The digital tide is hitting all of us, profoundly transforming our
everyday lives, and dramatically transforming the way
consumers behave and think about brands. Far from being the harbinger of the end of retail, digital is a big competitive advantage for stores that know how to use it. This presentation was shared by McKinsey partner Nathalie Remy (Paris) at the Women's Wear Daily Apparel and Retail CEO Summit. View McKinsey's top retail content: http://mckinseyonmarketingandsales.com/sector/retail
1. Are stores out of fashion…
…or a competitive weapon in the digital era?
Nathalie Remy
WWD CEO SUMMIT
October 28th, 2013
2. … than the 3 networks
broadcasted in the
last century
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3. In fashion too, digital is a tide…
<10%
2010-12 China
online market
France purchasers
Market share
How will this impact you?
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4. Transforming stores, a must to overcome
the dual burden
Consumer expectations are changing
The economics of stores are deteriorating
Are stores out of fashion…
…or a competitive weapon in the digital era?
McKinsey & Company
5. In the old world, customers followed a linear purchasing funnel
Consumers used to
narrow a broad
selection of brands
to a single choice
AWARENESS
FAMILIARITY
CONSIDERATION
PURCHASE
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6. Today, the fashion Consumer Decision Journey is
multichannel… and changing the role of the store
EVALUATE
Stores / catalogs / WoM
Blogs / websites / search /
comparison
CONSIDER
Outdoor / editorial / windows
Blogs / display / video / emails /
social / search
Offline
Online
BUY
In-store
E-shop/m-shop
Click & collect
EXPERIENCE
Interact with friends and family
Blogs / social / reviews
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7. Text
Consumers’ expectations are changing
“Stores are here to stay”
“Technology is cool”
“Experience is a must”
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8. Retail strategies are also evolving
"To what degree do you envision
changing your retail strategy given
digital proliferation?"
No change
TOP 3 LEVERS
Adopt new technologies
5
Adjust store formats
53
Some change
Significant change
SOURCE: WWD participants survey
42
Adapt supply chain
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9. Apparel store productivity has declined
Change between 2006 and 2012
Total sales
-2%
+3%
+93%
Offline sales
-9%
-2%
+79%
Retail space
+6%
0%
+103%
Offline sales
per sqf
-14%
-2%
-12%
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10. Retail economic equation will further deteriorate
Pressure on sales productivity...
… with continued costs drift
Market growth
Margin
Online share
Labor
Retail real estate
Rents
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11. 2 key steps to reinvent your retail strategy
Redefine role of the physical store
Adapt store formats and footprint
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12. Rethinking the role of each store…
PICKING
SELLING
BRAND BUILDING
…WITHIN AN INTEGRATED MULTICHANNEL STRATEGY
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13. Transforming store formats and footprint
Which retail format portfolio?
Flagship
Which target footprint?
F
FSS
SIS
Large free
standing store
Mini free
standing store
SIS
O
F
FSS
FSS
FSS
SIS
FSS
Shop-in-shop
Outlet
FSS
SIS
O
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14. The next challenge: make it happen!
Mindset
Technology
Performance
Talent
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15. Departing thoughts
Are stores out of fashion…
…or a competitive weapon in the digital era
nathalie_remy@mckinsey.com
@Remy_Nathalie