rai – tcs: state of multichannel retail

The State of Multichannel Retail

Retail Operations

Benchmarking and Excellence Survey 2014

ROBES 2014- The State of Multichannel Retail TCS Public

Benchmarking and Excellence Survey 2014

Agenda

- 1 -

• Context

• Scope & Methodology

• Key Insights

• Call to Action


Context

Why Multichannel?

- 2 -

Reduce store Size

Increase Reach

Reduce stores Dependency

Reinvent your Operations

Delight your Customers differently

Multichannel offers opportunities to reorient the

business radically !


- 3 -

Context

Why Multichannel?


Multichannel Offerings Today

- 4 -

Transactions

COD, Mobile,

Credit, Debit

Engagement

Comparative sites, SEO,

Social sharing, Info kiosk

Delivery

Next day delivery,

Click & Collect,

Delivery tracking,

Service at delivery

After Sales

Service

Multi-channel returns,

complaint resolution,

troubleshoot

on social

Multi-channel Options

Web, Contact centre,

Marketplace, Mobile,

Catalogue


Survey Preview

Good News

- 5 -

70%

>15%

6371

For majority,

e-commerce has seen

healthy growth

have online business reporting

directly to CEO or COO

ATV on website


- 6 -

Survey Preview

Reality & Challenges

Are retailers ready to do justice to the potential?

Are these tactical or strategic issues?

• Only 30% have a single view of customer orders

• 38% pursue uniform pricing across channels

• Only 17% have a unified marketing calendar

• Only 25% incentivize cross-channel collaboration at stores

• Only 17% have a unified CRM program


Key Performance

Indicators (KPIs)

Strategic Focus

Areas

Scope & Methodology

Parameters & Processes

The first-ever comprehensive multichannel retail benchmarking study covers

the following parameters:

- 7 -

Customer Experience

Marketing

Operations

Organization

Technology

Financial management

Process Maturity

1 2 3


Participating Brands

- 8 -

*The logos are property of their respective corporations


Methodology Used for This Study

- 9 -

LEVEL 2

LEVEL 3

LEVEL 4

Unified Customer Marketing & Relationship Program

Over-lapping programs (common promotions)

Channel specific programs

LEVEL 1 Store-based CRM program

25%

50%

75%

100%

Example: Customer

Experience

TCS Process Maturity Framework TCS‟ Process Maturity Framework

was used to:

• Define process maturity from

Level 1 (Low Maturity) to Level 4

(High Maturity)

• Allocate scores to each level of

maturity, which ranged from 25 to

100 percent

• One-to-one, in-depth interactions

with CXOs captured data and

insights.

• 1,200 data points were gathered

across six process areas.


Key Insights

- 10 -


Industry Level KPIs

- 11 -

Contribution of revenue from non-

store channels

Less than 1% 43%

1% to 3% 21%

3% to 5% 7%

5 to 10% 21%

>10% 7%

What is the sales growth of the non-

store channels (e-commerce)?

0-5% 8% 5-10% 8% 10-15% 0% 15-20% 28% >20% 56% What is your average transaction

value (ATV) in the channels that you

operate (Rs.)?

Store 5737

Website 6371

Marketplace 3967

Mobile Channel 4300

What is the proportion of

repeat/loyalty customers for non-

store channels (e-commerce)?

< 30% 58%

30-40% 11%

40-50% 32%

50-60% 0%

> 60% 0%

What is the percentage of customer

returns for your non-store channels

(e-commerce)?

0-3% 65%

3-5% 9%

5%-10% 13%

10%-15% 9%

>15% 4%

Loyal customers are driving your non store sales.

The ATV on the website is higher than the physical store !


Primary Objective of Multichannel

- 12 -

Improving Customer Experience and Geographical Expansion

high on retailers‟ multichannel strategy for FY2014-15

21%

21%

18%

17%

13%

10%

Prime objective of multi-channel strategy (FY2014-15)

(% of retailers for whom this item is a top priority


Overall Process Maturity – Cross Segment

Industry Maturity

- 13 -

Overall low process maturity

• Overall industry maturity

is “low”

• Organizational structures

are evolving to meet the

dynamic requirements

• The industry still faces

challenges on “one

version of truth”

– Customer, product, and

inventory information

across channels

57%

53%

75%

70%

50%

63%

0%

20%

40%

60%

80%

100%

Marketing

Operations

CustomerExperience

Organization

Technology

Financial


- 14 -

Overall Multichannel Process Maturity Is Low

A lot to learn from each other on good practices

Marketing Operations Customer Experience

Technology Finance Organization

57%

Leaders

Laggards

43%

37% Industry

benchmark

53%

Leaders

Laggards

40%

30% Industry

benchmark

75%

Leaders

Laggards

33%

57% Industry

benchmark

70%

Leaders

Laggards

57%

40% Industry

benchmark

63%

Leaders

Laggards

17%

20% Industry

benchmark

50%

Leaders

Laggards

33%

40% Industry

benchmark

Scope to share best practice: High High Medium

Scope to share best practice: High High Medium


P&L

Single or Separate for different Channels ?

- 15 -

10%

7%

66%

17%

Stores P&L only

Stores + Non-store (owner of multi-channel) P&L

Separate P&L for each individual channel(Intra Channel Decision Making)

Single P&L for all channels

Trade-off between collaboration and speed

Low Maturity

High Maturity


Delivery options offered- Cross Segment

Multichannel Operations

- 16 -

61%

18%

4%

18%

Buy on limited Channels (say,only Store or Online) &

Deliver to Home

Buy on any Channel &Deliver to Home

Buy on any Channel & Pick-In-Store in specific locations

Buy on any Channel & Pick-In-Store in any location

% respondents

• 18% have store pick up of

orders made from any channel

• 52% have channel specific

supply chain network but share

inventory

• 71% have “one view” of their

inventory

There is some way to go in terms of integrated

multichannel operations

Low Maturity

High Maturity


IT System Landscape- Cross Segment

Multichannel Technology

- 17 -

28%

28%

34%

10%

Independent

Low integration

Marginal integration

Complete integration

% respondents

• Only 10% have complete

integration of their systems

• Only 10% of retailers have one

view of customers

• 65% of respondents spend <10%

of IT budget on non store

channel

Technology is the least matured

function

Low Maturity

High Maturity


Cross Channel Incentives- Cross Segment

Multichannel Organization

- 18 -

No 79%

Yes 21%

% respondents

• Only 21% provide cross channel

incentives

• Only 34% share the same

customer and product view

across channels

• 70% of the retailers have multi-

channel sponsorship from the

CXO‟s office

Need to build synergies between the store and non store

channels


Best & Next Practices

- 19 -

A combination of mindset, policy changes and

technology intervention can create value

Marketing

• Cross-channel unified view of

customer and order data

• Cross-channel unified

marketing and promotion

calendar

Operations

• Continuous, cross-channel

assortment planning

• Cross-channel order

fulfillment

• „One view‟ of inventory cross-

channel

Customer Experience

• Unified CRM program across

all channels

• Multiple options for order pick-

up and delivery

• Multiple return options to

customer for non-store

purchases

Technology

• Integrated cross-channel

technology platform

• Real-time, cross-channel

update of data, promos and

pricing

Finance

• Channel-optimized annual

operating plans

• Unified P&L across channels

for combined decision making

Organization

• Single cross-channel view of

customer

• Intense oversight by

CEO/COO

• Reporting for collaboration

P

P

P

T

T

Process, Policy Technology T P

P

P

P

P

P

P

T

T

T

T


Summary

The first ever Multichannel Operations Benchmarking & Excellence

Survey reveals that:

• FY14 is a mixed bag in terms of performance

• True multichannel “integration” is not visible

• Overall maturity is low, though retailers are putting in place the

organization structures and processes for a multichannel play

- 20 -


Call to Action…

- 21 -

There is a great opportunity in the making to personalize, reach out

and transform customer experience

1. Re-evaluate and reboot your multichannel strategy ; Go back to the

drawing board and create roadmaps for all areas

2. Get your organization structure and people aspects right;

Collaborate and Innovate both

3. Unlock value of your “loyal customers” and leverage your

assets(stores) ; Build synergies between the store and non store

channels

4. Technology is the least evolved area ; Need to invest ; Have a long

term view and do not settle for “chalta hai solution”

5. Continued CEO involvement

Thank You

Anil Rajpal

Head Practice – Retail, CPG & E-Commerce, Emerging Markets

Global Consulting Practice

Tata Consultancy services

[email protected]