RAI – TCS: State of Multichannel Retail

Retail Operations
Benchmarking and Excellence Survey 2014
The State of Multichannel Retail

Benchmarking and Excellence Survey 2014
Agenda
• Context
• Scope & Methodology

• Key Insights
• Call to Action

-1-

ROBES 2014- The State of Multichannel Retail
TCS Public

Context
Why Multichannel?
Reduce store Size
Increase Reach

Reduce stores
Dependency
Reinvent your
Operations

Delight your
Customers differently
Multichannel offers opportunities to reorient the
business radically !
-2-

TCS Public

Context
Why Multichannel?

-3-

TCS Public

Multichannel Offerings Today

Multi-channel Options
Web, Contact centre,
Marketplace, Mobile,
Catalogue

Transactions
COD, Mobile,
Credit, Debit

Delivery
Next day delivery,
Click & Collect,
Delivery tracking,
Service at delivery

After Sales
Service
Multi-channel returns,
complaint resolution,
troubleshoot
on social

Engagement
Comparative sites, SEO,
Social sharing, Info kiosk

-4-

TCS Public

Survey Preview
Good News

>15%
For majority,
e-commerce has seen
healthy growth

70%
have online business reporting
directly to CEO or COO

6371
ATV on website

-5-

TCS Public

Survey Preview
Reality & Challenges
• Only 30%

have a single view of customer orders

• 38%

pursue uniform pricing across channels

• Only 17%

have a unified marketing calendar

• Only 25%

incentivize cross-channel collaboration at stores

• Only 17%

have a unified CRM program

Are retailers ready to do justice to the potential?
Are these tactical or strategic issues?
-6-

TCS Public

Scope & Methodology
Parameters & Processes
The first-ever comprehensive multichannel retail benchmarking study covers
the following parameters:

Customer
Experience

Financial
management

Key Performance
Indicators (KPIs)

Strategic Focus
Areas

Marketing

Process Maturity
Technology

Operations

Organization

1

2

3
-7-

TCS Public

Participating Brands

*The logos are property of their respective corporations
-8-

TCS Public

Methodology Used for This Study
TCS‟ Process Maturity Framework
was used to:

TCS Process Maturity Framework

100%

• Define process maturity from
Level 1 (Low Maturity) to Level 4
(High Maturity)

LEVEL 4

Unified Customer
Marketing &
Relationship
Program

75%

• Allocate scores to each level of
maturity, which ranged from 25 to
100 percent

LEVEL 3

Over-lapping
programs
(common
promotions)

50%
LEVEL 2

• One-to-one, in-depth interactions
with CXOs captured data and
insights.

Channel specific
programs

25%
LEVEL 1

Store-based
CRM program

Example: Customer
Experience

• 1,200 data points were gathered
across six process areas.
-9-

TCS Public

Key Insights

- 10 -

TCS Public

Industry Level KPIs
Contribution of revenue from nonstore channels

What is the sales growth of the nonstore channels (e-commerce)?

Less than 1%

43%

0-5%

8%

1% to 3%

21%

5-10%

8%

3% to 5%

7%

10-15%

0%

5 to 10%

21%

15-20%

28%

>10%

7%

>20%

56%

What is your average transaction
value (ATV) in the channels that you
operate (Rs.)?
Store

What is the proportion of
repeat/loyalty customers for nonstore channels (e-commerce)?

5737

Website

6371

Marketplace

3967

What is the percentage of customer
returns for your non-store channels
(e-commerce)?

Mobile Channel

4300

0-3%

65%

< 30%

58%

30-40%

11%

3-5%

9%

40-50%

32%

5%-10%

13%

50-60%

0%

10%-15%

9%

> 60%

0%

>15%

4%

Loyal customers are driving your non store sales.
The ATV on the website is higher than the physical store !
- 11 -

TCS Public

Primary Objective of Multichannel

Prime objective of multi-channel strategy (FY2014-15)
(% of retailers for whom this item is a top priority

21%

21%
18%
17%

13%
10%

Improving Customer Experience and Geographical Expansion
high on retailers‟ multichannel strategy for FY2014-15
- 12 -

TCS Public

Industry Maturity
• Overall industry maturity
is “low”

• Organizational structures
are evolving to meet the
dynamic requirements

Overall Process Maturity – Cross Segment
Marketing
100%
80%

57%

Financial

63%

40%

Operations

53%

20%

• The industry still faces
challenges on “one
version of truth”
– Customer, product, and
inventory information
across channels

60%

0%

50%

Customer

75% Experience

Technology

70%
Organization

Overall low process maturity
- 13 -

TCS Public

Overall Multichannel Process Maturity Is Low
Marketing

Customer Experience

Operations

Leaders

Leaders
43%

Leaders
40%

57%

33%
53%

37%

Industry
benchmark

75%
30%

Industry
benchmark

Laggards

Laggards

High

Scope to share best practice:

Medium

Finance

Technology

Leaders

Leaders
17%

57%

33%

63%

70%
Industry
benchmark

Laggards

High

Organization
Leaders

Industry
benchmark

40%

57%

Industry
benchmark

50%
20%
Laggards

40%

Industry
benchmark

Laggards

Scope to share best practice:

Laggards

High

Medium

High

A lot to learn from each other on good practices
- 14 -

TCS Public

P&L
Single or Separate for different Channels ?
High Maturity

Single P&L for all channels

17%

Separate P&L for each individual channel
(Intra Channel Decision Making)

66%

Stores + Non-store (owner of multichannel) P&L

7%

Stores P&L only

10%

Low Maturity

Trade-off between collaboration and speed
- 15 -

TCS Public

Multichannel Operations
• 18% have store pick up of
orders made from any channel

Delivery options offered- Cross Segment

% respondents
High Maturity

• 52% have channel specific
supply chain network but share
inventory

Buy on any Channel & PickIn-Store in any location

Buy on any Channel & PickIn-Store in specific locations

• 71% have “one view” of their
inventory

Buy on any Channel &
Deliver to Home
Buy on limited Channels (say,
only Store or Online) &
Deliver to Home

18%

4%

18%

61%

Low Maturity

There is some way to go in terms of integrated
multichannel operations
- 16 -

TCS Public

Multichannel Technology
• Only 10% have complete
integration of their systems

IT System Landscape- Cross Segment

% respondents
High Maturity

• Only 10% of retailers have one
view of customers

Complete integration

10%

Marginal integration

• 65% of respondents spend <10%
of IT budget on non store
channel

34%

Low integration

28%

Independent

28%

Low Maturity

Technology is the least matured
function
- 17 -

TCS Public

Multichannel Organization
• Only 21% provide cross channel
incentives

Cross Channel Incentives- Cross Segment

% respondents

• Only 34% share the same
customer and product view
across channels

Yes
21%

• 70% of the retailers have multichannel sponsorship from the
CXO‟s office
No
79%

Need to build synergies between the store and non store
channels
- 18 -

TCS Public

Best & Next Practices
Marketing

Operations

•
P Cross-channel unified view of

P• Continuous, cross-channel

•
P Cross-channel unified

T• Cross-channel order

customer and order data

marketing and promotion
calendar

assortment planning
fulfillment

T• „One view‟ of inventory crosschannel

Organization

Finance

•
P Single cross-channel view of
customer
•
P Intense oversight by

• Channel-optimized annual

P operating plans

P• Unified P&L across channels

CEO/COO

for combined decision making

•
T Reporting for collaboration

Customer Experience
T Unified CRM program across
•
all channels
•
P Multiple options for order pickup and delivery
•
P Multiple return options to
customer for non-store
purchases

Technology
•
T Integrated cross-channel
technology platform

•
T Real-time, cross-channel

update of data, promos and
pricing

P

Process, Policy

T

Technology

A combination of mindset, policy changes and
technology intervention can create value
- 19 -

TCS Public

Summary
The first ever Multichannel Operations Benchmarking & Excellence
Survey reveals that:

• FY14 is a mixed bag in terms of performance

• True multichannel “integration” is not visible

• Overall maturity is low, though retailers are putting in place the
organization structures and processes for a multichannel play

- 20 -

TCS Public

Call to Action…
There is a great opportunity in the making to personalize, reach out
and transform customer experience
1. Re-evaluate and reboot your multichannel strategy ; Go back to the
drawing board and create roadmaps for all areas
2. Get your organization structure and people aspects right;
Collaborate and Innovate both
3. Unlock value of your “loyal customers” and leverage your
assets(stores) ; Build synergies between the store and non store
channels

4. Technology is the least evolved area ; Need to invest ; Have a long
term view and do not settle for “chalta hai solution”
5. Continued CEO involvement
- 21 -

TCS Public

Thank You
Anil Rajpal
Head Practice – Retail, CPG & E-Commerce, Emerging Markets
Global Consulting Practice
Tata Consultancy services
a.rajpal@tcs.com

RAI – TCS: State of Multichannel Retail

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