Australian Retail and the Digital Advantage

The All Channel Experience DRIVING VALUE FOR YOUR CUSTOMERS AND YOUR BUSINESS

Ben Gilchriest & Antoinette Ienco Digital Transformation Lead, Retail Sector Industry SME Capgemini Consulting, Australia

Transform to the power of digital

Copyright © 2013 Capgemini. All rights reserved.

Australian retail sector challenges (briefly!)

How do you realise a Digital Advantage?

The danger of the “in between”

Digital Maturity Matters

62% active in mobile shopping

On-Line Mobile Social Media

Adoption of mobile as a payment channel growing rapidly C

Smartphone adoption

Growing subscriber base

High household broadband coverage A

A leader in internet penetration

5th highest internet penetration in the world

73% 73%

Australia USA

36% 51%

9.74

10.33

11.12

9.50

10.00

10.50

11.00

11.50

Dec 2010

Jun 2011

Dec 2011

Millions

73%

A major part of people’s on-line time

Facebook is still the #1 social media site

A significant channel for generating and finding opinions

Leading the world in social media

usage @7hrs / month

Nearly half of all Australian’s on-line are active in social

mediaA.

Majority are seeking other’s

opinions

read reviews & discuss brands

3%

4%

8%

9%

97%

Other

Myspace

Twi@er

LinkedIn

Facebook

*% of Australian social media users visited

LinkedIn in growing rapidly; +99% growth in 2011 d

A -domestic connections., 2011 B – business & domestic broadband connections. C - PayPal figures – purchases via mobile, 2010 - 2011 % of on-line users that are active in social media

71%

Mobile transactions growing at

430% year on year

20%

Australians with an Internet

connectionB

90%

Australians >16 years active on-line

81%

48%

0%

10%

20%

30%

40%

<5 min 5-‐30 min 30-‐60 min

over an hour

no shopping

20% 26% 11% 5%

38%

Australian consumers are leaders in internet and smartphone adoption and social engagement

2011 2012

The Australian retail sector is facing several challenges

§  Pure play online retailers. §  International retailers with efficient business models. §  Traditional channels extension with online §  Innovative Apps (combining online, user data,

mobility.

§  Shrinking square footage. §  Technology leveraged in-store to provide

outstanding customer service and increased personalization;

§  Kiosks; §  Mobile payments; § QR Codes.

§  Supply chains need to accommodate and fulfill individual customer orders.

§ Collaborative supply chain technology and practices like shared warehouses are critical for realizing improvements.

§  Production is based on predictive and actual demand from consumers.

•  More content is generated outside the company – unstructured.

•  Combination of loyalty data and unstructured data to respond to customer expectations.

•  Affinity analysis; •  Sentiment Analysis.

Changing Marketplace Supply Chain Op4misa4on

New Store Formats Data Availability Retail

New technology (digital) is both part of the challenge and the solution.



CU

STO

MER

C

HA

NN

EL

MO

DEL

IN

TERA

CTI

ON

M

OD

EL

Australian shoppers’ expected a dramatically different experience and they are becoming more vocal in demanding it



Yesterday Today

IN THE DARK Information poor. Limited choice.

Retail store the preference.

INSIDE-OUT Call centre centric. Retail store centric.

“TELLING” Mass marketing.

Outbound blast marketing. Reactive, inbound.

INFORMED, EMPOWERED Benchmark on trust, social responsibility

Constantly changing & sharing. High trust in peer review.

across industries and geographies

OUTSIDE-IN Integrated cross-channel.

Customer experience driven design.

“CONVERSING” Embrace social (P2P).

Co-creation. On-line at the core.

CU

STO

MER

C

HA

NN

EL

MO

DEL

IN

TERA

CTI

ON

M

OD

EL

However, many companies are struggling to catch-up with rapidly evolving customer demands



Yesterday Today

IN THE DARK Information poor. Limited choice.

Retail store the preference.

INSIDE-OUT Call centre centric. Retail store centric.

“TELLING” Mass marketing.

Outbound blast marketing. Reactive, inbound.

INFORMED, EMPOWERED Benchmark on trust, social responsibility

Constantly changing & sharing. High trust in peer review.

across industries and geographies

OUTSIDE-IN Integrated cross-channel.

Customer experience driven design.

“CONVERSING” Embrace social (P2P).

Co-creation. Personalisation at the core.

The “in-between”

“TALKING” Loyalty and reward schemes.

Social media largely outbound (minimal integration into org.)

MULTI-CHANNEL Multiple offerings,

not integrated

Despite many attempts, Australian retailers struggle to bridge the gap to address evolving shopper behaviour



§  ABS show $258 billion spent on retail and 9% is estimated to be on-line with overall growth of 12%.

§  On-line retail sales are expected to reach $18 billion in 2013 and forecasted to grow 39% to $25 billion by 2015.

§  28% of goods bought by Australians online were from overseas sites. Down from 43% in 2011,

§  Multiple overseas companies have launched dedicated Australian sites (e.g. ASOS, Saks, TM Lewin, Nordstrom, Gap, Wiggle etc.).

§  Companies are introducing experiences developed in other markets to Australia (e.g. ASOS scan-to-shop)

§  Of the top 15 online retailers, only two have a bricks-and-mortar offering…..

§  In the US, 13 of the top 15 online retailers had physical retail outlets.

§  Only 8% of companies use mobile to transform the customer experience and 14% for operational processes

§  Limited functionality and basic fulfilment

On-line Retail is expected to grow to $25b by 2015

Australians are benchmarking their digital

experience against established overseas brands

Australian retailers are struggling to respond

Digital maturity is a combination of “what” and organisation does and “how” they approach it



Digital Intensity (the “WHAT”)

Transformation Mngt Intensity (the “HOW”)

Technology-enabled initiatives in: •  Customer Experience •  Internal Operations

Leadership capabilities including: •  Vision •  Governance •  Engagement •  IT-Business Relationships

‘Beginners’ may be carrying out some experiments though are largely skeptical of value of digital



DIG

ITA

L IN

TEN

SITY

WHAT is the organisa3on

doing (digital

investments & assets)

TRANSFORMATION MANAGEMENT INTENSITY

HOW is the organisa3on

doing it (vision, governance

& roadmap)

BEGINNERS

This is not for us!

‘Conservatives’ have a digital vision and strong governance though have few advanced digital features



DIG

ITA

L IN

TEN

SITY


doing (digital





& roadmap)

BEGINNERS

This is not for us!

CONSERVATIVES

Analogue focus

‘Fashionistas’ have many advanced digital features though they’re run in silos and there is no over-arching vision



DIG

ITA

L IN

TEN

SITY


doing (digital





& roadmap)

BEGINNERS

This is not for us!

CONSERVATIVES

Analogue focus

FASHIONISTAS

Digital Digital

Digital

Digital Digital

‘Digirati’ have a strong vision, and governance with many digital initiatives generating business value in measurable ways



DIG

ITA

L IN

TEN

SITY


doing (digital





& roadmap)

BEGINNERS

This is not for us!

CONSERVATIVES

Analogue focus

FASHIONISTAS

Digital Digital

Digital

Digital Digital

DIGIRATI

Growth; +9% Profit; +26%

Digitally-mature companies have significantly better financial performance.

Digirati have a common Digital DNA, they invest 100% in the “how”



Digital Service Unit

VISION

IT/ BUSINESS

GOVERNANCE ENGAGEMENT

•  Transformative Vision •  Shared Vision

•  Digital Tsar •  Digital Units •  Investment Committees

•  Promoting Change •  Employee Participation •  Investing in Skills

•  Shared understanding between IT and business executives on role of IT

Chief Digital Officer

Digital Year

“The IT Team (...) now work hand in hand with the Creative Media team.”

..and they make strategic investments on where to excel



FOCUS INVESTMENTS

on where they Choose to

Excel Digitally

COMBINE DIGITAL

CAPABILITIES to Exploit Synergies

+

Customer Experience

Social media

Mobile channel

In-store

Online Unified Processes/ Integrated Data

Process Excellence

Supply-chain Integration

Centralized Ordering New biz.

models

Customer experience

Unified Processes/ Integrated Data

Analytics capabilities

Personalized Customer experience

Unified Processes/ Integrated Data

On-premise

Online

BURBERRY

ASIAN PAINTS

CAESARS ENTERTAINMENT

As a Digirati, Burberry have demonstrated how a balanced approach on the “what” and “how” drives real business results



There are ‘Digirati’ in every sub-sector



In Australian retail the challenge is that the ‘Digirati’ is often an overseas company.

* Digital maturity of 391 companies in our sample

DIG

ITA

L IN

TEN

SITY


BEGINNERS CONSERVATIVES

FASHIONISTAS DIGIRATI



DIGITAL MATURITY MATTERS

IT MATTERS IN EVERY SUB-SECTOR

ANY COMPANY CAN BUILD DIGITAL DNA

TAKE ACTION NOW TO CREATE YOUR OWN DIGITAL ADVANTAGE



QUESTIONS?

@BenGilchriest