Mobile retailing - if you don't do it, someone else will

1. Mobile Retailing If you don’t do it, someone else will Rik Veldhuizen

2. According to research... Which Industry has the most potential for new Mobile Growth and Value Generation? Healthcare / #1 Life Sciences #2 Retail Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: Deloitte - Open Mobile: The Growth Era Accelerates - 2012

3. According to some other research... Which Industry is most impacted by digital disruption (size/timing) #1 Retail #2 Finance Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: Deloitte - Digital Disruption - Short Fuse, Big Bang? - 2013

8. Mobile Disruptionmain considerations Mobile Strategy – 1970-1980 1990’s 2000’s 2010’s MOBILE IS NO LONGER OPTIONAL + Mainframe Terminals Windows Applications Web Applications Mobile Computing “Green screens” “Fat Client Server” “Thin” “Multi-Platform” Computers Tablets Smartphones Mobile Web Kiosk “The mobile power shift will touch every aspect of our lives at home and at work. This power shift will change how companies and institutions treat us and how they empower their own employees to take Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. action in their immediate context and moments of need” - Forrester, 2013

9. Constantly Connected Consumer Consumers love their devices Would Sleep next rather give to it up chocolate Use it on the toilet Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.Google/IPSOS Source: OTX Media CT Mobile Movement Study, April 2011: PEW Internet & American Life Project

10. Deﬁne own Purchase Path •Social Interaction •Product Discovery Pre-Purchase •Marketing •Price Checking •Cashless/cardless purchase Purchase online or in-store •Self-checkout •Order Management •Customer Service Post-Purchase •Loyalty Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. •Social Interaction

11. Mobile price checking & Social Networking } Makes prices & quality Reduces number of store transparant to everyone trips to comparison shops Customers buy from your Reduces store transactions competitors in your store! Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

12. Invasion Competitors invade your store } 65% changed where they purchased changed what they 77% purchased based on product reviews 6 of 10 smartphone owners comparison- shop online while in your store Source: Board of Governors of Federal Reserve System - Consumers & Mobile Financial Systems - March 2012 Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

14. Mobile Inﬂuence Factor “When are you most likely to use your smartphone for a store-related shopping trip?” Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: Deloitte Mobile Inﬂuence Survey, March 2012

16. Mobile Inﬂuence Factor - the future of retail Sources: Row 1: eMarketer — US Mobile Commerce Forecast: Capitalizing on Consumers’ Urgent Needs; Row 2: Deloitte analysis; Row 3: Forrester — U.S. Online Retail Forecast, 2011–2016 Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

17. Yet, focus is kept on mCommerce 82% “Mobile objective is to drive revenue to website” Forrester — Mobile Commerce Forecast: 2011–2016, June 17, 2011 Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

18. New Approach to Mobile Should be strategic imperative because it affects the entire business Should be C-suite issue, not a low-priority, eCommerce division task because 17-21% of store sales mobile-inﬂuenced by 2016; 21% Higher conversion rate driven by mobile Source: Deloitte Digital - the Dawn of Mobile Inﬂuence - 2012 Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

20. If they know more, they buy more Keep them hooked • Provide key tools & information to support customers at each stage of decision-making process • Especially in store • Information needs vary by product & shopping trip • Relevant & tailored • About products, locations, events & promotions • Be relevant on channels they use • Interactive experience Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

21. Get to know you customer Now more than ever • Complicated behaviour • Omni-channel analysis • But... new ways of getting to know your customer • Many customers rather share personal info with ‘machine’ than with sales person • Intimacy requires • Knowing how customers shop within product categories Lots of data • • Mining & Analysis 30% sales increase • Data analysis Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.Sources: Deloitte - Mobile retailing - are you ready for radical change? - 2012 Zebra Technologies, “How printing from iPad enhances the shopping experience: Lift sales while creating multi-channel opportunities,” 2011

22. Mobile Advertising is dead Long live tablet & smartphone advertising • Mobile advertising traditionally grouped tablets & smartphones together • Prediction is that “mobile” advertising will get split into 2 categories (similar yet distinct) € 0,46 € 5,38 • Makes it easier to realize value • Lots of innovation & experimentation • Second/Third screening ad revenue • In-game advertisements • Advertisement geared towards type of interaction... • Smartphone > discovery • Tablet > more information • Desktop > transaction € 1,90 € 9,70 • ...and towards device speciﬁcs • Screensize, location based, connectivity type, etc Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: Deloitte - Technology, Media & Telecommunications Predictions 2013 display revenue

24. “While physical stores may have once enjoyed the advantage of crafting cool shopping experiences, the aesthetics of the iPad and all the social sharing surrounding online shopping today are now shifting that advantage to online retailers.” Source: Industry Leader quote - Deloitte - Global Powers of Retailing 2013 - Retail Beyond Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

25. Price & Promotions Still relevant indicate Price & Promotions are 78% most important factors (targeted promotions) greater purchasing 4-5x rate than conventional marketing • Geofencing • Young technology; adoption is spotty use phones to learn about in-store 7% promotions or events • Popularity gaining • Most cost-effective Sources: Maxxing, “Increased promotions efforts in response to economic conditions” Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Forrester, “Can texting save stores? 'Geofencing' lets retailers offer deals to nearby customers, ﬁght price- shopping,” Wall Street Journal, May 8, 2012

26. Physical Space Retail Store is not dead, and is not going away • Supports consumer interaction with the brand, product and each other - mobile technology as starting point • Extends virtual world into the physical space - Merge • Shifts from transactional to experiential • Change in future store portfolio, footprint, layout & inventory • Brand & Product showroom • Hub & Spoke Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. • In-store pickup • After Sales Service

28. Talent Assess how to enable store-talent to deliver new service model, with the technology & right-sized workforce to support it • Mobility = Productivity Improvement • Free personel from checkout counters & stockroom • Check inventory across stores & distribution centers • Reduce inventory costs & stockouts and expand shopper’s choices • Out of stock items costs retailers almost 50% of intended purchases • Make inventory visible & keep customers from shopping elsewhere • Provide virtual inventory to mobile users • Technology-enabled product & service knowledge • Technology-savvy assistance with sales, order tracking & returns • Brand ambassadorship (face of the retailer) • Link personel with customers through mobile • Favorite sales associate Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

29. Process in the Store Systems of the future • Enabling Technology • Store technologies equip talent with tools to deliver superior service • Accomodate expectations of the connected consumer (drop off, showroom, after sales service a.o.) • Customer facing tools & technologies deliver customer experience of tomorrow • Requires ﬂexibility & ability to integrate existing & emerging applications and devices Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. • Intelligent Mobile Wallet

32. Mobile Payments - where are we today? Preparedness of key players to deploy mobile payments Most viable business model Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: Deloitte Future of Mobile Payment Survey

33. Mobile Payments - where are we today? Players & Scenarios Mobile Carriers Financial Institutions Handset Makers Merchants Consumers Loses by being on the Limited gain from Loses because of Gains by innovating sidelines or acts defensively Limited gain from small scale Wait & See disruptive models when credible threat NFC deployment by carrier competition to card-based fragmented offerings and ecosystem limited availability emerges Gains from tapping existing Loses by sharing merchant Moderate gains from NFC Gains from speeded up payment network and revenues with carriers unless Gains from merchant Buddy System generates incremental it is a niche player that deployment to larger transactions but loses from acceptance and convenience customer base upgrade costs of POS revenues expands revenue pie Significant risk without Significant risk without Limited gains from small- Limited gains from small- Limited gains from low Fly Solo commensurate returns commensurate rewards scale deployment scale deployment merchant acceptance Significant gains from mass Gains significantly because Significant gains from large- Moderate gains from large- Significant gains from mass deployment of NFC and of expanded choice, Open Federation scale mobile payment scale mobile payment deployment of NFC greater competition among merchant acceptance and deployment deployment payment instruments convenience Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: Deloitte - Cell me the money - Unlocking the value in the mobile payment ecosystem

34. Mobile Payments - where are we today? And why should you care? • Merchants reluctant • Changeover costs (even online) 22% • Operating costs, Stability & Processing time • Additional mode, but may be not perfect substitute think mobile wallets will be successful • Merchants have lot to gain • Expectations to be innovative 27% • Channel additional information a/o Increase customer loyalty • Differentiation from competition think NFC-enabled • Improved reporting & real-time analysis on purchases payments will be most • Reduced complexity in payment process successful Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: EHI Retail Institute 2011

35. Consumers don’t understand the value... 86% “Cash, Card and... phone. Another payment method” don’t know mobile payments systems Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Sources: Steinbeis Research Center for Financial Services 2012 EHI Retail Institute 2011

36. ...But they understand the risk 73% says security is most important factor re mobile payments 86% don’t want to pay extra for using mobile wallets Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved. Source: Steinbeis Research Center for Financial Services 2012

39. One size does not fit all... Use of Mobile Technology differs, as Retail formats differ in their value propositions, strategies, performance objectives & customer expectations Home Non-apparel Department Discount Apparel Store Club Store Drug Store Grocery Store Improvement Specialty Store Store Store Store • Expert opinions • Loyalty programs • Low prices • In-store Ambience • Loyalty programs • offerings • Targeted offerings • Discount offerings • Targeted offerings Personalized • Customized • Targeted offerings • Bundled products • Decrease checkout • Real-time • Expert opinions • Brand / product Clothing • Price discounts • Discounts time discounts • Store talent type connection to attract & retain appealing to price- attractive to price- may keep customers could shape • Customer profiling more important than young customers sensitive customers sensitive shoppers from shopping customer behaviour transaction speed elsewhere & increase loyalty • Efficient navigation Credible • Expert opinions • Real-time fashion • In-store navigation • Sale Mobile Point-of- • Locate specific • • How-to videos for • Personal advice information on relevant products recommendations items on shelves • Accelerate • Access social may help customers drugs shopping process networks to find products they to shorten wait times beneficial for club • Checkout time enhances customer based on shopper’s validate purchase & simplify shopping experience and own tastes & are looking for store customers decisions experience valued by customers decreases staffing requirements (members) requirements Deloitte Digital Copyright © 2013 Deloitte Consulting B.V. All rights reserved.

40. Choose your Consideration(s) You can’t do it all at once Map Customer Journey Usability & Experience first How do customers move from mobile to social to store to web and beyond as they go Usability is everything. But not just the app, make sure that integration points between through product & price considerations, purchase a.o.? Understanding the customer your mobile and other channels, notably the store, are in place and support a desirable journey is the bedrock of any mobile strategy. experience. Include Employees & Partners Product, Price, Promotion, Place & Payment As consumers become ‘super users’ of mobile devices and apps, deyning your sales Consider the impact mobility has on the 4P’s, plus the additional P for Payment. staff (ao) access to the same technology and tools could cause a fundamental 5P Consider how consumer do price research while in store, or provide proper promotions disconnect and lead to to an ineffective customer experience in the stores. when consumers are in the store or when they are scanning a certain product (bundles), Furthermore, consider how mobility can enable your interactions with suppliers and or how to deliver a new ‘place’ (in-store) experience. your distribution process. Mobile Capabilities Omnichannel approach Consider movement, NFC, Bar/QR codes, etc. Retailers should constantly explore how Make sure your mobility strategy isn’t operating in a silo. Things get really interesting these additional capabilities can not only speed up or enhance existing processes, but when mobility is combined with your other channels. more importantly how they can be leveraged to expand the horizon of what is possible. Preserve Flexibility Current Pain Points Consumers will increasingly expect a seamless and user-friendly mobile experience regardless of the mobile device or operating system they use. When selecting off-the- A great starting point for mobility is to identify current pain points. For example, have you shelf apps or developing mobile apps in-house, consider short and medium-term ever walked all over a store floor to find an available sales associate? Mobility could easily implications of your choice with respect to a potential change in the dominant alleviate this customer pain point by allowing the customer to submit a “help” request smartphone operating systems or brands. Always consider how your mobile strategy including their current location in the store through an app. impacts your overall flexibility. Don’t underestimate Security & Privacy Benefits of doing it right A mobile-related security or privacy breach could severely damage your reputation and Grow brand awareness and loyalty, Increase revenue, Increase traffic, Improve Deloitte Digital hamper adoption of mobile capabilities. If you want your customers to engage with your business via mobile Consulting B.V. All rights reserved. info such as their location, you should Copyright © 2013 Deloitte channels and share critical € conversion rate, Increase overall basket size, Enhance the customer experience, Keep pace with evolving customer demands and expectations, Reduce labor costs, Increase emphasize privacy & security at all times. marketing efficiency, Execute flawlessly, Implement securely

43. Secure By Design

Mobile retailing - if you don't do it, someone else will

Mobile retailing - if you don't do it, someone else will

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