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Rinnovare il Retail: Piattaforma, Esperienza e Innovazione

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Rinnovare il Retail: Piattaforma, Esperienza e Innovazione

  1. 1. Rinnovare il Retail: Piattaforma, Esperienza e Innovazione IDC Retail Summit 2017 Ivano Ortis, Vice President Retail, Manufacturing, Financial Insights
  2. 2. The retail singularity Speed Insight Agility $17 B eCommerce M&A in the past 12 months
  3. 3. Real-time hyper micro autonomic customer journeys are the way forward Source: IDC Global Retail Innovation Survey 2017; N=400 13% 48% 36% 3% Static Segments Dynamic Segments Dynamic Personas Real-time Individual Autonomic
  4. 4. 6% 52% 36% 7% Low priority Byproduct Program Strategy Strategic mission, programs, use cases. In order Source: IDC Global Retail Innovation Survey 2017; N=400 What is the state of innovation strategy at your company?
  5. 5. A new Cx platform is the innovation priority Source: IDC Global Retail Innovation Survey 2017; N=400 59% 50% eCommerce platform and mobile IoT platform 41% Omni-channel customer experience platform
  6. 6. The retail platform for the next decade... Source: IDC MarketScape: Retail Omni-Channel Commerce Platform, Vendor Assesment, 2017
  7. 7. How many global retailers will implement the new retail platform over the next 12 months? ? Source: IDC Global Retail Innovation Survey 2017; N=400
  8. 8. How many global retailers will implement the new retail platform over the next 12 months? 46% Source: IDC Global Retail Innovation Survey 2017; N=400
  9. 9. Innovation is a Reality
  10. 10. Lowes and Google 0:37
  11. 11. Retailers’ innovation mission points to disruption 31% 36% 32% Source: IDC Global Retail Innovation Survey 2017; N=400 20202017 38% 32% 30%
  12. 12. Retail Innovation Model
  13. 13. AI is a key enabler of retail innovation 54% of retailers think AI is a key enabler of innovation programs Source: IDC Global Retail Innovation Survey 2017; N=400
  14. 14. Retail Investments on AI accelerate 37% investing in AI for Cx personalization Source: IDC Global Retail Innovation Survey 2017; N=400
  15. 15. Customer Experience Architecture Dynamic Customer Journey Services Analytics Services Customer Product Inventory 3rd party Acquisition Ingestion Integration Information Level Back Office Partners IoT Mobile Web Store Other ChannelsInterface PRESENT ENGAGE SELL SERVICEATTRACT Process Level AI Real-Time, Contextual Hyper-Micro Segmentation Unified Info Lake
  16. 16. 16 Omnichannel Profitability Hyper-micro Personalization Omnichannel fulfilment / supply chain Next Generation Merchandise planning Omnichannel Orchestration 5% increase in revenue 20% improvements in stockturns 2x-4x increase in prom ROI 65% lift in store visits Source: IDC 2017; Companies’ annual reports; public cases Artificial Intelligence Use cases drive ROI 32% improved conversion 43% revenue increase 65% increase in repeat purchases AI for omni-channel forecasting reduction of 20% in surplus stock, 40% increase in forecast accuracy
  17. 17. Revenue big time. Cx metrics key 1% – 4% Top line improvement Source: IDC Global Retail Innovation Survey 2017; N=400 5% – 9% > 10% Revenue 26% 46% 28% Conversion rate 32% 47% 21% Traffic 31% 37% 32% Promo & loyalty 45% 33% 22% CX metrics 45% 36% 19%
  18. 18. Strategy, eCommerce, VP Omnichannel Top line improvement Source: IDC Global Retail Innovation Survey 2017; N=400 > 10% 26% 46% 2x 32% 47% 2x 31% 37% 1.5x 45% 33% 2x 45% 36% 1.5x 0 Revenue Conversion rate Traffic Promo & loyalty CX metrics
  19. 19. Reduced Inventory costs and promo pressure 1% – 4% Bottom line improvement Source: IDC Global Retail Innovation Survey 2017; N=400 5% – 9% > 10% Reduced out of stocks Reduced inventory costs Reduced operational costs Reduced promotional pressure 35% 47% 18% 33% 45% 22% 39% 39% 22% 41% 38% 21%
  20. 20. Guess what? 1% – 4% Bottom line improvement Source: IDC Global Retail Innovation Survey 2017; N=400 > 10% Reduced out of stocks Reduced inventory costs Reduced operational costs Reduced promotional pressure 35% 47% 1.5x 33% 45% 1.5x 39% 39% 1.5x 41% 38% 1.3x 0 0
  21. 21. 21 Innovate Speed Scale Cx Evolve Systems Processes Opportunity cost Discovering untapped demand IoT Commerce $10B by 2020 ROI Customer spend store visits conversion marketing ROI Spend 3x-6x 2.5x store visits +10-20% conversion +65% store visit reduced costs omnichannel fulfillment 30-50% savings 20%+ reduction of surplus stock Improved customer experience Store associates Omnichannel inventory & payments Rich digital store xp Zero wait time Business case considerations for a new platform Source: IDC Retail Insights, 2017
  22. 22. Retail platforms are the engines of (Artificial) t(h)rust Speed, Insight, Agility
  23. 23. Speed, Insight, Agility @IDCInsightsEMEA IDC Retail Insights EMEA Ivano Ortis Vice President, Research IDC Retail, Manufacturing, Financial Insights iortis@idc.com +39 02 28457 366 © IDC Visit us at IDC.com and follow us on Twitter: @IDC

Notes de l'éditeur

  • Welcome…we all hear a lot about retail transforming, changhing, the store experience changhing as ecommerce and omnichannel customer experience archetypes become the norm. Is this just an evolution? No I think we are at a singularity…
  • Think about the current market dynamics, changed customer expectations, disruptive competition, we are at the all time high for innovation in the industry, as witnessed by 17B spent in ecomm M&A over the past 12 months…project this to the time when IoT commerce will become a reality, and consumption will fundamentally change from ownership to use and service.
    This is what I call the retail singularity, and if you want to thrive there are innovation opportunities geared around three key attroibutes for success: speed insight agility

    Insights into customers and products to understand the context across complex and dynamic customer journeys and product lifecycles. Using customer insights everywhere - both anonymous and loyalty customers - to drive better, more personalized, more profitable product ranging and fulfillment decisions. Insights entails a more intelligent use of information, for example inventory data. No matter stock location, warehouse, distribution center or store, achieving omni-channel inventory visibility is foundational. Using this capability for intelligent order orchestration, more flexible logistics and last mile delivery is fundamental to achieve profit targets. So, insights will embrace all aspects of retail - operations, product and customer - to enable endless aisle approaches with reduced operational costs, higher sales close rates and improved fulfillment performance.

    The speed of change, in other words the pace of implementing innovation at scale, is the second key strategy. As James F. Nordstrom Jr., Exec VP of Nordstrom said: "The better job we do in all our stores, but particularly our higher-traffic stores of showing the customer something new, giving them a reason to buy something new, the better our business is.” Outdated business models, company cultures and organizational structures can hinder the speed and the impact of retail digital transformations and omnichannel strategies. Consider for example working on a new micro-merchandising strategy while organizational siloes still exist, or where a merchandise and buying-centric organization don't leverage quickly enough new capabilities. It results into very long projects (2-3 years), missed opportunities and higher implementation costs for the change. Also, the lack of a technology roadmap and a formal innovation model across discovery, selection, pilot and implementation can result in slow time to market and higher costs. As a result, improved collaboration, a unified, real-time information and analytics landscape and a new commerce platform are necessary for retailers to succeed in the next decade.

    And lastly agility, which means the ability to be flexible and efficient when responding to changing business requirements, customers' expectations and competitive dynamics. To execute current and future customer journeys effectively and efficiently, retailers need a new unified and flexible customer experience architecture that will provide a seamless composition of customer services leveraging information (customer, product, inventory, etc..), processes (merchandising, supply chain, commerce) and channels consistently.


    The foundational elements of the new customer experience architecture are data lakes, advanced analytics (predictive analytics, machine learning, artificial intelligence) and the Retail Omnichannel Commerce Platform, as illustrated in IDC MarketScape: Worldwide Retail Omichannel Commerce Platform Vendor Assessment, 2016
  • It all starts with the customer experience. Thorught my presentation I will refer to retail in abroad sense, including food, apparel, specialty retail but also consumer services sales like travel. I am going to share – actually as a WW preview only for you – the results of a research that we completed with400 EU & US retailers on innovating the industry. are the days of static customer segmentations, but it is still very popular in retail to find dynamic and persona segment. Unless you are in a very niche market, how can you truly personalzie the experience based on idealistic persona like hey I am Rachel 35 with 3 kids and a career in marketing? The future is all about the ability not only to sense but also to adapt and optimize customer journeys in real time, with thenecessary degree of automation and personalization that is required. So indidual not personas

    Hyper-micro personalization is an advanced and real-time customization of CX at an individual level
    Micro-segmentation is one-to-one segmentation (a specific product for a specific micro customer segment), but not adapted to the real-time customer context

    Market is at low maturity. Opportunity to shift. Real-time, dynamic, personalization. But Need a new innovation model
    What best describes the target customer journey model that your company plans to achieve over the next 12–24 months? [READ ALL, CHOOSE ONE]
    - We are working on a customer experience model that enables the definition, execution, and dynamic, real-time updates of customer journeys, based on hyper micro customer segmentation. Over the next 12–24 months, we plan to use artificial intelligence to dynamically optimize customer journey options, and fully automate selection and delivery of individual customer offers across all available customer touchpoints.
    - We are working on a customer experience model that enables the definition and execution of the customer journeys, based on customer personas segmentation. We update customer journeys every 3 to 6 months. Over the next 12–24 months, we plan to start leveraging artificial intelligence for micro-segmenting customer interaction flows across all available customer touchpoints.
    - We are working on the construction and execution of segment-based customer journeys, planning to update it every 6 to 12 months. Over the next 12–24 months, we plan to use more advanced analytics to improve offers across selected customer touch points.
    - We are working on the construction and execution of segment-based customer journeys. Over the next 12–24 months, we plan to use standardized customer interaction flows across selected customer touch points.
  • They say strategy is useless without execution, but a plan without a startegy may also not be a good thing.
    When I firstly saw this result I was very surpirse, how could only 7% of retailers have a defined innovation strategy while others are running opportunitsic, use case based innovation-programs? We think it should start from defining what is the strategic mission for innovatioon, identify the programs that will deliver the mission, and then the use cases that will enable the program’s objectives.

    What is the state of innovation strategy at your company?
    An organizationwide innovation strategy is currently ongoing or is under development.
    The organization has innovation activities or programs (current or planned), with no defined strategy.
    Innovation happened or might happen as a "byproduct" of other initiatives (e.g., we needed to solve a business problem and came up with an innovative way of doing it).
    Innovation is not a main priority in our organization.
  • Wheter it starts from eCommerce, mobile, IoT or a full omnichannel Cx platfrom, a new Cx platform is the innovation priority

    Omni-channel CX is one of the top 3 capabilities to enable innovation programs
    Considering the innovation priorities at your company over the next 12–24 months, please rate the importance of the following capabilities to enable innovation programs. 
    Top 3
    59% eCommerce platform and mobile
    50% IoT platform (providing hardware/sensor connectivity, data management, analytics, and real-time alerting and action automation)
    41% Omni-channel customer experience (providing a seamless, dynamic, and personalized customer experience across touchpoints, and delivering optimized execution of promotional/marketing campaigns)
  • So let me share my view.
    The retail platform for the next decade is not ERP or your merchandising system, rather what we call at IDC The retail omnichannel commerce platform
    4 boxes.
    Microservices
    Analytics foundation
    MDM example
  • 46% of global retailers are going to implement a retail omni-channel commerce platform in the next 12 months
  • 46% of global retailers are going to implement a retail omni-channel commerce platform in the next 12 months
  • So enough from the theory, The role of an alysts is to understand the theory enough so that it can give reccomnendations on how to do it. Here is a great example on how Lowe’s is driving their innovation effort
  • https://www.youtube.com/watch?v=k4US6BO59YU
  • What is the right model for innovation? Well I think it depends on the objective, in other words what is the innovation mission?

    q3. Currently - Considering the total effort (investments and resources) spent on innovation at your organization in the current fiscal year, how is it distributed across different innovation missions? 
    Contextual 38%
    Disruptive 32%
    Ecosystem 30%
  • Pilot on the platform for agility...
    Pilots are embedded in the platform. Agile/DevOps. Formal reuse of learnings

    Implement @ Scale & Speed with Platform and Industry Clouds. No barriers
    New capabilities available across business functions through the platform and industry clouds to scale fast


    So if we put everything together here is an high level view of the IDC Retail Innovation Model. Central to the model ar two things:
    Paths or innovation trajectory, how do you plan to achieve an innovation mission passing though the diffrent phases? What partners, masteries and business case constructs will you use? Are you really ready to fail fast and move on with a smile and a gain?
    And secondly The platform, which becomes not only your core retail system but also your core innovation platform to scale fast and increase business results at speed. Both your production and your test environment. So having to bring to you the best of both worlds.
  • In addition to the retail omnichannel commerce platform, Analytics and AI are a foundational element for retail strategies. Half of retailers think that AI infact is a key enabler of innovation programs, and I am personally receiving from retailers across segments, and countries a lot of questions about AI, how to use it, and what are the benefits

    Have you already implemented or do you plan to invest in the following innovations over the next 12–24 months?
    Adopting AI for CX personalization 37%
    This goes along with 81% of retailers that are implementing IoT, that is increasing the available customer data

    Considering the innovation priorities at your company over the next 12–24 months, please rate the importance of the following capabilities to enable innovation programs. 
    For 54% of retailers, AI is of high importance in the innovation strategy of the next 2 to 3 years
  • And one of the key domani where AI promises to bring important benefits is personalization.

    Have you already implemented or do you plan to invest in the following innovations over the next 12–24 months?
    Adopting AI for CX personalization 37%
    This goes along with 81% of retailers that are implementing IoT, that is increasing the available customer data

    Considering the innovation priorities at your company over the next 12–24 months, please rate the importance of the following capabilities to enable innovation programs. 
    For 54% of retailers, AI is of high importance in the innovation strategy of the next 2 to 3 years
  • So, Artificial Intelligence is a reality and It’s innovating the customer experience, and customer experience is at the core of innovation.

    To execute the new dynamic customer journey, retailers need a new unified and flexible customer experience architecture aimed at providing a seamless composition of customer services leveraging information, processes, and channels consistently.
    A unified information lake makes all the information available from different sources, structured and unstructured. So, retailers need to expand the rich offline data they hold, to include the more dynamic aspects of the customer relationship.
    Once behavioral triggers and detailed customer profiles have been identified, retailers should apply descriptive, diagnostic, and prescriptive analytics and use these insights to guide the execution of customer experience processes.
    Once context is established, retailers can deliver the next best action for individual customers, regardless of channels, and ensure continuous improvement.

    This dynamic environment requires a continuous adaptation of the composition of services, due to the constant change of the customer journey. The dynamic composition services layer allows retailers to deliver innovative services and meet customer needs through an iterative learn and adapt process.


  • Behavioral economics – Personalization
    Pricing, assortment strategies and supply chain decisions optimized for different conditions, e.g., new customer, short- and long-supply inventory, seasonality, margin target, etc
    Stockturns – a fast fashion retail with revenues of 1.5B was carrying 300M of old stock every year. They reduced further the product lifecycle and moved to more granular, customer centric assortment planning and achieved revenue increases and a 20% improvement in stockturns which saved them 10s of million.

    Target guests can use mobile apps o build shopping lists, find product locations, determine availability at their local store, and get personalized recommendations.
  • And, according to retailers, innovation will provide interesting outcomes in many other different areas

    Who has a strategy expect more than 10% rev increase (48%), ecommerce highest than any other segment 2X
    VP omnichannel and QSR expect highest conversion rate impro (10%) 2X
    45% of Food stores and DIY/Cons Elect/Home expect more than 10% improvement in traffic
    37% VP omnichannel expect as well more than 10% improvement in promo & loyalty. At the same time, 40% of eCommerce and DIY/Cons Elect/Home expect improvement between 5 – 9%
    eCommerce (29%) and QSR (30%) show the top confidence for more than 10% improvement in CX metrics


    Thinking about your expected outcomes from innovation programs, please estimate the percentage improvement in each of the following areas
    Increased traffic 31%
    Increased promotion and loyalty effectiveness 45%
    Increased conversion rate 47%
    Increased revenue 46%
    Increased CX metrics (net promoter score, customer satisfaction) 45%
  • And, according to retailers, innovation will provide interesting outcomes in many other different areas

    Who has a strategy expect more than 10% rev increase (48%), ecommerce highest than any other segment 2X
    VP omnichannel and QSR expect highest conversion rate impro (10%) 2X
    45% of Food stores and DIY/Cons Elect/Home expect more than 10% improvement in traffic
    37% VP omnichannel expect as well more than 10% improvement in promo & loyalty. At the same time, 40% of eCommerce and DIY/Cons Elect/Home expect improvement between 5 – 9%
    eCommerce (29%) and QSR (30%) show the top confidence for more than 10% improvement in CX metrics


    Thinking about your expected outcomes from innovation programs, please estimate the percentage improvement in each of the following areas
    Increased traffic 31%
    Increased promotion and loyalty effectiveness 45%
    Increased conversion rate 47%
    Increased revenue 46%
    Increased CX metrics (net promoter score, customer satisfaction) 45%
  • 29% eCommerce expect more than 10% improvement in reduced out of stocks
    31% eCommerce expect more than 10% improvement in reduced inventory costs. VP omnichannel (37%) are the ones with highest expectations for reduction of inventory costs.
    One third of the companies that have an innovation strategy expect more than 10% improvement in reduced operational costs, at significant distance from companies at previous maturity levels (average 16%)
    Specialty retailers and eCommerce are top segment (27%) for more than 10% improvement in reduced promotional pressure. To be highlighted that almost half of DIY/Cons Elect/Home expect improvement between 5 – 9%
    QSR are the top ones (35%) for expectations in reduction of inventory write-offs, this could be mainly related to perishable goods.
  • It’s again strategy, ecommerce, omnichannel….

    29% eCommerce expect more than 10% improvement in reduced out of stocks
    31% eCommerce expect more than 10% improvement in reduced inventory costs. VP omnichannel (37%) are the ones with highest expectations for reduction of inventory costs.
    One third of the companies that have an innovation strategy expect more than 10% improvement in reduced operational costs, at significant distance from companies at previous maturity levels (average 16%)
    Specialty retailers and eCommerce are top segment (27%) for more than 10% improvement in reduced promotional pressure. To be highlighted that almost half of DIY/Cons Elect/Home expect improvement between 5 – 9%
    QSR are the top ones (35%) for expectations in reduction of inventory write-offs, this could be mainly related to perishable goods.
  • So to wrap up, what is the business case for omnichannel retail and customer experience innovation?
    The retail omnichannel commerce platform enables retailers to respond to accelerated customer needs, competitive dynamics, and business ecosystem opportunities. Essentially allowing retail organizations to be more agile as retailers will constantly re-evaluate the business needs and shift focus when necessary, being more innovative, capable of enabling rapid development and deployment of new services.

    The difficulty in measuring the business case for omnichannel retail is it is in a large part all about discovering untapped demand
    And think of IoT Commerce on the horizon, a large market opportunity but also another threat to the idnustry.

  • So my recomendation is to accelerate on the digital platforms for growth. Driven by an innovation strategy that is centered on speed, insight, and agility

    Thank you very much
  • So my recomendation is to accelerate on the digital platforms for growth. Driven by an innovation strategy that is centered on speed, insight, and agility

    Thank you very much

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