Retail Industry trends - 2014
- 1. Retail Industry 2014: Key trends and segments Nikhilesh Mahakur 18th June;2014
- 2. Retail Industry overview Stores Customer Associates Ecommerce Mobile Commerce External touch points Call Center Catalogs Social Commerce
- 3. Retail Industry business environment – Economic outlook • Slow economic growth • high levels of unemployment impacJng the business – Retail industry growth • Key Finding :The pressures of consumerizaJon conJnue to disrupt many enterprises, forcing them to change their tradiJonal business processes and operaJonal models. • Need for focus on – – PersonalizaJon – Enhanced customer service – Big Data – Digital business model – Threats to profits and business models • LegislaJons • High spends • PromoJons and discounts eroding profit margins
- 4. Trends and predicJons -‐ 2014 • Omnichannel as the norm • Rise of the mobile wallet • Personalized in store experience and personalizaJon online • Highly integrated technology in brick and mortar stores • Rise of mobile businesses • Loyalty and beyond – reinvenJon • RelaJonship markeJng to drives sales and markeJng strategies • Customers need for speed to grow further in 2014 • Higher investment in big data and customer analyJcs • Privacy concerns to rise with big data • Impact of social media on product decisions • ConJnued growth in emerging markets
- 5. Technology in Retail -‐ trends • Disrup;ve technology and transforma;on – Empowering consumers and changing consumer behavior – Cloud – facilitates Omnichannel strategy and helps retailers manage mulJple channels and locaJons, integrate their websites with business, support their Point-‐of-‐Sale (PoS) systems, provide a unified real-‐Jme view of business, perform automated merchandising and markeJng, and gain a 360-‐degree view of each customer. – Data and analyJcs – value add by customer profiling and acquisiJon, branding, product management and determining pricing decisions, – Mobile & Social media -‐adverJsing, product and pricing comparisons, promoJons, coupons – “On Jme” / “Same Day” delivery – Increased spends on IT, markeJng and adverJsing to spur growth • Surveys state retaining exisJng customers and adding new ones will be key drivers of revenue growth over the next one-‐to-‐three years. And while increasing customer loyalty and the share of a customer’s wallet can give revenue a boost, 29 percent also predict that improving economic condiJons will bolster revenue growth. • While online and mobile technologies offer consumers convenience, speed, and ease of use, brick and mortar stores have a disJnct advantage – face-‐to-‐face personal interacJon between the consumer and the associate in the store. Leading companies are shrinking square footage and instead allocaJng investment and innovaJon dollars toward brick and mortar business models that create a superior shopping “experience” for the consumer.
- 6. Retail 2014 :Key focus segments Omnichannel LogisJcs Banking CPG
- 7. Omnichannel commerce will rule the future. – Typical example : Store pick up • Order placed by customer • Backend process triggered by OMS and specific store inventory validated, a flagged response is available based on web only categories and logic built in based on the thresh hold of the store based on which the kill switch deacJvates the store once a limit is reached ( Item level and order level). • Product moved to store pick up Kiosk for customer to collect – Key challenges • Inaccurate inventory sync • Oversell • Difficult to idenJfy categories for sale staJsJcs Banking in Retail / Store Credit cards to drive sales – Examples : • Loyalty cards • Gii cards • Store value cards • Merchandise cards – Key challenges : • Data risk and fraud • Customer retenJon
- 8. Logis;cs : – A key winning example is Amazon’s year round 2 day delivery for $ 70 , where the retailer has an influx of capital at the beginning. – Typical examples : • LTL with white glove doorstep • LTL with white glove installed – Key challenges • Route opJmizaJon • Same day delivery -‐ minimum $ amount order for profitability ( High impact to profitability) Consumer Packaged Goods : – Pick up in store – Key examples : • Frozen goods : Meat products • Perishables : Nestle chocolates, grocery – Key challenges : • Low shelf life , frequent replenishment • Same day delivery could work only if inventory if found at a store close to a logisJcs partner / Dark stores could be used for the same. • Lower range of assortment
- 9. Retail Industry in India 5th largest in the world, sunrise sector with high growth potenJal, accounts for more than 15% of country’s GDP – Emerging Areas Some sectors that occupy a prominent posiJon with the retail industry are: » Apparel and fashion –Over $20 billion were spent on online apparel shopping in 2009 and increasing since then. » Fashion & Lifestyle -‐ In India the vast middle class and its almost untapped retail industry are the key anracJve forces for global retail giants wanJng to enter into newer markets, which in turn will help the retail to grow faster. » Food & Beverage retail -‐ Backed by huge potenJal and changing lifestyles, the food and beverage retail market is growing at a robust 30-‐35 per cent per year. » PharmaceuJcal Retail – Driven by therapies like anJ-‐diabeJc, vitamin, anJ-‐ infecJve and dermatology, it accounted for a robust 15% growth » E-‐commerce or E-‐tailing – the next big revoluJon -‐ With the advent of e-‐commerce in the retail industry, retail stores are facing sJff compeJJon from e-‐stores. The rising demand for e-‐shopping has lead to a new debate cropping up in the world. – Factors driving growth are: » Emergence of nuclear families » Falling real estate prices » Growing trend of double-‐income households » Increase in disposable income and customer aspiraJon » Increase in expenditure for luxury items » Large working populaJon » Low share of organized retailing » Growing liberalizaJon of the FDI policy in the past decade