Keeping Pace in the Retail Automation Technology Market Through 2011 and Beyond

VDC Research Webcast
Keeping Pace in the Retail
Automation Technology Market
Through 2011 and Beyond
AutoID & Transaction Automation Practice
Chris Rezendes – Executive Vice-President

Frequently Asked Questions

These slides are from a webcast presented on 12/8/10.

A full audio recording is available at:

http://vdcresearch.com/Landing/2011CET_webcast.aspx

1 –  2010 VDC Research Group, Inc.

VDC Research Group

Complimentary insights and marketing data on the

2011 Customer Engagement Technology Planning Service &
2010 Retail Automation Planning Service and

www.vdcresearch.com


Today’s Speaker

• VDC Research Group
 Founded in 1971, continuous, profitable operation for nearly 40 years.
 Focus on a number of mission critical edge and embedded network and enabling technology markets
 Hundreds of clients annually…90% technology suppliers, tech investors.
 Customer engagement and retail automation coverage initiated more than 20 years ago.

• Chris Rezendes – Executive Vice President
Chris has nearly 20 years experience in embedded, industrial, defense and other mission critical and high availability
technology industries. He has more than 15 years experience in senior management and leadership positions at a
number of IT systems and professional services organizations.
His work includes working closely with multiple levels of client organizations from Product Managers through CEOs,
providing decision support on a wide range of product, market, channel, organization and corporate development
opportunities.
He has also worked with many of the most successful private equity and venture capital firms in the Americas and
Europe. His work with the financial services community includes opportunity identification and due diligence support
on investments ranging from $30 million to nearly $3 billion.


Today’s Agenda

Status Update for b-to-c Operators

Operator Investment Drivers

Core Customer Empowerment Solutions

Customer Empowerment & Mobility

Take Aways


Customer Engagement Lifecycle, Location,
Still Changing

3rd Site
Point of
Service:
Selection

Point of Point of Point of Point of Street
Service: Decision Service: Sale
Delivery Selection

Road Point of
Sale

Customer
Point of Point of
Service: Decision
Delivery
Source: VDC Research


For the b-t-c Operator, Payrolls Remain Smaller …

Employment Changes Since the Recession Began
2001 Recession:
> 3.5 years

2007 Recession:
3-5 years (expected)

Source: New York Times, 2010


…While the Retail Automation Footprint Expands…

Materials Management
Store Operations • Asset Management
• Merchandising • Facilities Management
• Mobile POS / Mobile • Shipping & Receiving
Electronic Payment • WIP Tracking
• Personal Shopping • Inventory/ Warehouse Management
• Self Service • Order Management
• Returns Management • Direct Store Delivery (DSD) / Route Sales
• Loss Prevention • Wireless Email
• Shelf Labeling
& Signage Management
• Traffic Counting
• Wireless Email
• Shipping & Receiving
• Location Based Services
• Facilities Management Workforce Management
• Compliance Management • PIMS (Personal Information
Customer Facing Management)
• Personal Shopping • Asset Management
• Self Service • Wireless Email
• Location Based Services • Dispatch Management /
• Mobile POS/ Mobile Scheduling
Electronic Payment • Work Order Automation
• Customer Intelligence • Human Capital Management
& Loyalty



…Led By Cost & Ops Goals, Customer Empowerment

Investment Drivers • Retailers work with wafer-thin margins and are thus
always looking for cost savings on the operational
front, in an effort to also be able to pass on these
Cost Savings 4.1
savings to the consumer / shopper. For respondents,
this continued to be the single most important
Operations Improvement 3.8
investment driver for the purchase of retail
automation technologies.

Customer Empowerment 3.8
• Retail enterprises are also continually turning to
automation technology to increase operational
efficiencies as a method to generate cost savings
Sales Uplift 3.6 while enhancing overall shopper experience, giving
this investment driver an importance rating of 3.8.

Industry Compliance 3.6 • Compliance with industry standards and regulations
didn’t rate as high as most of the other drivers. This
is, however, bound to change especially with an
Multichannel Synchronization 3.5 increase in the number of card-related frauds in
retail establishments lately.
Government Compliance 3.4

1.0 2.0 3.0 4.0 5.0

Investment Drivers



Customer Empowerment Means Self-Service …

Department Stores Convenience Stores
Planning to Planning to
Currently Install in No Plans Currently Install in No Plans
Technology Technology
Using 12-24 to Use Using 12-24 to Use
months months
POS Terminals/ POS Terminals/
Workstations
83.3% 12.5% 4.2% Workstations
60.0% 34.0% 6.0%

POS Receipt Printers 70.8% 25.0% 4.2% POS Receipt Printers 70.0% 22.0% 8.0%

Payment/Transaction Payment/Transaction
Terminals
54.2% 37.5% 8.3% Terminals
74.0% 22.0% 4.0%

Imaging Solutions 33.3% 41.7% 25.0% Imaging Solutions 44.0% 38.0% 18.0%

Self-Checkout Self-Checkout
Solutions
41.7% 41.7% 16.7% Solutions
48.0% 42.0% 10.0%

Self-Service Kiosks 41.7% 37.5% 20.8% Self-Service Kiosks 42.0% 44.0% 14.0%

Personal Shopping Personal Shopping
Systems
25.0% 50.0% 25.0% Systems
36.0% 36.0% 28.0%

Electronic Shelf Electronic Shelf
Labels
41.7% 41.7% 16.7% Labels
44.0% 34.0% 22.0%

Interactive Displays Interactive Displays
& Digital Signage
54.2% 25.0% 20.8% & Digital Signage
48.0% 34.0% 18.0%



…and Mobility – Where Many Budgets are Migrating



Retail Mobility Deployments are About Consumers…

 Q: “What level of benefit was achieved through your most recent mobility deployment? “
Retailer Drivers for Mobility Investment

30%
Improved inventory accuracy
25.8%

28%
Improved customer loyalty and repeat business
25.3%

27%
Increased mobile worker productivity
29.9%

26%
Increased sales/ revenues
25.4%

24%
Reduced asset failures
24.6%

19%
Improve real time decision making
25.9%
Retail
19%
Reduced operating costs Industrty Avg.
24.2%

0% 5% 10% 15% 20% 25% 30% 35%



…App Developers Know This, and are Busy…

Consumer Oriented Development Activities • Gaming and social networking apps lead:
(Overall)
 The success of interactive games that utilize the increasingly
powerful hardware and screen technologies being brought to
Social Networking 38% 15% 47% market by handset OEMs had lead to massive revenue and
marketing opportunities for mobile developers.
 The success of applications such as Twitter, Foursquare,
Mobile Commerce 28% 23% 49% and commerce gear applications like Shopkick also support
the continued mobile development that is occurring.

Games 39% 11% 50% • Commerce and location based applications are
coming.
Location Based 20% 26% 53%  Mobile commerce and location based applications are the
two most widely planed application areas for developers.
 Location based applications and mobile advertising are big
Instructional Videos 24% 21% 56% drivers and are very early in their development stage –
business model are continuing to emerge with Shopkick
Interactive
being an excellent example.
22% 22% 57%
Brochures  Near field communication (NFC) capable Smartphones
are on the horizon, which will bring new mobile applications
and channel opportunities. Verizon, AT&T and T-Mobile all
Navigation (GPS) 29% 12% 59%
plan to launch trials for mobile-payment services in 2011.

Ringtones 31% 9% 60%

Have Already/Currently Developed Planning No Plans



…thus, retailers need to support personal
liability devices

Smartphone Deployment Approach by Industry

100%

90% Employee purchased only:
Any phone
80%

70% Employee purchased only:
Approved list
60%

50% Both company and employee
purchased: Any phone
40%

30% Both company and employee
purchased: Approved list
20%

10% Company purchased only

0%



Predictably, Security is the Number One Barrier

Retailer Concerns with Mobility Investment

35.3%
Other capital projects with higher priority
18.75%

23.5%
Security issues
43.75%

17.6%
Unclear return on investment
12.50%

11.8%
Lack of people with appropriate skills
6.00%

5.9% Deployed
Desire to wait for proven applications and technology in this industry
12.10% Evaluating

0% 10% 20% 30% 40% 50%



‘Kansas’ May No Longer Exist, but KS is Everywhere

• The global economy as we knew it no longer exists. Customers are more powerful than ever
before, forcing b-to-c and b-to-b operators to realign with a rapidly changing customer base
and ever expanding scope of requirements.
• For retailers and other b-to-c operators prepared for this, these informed customers become
better customers. For the unprepared, not so much …
• Retailers, b-to-c operators and their technology suppliers have the clear mandate to meet
customers where they are, and where they are going, in the post-Ford century / post-
recession economy where consumerism as we knew it has changed fundamentally.
• This means we are going to need to support personal liability devices – from associates,
to partners and now customers.
• But, those devices will need to be deployed and managed with specific technical,
operational and financial context …


Where does this leave us? Where are we going?

• Reconsider b-to-c operator IT investment within one of the following larger frameworks:
 Inventory management
 Customer empowerment
 Financial and regulatory compliance
• Customer empowerment is the most volatile, fastest growing, and uncertain segment of
the retail, or b-to-c operator opportunity
 Involves dozens of technologies – many with fuzzy market segment definitions
 Incorporates some of the hardest to define ROI solutions on the market – think social media, IDDS and mobile
marketing and merchandising
 Integration requirements and BI/ analytics are top considerations for evaluators
• Mobility is not coming … it is here … but it is NOT the only play in the market
 Managed services technical and commercial models matter in a growing number of segments
 A theme that we identified in 2008 – transaction singulation inside individual user profiles in real time –
is higher on the wish list of more operators
 Physical and logical security solutions – discrete, applied, integrated, embedded remain key priorities
• Traditional POS technology opportunities are stronger when they relate to these solutions


Q&A Session

Thank You for Attending this VDC Webcast.
For more information about the
2011 Customer Engagement Technologies
Please Contact:

Janice Seidman – Account Director
jseidman@vdcresearch.com | 508.653.9000 x139

Christopher Rezendes – Executive Vice President
cjr@vdcresearch.com | 508.653.9000 x120

Tom Wimmer – Director, AutoID & Transaction Practice
twimmer@vdcresearch.com | 630.279.7959


Keeping Pace in the Retail Automation Technology Market Through 2011 and Beyond

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