Financial Controllers’ Club - Deloitte US...17 Deloitte Finance Club –The rise of omnichannel:...

©2015 Deloitte LLP. All rights reserved.

Deloitte Finance Club

The community for Financial Controllers and senior financial executives

Wednesday, 25th March 2015

WATCH

full-length

video1hr 17min

http://j.mp/1NBwAOx

http://j.mp/1NBwAOx

http://j.mp/1NBwAOx



A few facts

• Established in May 1997 as the Financial Controllers’ Club, and renamed

Deloitte Finance Club in 2013

• Provides an annual programme of technical updates and hot topic briefings

• Connects our members to relevant experts as well as over 2,200 members

across the country

Deloitte Finance Club – The rise of omnichannel: what it means for Finance (25 Mar 2015)2



Upcoming programme

• Business partnering – better decision-making through Finance insight

Wednesday, 29 April 2015 – 5:30pm-7:00pm (arrivals from 5pm)

• Summer finance checklist 2015

Thursday, 14 May 2015 – 8:30am-10:30am (arrivals from 8am)

Further dates and topics to be confirmed


https://www.deloitte.co.uk/financeclub/register0429.cfm



Deloitte Finance Conference

Driving better business decisionsThursday, 7th May 2015 – 8am-2pm – Central London

The Deloitte Finance Conference explores the role of Finance as a

strategist and catalyst, transforming and adapting to the

possibilities and realities offered by the mine of data now available.

The agenda features case studies from senior finance leaders

from organisations such as EasyJet, HSBC, Sky, Heathrow and

Transport for London, showing how smart use of data has

transformed their reporting and decision-making.

Deloitte’s Chief Economist, Ian Stewart will talk about how finance

teams can keep abreast of macroeconomic risk by utilising data

insights and there will be time to network with peers over lunch.

The conference is free to attend for Finance Directors and Group

Financial Controllers of large organisations. Please visit our web

page to register online: www.deloitte.co.uk/financeconference

4 Deloitte Finance Club – The rise of omnichannel: what it means for Finance (25 Mar 2015)

http://www.deloitte.co.uk/financeconference


The Deloitte Finance Club

The rise of omnichannel: what it means for Finance

Wednesday, 25th March 2015


Rise of omnichannel: what it means for Finance

Agenda

• The rise of omnichannel Ben Perkins

• What it means for Finance? Lucy Newman

Colin Jeffrey

Oliver Vernon-Harcourt

Rupert Alston



The Deloitte Consumer Review

The rise of omnichannel

Ben Perkins

WATCH

video

commentary00:01:40

http://j.mp/1EDmc9u

http://j.mp/1EDmc9u

http://j.mp/1EDmc9u


Data

02

• Online continues to outperform all retail

• Plays a role in 33% of all store

purchases

• Opportunities to engage with

consumers and build loyalty

• Still issues with execution

03

Digital

01• Discounters have exposed

weaknesses of the big four

• Success is about proximity

& simplicity as well as price

• Structural change in UK

food retailing

• Analytics playing a key role across

more businesses

• As predicted, greater focus on

commercial applications

• Still much to be done with small data!

• Larger digital perimeter to secure

04 • Fulfilment is now a

key battleground

• Click & collect has

boomed

• Peak demand has

really challenged

retailers

The rise of the omnichannel customer

A 4-D view of retail in 2014


WATCH

video

commentary00:04:34

http://j.mp/1aiKU2n

http://j.mp/1aiKU2n

http://j.mp/1aiKU2n


The consumer in 2015

Improving outlook with significant opportunities

2. Selective spending

will continue

Consumers are smarter

and reluctant to leave

recessionary behaviours

behind. Growth of the

discounters have

changed perceptions of

value.

4. Nature of influence is

changing

Consumers are less loyal

to brands and retailers.

They are subject to a

wider range of

influences. Content and

a more editorial

approach is essential.

1. Less pressure

on spending

Strong job market,

low food prices and

falling oil prices all

mean consumers

have more money in

their pockets.

3. Increasing

connectivity

Consumers have

been empowered by

technology and

connectivity. New

opportunities to

engage with

consumers.

4.7%

Growth*

in

2015

*Source: TLT Retail Growth Strategies report 2015


WATCH

video

commentary00:03:50

http://j.mp/1I4HbDm

http://j.mp/1I4HbDm

http://j.mp/1I4HbDm


The consumer in 2015

The changing path to purchase

It starts with a

dreaming phase,

where consumers look

to technology to

provide them with the

information and

inspiration they need

to make their choices

It ends with a sharing

phase, whereby one

consumer’s experience

can often inspire the

next to start dreaming

about theirs


WATCH

video

commentary00:02:59

http://j.mp/1IQgrEb

http://j.mp/1IQgrEb

http://j.mp/1IQgrEb


What it means for Finance

- measuring performance- fulfilment- revenue considerations- KPIs

Lucy Newman

Colin Jeffrey

Oliver Vernon-Harcourt

Rupert Alston

WATCH

video

commentary00:01:57

http://j.mp/1F2koC5

http://j.mp/1F2koC5

http://j.mp/1F2koC5


Question 1

For management reporting purposes do

you assess store and online channel

performance separately?

• Yes

• No80%

20%

Yes No



Measuring performance

WATCH

video

commentary00:02:31

http://j.mp/1CwW24J

http://j.mp/1CwW24J

http://j.mp/1CwW24J



Measuring performanceOur recent research “Digital Influence in UK Retail” showed:


78% of shoppers used a

digital device prior to/

during their most recent

shopping trip

Digital technology

influences 33% of

in-store retail sales

in the UK21% spend more

when using a

digital device

when shopping

Mobile is affecting

17% of in-store

sales

42% higher conversion for

those who use a digital

device prior or during a

shopping trip

WATCH

video

commentary00:05:17

http://j.mp/1HiTEjr

http://j.mp/1HiTEjr

http://j.mp/1HiTEjr



Measuring performanceIn addition a Deloitte employee survey has also shown Bricks and Clicks are not

independent


33% of in-store

shoppers

researched

purchases online

50% research

online clothing

purchases in store

first

20% would not

purchase a

product if not

available in store74% of shoppers

favour the nearest

store to their home

WATCH

video

commentary00:01:22

http://j.mp/19EESYU

http://j.mp/19EESYU

http://j.mp/19EESYU

©2015 Deloitte LLP. All rights reserved.Deloitte Finance Club – The rise of omnichannel: what it means for Finance (25 Mar 2015)15


The burning questions

Can traditional analysis of

performance by channel provide

any meaningful insight in a multi-

channel era?

Does the business fully

understand the interplay between

channels?

How should the performance of

strategic assets such as flagship

stores and websites be

assessed?

What does this mean for

accounting judgements

particularly around store

impairments?

WATCH

video

commentary00:00:55

http://j.mp/1BQ9Zs0

http://j.mp/1BQ9Zs0

http://j.mp/1BQ9Zs0



Performance management, planning & reporting

Online to drive store

footfall (e.g. Argos)Online as standalone

business (e.g. Jigsaw)Integrated experience

(e.g. Burberry)

1 Strategy development

2 Value creation

4 Behaviours and rewards

Store

BMDDigital team

Supply Chain

3 Measures and targets Revenues Costs AssetsCustomer

satisfaction

WATCH

video

commentary00:07:16

http://j.mp/1NBsciN

http://j.mp/1NBsciN

http://j.mp/1NBsciN



Store/asset impairmentKey points to consider:


Online Assets – should they be treated as

an independent CGU their own?

Flagship Stores – for those stores never

intended to be profit making, how are they

assessed for impairment ?

Allocation of online sales – can sales

utilising store assets be allocated to the

specific store e.g. order in store/ collect in

store?

Can you justify allocating other elements

of online sales to stores where it plays no

“tangible” part in the transaction?

Online Assets – with the pace of

technological development, how are UELs

changing?

How can the Finance function be a better business partner in terms of

measuring profitability across channels to help the business make better

investment and other strategic decisions?

WATCH

video

commentary00:09:47

http://j.mp/1NBsd6h

http://j.mp/1NBsd6h

http://j.mp/1NBsd6h


Question 2

When assessing store performance do

you include:

• Sales made purely in store

• Sales made in store plus click and

collect sales relating to that store

• In-store sales plus other onlne-related

revenues?

13%

40%

47%

In store Click-&-collect Other online




WATCH

video

commentary00:02:48

http://j.mp/1I4I5jp

http://j.mp/1I4I5jp

http://j.mp/1I4I5jp



Fulfilment

What information is required for more effective inventory management?

What are the operational and reporting pitfalls that prevents an effective holistic

inventory management approach?

What is the accounting implication for inventory and delivery costs?

WATCH

video

commentary00:10:46

http://j.mp/1CMJYOf

http://j.mp/1CMJYOf

http://j.mp/1CMJYOf


Question 3

Do you manage inventory:

• On an enterprise-wide basis

• By distribution channel

• A mixture?

31%

31%

38%

Enterprise-wide Distribution channel Mixture




WATCH

video

commentary00:03:58

http://j.mp/1MzIcq8

http://j.mp/1MzIcq8

http://j.mp/1MzIcq8



Revenue considerations

Rise of click and collect leading to increased returns

How can you make better use of data analytics to predict returns rates and

therefore forecast revenues?

Operationally, how can returns be minimised?

• 3D rotation

• Videos

• Charging habitual returners

What is the cost of returns, impact on margin and revenue cut-off?

WATCH

video

commentary00:07:24

http://j.mp/1MzIhdx

http://j.mp/1MzIhdx

http://j.mp/1MzIhdx


Question 4

Do you track returns rates and

behaviours:

• On an overall basis

• Separately for different distribution

channels?

33%

67%

Overall Separately




WATCH

video

commentary00:01:38

http://j.mp/1I4IvWI

http://j.mp/1I4IvWI

http://j.mp/1I4IvWI


Question 5

How well do you understand the costs

to the business of returns through the

various channels?

• Fully

• To some extent

• Not yet

0%

55%45%

Fully Some extent Not yet




Fully

WATCH

video

commentary00:01:07

http://j.mp/1BMlXC9

http://j.mp/1BMlXC9

http://j.mp/1BMlXC9



Top 10 KPIs (analysis of 12 key retailers)Type KPI Omnichannel relevance? Suggestions

Revenue Revenue growth (%)Increasingly relevant to understand how

interplay of channels can maximise this

More sophisticated

measure?

Revenue Like for like sales growth (%)Still relevant to some extent but how does it

capture new online functionality?

Measurement of impact of

new tech investment?

Revenue Sales per sq ft Only relevant to physical store channel Measure of online

distribution space?

Profit Profit before taxWill continue to be key measure for

investors

Profit Gross/ Operating marginIncreasingly important to understand impact

of each channel on GM/ OpM%

More sophisticated

measure?

Profit Operating profit per sq ftOnly relevant to physical store channel Measure of online

distribution space?

Profit ROCEIncreasingly relevant - need to assess return

on store and tech investment

More sophisticated

measure?

Other Footfall Only relevant to physical store channelNumber of visits – to store

and website?

Other Number of storesOnly relevant to physical store channel

- Is it +ve or –ve?

Number of SKUs available

online?

Other ATV/ Basket sizeIncreasingly relevant in understanding cross-

channel impacts on this measure

More sophisticated

measure?


WATCH

video

commentary00:05:12

http://j.mp/1MzIJZ9

http://j.mp/1MzIJZ9

http://j.mp/1MzIJZ9


Question 6

Based on today’s session do you think

that your KPIs will need to be updated

in the near future?

• Yes – already discussing it internally

• Yes

• No

61%

39%

0%

Already discussing Yes No




No

WATCH

video

commentary00:00:47

http://j.mp/1C7TjeG

http://j.mp/1C7TjeG

http://j.mp/1C7TjeG



Wrap up

• Impact of the omnichannel consumer continues to evolve

• Additional considerations in 3 main accounting areas:

‒ Asset Impairment

‒ Stock management

‒ Returns

• Please participate in our research in this area later this year


WATCH

video

commentary00:00:40

http://j.mp/1CwX6pq

http://j.mp/1CwX6pq

http://j.mp/1CwX6pq


Discussion



Upcoming programme

• Business partnering – better decision-making through Finance insight

Wednesday, 29 April 2015 – 5:30pm-7:00pm (arrivals from 5pm)

• Summer finance checklist 2015

Thursday, 14 May 2015 – 8:30am-10:30am (arrivals from 8am)

Further dates and topics to be confirmed






Contacts and resources• Lucy Newman +44 20 7007 2107 [email protected]

• Colin Jeffrey +44 20 7007 0194 [email protected]

• Oliver Vernon-Harcourt +44 20 7007 1628 [email protected]

• Rupert Alston +44 20 7303 2715 [email protected]

• Ben Perkins +44 20 7007 2207 [email protected]

• James Bates +44 20 7303 0094 [email protected]

Resources:

• Deloitte Finance Club home page: www.deloitte.co.uk/financeclub

• UK Accounting Plus (formerly IAS Plus): www.ukaccountingplus.co.uk

• Annual report insights 2014: www.deloitte.co.uk/annualreportinsights

• Future of UK GAAP: www.deloitte.co.uk/futureofukgaap


mailto:[email protected]






http://www.deloitte.co.uk/financeclub

http://www.ukaccountingplus.co.uk/

http://www.deloitte.co.uk/annualreportinsights

http://www.deloitte.co.uk/futureofukgaap



Recent seminars• Revenue recognition and the TMT sector – Wednesday, 26 March 2014

• Accounting for real estate and a Tax update – Wednesday, 23 April 2014

• Finance IT systems – Wednesday, 7 May 2014

• Summer finance checklist – Thursday, 17 July 2014

• Football Finance and Fraud: an inevitable cost of doing business? –

Wednesday, 1 October 2014

• Managing pensions risks and costs and a Tax update –

Wednesday, 22 October 2014

• All change! Key trends and developments in the UK insurance market –

Wednesday, 19 November 2014

• Holiday finance checklist 2014 – Wednesday, 10 December 2014


http://www.deloitte.co.uk/email/DFC-revenue-recognition.pdf

http://www.deloitte.co.uk/email/DFC-Real-estate-Tax.pdf

http://www.deloitte.co.uk/email/Tjt5tUwru.pdf

http://www.deloitte.co.uk/email/DFC-SummerFC14.pdf

http://www.deloitte.co.uk/email/DFC-Football-Finance-Fraud.pdf

http://www.deloitte.co.uk/email/DFC-pensions-tax.pdf

http://www.deloitte.co.uk/email/DFC-Insurance.pdf

http://www.deloitte.co.uk/email/DFC-HolidayFC14.pdf


©2015 Deloitte LLP.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of

which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is the United Kingdom member firm of DTTL.

This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon

the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this

publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP

accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.


Financial Controllers’ Club - Deloitte US...17 Deloitte Finance Club –The rise of omnichannel:...

Documents

Transcript of Financial Controllers’ Club - Deloitte US...17 Deloitte Finance Club –The rise of omnichannel:...