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Conference Name: L2inc
Code: omnichannel
1
OMNICHANNEL RETAIL 2015
NEW YORK CITY | THE CROSBY | JULY 16, 2015
2
UPCOMING RESEARCH
Intelligence Report:
VIDEO
Intelligence Report:
OMNICHANNEL RETAIL
Digital IQ Index®:
SPECIALTY RETAIL
Digital IQ Index®:
DEPARTMENT STORES
Intelligence Report:
LOCALIZATION
3
UPCOMING EVENTS
BREAKFAST
LOCALIZATION
New York City
July 23rd, 2015
BREAKFAST
BREAKFAST
DEPARTMENT STORES
New York City
SPECIALTY RETAIL
New York City
August 11th, 2015
September 10th, 2015
4
5
5
OMNICHANNEL 2015
INTRODUCTION
6
THE NEW RETAIL EQUATION
THEN
NOW
7
THE OPPORTUNITY
Digital Influence Projections: Percent of Sales Influenced by Digital
2009 – 2021E
Source: Deloitte Digital, “Navigating the New Digital Divide,” May 2015
8
INFLUENCE RUNS BOTH WAYS
Importance of Select Channels When Making a Purchase
According to Digital Shoppers, Worldwide
June 2014
◼︎ Digital Channels
Traditional Store Experience
72%
Site
67%
In-Store Technology
53%
Email
48%
Mobile App / Mobile Web
Social Media
Call Center
42%
36%
31%
Robust digital investments are important to driving online sales…
Source: Capgemini, “Digital Shopper Relevancy Report 2014,” September 2014
9
INFLUENCE RUNS BOTH WAYS
Importance of Select Channels When Making a Purchase
According to Digital Shoppers, Worldwide
June 2014
◼︎ Digital Channels
Traditional Store Experience
72%
Site
67%
In-Store Technology
53%
Email
48%
Mobile App / Mobile Web
Social Media
Call Center
42%
36%
31%
..but digital shoppers consider in-store experience the most influential channel.
Source: Capgemini, “Digital Shopper Relevancy Report 2014,” September 2014
10
OMNICHANNEL EQUATION
Net Sales Given Omnichannel Capabilities
Source: ICSC, “Shopping Centers: America’s First and Foremost Marketplace,” 2014
11
PROGRESS?
Cross-Channel Fulfillment Capabilities
Ability of Inventory Allocated to One Channel to be Used for Another Channel’s Fulfillment
May/June 2014, N=500+ North American Retailers
2014
2013
85%
32%
Source: Boston Retail Partners, “Annual Supply Chain Benchmark Survey,” May/June 2014
12
NOT FAST ENOUGH
Implementation Status of a Single Order Management Platform
November/December 2014, N=500+ North American Retailers
No Plans
23%
More Than 3
Years
8%
Already in
Place
20%
Within 12
Months
15%
Two-thirds of retailers are more
than one year out from having a
single order management platform
Within 1-3
Years
34%
Source: Boston Retail Partners, “POS/Customer Engagement Survey,” November/December 2014
13
WHY?
Current Age of Existing Retailer POS Systems
November / December 2014
< 2 Years
2 to 4 Years
POS Terminals
POS Software
Mobile Device POS
5 to 8 Years
15%
18%
25%
> 8 Years
43%
28%
20%
14%
30%
13%
8%
3%
41% of retailers have had their existing POS terminals for 5+ years.
Source: Boston Retail Partners, “POS/Customer Engagement Survey,” November/December 2014
14
PRIORITIES VARY BY MARKET
Hybrid Fulfillment Capabilities, by Market
Grocery, Hypermart and Big Box Retailers, June 2015
◼︎︎ Market with Highest Adoption ◼︎︎ Market with Lowest Adoption
Click & Collect
Curbside
Pickup
Return In-Store
In-Store
Inventory
Free
Shipping
Same-Day
Delivery
Delivery Pass
Program
66%
20%
73%
87%
100%
0%
7%
79%
21%
57%
57%
29%
21%
0%
62%
8%
54%
62%
38%
23%
23%
45%
0%
18%
27%
9%
9%
0%
43%
14%
43%
36%
21%
7%
0%
n=15
n=14
n=13
n=11
n=14
Source: L2 Inc., “Omnichannel Retail 2015,” July 2015
15
GLOBAL RISE OF CLICK & COLLECT
Percent of Consumers Who Have Used Click & Collect, by Country
◼︎ 2013 ◼︎︎ 2014
60%
57%
51%
41%
32%
21%
12%
19%
Source: comScore, Inc., “UPS Pulse of the Online Shopper”
16
SECOND WAVE OF E-COMMERCE?
UK Click-and-Collect Sales
Select UK Click-and-Collect Outliers
2014 vs. 2015
% of Digital Retail Sales
◼︎︎ % Digital Retail Sales ◼︎︎ % Total Retail Sales
2014
91%
17.0%
15.0%
70%
63%
59%
1.7%
2014
2.2%
2015
Source: Mintel, “UK Consumer Trends 2015,” October 2014
54%
45%
17
Source: Company Annual Reports and Press
COST + CONVENIENCE
Reasons for Using Click-and-Collect
Among UK Digital Buyers
April 2015
Avoid Home Delivery Charges
57%
More Convenient than Home Delivery
More Confident in Receiving Items
Source: JDA and Centiro, “Customer Pulse Report 2015” June 2015
55%
19%
18
OPERATIONAL HURDLES ABOUND…
Problems Experienced While Using Click-and-Collect Services
Among UK Respondents, April 2015
32%
Long Wait Due to Lack of In-Store Staff
30%
Staff Unable to Locate Goods In-Store
No Dedicated Area for Click-and-Collect In-Store
16%
Items No Longer Available After Placing Order
16%
Items Out-Of-Stock at Preferred Store
15%
Operational
Issues
Staff Unable to Locate Goods via Internal Systems
15%
Inventory
Issues
Source: JDA and Centiro, “Customer Pulse Report 2015” June 2015
19
AND SCALE CHALLENGES
Home
Delivery
46%
“There is a huge logistical operation behind this
system and quite frankly it’s unsustainable.”
-Andy Street, John Lewis MD
July 2015
Click
and
Collect
54%
2008: 350K packages / year
Today: 6M packages / year
20
…PROMPTING NEW FORMATS
• 120 large-format “hub” stores, each serving
4-6 small-format “spoke” stores / 25
“digital concept” stores
• Frequent inventory replenishment routes
throughout the day allows for same-day
collection of 20K+ products
• Enabled by real-time stock visibility
21
OMNICHANNEL 2015
STUDY PREVIEW
22
STUDY PREVIEW
L2 Intelligence Report: Omnichannel 2015
Methodology Preview
L2 Intelligence Report: Omnichannel Retail 2015
Third annual report to be published in late July
Benchmarks omnichannel capabilities of 116 US
retailers + 52 EU retailers across 8 categories
SITE INTEGRATION
SHIPPING & LAST MILE
IN-STORE & MOBILE
THE OMNICHANNEL ORGANIZATION
23
BRAND LIST
APPAREL & ACCESSORIES
A|X Armani Exchange
Abercrombie & Fitch
Aéropostale
ALDO
American Eagle Outfitters
Ann Taylor
Anthropologie
Banana Republic
Brooks Brothers
Burberry
Calvin Klein
Chanel
Chico’s
Club Monaco
Coach
Cole Haan
Desigual
DEPARTMENT
STORES
Barneys New York
Bergdorf Goodman
Bloomingdale’s
JCPenney
Macy’s
Neiman Marcus
Nordstrom
Saks Fifth Avenue
Sears
Diane von Furstenberg
Dior
Express
Forever 21
Gap
Gucci
Guess
H&M
Hugo Boss
J.Crew
Joe Fresh
Kate Spade
Kenneth Cole
Lacoste
LOFT
Louis Vuitton
Marc Jacobs
WATCHES &
JEWELRY
Alex and Ani
Cartier
Fossil
Montblanc
Swarovski
Swatch
Tag Heuer
Tiffany & Co.
Tourneau
EU BRANDS
Michael Kors
Nine West
Prada
Ralph Lauren
Rebecca Minkoff
Salvatore Ferragamo
Steve Madden
Stuart Weitzman
Talbot’s
Tommy Hilfiger
Tory Burch
UNIQLO
Urban Outfitters
Victoria’s Secret
White House | Black Market
Zara
BIG BOX
Bed Bath & Beyond
Best Buy
CVS
Home Depot
Lowe’s
Office Depot
Pet Smart
Petco
Rite Aid
Staples
Target
Walgreens
Walmart
Alcampo
Aldi
Auchan
Argos
Asda
B&Q
Boots
Carrefour
Consum
Darty
Decathlon
Dia
E Leclerc
Edeka
Hipercor
IKEA
HOME
Crate & Barrel
Ethan Allen
Pier 1
Pottery Barn
Restoration Hardware
Sur La Table
West Elm
Williams-Sonoma
Intermarché
Kaufland
Leroy Merlin
Lidl
Media Markt
Mercadona
Monoprix
Morrison’s
Penny Market
Rewe
Sainsbury’s
Sports Direct
Super U
Tesco
Waitrose
BEAUTY
Bath & Body Works
Benefit Cosmetics
Kiehl’s
L’OCCITANE en
Provence
Lush
M.A.C Cosmetics
Origins
Sephora
The Body Shop
Ulta
SPORTSWEAR
Adidas
Athleta
Eastern Mountain Sports
Eddie Bauer
L.L.Bean
Lululemon
Nike
North Face
Oakley
Patagonia
REI
Under Armour
Vans
OTHER
Apple
Bose
Samsung
Tumi
24
OMNICHANNEL 2015
SITE INTEGRATION
25
ONLINE / OFFLINE METHODOLOGY
E-Commerce vs. Brick-and-Mortar Incentives
Fulfillment / Integrated Inventory
Store Locator
Online Purchase / Reservation / Store Pick-up
In Homepage Header / Linked From Product Page
SMS Alerts For Pick-up
Use Of Geolocation
Online Pre-Order
Online Purchase / In-Store Return
Filter By Product Category / Services / Store Type
Online Exclusive Products
Real-Time In-Store Inventory
Availability Of Contact Information & Store Hours
Curbside Pick-Up
On-Site Mapping & Directions
Preferred Store / Inventory
Inclusion Of Retailers / Outlet
Filter by Inventory
Send Directions To Email / SMS
Free Shipping
Ship-From-Store
Individual Store Social Handles / Photos
Expedited Free Shipping / ShopRunner
Partnership
Events & Services
Account Functionality
Promoting In-Store Services
Wishlist / Shopping List / Registry
Book Online Appointment
Synchs With In-Store Inventory
Promoting In-Store Events / RSVP Online
E-Commerce Exclusives
Online Customizable Products
Online Exclusive Sales / Promotions
Availability Of Express Payment Options
(e.g. Paypal)
Google Shopping Vendor / In-Store
Inventory
Events Space In Store Locator
26
LUXURY: DIGITAL LIFE RAFT
E-Commerce vs. Brick & Mortar Incentives
Luxury Pricepoint, June 2015, n=14 brands
E-Commerce Incentives
2014
2015
10
E-COMMERCE
FOCUSED
OMNICHANNEL
AWARE
8
6
0
2
4
6
4
2015
Average
8
10
Brick & Mortar Incentives
2
OMNICHANNEL
LAGGARDS
Source: L2 Inc., Omnichannel 2015
0
IN-STORE
FOCUSED
27
PRESTIGE: RESHUFFLING
E-Commerce vs. Brick & Mortar Incentives
Prestige Pricepoint, June 2015, n=35 brands
E-Commerce Incentives
2014
2015
10.0
E-COMMERCE
FOCUSED
OMNICHANNEL
AWARE
8.0
6.0
0.0
2.0
4.0
6.0
4.0
2015
Average
8.0
10.0
Brick & Mortar Incentives
2.0
OMNICHANNEL
LAGGARDS
Source: L2 Inc., Omnichannel 2015
0.0
IN-STORE
FOCUSED
28
MASS: ALL ABOUT STORES
E-Commerce vs. Brick & Mortar Incentives
Mass Pricepoint, June 2015, n=15 brands
E-Commerce Incentives
2014
2015
10.0
E-COMMERCE
FOCUSED
OMNICHANNEL
AWARE
8.0
6.0
0.0
2.0
4.0
6.0
4.0
8.0
10.0
Brick & Mortar Incentives
2015
Average
2.0
OMNICHANNEL
LAGGARDS
Source: L2 Inc., Omnichannel 2015
0.0
IN-STORE
FOCUSED
29
UK: FAST OMNICHANNEL PROGRESS
E-Commerce vs. Brick & Mortar Incentives
UK Brands, June 2015, n=8 brands
E-Commerce Incentives
2014
2015
10.0
E-COMMERCE
FOCUSED
OMNICHANNEL
AWARE
8.0
2015 6.0
Average
0.0
2.0
4.0
6.0
4.0
8.0
10.0
Brick & Mortar Incentives
2.0
OMNICHANNEL
LAGGARDS
Source: L2 Inc., Omnichannel 2015
0.0
IN-STORE
FOCUSED
30
LEADERS: CLOSING MORE STORES
Omnichannel: Percentage of Store Closed YoY
Percentage of Stores
2014 to 2015, n=16
4.00%
2.82%
Leaders
Laggards
Scored in top 40% for
E-commerce and Brick
and Mortar incentives
Scored in bottom 40% for
E-commerce and Brick
and Mortar incentives
Source: Company Annual Reports for Brands Reporting Data
31
BUT MORE EFFICIENT STORE SPACE
Omnichannel: Same-Store Sales YoY Growth
Percentage of Brands
2014 to 2015, n=19
Positive YoY Same Store Sales
Negative YoY Same Store Sales
Leaders
Scored in top 40% for
E-commerce and Brick
and Mortar incentives
Laggards
Scored in bottom 40% for
E-commerce and Brick
and Mortar incentives
Source: Company Annual Reports for Brands Reporting Data
89%
11%
50%
50%
32
CUSTOMER IS OMNICHANNEL
Important Omnichannel Retail Capabilities for US Digital Shoppers
September 2014
Check in-store availability online
82%
Buy online/via mobile, pick up in-store
57%
Option to receive in-store receipt via email
51%
Easy access to profile data across channels
50%
Consistently personalized shopping experience
across channels
47%
Sophisticated mobile site
Usage of social media for access across channels
43%
24%
Best-in-class omnichannel solutions provide convenience, transparency, and personalization.
33
Source: The E-Tailing Group, "Holiday 2014 Omni-Channel Gift Behavior,” October 2014
33
TIPPING POINT
Real-Time In-Store Inventory by Pricepoint, Year-Over-Year
March 2013 vs. May 2014 vs. June 2015
◼︎︎ 2013 ◼︎︎ 2014 ◼︎︎ 2015
100% 100%
52%
50%
34%
50%
46%
41%
32%
20%
8% 8%
0%
US Mass, n=8
US Aspirational, n=32
US Prestige, n=25
Source: L2 Inc., “Omnichannel Retail 2015,” July 2015
N/A
N/A 0%
US Luxury, n=13
UK Brands, n=8
N/A N/A
EU Brands, n=52
34
IN-STORE FILTERS
35
CLICK & COLLECT: SLOWER
Click & Collect by Pricepoint, Year-Over-Year
March 2013 vs. May 2014 vs. June 2015
◼︎︎ 2013 ◼︎︎ 2014 ◼︎︎ 2015
100% 100%
88% 88%
60%
25% 25%
13%
20% 24%
12%
23%
15% 15%
N/A
US Mass, n=8
US Aspirational, n=32
US Prestige, n=25
Source: L2 Inc., “Omnichannel Retail 2015,” July 2015
US Luxury, n=13
N/A
N/A N/A
UK Brands, n=8
EU Brands, n=52
36
UNCOVERING BEST PRACTICES: 2014
BUY Online, Pick-Up In-Store
RESERVE Online, Pick-Up In-Store
37
UNCOVERING BEST PRACTICES: 2015
BUY Online, Pick-Up In-Store
RESERVE Online, Pick-Up In-Store
38
AEO: RESERVE, TRY & BUY
New Reserve, Try & Buy feature is
exclusive to the AEO | Aerie app.
39
CURBSIDE GAINING GROUND
Sears and Kmart promise
curbside delivery in 5 minutes
or less, trackable via in-app
stopwatch. Consumers receive
coupons for longer waits.
Consumers call or text when approaching
one of 20 Nordstrom pilot stores offering
curbside pickup, launched in May 2015.
40
OUTSOURCING
41
WALMART’S TEST KITCHEN
Click & Collect
Pick-Up DriveThru
Tube Station
Lockers
Cold-Storage
Lockers
Fall 2012
April 2013
November 2013
March 2014
Not Yet Launched
Not Yet Launched
Fall 2014
October 2014
42
GOOGLE’S OMNICHANNEL PLAY
Google Product Listing Ads
Percent of Brands Listing Products and Including In-Store Inventory
June 2015, n=116 brands
Authorized Google Shopping Vendor
Displays In-Store Inventory in PLAs
89%
75%
69%
38%
22%
60%
31%
59%
54%
33%
30%
15%
0%
Department
Stores (n=9)
Home (n=8)
Big Box (n=13)
Beauty (n=10)
Apparel &
Accessories
(n=51)
0%
Sportswear
(n=13)
Watches &
Jewelry (n=9)
0% 0%
Consumer
Electronics (n=3)
43
GOOGLE’S OMNICHANNEL PLAY
44
IMPLICATIONS
45
OMNICHANNEL 2015
SHIPPING & LAST MILE
46
RETAILERS TAKING BACK CONTROL?
Brands Offering Regular Free Shipping by Pricepoint, Year on Year
March 2013 vs. May 2014 vs. June 2015
◼︎︎ 2013 ◼︎︎ 2014 ◼︎︎ 2015
100% 100%
(added)
100% 100%
92%
84%
75% 75%
66%
76% 72%
25%
N/A
US Mass (n=8)
N/A N/A
US Aspirational (n=32)
Source: L2 Inc., “Omnichannel Retail 2015,” July 2015
US Prestige (n=25)
US Luxury (n=13)
EU Brands (N=52)
47
THRESHOLDS ARE ON THE RISE
Average Threshold Amount for Free Shipping, by Category
May 2014 vs. June 2015, N=85 Brands With Threshold-Based Free Shipping (US)
◼︎︎ Average Threshold 2014 ◼︎︎ Average Threshold 2015
+$42
+$4
+$7
+$4
$0
$0
$36 $40
$39 $39
$33 $33
$0
$166
$124
$59 $63
$40
$47
Watches & Jewelry
Apparel &
Sportswear (n=10)
(n=9)
Accessories (n=41)
Source: L2 Inc., “Omnichannel Retail 2015,” July 2015
Big Box (n=7)
Department Stores
(n=8)
Beauty (n=7)
$20 $20
Home (n=3)
48
IN REALITY… THE “PRIME” EFFECT
Percentage of U.S. E-Commerce Purchases Eligible for Free Shipping
Q3 2013 vs. Q3 2014
Customer
Pays
Shipping
Charge
Free
Shipping
Customer
Pays
Shipping
Charge
44%
32%
56%
Q3 2013
Source: ComScore
Free
Shipping
68%
Q3 2014
49
WHAT’S GOING ON?
50
WHAT’S GOING ON?
100% of Abercrombie and Fitch emails promoted free shipping in Q2 2015…
… despite not being promoted on-site
51
GOLIATH BATTLE LINES
# of U.S. FCs
# of SFS
Locations
Free Shipping
Min.
Same Day
Shipping
Member
Shipping
Curbside
Pick-Up
66
N/A
$35
Prime: free
over $35;
14 markets
$99/year, 2day; media
Audi trunk
delivery pilot
7
140
$25
$10 for 20
items max;
3 markets
REDcard nothreshold free
shipping
11 markets;
California
N/A
$50/year, 3-day
shipping
5 markets;
grocery
N/A
N/A
N/A
N/A
11
83
$50
$4-$9 for
grocery only; 5
markets
8
650
$99
$5 if over $99;
select markets
1-Hour
Shipping
$7.99 or free
2-hour;
7 markets
52
AMAZON OMNICHANNEL PLAYS 2015
February 2015
March 2015
March 2015
Ongoing
Amazon Campus
Amazon Dash
Patent Applications
Kindle Trucks
•
First staffed pick-up / drop-off
location (Amazon@Purdue)
•
Co-branded
purdue.amazon.com
•
Free one-day shipping
•
Wireless-enabled button to
restock household essentials
•
Pre-stocked pick-up kiosks
•
Checkout-less stores via
cameras, sensors and RFID
•
Food-truck style for retailing
Kindles and other electronics
53
SAME DAY: RACE TO THE BOTTOM?
Fulfillment Options that U.S. Internet Users Would be Willing to Pay For
September 2014, N=964
61%
Same Day Delivery
58%
1-2 Day Delivery
Agreed-Upon Timeframe for
Delivery
43%
Pick-Up from Convenient
Location (e.g. FedEx)
38%
90-Minute Delivery for Store
Based Purchases
Locker Collection
37%
15%
Yet 78% of shoppers select standard economy shipping options when actually shopping,
usually 10-day ground (TrueShip, November 2014).
Source: PwC, “Total Retail V Survey: United States,” February, 2015
54
PERCEPTION VS. REALITY
Customer Preference for Free vs. Fast Shipping
According to Retailers and Manufacturers Brands
January 2014
Fast
Shipping
32%
Free
Shipping
68%
Source: Internet Retailer, February 2014
55
TRIAL & ERROR
August 2014
Washington, D.C.
(Discontinued
January 2015)
San Francisco
September 2014
Manhattan
December 2014
1-Hour: FREE
for 2 Items / or $4.99
2-Hour: FREE
Manhattan
December 2014
+ 6 Addt. Markets
On-Demand:
FREE
One-Hour: $7.99
(Prime Members)
56
SCALE?
Cities in Which Last Mile Services Have Deployed
57
THE LATEST TESTS
58
THE LATEST TESTS
59
THE LATEST TESTS
Amazon’s partnership with Audi and
DHL in Munich enabled delivery of
packages to the trunk of customer’s cars.
Volvo’s Roam Delivery service provided
delivery companies with the location of
your Volvo and a one-time digital key.
60
OMNICHANNEL 2015
IN-STORE & MOBILE
61
RECOGNITION PAYS OFF
Benefits of Synchronizing Customer Information Across All Channels
N=124 Retailers
October 2014
58%
Improved Customer Satisfaction
54%
Increased In-Store Basket Size
42%
Increased Online Basket Size
41%
Increased Shopping Frequency
Improved Employee Satisfaction
19%
Source: Oracle, “The Omnichannel Challenge: Strategies That Work,” October 2014
62
LONG WAY TO GO
Identifying the Customer via Smartphone In-Store
By Implementation Status, March/April 2015
Implemented
Implement within 2 Years
Ability to ID Customers
When They Walk In
6%
Implement in 3-5 Years
39%
14%
No Plans / Longer Term Time Horizon
41%
63
Source: Boston Retail Partners, “CRM/Unified Commerce Survey,” March/April 2015
MISSING LOW-HANGING FRUIT
Email Opt-In Incentives, Online vs. In-Store Sign-Up
May 2015 – June 2015, N=104
Offers Newsletter Sign-Up
Offers Opt-In Incentive
93%
58%
37%
4%
Online
In-Store
Brands are 9x more likely to offer an email opt-in incentive online.
Source: L2 Inc., “Omnichannel 2015,” July 2015
64
BEACONS STILL UNDER-PENETRATED
Beacon & Geotargeting Technology Implementation Status
February 2015
Testing InProgress
8%
Not Being
Considered
10%
6-18 Month
Roadmap
19%
Not
Applicable
32%
Wait-and-See
31%
Source: FitForCommerce, February 2015
65
APP EXPERIENCES START IN-STORE
Contact personal sales
associates through the
app via phone, text, email,
or video conference.
In-store signage
encourages consumers to
download the app for an
exclusive discount.
66
WALMART: SAVINGS CATCHER
Walmart’s receipt catcher allows shoppers to scan their receipts to save them
and to compare items with competitors to check for lower prices.
67
NEW LOYALTY OPPORTUNITIES
"Apple Pay automatically presents the right card so you never miss a reward”
– Jennifer Bailey, VP of Apple Pay
June 2015
68
U.S. = BEHIND
Worldwide EMV (Chip Card) Deployment Statistics
Percent of Card-Present Transactions That Are EMV, by Region
Q4 2014
Western Europe
98%
Canada, Latin
America, Carribbean
8%
Africa & Middle East
80%
Eastern Europe
58%
Asia
U.S.
27%
0.12%
Less than one percent of in-person payment card transactions
in the U.S. are EMV-compliant, versus the global average of 32%.
Source: EMVCo
69
CATALYST: LIABILITY SHIFT
Cost of EMV-Compliance in the U.S.
Item
Volume
Cost to Upgrade
POS Devices
15,000,000
$6.75B
ATMs
360,000
$0.50B
Credit/Debit Cards
1,126,800,000
$1.40B
Total
1,142,160,000
$8.65B
An estimated 90% of payment cards and 87% of
terminals in the U.S. will be compliant by 2016/17.
Sources: Javelin Strategy & Research; WorldPay
70
TIPPING THE BALANCE?
Attitudes Towards In-Store Payments Among U.S. Smartphone Owners
Percent of Consumers Who Would Prefer to Use a Wearable Device vs. Mobile Device
January 2015, N=400 Consumers, 24-50 Years Old
Would
Not
Prefer
33%
Would
Prefer
67%
Source: Stratos, “Wearables & Payments Survey,” January 2015
71
OMNICHANNEL 2015
THE OMNICHANNEL
ORGANIZATION
72
NEW LEADERSHIP DOMAINS
New C-Level / Executive Roles in Place at Organizations
October 2014, N=167
In Place Today
Adding in Next 18 Months
Chief Merchandising Officer
Chief Strategy Officer
33%
11%
Chief Customer Experience Officer
14%
Chief Digital Officer
Chief Analytics/Data Officer
39%
9%
20%
7%
19%
5%
Chief Innovation Officer
Chief Omnichannel Officer
Chief Transformation Officer
Source: Retail TouchPoints, “Changing Roles In Retail,” October 2014
20%
11%
12%
8%
9%
11%
17%
73
WAS THIS THE ANSWER?
Select Senior Omnichannel Executives
Roles Created Prior to 2013
Ken Seiff
EVP, Direct & Omnichannel
Harriet Williams
Director of Multichannel
Laura Wade-Gery
Executive Director, Multichannel
R.B. Harrison
Chief Omnichannel Officer
Casey Carl
President, Multichannel
Joe Megibow
SVP, Omnichannel E-Commmerce
74
Source: LinkedIn
YES AND NO
Select Senior Omnichannel Executives
Current Role as of June 2015
Ken Seiff
EVP, Direct & Omnichannel
Left in 2013; Role Not Filled
Harriet Williams
Director of Multichannel
Laura Wade-Gery
R.B. Harrison
Chief Omnichannel Officer
Executive Director, Multichannel
Casey Carl
President, Multichannel
Chief Strategy & Innovation Officer
Joe Megibow
SVP, Omnichannel E-Commmerce
Chief Digital Officer
75
Source: LinkedIn
SIGN OF THE TIMES
April 2014
May 2014
January 2015
76
NM: CHANNEL UNIFICATION
Karen Katz
CEO
Jim Gold
President of Specialty Retail
Chief Merchandising Officer
John Koryl
President of Direct
President of Stores & Online
Integrated Merchant & Planning
Team (Omnichannel)
Buyers (Single Channel)
Divisional Merchandise
Managers (Omnichannel)
77
Source: Dallas Business Journal
WHAT DOES THIS LOOK LIKE?
VP / DMM, Omni Beauty
NM Stores & Online, 2014 – Present
VP / DMM, Online – Beauty, Accessories
NM Direct, 2008 – 2014
Associate DMM – Beauty
NM Stores, 2004 – 2008
Buyer, Online – Home Décor & Table Linens
NM Direct, 2001 – 2004
Buyer, Online – Cosmetics & Fragrances
NM Direct, 1999 – 2001
Source: LinkedIn, L2 Analysis
78
INTEGRATED BUYING
Current Role & Past Experience of Macy’s Omnichannel Team
Individuals on Linkedin VP or Above with “Omnichannel” in Title
Past: EVP General
Merchandising Manager
Past: Macy’s Credit Card
Past: VP Planning
Past: Director Social Media
Past: Deloitte
Past: VP Finance
Past: VP Planning
Past: Boston Consulting
Group
Past: VP Sales Edison
Properties
Past: VP Planning
Past: Director of Sales
Effectiveness VWR
Past: VP Private Brands
Past: VP E-commerce
79
OMNICHANNEL 2015
CONCLUSIONS
80
4 TENSIONS
Localization vs. Scale
Well subsidized start-ups are building local omnichannel ecosystems, and are ripe for
retailer experimentation – yet most still operate in just a handful of markets.
Speed vs. Convenience
Retailers are refocusing the equation from expedited offers to those that are free and
favor convenience.
Flash vs. Function
Retailers are eager to signal omnichannel savvy – yet have sacrificed foundational
investments for for flashier PR plays.
One-Off vs. Integrated
Omnichannel, Digital and Customer Experience officers are cropping up across
organizations – yet these inherently siloed roles may be counter-productive.
81
THE NEW RETAIL EQUATION
THEN
NOW
82
OMNICHANNEL MODULE
Inventory Visibility Opportunities: Sample Brand X
•
Consistency across channels is baked into brand’s DNA – e.g. policy against creating online exclusive /
flagship exclusive products
•
Single, integrated team ensures a consistent strategy across channels and helps to eliminate
organizational silos, attribution challenges, etc.
•
Increase data capture during account sign-up, e.g. ask consumers to provide their favorite locations /
cities where they shop
•
Test consumer appetite for new fulfillment methods with a reserve-in-store pilot (see Gap, Banana
Republic, Armani Exchange)
•
Consider positioning as a high-touch experience integrated with personal shopper services (see Harvey
Nichols “Click & Try”)
•
Enable in-store inventory look-up across channels (desktop / mobile / tablet) to drive foot traffic
•
Leverage account information (preferred stores / cities) to seamlessly update inventory availability
across product pages when logged in
•
Implement end-to-end click-and-collect services
•
Pilot ship-from-stores across key metro areas to deliver on sub-2 day shipping (site currently estimates
ground shipping is 3-6 days from order processing date)
STRENGTHS
SHORT TERM
OPPORTUNTIES
LONG TERM
OPPORTUNITIES
BEST-IN-CLASS
BENCHMARKS
Banana Republic
Best Buy
Crate & Barrel
Gap
Home Depot
Macy’s
Nordstrom
Walmart
83
OMNICHANNEL MODULE
Omnichannel Investments Among Luxury Department Stores
Retailer
In-Store Pickup
In-Store Stock
Status
Free Shipping
Ship-From-Store
Announcement
Barneys New York
✗
✗
✓
N/A
Bergdorf Goodman
✗
✗
✓
N/A
Bloomingdale’s
✓
✓
✓(over $150)
Q1 2013
Macy’s
✓
✓
✓ (over $99)
Q1 2013
Neiman Marcus
✓
✓
✓
N/A
Nordstrom
✓
✓
✓
Q3 2009
Saks Fifth Avenue
✗
✓
✓
Q4 2012
Harrods
✗
✗
✗
N/A
Harvey Nichols
✓
✗
✗
N/A
John Lewis
✓
✗
✓ (over £50)
N/A
Selfridges
✓
✗
✗
N/A
84
OMNICHANNEL MODULE
Brand Investments In E-Commerce vs. Brick & Mortar Incentives
Department Stores & Luxury Brands
May 2014, N=14 brands
E-Commerce Incentives
E-COMMERCE
FOCUSED
10.0
8.0
6.0
0.0
2.0
4.0
OMNICHANNEL
AWARE
6.0
4.0
8.0
10.0
Brick & Mortar Incentives
Luxury
Average
2.0
OMNICHANNEL
LAGGARDS
Online: 2.9 / 10.0
Offline: 4.0 / 10.0
0.0
85
L2 INTELLIGENCE MODULES
L2 Intelligence Modules blend deep category insights…
…with brand-specific opportunities
•
•
•
•
Provide both the strategic frameworks and
actionable recommendations to execute
quickly on key initiatives
Topics determined each year based on the
biggest challenges facing organizations
Each Module Includes:
•
2 – 3 hour in-person delivery by L2 Partners
and Principals
•
60 – 80 slide PowerPoint deck with
actionable, brand-specific recommendations
•
5 – 10 hours follow-up consulting time
Index®
Similar to Digital IQ
Deep Dives,
modules provide organizations with an
ongoing metric to track progress across
priority objectives
Most organizations opt for annual or
quarterly tracking to ensure forward
movement
86
50% of Offline Retail
Influenced by Online
50%
$593B
4x
Of $3 trillion
influenced by online
Influenced by
smartphone
Increase in smartphone
influence YoY
Understanding omnichannel shopping behaviour ultimately drives
deeper engagement, higher revenues and greater customer loyalty.
The Relevance Cloud is a powerful, rapid innovation platform to
personalise every customer experience across the spectrum of your
customer’s lifecycle. The result is a highly relevant shopping
experience that Respects the Shopper.
RichRelevance
#1 in Omnichannel Personalization
550 Global Sites
200M
Weekly
Shoppers
All Shopping
Behavior
Online and Offline
The Omnichannel Personalization
Maturity Model™
LEVEL 5
OMNICHANNEL
INNOVATION
LEVEL 4
LEVEL 3
LEVEL 2
LEVEL 1
OFFLINE
INTEGRATION
ONLINE
EXPERIENCE
• Refined personalization using
offline (POS) transaction
history
• Individualized experiences on
site
• Personalized
recommendations, content,
promotions, sort and search
• Shopper preferences
influenced experiences
• Affinity/compatibility based
merchandising
• Enhanced segments using
CRM or 3rd party data
(Acxiom, Merkle, etc)
• Connecting store to online
with local inventory at
preferred stores
SEAMLESS DIGITAL
EXPERIENCE
SEAMLESS
PHYSICAL
EXPERIENCE
• Integrated POS for in-store
personalization: click and
collect, returns saver, ereceipts
• Develop single view of the
customer
• Store assistant app for
clientelling
• Personalized mobile and
tablet apps using web, mobile,
offline data
• Personalized interactions with
contact center agent app
• Integrated email for
promotions, cart
abandonment, receipts
• Digital journey analytics
• Cross device/cross ID
customer matching
• 1-to-1 dialogue with customer,
regardless of channel
• Personalized catalogs
• Cross channel customer
matching
• Location-based targeting instore
• Custom applications
• Omnichannel journey
analytics
Realtime 1:1
interactions
Non-digital touchpoint personalization using
omnichannel data
Digital touchpoint personalization using omnichannel data
Single touchpoint personalization using omnichannel data
Single touchpoint personalization using single channel data
“
We have built up personalization
capabilities that find out who you
are among 58M customer
households and serve you
personalized content in 30ms to
make your experience relevant in
the store or on the website.
PATRICK J. CONNOLLY
EVP & CHIEF STRATEGY OFFICER
Source: L2 Clicks and Mortar Clinic, January 13, 2015
https://www.youtube.com/watch?v=GfJs13LHHi0&feature=youtu.be
”
Omnichannel Case Study: Project MAX Monsoon
Project MAX stores (compared to nonMAX stores):
• 133% increase in AOV
• Increase in one item per check out
basket
• Reduced returns by 2%
• Improved customer experience: 84%
“excellent” rating
Personalised Digital Receipts:
• Open rates in excess of 70%
• Click-through rates of 8%
95