Accenture Retail Edge New Opportunities Customers Retailers

7/27/2019 Accenture Retail Edge New Opportunities Customers Retailers

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Retail@ the EdgeNew Opportunities orCustomers and Retailers


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We are surrounded by sweeping trends

and volatile swings in customer behavior,

technology, and the economic and political

environment. Customers are adopting

new technologies and communication

channels aster than ever. Governments

are changing overnightsuccumbing

to the power o connected people. And

new competitors are popping up at every

corner, and at rapid rates.

2 | Retail @ the Edge: New Opportunities or Customers and Retailers


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Customers have moved ahead. They expect tointeract with retailers in new ways. They areshopping around or the right retailers to meettheir needs. They are not interested in the methods

o yesterday.

Amid the whirlwind o ever-shiting trends,predicting where the customer will land is nearlyimpossible. So, what can a retailer do? Now is thetime to be at the edge, looking out at the digitalworld, nding opportunities to adapt aster and

ratchet up appeal to customers.

Retailers are oten hampered by the burdens

o inrastructure, capital and dated operating

models. They are not stepping up to meet the

needs o customers who long or new ways o

doing business. Right now, retailers have the

opportunity to push the boundaries to create

new experiences or their customers and tap new

value streams or their companies.

This shit means out with the old and in with the

newlegacy is over. Leaders will have to rethink

the next dollar o investment, integrate more

tightly within and across organizations, andopen their minds to unconventional approaches

o engaging with customers and employees.

Companies will need shrewd strategies to gain

insight quicker and turn it into actions that truly

impact the customer. Companies also will need to

reconsider platorms, technologies and operating

procedures. And they will need to be prompt and

disciplined about execution.

To envision the right opportunities to seize

in retail, look no urther than the extreme

customers who are setting tomorrows trends.

Who are these customers? They are the ones

ueling the growth o new, small entrants by

fexing the power o their social network. They

are using technology to overturn traditional

modes o shopping. They keep a constant eye onthe digital landscape, looking or new providers

who can meet their needs better than traditional

retailers can.

Pushing the boundaries o the retail experience

Retail @ the Edge: New Opportunities or Customers and Retailers | 3


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Opportunities at the edge. Why not?

Through deep research into retail trends, Accenture identied examples o these extreme customers and envisioned the opportunities that they create or

retailers. When exploring these opportunities, ask yoursel the same question your customers are askingwhy not? Why cant I get it the way I want it?

Why cant you oer the same products in store as online? Why cant you provide me access anywhere and at any time? Why cant I be rewarded or the

infuence I have on your brands? You can choose to stand still and observe the changes or ask, why not create new experiences and new value?

And why not now?

Accenture sees three distinct opportunities at the edge o retail:

The Inuence Marketplace

Context Retailing

The Streaming Environment

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2

3

A world where the cost o building awareness is negligible

and a companys success is predicated on whether its

products and services are noteworthy enough or people

to spread the word. Infuence is the currency in this mode

The context or customer interaction shits rom stores/

channels/our tur to their tur: their home, car or social

setting. Companies present products and oers within a

dynamic kaleidoscope o demand pockets, wherever the

customer is at that moment o need. The challenge is to

deliver tangible relevance in distributed, varied contexts.

Retailers become the Netfix o solutions, streaming

bundled solutions to meet customers specic needs.

Delivered through a variety o ownership models,

goods and services are relevant or the customer across

channel, across time and across company.



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Keeping up with the customerNew technologies, new buying habits and newcomers to retail make keeping

up with the customer an ever-changing playing eld. Trends include:

Interconnectivity.

Threat o new entrants.

Digital living.

Connected empowerment.

Loyalty is gone.

Redefning stereotypes.

Changing media channels.

New paths to purchase.

In just 20 minutes on Facebook, more than 1 million links are shared, 2 million

riend requests are accepted and almost 3 million messages are sent.

TV is no longer the primary viewing option or those under the age o 35.

Pinterest drives more reerral trac than Google Plus, LinkedIn

and YouTube combined.2

By 2015, South Korean school children will have access to only digitized

textbooks.

Occupy Wall Street donations increased by 301 percent in a 17-day period,

growing at an average o 17.72 percent per day.4

Eighty-our percent o US employees plan to change jobs within a year.1

Internet users over the age o 55 are driving the growth o social

networking through the mobile Internet.5

Eighty-three percent o shoppers make their purchase decisions beore

even entering a store.3



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The customer experience includes

The role o the retailer is

Loyalty is dened

Investment shits

Successul companies use

Dramatic change is required

social infuence that can be expressed

and accessed at every stage o the buying

decision and in every channel.

to lter eedback and make connections to

relevant infuencers that the customer nds

credible.

by network value, the degree o infuence

on others purchases.

rom building awareness to creating credible

products and services that generate social

endorsement.

insight rom infuencers to manage the

business and enable a broad distribution o

social infuence.

in retailers ability to integrate infuence

actors into operations and into marketing

and merchandising decisions, such as

assortment optimization, store locations,

private labels, service oerings and pricing.

1

67% of shoppers spend more

when they have received a

recommendation from their online

community of friends.6

Recommendation

Good Bad



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Infuence is the currency in this new world

Signals that customers are at the edge

What does loyalty mean to you? Its time to

rethink the denition. Rather than ocus on

loyalty through total number o purchases,

look at the total value o a customers infuence

network. The customers with the highest network

value will be rewarded through discounts, ree

goods and incentives. Retailers might also oer

incentives within the broader circle o infuence.

In act, its happening already. The Palms Hotel

and Casino in Las Vegas is creating the Klout Klub,

which will use social media metrics to measure

the infuence o each patron. The Klout Score will

allow visitors to experience certain amenities,

not based only on their spending/betting/playing

but depending on the het o their social media

ootprint.7

Infuence reigned king when the Dutch airline

KLM was challenged by a duo o lmmakers,

who wagered they could solicit enough Twitter

ollowers to ully book a KLM direct fight rom

Amsterdam to Miami. In exchange, the airline

would comply and oer this never-beore,

nonstop route. Forty hours post-challenge, the

airline conceded and 426 tweeters got their seats.

Infuence ratings can be used as a key metric in

assortment and space optimization, and even

to drive inventory levels and replenishment.

Based on buzz, retailers can reallocate product

distribution in real time based on what

infuencers deem to be the hot item.

Customers themselves can use infuence in

making decisions about products. Imagine that

as a customer stands in ront o a store shel,

through augmented reality, that person is able

to see the ratings o infuencers (including

acquaintances and experts) whom he or she

trusts. I your most trusted riends think a

product is great, likely so will you.

Cautious consumers are thirsty or credibility in products and services. Whether it is credibility in products (such as nutrition and usage inormation) or

credibility in communication (saying the right thing at the right time based on consumer needs). In short, customers want to believe in what they are buying.

A number o wild fuctuations are compelling todays consumer to be more discriminating:

Consumers are oten mistrusting and want to

know a retailer is doing right by them. These

customers may lean on eedback rom infuencers

to identiy the retailers who are delivering

credible solutions. In act, according to ndings

by Reevoo, more than two-thirds o consumers

(68 percent) trust reviews more when they see a

mix o both good and bad eedback. Furthermore

95 percent o consumers become suspicious

when no bad reviews are evident, believing the

site to be censored or aked.8

With consumers remaining cautious amid high

unemployment rates in Western countries and

with growth remaining weak globally, retailers

are struggling to pass on cost price infation.

Defation also aects consumer spending,

as there is a risk in buying today what may

be cheaper tomorrow. According to the 2011

Accenture Global Consumer Survey, with

uncertainty and lack o predictability becoming

the norm, connecting consumers with sources

and inormation that they can trust can help to

overcome realities like the high rates o switching

and price comparing that we are seeing in so

many markets today.

Social networking and digital media can build

awareness or ewer bucks. Social networking

continues to dominate. Across a snapshot o 10

major global markets, social networks and blogs

reach more than three-quarters o active Internet

users.9 The ease with which consumers can share

their views online means that i retailers have

a credible product or service, consumers will

advocate and market it. In act, social networking

is becoming so ingrained in our daily lives that

even media consumption is becoming social. For

example, Get Glue lets participants check in to

their avorite shows or other media orms to let

the world know what they are watching.

Nonbelievers are not buyers.

Volatility is the norm.

The people have a podium.



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Moving to the edge o the Infuence Marketplace

Retailers tend to dump dollars into consumer and trade promotion. But theres a better way. The cost o creating brand awareness and generating demand

generation is shiting due to alternative and lower-cost avenues. Its time to ask, where can I get the biggest bang or my marketing buck? Pioneering

companies are looking or ways to capture more value rom the infuencers that are out there advocating or the brand. They ask, can we generate greater

return i we identiy top infuencers, treat them dierently and give them something to buzz about?

Create an infuence exchange.

Measure social infuence.

Get a return on infuence.

How can retailers take steps closer to the edge?

Retailers will need to use sophisticated analytics

enterprise-wide to understand who is the most

infuential. Then they can tantalize infuencers

by delivering more customized, credible and

relevant messages, promotions and products.

In this marketplace, companies will incentivize

infuencers to create buzz about their oerings

call it an infuence exchangeand will reward

those making the most noise.

Social Q&A tools, Like buttons and reer-a-

riend discounts are modern-day tactics that

can drive value in the Infuence Marketplace. Butyou cant manage what you cant measure. At

the edge, retailers will measure infuence actors

and incorporate social infuence measurements

into a holistic infuence management approach

that connects back into the organization acrossall relevant areas, rom merchandising to supply

chain and even to areas like human resources.

To ensure a return on their investment in

infuence as retailers tap new channels, they must

have a clear strategy and an operating model

that supports tighter integration o marketing,

supply chain and merchandising unctions, and

metrics. Furthermore, as the cost o creating

awareness goes down, spending will shit away

rom capturing attention and will be reinvested in

improving the oering itsel.



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Loyalty is dened

Investment shits

Successul companies are able


selecting tangible products with the

option to add intangible elements that are

personalized, based on context.

to use insight into the consumers needs

to deliver the most relevant products and

services, based on the consumers context.

by the number and requency o points o

interaction the customer has with the retailer.

rom creating environments or sales to

creating insight into the customers context

and ways to communicate with the customer

outside o the channel, rom distributing to

consultative selling.

to derive value by adding intangible

elements such as ndability, verication or

personalization, based on the context o the

decision to buy.

in developing communication with customers

that engenders trust and helps to capture or

receive inormation about their environment.

2

Of the 40 percent of consumerswho own smartphones, 70 percent

use their smartphones while

shopping in stores.10

40 %

70 %use their smartphoneswhile shopping in stores

US consumers whoown smartphones



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Innovation in context

Customers observe, interact with and decide on

products and services in a variety o contexts

at home, in the car, on the street and in the

oce. At the edge o retail, there is a symbiotic

relationship between customer and retailer: I

scratch your back, you scratch mine. Customers

share inormation and preerences with retailers,

and retailers respond by delivering a more

authentic, personalized and thereore richer

experience to the customer.

What does your customer care about, and how

can you respond in context? For example, your

diabetic customers may want to use their mobile

phone to certiy that product ingredients comply

with their dietary restrictions. Your socially aware

customer may want to preview a live eed o the

actory conditions where an article o clothing

was made. Your soccer mom may want to see

whether the rug she is considering will hold up to

her amilys oot trac or whether the makeup

will last throughout her busy day. Its all about the

context o daily lie. Can your customer see him

or hersel usingand enjoyingyour products?

Signals that customers are at the edge

Several trends are infuencing the rise o context retailing:

Digitization has skyrocketed as tech-savvy

consumers have come to expect inormationat their ngertips. The appeal o paperless is

apparent in the popularity o e-readers, such as

the Kindle and NOOK. Furthermore, books are

moving o the shelves in national libraries and

in schools. Look at South Korea. They plan to

digitize all textbooks by 2015. Digital interactionsare becoming second nature or customers who

are hungry or more engaging, interactive and

dierentiated shopping experiences.

Consumers reality is becoming more blended

with virtual reality as they spend more time

connected to digital devices, playing on

gaming systems and interacting via virtual

communication media. The popularity o Wii and

Kinect is evidence that this trend will continueto be a part o our daily lives. In act, in its rst

60 days on the market, Kinect sold 8 million

units, making it the astest selling consumer

electronics device, according to Guinness World

Records. The Cratsman Experience Store creates

a branded experience accessible across social and

digital channels by combining hands-on work

stations, a live social media studio and project

demonstrations that showcase the innovation

and perormance o Cratsman tools. And newmobile applications like uDecore, String and

Blipper let users view and manipulate products

in 3-D, such as a replica o a shoe or a couch

they are interested in buying.

The online experience is being replicated ofine

and vice versa. Even while shopping in stores,

customers are going digital. O the 40 percent o

US consumers who own smartphones, 70 percent

use their smartphones while shopping in stores.10

A budding trend is being able to replicate theofine world more eectively via digital means

to create new and innovative experiences or

shoppers. One example, Google Streetview, is a

project that allows people to explore a store just

as they would i they were physically in the store,

yet do it all online. Another example, Turnhills.

com, uses crowd-sourced photography to enable

consumers anywhere to window shop in New

York. Yet another, Meijer Find-It app, is using

online and ofine by knowing what store youare located in and providing the optimal route to

purchase your shopping list.

Go digital or bust.

Very virtual.

Online and ofine collide.



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Moving to the edge o Context Retailing

In their marketing and merchandising plans, retailers will need to look beyond traditional digital tactics as levers or merchandising and selling. Instead,

they will need to thoughtully outline in their plans how to maniest the intangible attributes o an oering in ways that are individualized, interactive and

tangible to consumers diering needs and preerences. The talent devising the marketing and merchandising plans will need expertise in the innovative

technologies and tactics that can drive value through context.

Understand the tactics.

Take the retail and productexperience virtual.

Invest in the technologies.


Retailers will need to understand the tactics and

methods used in Context Retailing and will have

to train employees in how to integrate these

practices into interactions with shoppers. Also

critical will be educating consumers in how to use

various emerging applications to examine and

compare an oering in various contexts.

By overlaying data in a simulated world, retailers

will gain speed, coordination and the ability to

operate and make decisions within the context

o real market conditions and operating realities.

Companies will increase their visibility into real-

time supply chain occurrences, store conditions

and new market realities. With that insight,

retailers will be able to develop products and

services with a view into how, when and where

they will be used.

Context retailing requires both an investment

in ever-evolving virtualization/visualization

technologies and a test-and-learn model.

Tailoring merchandising and communication

according to an individual shoppers context

will require advanced intelligence engines that

connect to marketing and selling channels and

that can be maniested easily as the inormation

or experience appropriate to the shopper.



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Loyalty is dened

Investment shits

Successul companies provide


on-demand access to streaming products

and services that are accessed and bundled

as solutions.

to be the connector and access point between

the consumer and entities that provide the

products and services to ll a need.

by the requency and margin mix o what a

customer accesses and by aliation with a

specic retailer.

rom buying, stocking and selling inventory

to providing visibility and access based on

consumers needs.

the easiest access to the most relevant goods

and services, earning income not only rom

the margin on goods, but also rom the value

o access.

in developing a multidirectional fow o

goods, deriving value rom the access

model and presenting relevant solutions in

innovative ways to the customer.

3

Grocery retailers in the US have

reduced the rate at which they are

adding square footage by 56 percent.

56 %



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Moving to the edge o the Streaming Environment

For retailers to make this opportunity a reality, they must undamentally rethink the model by which they supply goods across their markets and invent

a model that thrives on ragmentation. Fragmentation will exist in multiple ormscustomers, channels, mode o distribution and acquisition type (buy,

rent, exchange, etc.). Managing supply and demand will be core to dierentiation and will require leading-class insights, inrastructure and collaboration

capabilities.

Apply customer insights.

Rightsize.

Create multidirectional fow.


Do you know what your customers are doing?

Retailers must track, capture and interpret

customers behavior across every available

channel and in their lie stages. The ability to

bridge structured and unstructured data, and

integrate it across the organization to apply the

insights toward sales o solutions, will become

more critical. To truly stay in tune with demand

patterns and appropriately manage supply,

retailersgoing beyond the traditional sources

or customer insightswill need to tap into social

buzz and collaborate with suppliers and maybe

even competitors.

Successul companies will shit investments rom

buying and storing inventory to creating new

solutions and access models. They will manage

store size and inventory fow proactively. It will

also become increasingly important to leverage

the network o industry peers, suppliers, partners

and customers to share assets and inrastructure

in order to achieve a truly fexible, right-sized and

fuid value chain.

The uture calls or the ability to aggregate

and create dynamic delivery routes and a

multidirectional fow o goods. Standard

merchandising channels become more complex

in the streaming environment because goods are

not coming rom or going to one place. Inventory

is coming rom multiple places and is at various

levels o use (e.g., pre-owned). Dynamic delivery

can enable better orecasting accuracy and better

supply chain visibility.



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The physical and virtual worlds

oer new channels and venues or

reaching a wide range o customers.

The customer is there at the edge,

ready to shop, interact with and

advocate your products. Are you

there as well, adapting to the digital

consumer, tapping social infuence,

selling in context and nding

ways to continually eed relevant

oerings to customers? Get to the

edge. Because now is the time to

make the leap into the exciting

uture o retail.

are @the edgeare you there with them?

The customers

For more inormation on becoming a retailer at the edge, please contact:

Renee Sang

Accenture Customer Innovation Network

Director

[email protected]

Allison Muller


Co-Lead, North America

[email protected]

Karen Voelker


Co-Lead, North America

[email protected]

1 http://www.mainstreet.com/article/career/employment/more-americans-will-change-jobs-2011

2 http://blog.shareaholic.com/2012/01/pinterest-reerral-trac

3 IRI, Channel Migration: The Blurring of Shopper Loyalty, 2009

4 http://www.dailydot.com/news/new-data-occupy-wall-street-unding

5 http://blog.nielsen.com/nielsenwire/online_mobile/social-media-report-spending-time-money-and-going-mobile

6. Internet Retailer, September 2009

7 http://adage.com/article/digitalnext/marketing-las-vegas-palms-hotel-klout-scores/146189

8 http://www.bizreport.com/2012/01/bad-reviews-good-or-conversion-rates.html

9 http://blog.nielsen.com/nielsenwire/online_mobile/social-media-report-spending-time-money-and-going-mobile

10 Google & IPSOS OTX, April 2011

11 SymphonyIRI Group, New Product Pacesetters: Carving out Growth in a Down Economy, 2011

12 Kantar Research

Accenture Retail Practice



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About Accenture

Accenture is a global management consulting,

technology services and outsourcing company,

with more than 246,000 people serving

clients in more than 120 countries. Combining

unparalleled experience, comprehensive

capabilities across all industries and business

functions, and extensive research on the

worlds most successful companies, Accenture

collaborates with clients to help them become

high-performance businesses and governments.

The company generated net revenues of

US$25.5 billion for the fiscal year ended Aug.

31, 2011. Its home page is www.accenture.com.

Accenture Retail Edge New Opportunities Customers Retailers

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