eRetail 2013 - Rik Veldhuizen - Deloitte

Mobile RetailingIf you don’t do it, someone else will

Rik Veldhuizen

Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

According to research...Which Industry has the most potential for new Mobile Growth and Value Generation?

#1 Healthcare / Life Sciences #2 Retail

Source: Deloitte - Open Mobile: The Growth Era Accelerates - 2012


According to some other research...Which Industry is most impacted by digital disruption (size/timing)

#1 Retail #2 Finance

Source: Deloitte - Digital Disruption - Short Fuse, Big Bang? - 2013


41

CRM


TopicsHigh level topics for today

Mobile Influence

What canyou do?

One sizedoes notfit all...

4 +1 P’s

Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. 7

Mobile InfluenceMobile Disruption & its Influence on Retail


Mobile Strategy – main considerationsMobile Disruption

Mainframe Terminals“Green screens”

Windows Applications“Fat Client Server”

Web Applications“Thin”

Mobile Computing“Multi-Platform”

1970-1980 1990’s 2000’s 2010’s

Computers Tablets Smartphones Mobile Web Kiosk

MOBILE IS NO LONGER OPTIONAL

+

“The mobile power shift will touch every aspect of our lives at home and at work. This power shift will change how companies and institutions treat us and how they empower their own employees to take action in their immediate context and moments of need”- Forrester, 2013


Constantly Connected Consumer

Source: Google/IPSOS OTX Media CT Mobile Movement Study, April 2011: PEW Internet & American Life Project

Consumers love their devices

Would rather give

up chocolate

Use it on the toilet

Sleep nextto it


Define own Purchase Path

Pre-Purchase•Social Interaction•Product Discovery•Marketing•Price Checking

Purchase•Cashless/cardless purchase

online or in-store•Self-checkout

Post-Purchase•Order Management•Customer Service•Loyalty•Social Interaction


}Makes prices & quality

transparant to everyone

Customers buy from your competitors in your store!

Reduces number of store trips to comparison shops

Reduces store transactions

Mobile price checking & Social Networking


InvasionCompetitors invade your store } changed where they

purchased

changed what they purchased based on product reviews

65%

77%

6 of 10 smartphone owners comparison-shop online while in your store Source: Board of Governors of Federal Reserve System - Consumers & Mobile Financial Systems - March 2012


Mobile Influence Factor

Source: Deloitte Mobile Influence Survey, March 2012


Mobile Influence Factor


“When are you most likely to use your smartphone for a

store-related shopping trip?”


Mobile Influence Factor - by store category



Mobile Influence Factor - the future of retail

Sources: Row 1: eMarketer — US Mobile Commerce Forecast: Capitalizing on Consumers’ Urgent Needs; Row 2: Deloitte analysis; Row 3: Forrester — U.S. Online Retail Forecast, 2011–2016


Yet, focus is kept on mCommerce

82%“Mobile objective is to drive revenue to website”

Forrester — Mobile Commerce Forecast: 2011–2016, June 17, 2011


New Approach to Mobile

Should be strategic imperative because it affects the entire business

Should be C-suite issue, not a low-priority, eCommerce division task

because

17-21% of store sales mobile-influenced by 2016;21% Higher conversion rate driven by mobile

Source: Deloitte Digital - the Dawn of Mobile Influence - 2012


What can you do?Knowledge, Experience & Payments


If they know more, they buy moreKeep them hooked

• Provide key tools & information to support customers at each stage of decision-making process• Especially in store

• Information needs vary by product & shopping trip• Relevant & tailored• About products, locations, events & promotions

• Be relevant on channels they use

• Interactive experience


Get to know you customerNow more than ever

• Complicated behaviour

• Omni-channel analysis

• But... new ways of getting to know your customer

• Many customers rather share personal info with ‘machine’ than with sales person

• Intimacy requires• Knowing how customers shop within

product categories• Lots of data• Mining & Analysis• Data analysis

Sources: Deloitte - Mobile retailing - are you ready for radical change? - 2012Zebra Technologies, “How printing from iPad enhances the shopping experience: Lift sales while creating multi-channel opportunities,” 2011

30% sales increase


Mobile Advertising is deadLong live tablet & smartphone advertising

€ 1,90 € 9,70

€ 0,46 € 5,38

• Mobile advertising traditionally grouped tablets & smartphones together

• Prediction is that “mobile” advertising will get split into 2 categories (similar yet distinct)

• Makes it easier to realize value• Lots of innovation & experimentation

• Second/Third screening• In-game advertisements

• Advertisement geared towards type of interaction...• Smartphone > discovery• Tablet > more information• Desktop > transaction

• ...and towards device specifics• Screensize, location based, connectivity type, etc

Source: Deloitte - Technology, Media & Telecommunications Predictions 2013

ad revenue

display revenue


ExperienceAre you ready for tomorrow’s store?


“While physical stores may have once enjoyed the advantage of crafting cool

shopping experiences, the aesthetics of the iPad and all the social sharing surrounding

online shopping today are now shifting that advantage to online retailers.”

Source: Industry Leader quote - Deloitte - Global Powers of Retailing 2013 - Retail Beyond


Price & PromotionsStill relevant

• Geofencing• Young technology; adoption is spotty

78% indicate Price & Promotions are most important factors

4-5x (targeted promotions) greater purchasing rate than conventional marketing

7% use phones to learn about in-store promotions or events

Sources: Maxxing, “Increased promotions efforts in response to economic conditions”Forrester, “Can texting save stores? 'Geofencing' lets retailers offer deals to nearby customers, fight price- shopping,” Wall Street Journal, May 8, 2012

• Popularity gaining• Most cost-effective


Physical SpaceRetail Store is not dead, and is not going away

• Supports consumer interaction with the brand, product and each other - mobile technology as starting point

• Extends virtual world into the physical space - Merge

• Shifts from transactional to experiential

• Change in future store portfolio, footprint, layout & inventory• Brand & Product showroom• Hub & Spoke• In-store pickup• After Sales Service


Elevate In-Store ExperienceSome examples


TalentAssess how to enable store-talent to deliver new service model, with the technology & right-sized workforce to support it

• Mobility = Productivity Improvement

• Free personel from checkout counters & stockroom• Check inventory across stores & distribution centers

• Reduce inventory costs & stockouts and expand shopper’s choices• Out of stock items costs retailers almost 50% of intended purchases• Make inventory visible & keep customers from shopping elsewhere• Provide virtual inventory to mobile users

• Technology-enabled product & service knowledge

• Technology-savvy assistance with sales, order tracking & returns

• Brand ambassadorship (face of the retailer)

• Link personel with customers through mobile• Favorite sales associate


Process in the StoreSystems of the future

• Enabling Technology

• Store technologies equip talent with tools to deliver superior service

• Accomodate expectations of the connected consumer (drop off, showroom, after sales service a.o.)

• Customer facing tools & technologies deliver customer experience of tomorrow

• Requires flexibility & ability to integrate existing & emerging applications and devices

• Intelligent Mobile Wallet


4+1PsProduct, Price, Promotion, Place & ... Payment


Mobile, Money & CardsTurning into the inevitable Mobile Wallet


Mobile Payments - where are we today?Preparedness of key players to deploy mobile payments

Most viable business model

Source: Deloitte Future of Mobile Payment Survey


Mobile Payments - where are we today?

Mobile Carriers Financial Institutions Handset Makers Merchants Consumers

Wait & See Gains by innovating disruptive models

Loses by being on the sidelines or acts defensively when credible threat emerges

Limited gain from small scale NFC deployment by carrier

Limited gain from competition to card-based ecosystem

Loses because of fragmented offerings and limited availability

Buddy SystemGains from tapping existing payment network and generates incremental revenues

Loses by sharing merchant revenues with carriers unless it is a niche player that expands revenue pie

Moderate gains from NFC deployment to larger customer base

Gains from speeded up transactions but loses from upgrade costs of POS

Gains from merchant acceptance and convenience

Fly Solo Significant risk without commensurate returns

Significant risk without commensurate rewards

Limited gains from small-scale deployment

Limited gains from small-scale deployment

Limited gains from low merchant acceptance

Open FederationSignificant gains from large-scale mobile payment deployment

Moderate gains from large-scale mobile payment deployment

Significant gains from mass deployment of NFC

Significant gains from mass deployment of NFC and greater competition among payment instruments

Gains significantly because of expanded choice, merchant acceptance and convenience

Players & Scenarios

Source: Deloitte - Cell me the money - Unlocking the value in the mobile payment ecosystem


Mobile Payments - where are we today?And why should you care?

• Merchants reluctant• Changeover costs (even online)• Operating costs, Stability & Processing time• Additional mode, but may be not perfect substitute

• Merchants have lot to gain• Expectations to be innovative• Channel additional information a/o Increase customer loyalty • Differentiation from competition• Improved reporting & real-time analysis on purchases• Reduced complexity in payment process

Source: EHI Retail Institute 2011

22%

think mobile wallets will be successful

27%

think NFC-enabled payments will be most

successful


Consumers don’t understand the value...

86%

don’t know mobile payments systems

Sources: Steinbeis Research Center for Financial Services 2012EHI Retail Institute 2011

“Cash, Card and... phone. Another payment method”


...But they understand the risk

Source: Steinbeis Research Center for Financial Services 2012

73%

says security is most important factor re mobile payments

86% don’t want to pay extra for using mobile wallets


B: 2014

C: 2015 D: 2016

When will Mobile Wallets rule the world?

A: 2013


One size...does not fit all


One size does not fit all...Use of Mobile Technology differs, as Retail formats differ in their value propositions, strategies, performance objectives & customer expectations

Apparel Store Department Store

Discount Store Club Store Drug Store Grocery Store

Home Improvement

Store

Non-apparel Specialty

Store

• Expert opinions• In-store Ambience• Customized

Clothing

more important than transaction speed

• Loyalty programs• Targeted offerings

to attract & retain young customers

• Personalized offerings

• Price discounts

appealing to price-sensitive customers

• Targeted offerings• Bundled products• Discounts

attractive to price-sensitive shoppers

• Loyalty programs• Discount offerings• Decrease checkout

time

may keep customers from shopping elsewhere

• Low prices• Targeted offerings• Real-time

discounts

could shape customer behaviour & increase loyalty

• Expert opinions• Store talent

• Brand / product type connection

• Customer profiling

• Real-time fashion advice

• Access social networks to validate purchase decisions

• In-store navigation

may help customers find products they are looking for

• Mobile Point-of-Sale

to shorten wait times & simplify shopping experience

• Efficient navigation• Locate specific

items on shelves

beneficial for club store customers (members)

• Credible information on drugs

• Checkout time

valued by customers

• Accelerate shopping process

• Expert opinions• How-to videos for

relevant products

enhances customer experience and decreases staffing requirements

• Personal recommendations

based on shopper’s own tastes & requirements


Choose your Consideration(s)You can’t do it all at once

Preserve FlexibilityConsumers will increasingly expect a seamless and user-friendly mobile experience regardless of the mobile device or operating system they use. When selecting off-the-shelf apps or developing mobile apps in-house, consider short and medium-term implications of your choice with respect to a potential change in the dominant smartphone operating systems or brands. Always consider how your mobile strategy impacts your overall flexibility.

Current Pain PointsA great starting point for mobility is to identify current pain points. For example, have you ever walked all over a store floor to find an available sales associate? Mobility could easily alleviate this customer pain point by allowing the customer to submit a “help” request including their current location in the store through an app.

Include Employees & PartnersAs consumers become ‘super users’ of mobile devices and apps, deyning your sales staff (ao) access to the same technology and tools could cause a fundamental disconnect and lead to to an ineffective customer experience in the stores. Furthermore, consider how mobility can enable your interactions with suppliers and your distribution process.

Map Customer JourneyHow do customers move from mobile to social to store to web and beyond as they go through product & price considerations, purchase a.o.? Understanding the customer journey is the bedrock of any mobile strategy.

Don’t underestimate Security & PrivacyA mobile-related security or privacy breach could severely damage your reputation and hamper adoption of mobile capabilities. If you want your customers to engage with your business via mobile channels and share critical info such as their location, you should emphasize privacy & security at all times.

Usability & Experience firstUsability is everything. But not just the app, make sure that integration points between your mobile and other channels, notably the store, are in place and support a desirable experience.

Omnichannel approachMake sure your mobility strategy isn’t operating in a silo. Things get really interesting when mobility is combined with your other channels.

5PProduct, Price, Promotion, Place & PaymentConsider the impact mobility has on the 4P’s, plus the additional P for Payment. Consider how consumer do price research while in store, or provide proper promotions when consumers are in the store or when they are scanning a certain product (bundles), or how to deliver a new ‘place’ (in-store) experience.

Mobile CapabilitiesConsider movement, NFC, Bar/QR codes, etc. Retailers should constantly explore how these additional capabilities can not only speed up or enhance existing processes, but more importantly how they can be leveraged to expand the horizon of what is possible.

€Benefits of doing it rightGrow brand awareness and loyalty, Increase revenue, Increase traffic, Improve conversion rate, Increase overall basket size, Enhance the customer experience, Keep pace with evolving customer demands and expectations, Reduce labor costs, Increase marketing efficiency, Execute flawlessly, Implement securely


Bottom Line

If you don’t do it, someone else will...

And they’ll do it to customers inside your stores


Thank you.

S e c u r e B y D e s i g n

eRetail 2013 - Rik Veldhuizen - Deloitte

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