to creating new
solutions and access models. They will manage
store size and inventory fow proactively. It will
also become increasingly important to leverage
the network o industry peers, suppliers, partners
and customers to share assets and inrastructure
in order to achieve a truly fexible, right-sized and
fuid value chain.
The uture calls or the ability to aggregate
and create dynamic delivery routes and a
multidirectional fow o goods. Standard
merchandising channels become more complex
in the streaming environment because goods are
not coming rom or going to one place. Inventory
is coming rom multiple places and is at various
levels o use (e.g., pre-owned). Dynamic delivery
can enable better orecasting accuracy and better
supply chain visibility.
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The physical and virtual worlds
oer new channels and venues or
reaching a wide range o customers.
The customer is there at the edge,
ready to shop, interact with and
advocate your products. Are you
there as well, adapting to the digital
consumer, tapping social infuence,
selling in context and nding
ways to continually eed relevant
oerings to customers? Get to the
edge. Because now is the time to
make the leap into the exciting
uture o retail.
are @the edgeare you there with them?
The customers
For more inormation on becoming a retailer at the edge, please contact:
Renee Sang
Accenture Customer Innovation Network
Director
Allison Muller
Accenture Customer Innovation Network
Co-Lead, North America
Karen Voelker
Accenture Customer Innovation Network
Co-Lead, North America
1 http://www.mainstreet.com/article/career/employment/more-americans-will-change-jobs-2011
2 http://blog.shareaholic.com/2012/01/pinterest-reerral-trac
3 IRI, Channel Migration: The Blurring of Shopper Loyalty, 2009
4 http://www.dailydot.com/news/new-data-occupy-wall-street-unding
5 http://blog.nielsen.com/nielsenwire/online_mobile/social-media-report-spending-time-money-and-going-mobile
6. Internet Retailer, September 2009
7 http://adage.com/article/digitalnext/marketing-las-vegas-palms-hotel-klout-scores/146189
8 http://www.bizreport.com/2012/01/bad-reviews-good-or-conversion-rates.html
9 http://blog.nielsen.com/nielsenwire/online_mobile/social-media-report-spending-time-money-and-going-mobile
10 Google & IPSOS OTX, April 2011
11 SymphonyIRI Group, New Product Pacesetters: Carving out Growth in a Down Economy, 2011
12 Kantar Research
Accenture Retail Practice
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Copyright 2012 AccentureAll rights reserved.
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About Accenture
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technology services and outsourcing company,
with more than 246,000 people serving
clients in more than 120 countries. Combining
unparalleled experience, comprehensive
capabilities across all industries and business
functions, and extensive research on the
worlds most successful companies, Accenture
collaborates with clients to help them become
high-performance businesses and governments.
The company generated net revenues of
US$25.5 billion for the fiscal year ended Aug.
31, 2011. Its home page is www.accenture.com.