1.Martin Newman CEO Practicology Preparing for customer-centric evolution 18th March 2014

2. What gives me the right to stand in front of you today? 3. What Practicology does Strategy Development Commercial Planning Technology Selection Organisational Design & Change Analytics & BI Conversion Rate Optimisation Customer Insight UX & Usability Site Design Digital Marketing Trading Services 4. What makes us special? 5. Who we do it for 6. Retailers cant afford to be only thinking about today and next year 7. Bricks 8. Flicks 9. Clicks: Waitrose 1.0 10. What a difference 10 years make! 11. The customer journey has changed and the customer is firmly in control of where, how and when they shop 12. The old Retail driver: Used to be location, location, location 13. The new Retail drivers: Now its: Convenience, Convenience, Convenience Buy from the channel of choice: Online, in store, by phone Return to the channel of choicefree Have your order delivered to the place of choice: Work, home, your store for pick up Have the order fulfilled at a time of your choosing You could call this The New Normal 14. Delivery is a competitive differentiator House of Fraser offers next-evening delivery slots 7 days a week Dixons offers same-day delivery for orders made before 9.30am Grocery Click & Collect: Asda shoppers can order before 10am for pick up after 2pm at 200 shops 15. High Barnet tube: Order before 12pm, collect after 4pm 16. HOWEVER changes in customer behaviour are running ahead of changes in retailers multichannel propositions 17. Omni channel/Shmomni channel 18. The challenges retailers face The percentage of sales online is increasing in all categories there is no saturation point Online browsing and transactions are increasingly conducted on mobile devices Retailers face channel proliferation. Its no longer just stores, catalogues and online; youll need to think about mobile-optimised channels, localised sites for international markets, marketplaces and social channels too Customers journeys cross these channels and they expect to move between them seamlessly 19. The five things retailers can do to future-proof their businesses 20. 1. Embed a customer-centric culture 21. Retailers responses must be truly customer-centric 22. What does a customer-centric culture mean in online retail? It means Argos feeds back product reviews to its buying and merchandising teams and stops selling products that get consistently bad reviews It means Debenhams credits its stores with online sales based on the postcode of where they are delivered to this means staff are incentivised to offer great service to customers who come into store and then go home and buy online. And it means John Lewis has integrated its Direct business and stores business to help customers feel like they are dealing with one business whether they buy online or offline. 23. Loyalty 2.0? Im not sure we ever reached loyalty 1.0 Too many retailers take customer loyalty for granted It has to be earned Where can you add value? To make the customers weekly chores easier To enrich their experience through content To deliver a truly personalised experience 24. Engagement is the new loyalty 25. Whats just about the most boring product category?... White Goods! 26. Washing machines just became interesting Customer value proposition Community & engagement = Trust 150k views a week on YouTube 27. The customer feedback loop AO.com have created a Facebook feedback book The CEO writes to couriers/drivers personally to tell them about customer complaints He also writes to compliment them Responses are posted on Facebook and customers respond commenting positively 28. The online customer of the future Any age Any country Expect product when and where they want it without constraints on fulfilment Mostly using mobile devices (the exception potentially being at work) Expect personalised experience, offers, prices and even product Will be loyal to brands who provide unique and/or innovative products or services, and not loyal to others 29. 2. Organisational design 30. Team realignment Retailers teams must work more closely together This is not just about channels, but aligning marketing, merchandising, supply chain, customer service and other functions Current hierarchies, reporting relationships and even P&L and incentive structures are simply not designed to deliver on what the customer assumes is an entirely logical - if largely invisible - infrastructure to support how they already shop 31. Current organisation design 32. A model for the future? 33. My favourite quote of 2013 34. Greg Wasson, CEO Walgreens speaking at Shop.org 2013 I see myself as a B52 bomber providing cover for Sona and her team, removing roadblocks to enable her to leverage digital to help us achieve our business objectives 35. 3. An international outlook 36. International Ecommerce The Netherlands was 11th for online retail sales in 2012, punching well above its weight by population To maintain the double-digit growth rates previously seen, UK online retailers are now targeting sales in other countries on this list UK retailers who sell more abroad than they do in the UK include ASOS and Boden 37. International ecommerce Even if you dont want to target an international customer base, you need to be aware that your competition is now international US retailers and brands entering Europe often set up an EU website to accompany flagship stores 38. 4. Technology platforms that enable flexibility 39. Responsive design Sites are being built with responsive design principles to addressing device proliferation 40. Connected devices of the future Internet giants such as Google are obsessed with what could be connected to the internet What kind of consumer devices might your systems need to interact with in the future? The Internet of Things concept holds that many devices will become internet- enabled within the next decade There will be 50 billion internet-connected objects by 2020 6.6 objects for every person who uses the web More web devices than humans since 2008 41. The internet of things The Internet of Things (IoT) is the network of physical objects accessed through the Internet, as defined by technology analysts and visionaries. These objects contain embedded technology to interact with internal states or the external environment. In other words, when objects can sense and communicate, it changes how and where decisions are made, and who makes them. - Cisco 42. The possibilities 43. Smart pad is already here People talk about smart fridges, but the smart pad is already here. Internet-connected devices are entering the home by stealth Imagine what the data on what people actually eat would be worth to a major supermarket! 44. Smart pad is already here 45. Staples Connect universal hub A wireless hub and smartphone/tablet app that allows consumers and small businesses to control all of their networked home devices in one place, including lighting, heating, CCTV etc. Staples is also committing space in its stores to make all the different connecting devices available. An office products provider has innovated in this space and stolen the march on competitors such as Best Buy who are struggling to maintain relevancy in the modern world. 46. Big data, small data, who cares what you call it data 5. Leveraging insight from digital channels to improve range, product, supply chain and marketing = Actionable insight 47. Predict what your customers really want to buy? Basket analysis of EPOS data is backward looking it shows what has been bought in the past - but is dependent on previous B&M decisions and availability Customers cant buy what you dont yet sell; they can only buy whats on the shelves that day What decisions would you make differently if you had insight into what they wanted to buy, not just what they ended up buying? 48. ASOS is already using Editd 200 buyers and online traders have access to real-time analytics Pulls in data from blogs, social media, competitor websites and emails, press mentions to help with decisions about ranging, pricing and discounting ASOS credits Editd for its recent 33% YOY sales lift 49. Safeways Just For U programme already offers personalised prices 50. How Just For U works Customers access via a browser or iOS or Android app and are presented with discounts and deals based on their online and offline purchase history from Safeways Club Card They Add the offers they are interested in to their Club Card in order that the system learns what they are interested in and improves relevance over time The system is real-time so customers can even add offers while they shop and receive the discount at the checkout Customers can even use supplier coupons on top of their personalised discounts in some cases Store receipts provide a summary of Just For U savings so customers know theyve got their deals 51. Smart(er) advertising will appear Sky AdSmart is now available in a fifth of UK households, tailors commercial ad breaks based upon the viewers profile and location, enabling advertisers to better target campaigns while also opening up channels to local businesses unable to afford national campaigns Sky states that one quarter of brands to have signed up so far are either new to TV advertising or had previously quit the market 52. What do changing customer expectations mean for your business? 53. Fulfilment Delivery and click and collect services are only just starting to really address customer convenience In the future, radical thinking will create completely new ways of getting products to customers when they want them Youve surely already heard about Amazons drones idea, but a few other recent developments provide a more tangible taste of things to come 54. The flats pictured in London SE1 Grange Gardens in Southwark have a concierge and refrigerated delivery docks so they can accept grocery deliveries when residents are out. Could supermarkets and other retailers expand their delivery lockers to such locations? This could be a serious alternative to click and collect in the future. 55. Deliver to car? Volvo unveiled a system at Mobile World Congress 2014 to allow couriers to leave or take packages from a customers car The couriers can unlock the car for a limited time period with a digital key Car owners will be able to track when their car has been opened and locked with a smartphone or tablet app 56. GPS to improve collect from store? 57. True customer service choice Customers want digital interactions O2 sees one million less customer service calls than two years ago Launched #TweetServe giving customers access to info such as account balance, call allowance and latest handset offers via Twitter DM once verified via SMS 58. iBeacons: Whats to come? Apples iBeacons tech being trialled in stores such as Macys and soon to land in the UK In future the tech could be used in individual departments or when customers are near a store 59. Amazon Amazon subsidiary A9 produced the Flow augmented reality app Users hold their phone up to a product and if its sold on Amazon.com it is recognised and a link is created. A barcode scanner acts as a back-up recognition tool Unlike similar barcode scanner apps, this stores links to all scanned products so its easy to go back and buy something at a later date or scan multiple products to compare 60. Addressing changing demographics Convenience is a huge trend due to changing demographics in developed economies How can you meet the needs of one-person households, older customers and those with busy lifestyles online? 61. Subscription models for convenience Graze delivers over 300,000 boxes a week and recently launched in the US too. Sales nearly doubled to 40.2m in 2013. Pre-tax profits shot up from 3.3m to 9.5m. 62. Thank You! Please email me for a copy of the presentation: Martin@Practicology.com @MartinNewman @practicology