Enhancing the Retail Omnichannel Customer Experience

Enhancing the Retail
Omnichannel
Customer Experience

Today’s Speakers
Peter Zaballos
Vice President,
Marketing & Product
SPS Commerce
Todd Kozan
Principal Consultant,
eBusiness and Channel
Strategy
Forrester Research
© 2014 SPS Commerce 2

•  The power of the consumer
•  Omnichannel readiness
•  Forrester study findings and insights
•  Q&A
Agenda

SPS Commerce –
the cloud retail leader
155K
trading partners
Membership
1.3M
products
Sourcing
7K companies
35M
UPCs
Item Management
Supportall models
Fulfillment
300K
retail locations
Analysis
$
1+T
orders annually
Volume

The perfect order ‒ 2009
retailer vendor
On time
Complete
Damage-free
Complete & accurate
documentation

Consumer
The omnichannel perfect order - 2014
Product
Informa.on

Social
valida.on

Inventory
informa.on

Compe..ve
pricing

Convenient
fulﬁllment

Convenient
returns

retailer

vendor

3PL

Consumers are
driving change
Source: 2014 Annual SPS Commerce Retail Benchmark Survey
65
%
Expect more product variety
82
%
Expect to buy online
and return in-store

The rise of the
omnichannel consumer
$300B
e-commerce sales
$1.4T
web-influenced sales

Omnichannel execution
is lagging demand
Source: 2014 Annual SPS Commerce Retail Benchmark Survey
52%
“Other priorities” ahead of
omnichannel
34%
“Legacy systems” holding
back change
43%
“Don’t know what percent of sales
originate via mobile”
4%of retailers and suppliers
have executed an
omnichannel strategy

10© 2015 Forrester Research, Inc. Reproduction Prohibited
Making Leaders Successful
Every Day
We help you make better decisions in a world where
technology is radically changing your customers.

SPS Webinar: Enhancing The Retail
Omnichannel Customer Experience
January 22, 2015

Agenda
› Why are we here?
› How do we define omnichannel?
› Consumer trends
› The market potential
› The digital and physical worlds collide
› The new shopping experience - it’s mobile guided
› Q&A

Why are we here?
›  SPS Commerce commissioned Forrester Consulting to examine the hypothesis
that retailers must provide a seamless, omnichannel user experience, increasingly
driven by mobile, to achieve success.
›  This study evaluates how consumers are currently engaging with retailers and
explores the current capabilities of retailers to meet consumers’ growing
expectations.
›  Existing consumer data from Forrester’s Consumer Technographics was used, as
well as data from a custom survey of 50 retail decision-makers responsible for
merchandising, purchasing, operations, supply chain or IT.

Source - http://en.wikipedia.org/wiki/Omni-channel_Retailing
What do we mean when we say omnichannel?
Omnichannel refers to a seamless
approach to the consumer experience
through all available shopping
channels, i.e., mobile devices,
computers, brick-and-mortar, television,
catalog and so on

The Age of the Customer: A new era led by empowered
customers
Age of manufacturing
Mass manufacturing
makes industrial
powerhouses
successful
•  Ford
•  Boeing
•  GE
•  RCA
Age of distribution
Global connections
and transportation
systems make
distribution key
•  Wal-Mart
•  Toyota
•  P&G
•  UPS
Age of information
Connected PCs and
supply chains mean
those that control
information flow
dominate
•  Amazon
•  Google
•  Comcast
•  Capital One
Age of the customer
Empowered buyers
demand a new level of
customer obsession
•  Macy’s
•  Nike
•  Beats Headphones
•  Amazon

The Age of the Customer: A new era led by empowered
customers
Age of manufacturing
Mass manufacturing
makes industrial
powerhouses
successful
•  Ford
•  Boeing
•  GE
•  RCA
Age of distribution
Global connections
and transportation
systems make
distribution key
•  Wal-Mart
•  Toyota
•  P&G
•  UPS
Age of information
Connected PCs and
supply chains mean
those that control
information flow
dominate
•  Amazon
•  Google
•  Comcast
•  Capital One
Age of the customer
Empowered buyers
demand a new level of
customer obsession
•  Macy’s
•  Nike
•  Beats Headphones
•  Amazon
The age of the customer is a 20-year business cycle in which the
most successful enterprises will reinvent themselves to systematically
understand and serve increasingly powerful customers.

Turn big data
into business
insights
Transform
the customer
experience
Accelerate
your digital
business
Age of the
Customer
Embrace
the mobile
mind shift
In the Age of the Customer, organizations need to focus on
four market imperatives

Innovative businesses continuously exploit
digital technologies to create both new
sources of value for customers and
increase operational agility in servicing
their customers.

For consumers, as digital engagement increases the
influence of traditional touchpoints declines
Source: April 2014 “Understand The Digital Business Landscape” report
Customers
are relying
less on
traditional
touchpoints
!

Your sales force is also being impacted by
digital disruption
Customers
expect sales
people to have
access to key
content and
information
!

You must become a digital
business… But why?

Your customers are digital
By 2018…
85% of US adults will
own mobile phones
82% of EU adults will
own mobile phones
64% of metropolitan
APAC adults will own
mobile phones
70% of metropolitan
Latin American adults will
own mobile phones
Source: Forrester Research Online Retail Forecasts 2013 – 2018; Note: figures represent specific markets (see notes for more detail)

Your customers are digital
Empowered customers
and employees will
expect experiences that
are device agnostic…
…and will support them
in their moment of need
Sources: Forrester Research World Smartphone Adoption Forecast, 2012 to 2017 (Global); Forrester Research World Tablet
Adoption Forecast, 2012 to 2017 (Global); Forrester’s US Mobile Mind Shift Online Survey, Q3 2013

Source: North American Consumer Technographics Online Benchmark Survey (Part 1), 2014
And your customers are digital from many locations
“Where do you use each of the following devices to
access the internet?”
Base: US online adults 18+ (online weekly or more) who access the internet on a cell phone

Your channels are digital
Annually by 2018…
$294B will be spent
online in North America
€224B will be spent
online in Europe
$858B will be spent
online in APAC
$47B will be spent
online in Latin America
Source: Forrester Research Online Retail Forecasts 2013 – 2018; Note: figures represent specific markets (see notes for more detail)

Source: April 16, 2014 “Understand The Digital Business Landscape” report
Digital businesses are different

The businesses that survive will master two critical aspects
of digital – digital customer experience and digital
operational excellence
Source: April 2014 “The Digital Business Imperative” report

Source: A commissioned study conducted by Forrester Consulting on behalf of SPS Commerce, July 2014
Which are the top 3 priorities to which your company is planning to apply, or have already applied,
resources to advance your omnichannel strategy?
10%
12%
14%
14%
22%
8%
10%
2%
8%
22%
8%
10%
14%
10%
16%
Monitoring social media
Adding items/SKUs
Providing cross-channel inventory visibility
Equipping in-store employees with mobile apps
Enhancing e-commerce site(s)
Rank 1 Rank 2 Rank 3
Base: 50 retail decision makers responsible for merchandising, purchasing, operations, supply chain, or IT
Those that are mastering both the digital customer experience and
operational excellence are focused in a few key areas

2%
2%
8%
12%
22%
28%
28%
32%
58%
60%
Other
BLE/proximity systems
ERP systems
Sourcing communities
Search functionality
Fulfillment automation
Mobile apps
Item management / catalogs
Point-of-Sale solutions
Customer analytics
What
technologies
are most
critical to your
omnichannel
initiative?
Based on their priorities retailers are focused on several key
technologies

Why are retailers focused on these initiatives and what’s
the long term view?
›  It’s clear that digital and physical stores are colliding and unlocking new value for retailers and
their customers
›  Customers are beginning to expect a higher level of digital engagement while shopping in the
store
›  Retailers are figuring out how to use analytics to deliver a more personalized and relevant
experience for their customers
›  For retailers, this means Marketing and eBusiness teams need to partner tightly with IT to win,
serve and retain customers

Which of the following, if any, have you used your mobile phone for in the PAST 3 MONTHS?
8%
9%
9%
10%
13%
13%
13%
17%
18%
18%
20%
20%
22%
24%
33%
To reserve items at a store for pickup
To store/save a receipt
To store my membership card/loyalty
To store gift cards
To scan 2-D barcodes
To learn about an in-store promotion
To access my loyalty rewards account
To check in-store availability of a
To compare physical store prices with
To check availability of a product in an
To find or redeem a coupon/coupon
To look up product information while
To purchase a product
To read customer reviews of a product
To research a product
Base: 4814 US Online Adults 18+ (Online Weekly or More) MOBILE PHONE USERS
Source: North American Technographics Retail Survey, 2013 (US), Forrester Research, Inc.
The early adopters have focused on this for good reason - mobile
usage when shopping is strong across a number of use cases
Customers are not
only researching
products but also
buying and looking
up product
information while
shopping in stores

Find What I Need
The app lets you
know early in the
browsing process
that the product is
available in-store
Home Depot’s native app is excellent at addressing many of these key
mobile uses cases and makes a real connection with their stores
Search for a ProductLaunch the App

Not only does the Home Depot app tell you what’s
available but it also tells you where in store it’s located
Home Depot
provides the exact
amount in stock and
location in-store.
Home Depot provides
inventory visibility across
the browsing experience
and allows a user to look
at other stores

Target’s retail app also provides clear inventory visibility
and tells you which store has availability

Once you add an item to your cart Target tells you the
exact location of the item via a pinch and zoom store map

Understand buying and inventory trends will enable a more
personalized experience for users in-store and online
Deliver targeted
mobile experiences
Make use of customer
shared profile information
and past purchase history
to help improve the
relevancy of offers that are
shared with the end user
which, in turn, will drive
better engagement.
Despite having
the user connect
through Facebook
and allowing
access to
personal
information,
Target failed to
recommend
relevant coupons
for the user.
Source: Target Cartwheel app

16%
16%
16%
17%
10%
32%
32%
30%
29%
26%
36%
44%
47%
39%
41%
13%
7%
8%
11%
20%
Find/redeem a coupon/coupon
code
Look up product information
Compare physical store prices
with online prices
Read product reviews
Scan 2-D barcodes
Every time Most of the time Sometimes Rarely Never
Base: Varied counts of US Online Adults 18+ (Online Weekly or More) MOBILE PHONE USERS WHO HAVE DONE THE
MENTIONED ACTIVITES ON THEIR MOBILE PHONE IN THE PAST 3 MONTHS
Source: North American Technographics Retail Survey, 2013 (US), Forrester Research, Inc
How often do you do each of the following activities on your mobile phone while shopping in a
physical store?
It’s clear customers are using their phone while in a store
but what are they doing?
Across three in
store use cases,
48% of customers
are using their
phone most of
the time or all the
time

Walmart addresses mobile in-store shopping needs by offering a “smart
shopping list” when the app is in “store mode”
Shopping lists can be set before a visit to the store.
Items can be easily added from “Favorites” and “Basket
History.” Once at the store, the application switches to
“Store Mode” a guided break down of in-store product
locations, offers, and pricing is available.
Unfortunately,
shopping lists are
not synced
between mobile
and desktop/tablet:

Target uses text messaging to deliver offers to customers in the store
that can be instantly redeemed at checkout
Target prompts users to text in to receive extra discounts while in a store. After
texting in “extra4,” the user will then receive a link response with a barcode that can
be scanned at checkout.

Walgreen’s mobile app automatically switches to store mode when
in a store and prompts the users with their balance reward card and
coupons

How effective are the following applications/technologies at driving sales?
6%
6%
14%
18%
26%
28%
46%
26%
14%
30%
16%
16%
32%
22%
22%
30%
20%
22%
12%
18%
14%
12%
16%
14%
12%
8%
6%
16%
16%
22%
14%
18%
6%
6%
8%
12%
6%
6%
12%
10%
6%
10%
Multi-retailer apps
BLE/proximity-based promotions
In-store QR code promotions
Multi-retailer coupon apps
Flash sale opportunities
Retailer app
Loyalty/rewards programs
Significant effect on driving sales (5) 4 3 2 No effect on sales (1) Don't know NA
In an omnichannel world retailers are finding several key
tactics have a significant effect on sales

Starbucks’ loyalty profiles for
customers display key
information, including current
card balance, the number of
stars a customer has
unlocked, the amount of stars
to achieve the next free
reward, and a month by
month history of rewards
earned.
Companies like Starbucks have capitalized by building robust loyalty
and rewards programs that have been well embraced by consumers

7-Eleven offers locations based coupons and rewards to
drive consumers to their stores
Instructional
content
effectively
communicates
the value of
using the app.

Using analytics to understand buying trends is critical
›  Most companies and retailers struggle with mobile analytics in the context of an omnichannel experience
›  Most focus on key metrics such as engagement, customer satisfaction and revenue
›  Instead of solely focusing on engagement and revenue glean insights from the analytics to improve the
overall customer experience by making it relevant and contextual
›  This focus will yield longer term outcomes around engagement and revenue
Source: December 2014, “Digital Business Pros Must Use Analytics to Deliver Simplified, Relevant Experiences” report

The omnichannel experience is here to stay and mobile is
a key component
›  IF you’re just embarking on the omnichannel journey
•  Understand your customers behaviors online and in-store
•  Understand how they are using mobile
•  Assess your maturity when it comes to key omnichannel use cases such as buy online and pick up
in store
•  Conduct a rigorous technology assessment to identify gaps
›  IF you’re further along:
•  Continue to optimize mobile to deliver personalized experiences while in-store
•  Choose the right assortment for store pickup
•  Deliver on customer SLAs that meet or exceed standard market offerings
•  Market in-store pickup as a competitive value proposition
•  Incentivize customers to add items to in-store pickup orders

Enhancing the Retail Omnichannel Customer Experience

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