Keeping Pace in the Retail Automation Technology Market Through 2011 and Beyond

VDC Research WebcastKeeping Pace in the Retail Automation Technology Market Through 2011 and Beyond AutoID & Transaction Automation PracticeChris Rezendes – Executive Vice-President

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These slides are from a webcast presented on 12/8/10.

A full audio recording is available at:

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1 – 2010 VDC Research Group, Inc.AutoID & Transaction Automation Practice

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2011 Customer Engagement Technology Planning Service &

2010 Retail Automation Planning Service and

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Today’s Speaker

• VDC Research Group Founded in 1971, continuous, profitable operation for nearly 40 years. Focus on a number of mission critical edge and embedded network and enabling technology markets Hundreds of clients annually…90% technology suppliers, tech investors. Customer engagement and retail automation coverage initiated more than 20 years ago.

• Chris Rezendes – Executive Vice PresidentChris has nearly 20 years experience in embedded, industrial, defense and other mission critical and high availability technology industries. He has more than 15 years experience in senior management and leadership positions at a number of IT systems and professional services organizations.

His work includes working closely with multiple levels of client organizations from Product Managers through CEOs, providing decision support on a wide range of product, market, channel, organization and corporate development opportunities.

He has also worked with many of the most successful private equity and venture capital firms in the Americas and Europe. His work with the financial services community includes opportunity identification and due diligence support on investments ranging from $30 million to nearly $3 billion.


Today’s Agenda


Status Update for b-to-c Operators

Operator Investment Drivers

Core Customer Empowerment Solutions

Customer Empowerment & Mobility

Take Aways

Customer Engagement Lifecycle, Location, Still Changing

Point of Service:Delivery

Point of Service:Selection

Point of Sale

Point ofDecision

3rd Site

Street

Road

Customer

Point of Service:Delivery

Point ofDecision

Point of Service:

Selection

Point of Sale


Source: VDC Research

For the b-t-c Operator, Payrolls Remain Smaller …


Source: New York Times, 2010

2001 Recession: > 3.5 years

2007 Recession: 3-5 years (expected)

Employment Changes Since the Recession Began

…While the Retail Automation Footprint Expands…

Workforce Management• PIMS (Personal Information

Management)• Asset Management• Wireless Email• Dispatch Management /

Scheduling• Work Order Automation• Human Capital Management

Materials Management • Asset Management• Facilities Management• Shipping & Receiving• WIP Tracking• Inventory/Warehouse Management• Order Management• Direct Store Delivery (DSD) /Route Sales• Wireless Email

Store Operations• Merchandising• Mobile POS/Mobile

Electronic Payment• Personal Shopping• Self Service• Returns Management• Loss Prevention• Shelf Labeling

& Signage Management• Traffic Counting• Wireless Email• Shipping & Receiving• Location Based Services• Facilities Management• Compliance Management

Customer Facing• Personal Shopping• Self Service• Location Based Services• Mobile POS/ Mobile

Electronic Payment• Customer Intelligence

& Loyalty



…Led By Cost & Ops Goals, Customer Empowerment

3.4

3.5

3.6

3.6

3.8

3.8

4.1

1.0 2.0 3.0 4.0 5.0

Government Compliance

Multichannel Synchronization

Industry Compliance

Sales Uplift

Customer Empowerment

Operations Improvement

Cost Savings

Investment Drivers

Investment Drivers

• Retailers work with wafer-thin margins and are thus always looking for cost savings on the operational front, in an effort to also be able to pass on these savings to the consumer /shopper. For respondents, this continued to be the single most important investment driver for the purchase of retail automation technologies.

• Retail enterprises are also continually turning to automation technology to increase operational efficiencies as a method to generate cost savings while enhancing overall shopper experience, giving this investment driver an importance rating of 3.8.

• Compliance with industry standards and regulations didn’t rate as high as most of the other drivers. This is, however, bound to change especially with an increase in the number of card-related frauds in retail establishments lately.



Customer Empowerment Means Self-Service …

TechnologyCurrently

Using

Planning to Install in

12-24months

No Plans to Use

POS Terminals/ Workstations 83.3% 12.5% 4.2%

POS Receipt Printers 70.8% 25.0% 4.2%

Payment/Transaction Terminals 54.2% 37.5% 8.3%

Imaging Solutions 33.3% 41.7% 25.0%

Self-Checkout Solutions 41.7% 41.7% 16.7%

Self-Service Kiosks 41.7% 37.5% 20.8%

Personal Shopping Systems 25.0% 50.0% 25.0%

Electronic Shelf Labels 41.7% 41.7% 16.7%

Interactive Displays & Digital Signage 54.2% 25.0% 20.8%

TechnologyCurrently

Using

Planning to Install in

12-24months

No Plans to Use

POS Terminals/ Workstations 60.0% 34.0% 6.0%

POS Receipt Printers 70.0% 22.0% 8.0%

Payment/Transaction Terminals 74.0% 22.0% 4.0%

Imaging Solutions 44.0% 38.0% 18.0%

Self-Checkout Solutions 48.0% 42.0% 10.0%

Self-Service Kiosks 42.0% 44.0% 14.0%

Personal Shopping Systems 36.0% 36.0% 28.0%

Electronic Shelf Labels 44.0% 34.0% 22.0%

Interactive Displays & Digital Signage 48.0% 34.0% 18.0%

Department Stores Convenience Stores



…and Mobility – Where Many Budgets are Migrating



Q: “What level of benefit was achieved through your most recent mobility deployment? “

Retail Mobility Deployments are About Consumers…


24.2%

25.9%

24.6%

25.4%

29.9%

25.3%

25.8%

19%

19%

24%

26%

27%

28%

30%

0% 5% 10% 15% 20% 25% 30% 35%

Reduced operating costs

Improve real time decision making

Reduced asset failures

Increased sales/ revenues

Increased mobile worker productivity

Improved customer loyalty and repeat business

Improved inventory accuracy

Retail

Industrty Avg.

Retailer Drivers for Mobility Investment


…App Developers Know This, and are Busy…

38%

28%

39%

20%

24%

22%

29%

31%

15%

23%

11%

26%

21%

22%

12%

9%

47%

49%

50%

53%

56%

57%

59%

60%

Social Networking

Mobile Commerce

Games

Location Based

Instructional Videos

Interactive Brochures

Navigation (GPS)

Ringtones

Consumer Oriented Development Activities (Overall)

Have Already/Currently Developed Planning No Plans

• Gaming and social networking apps lead: The success of interactive games that utilize the increasingly

powerful hardware and screen technologies being brought to market by handset OEMs had lead to massive revenue and marketing opportunities for mobile developers.

The success of applications such as Twitter, Foursquare, and commerce gear applications like Shopkick also support the continued mobile development that is occurring.

• Commerce and location based applications are coming. Mobile commerce and location based applications are the

two most widely planed application areas for developers. Location based applications and mobile advertising are big

drivers and are very early in their development stage –business model are continuing to emerge with Shopkickbeing an excellent example.

Near field communication (NFC) capable Smartphonesare on the horizon, which will bring new mobile applications and channel opportunities. Verizon, AT&T and T-Mobile all plan to launch trials for mobile-payment services in 2011.



…thus, retailers need to support personal liability devices

Smartphone Deployment Approach by Industry

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Employee purchased only: Any phone

Employee purchased only: Approved list

Both company and employee purchased: Any phone

Both company and employee purchased: Approved list

Company purchased only



Predictably, Security is the Number One Barrier

12.10%

6.00%

12.50%

43.75%

18.75%

5.9%

11.8%

17.6%

23.5%

35.3%

0% 10% 20% 30% 40% 50%

Desire to wait for proven applications and technology in this industry

Lack of people with appropriate skills

Unclear return on investment

Security issues

Other capital projects with higher priority

DeployedEvaluating

Retailer Concerns with Mobility Investment



‘Kansas’ May No Longer Exist, but KS is Everywhere

• The global economy as we knew it no longer exists. Customers are more powerful than ever before, forcing b-to-c and b-to-b operators to realign with a rapidly changing customer base and ever expanding scope of requirements.

• For retailers and other b-to-c operators prepared for this, these informed customers become better customers. For the unprepared, not so much …

• Retailers, b-to-c operators and their technology suppliers have the clear mandate to meet customers where they are, and where they are going, in the post-Ford century / post-recession economy where consumerism as we knew it has changed fundamentally.

• This means we are going to need to support personal liability devices – from associates, to partners and now customers.

• But, those devices will need to be deployed and managed with specific technical, operational and financial context …


Where does this leave us? Where are we going?

• Reconsider b-to-c operator IT investment within one of the following larger frameworks: Inventory management Customer empowerment Financial and regulatory compliance

• Customer empowerment is the most volatile, fastest growing, and uncertain segment of the retail, or b-to-c operator opportunity Involves dozens of technologies – many with fuzzy market segment definitions Incorporates some of the hardest to define ROI solutions on the market – think social media, IDDS and mobile

marketing and merchandising Integration requirements and BI/ analytics are top considerations for evaluators

• Mobility is not coming … it is here … but it is NOT the only play in the market Managed services technical and commercial models matter in a growing number of segments A theme that we identified in 2008 – transaction singulation inside individual user profiles in real time –

is higher on the wish list of more operators Physical and logical security solutions – discrete, applied, integrated, embedded remain key priorities

• Traditional POS technology opportunities are stronger when they relate to these solutions


Thank You for Attending this VDC Webcast.For more information about the 2011 Customer Engagement TechnologiesPlease Contact:

Janice Seidman – Account [email protected] | 508.653.9000 x139

Christopher Rezendes – Executive Vice [email protected] | 508.653.9000 x120

Tom Wimmer – Director, AutoID & Transaction [email protected] | 630.279.7959

Q&A Session


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Keeping Pace in the Retail Automation Technology Market Through 2011 and Beyond