Organizing for Success with Digital Retail

Organizing for Success withOrganizing for Success withDigital RetailDigital Retail

Organizing For SuccessOrganizing For SuccessWithWith Digital RetailDigital Retail


March 27, 2012 #JDAchat


Kevin O’MarahSenior FellowStanford GlobalSupply Chain Forum

Kevin O’MarahSenior FellowStanford GlobalSupply Chain Forum

Wayne UsieSVP of RetailJDA Software Group, Inc

Wayne UsieSVP of RetailJDA Software Group, Inc

1) Big changes to retail value chainStores, supply network, merchandising and brand

2) One organization for all channels3) Converge or integrate processes4) Leadership demands new talent5) Transition by design and prepare

to adopt new metrics of success

FACTORSFACTORS

REVOLUTION RETAIL –Organizational Considerations

Agenda

Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

1) Big changes to retail value chainStores, supply network, merchandising and brand

2) One organization for all channels3) Converge or integrate processes4) Leadership demands new talent5) Transition by design and prepare

to adopt new metrics of success

FACTORSFACTORS

JP MorganGlobal $963B by 201319.4% CAGRUS $235B by 201312.4% CAGR

EuromonitorGlobal 90% growthbetween 2010-2014$520B

GartnerUS $313B by 20158.8% of total retail salesUK $86B by 201523.6% of total retail sales

ForresterUS $249B by 2014

Projections – eCommerceNear Term


JP MorganGlobal $963B by 201319.4% CAGRUS $235B by 201312.4% CAGR

EuromonitorGlobal 90% growthbetween 2010-2014$520B

GartnerUS $313B by 20158.8% of total retail salesUK $86B by 201523.6% of total retail sales

ForresterUS $249B by 2014

Stores and eCommerce

2.00

2.50

3.00

Cars and PartsFurniture +Electronics +

Percentage of Sales via eCommerce


Source: US Bureau of Census, 2012 Statistical Abstract

0.00

0.50

1.00

1.50

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Home ImprovementGroceryDrugApparelSports+MediaMiscellaneous

Non-Stores and eCommercePercentage of Sales via eCommerce

25.00

30.00

35.00

40.00

Cars and PartsFurniture +Electronics +

$117B


Source: US Bureau of Census, 2012 Statistical Abstract

0.00

5.00

10.00

15.00

20.00

25.00

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Home ImprovementGroceryDrugApparelSports+MediaMiscellaneousNonstore

$28B

$4B

eCommerce Changes thePhysical Network for Retailers…

161

14

Buy online and pickup in store will be: Buy online and ship from store will be:


5232

16

Essential Common Sometimes Rare or Not at all

39

30

17

14

Essential Common Sometimes Rare or Not at all

N=115, data collected 12/2011

…and the Role of StoresDo you think the physical store in an eCommerce future will be:

815

4



73

More Important

Less Important

Same, but DifferentRole

…While Offering New Possibilitiesfor Branding & Promotion

29%39%14%

21%

Brand Loyalty Demand Flexibility


32%

Favors Retailer Favors ManufacturerNo Change

65%14%

More Receptive to Offers* Less Receptive to Offers* Unchanged

Product Choice, Price Point, Availability, Convenience are alljointly delivered by the retailer and the manufacturer

Marks & Spencer Leads the Way


“As well as acting as a distributioncentre for stores, the huge warehousewill house the group's e-commerceoperation and will also be a base for itsinternational distribution business. It willbe one of the biggest buildings in theEast Midlands.”

“As well as acting as a distributioncentre for stores, the huge warehousewill house the group's e-commerceoperation and will also be a base for itsinternational distribution business. It willbe one of the biggest buildings in theEast Midlands.”

Fragmented Structures Will Struggle

SupplyChain Merchandising

eCommerceOps Store Ops

Store Assortment 5% 64% 5% 15%

Store Fulfillment 54% 5% 8% 28%

Store-to-Store Transfers 37% 5% 5% 37%


Store-to-Store Transfers 37% 5% 5% 37%

Store Fulfill Online 16% 0% 16% 34%

In Store Kiosk Sales 5% 3% 8% 21%

Site-to-Site Transfers 46% 8% 5% 8%

eCommerce Assortment 5% 42% 30% 2%

eCommerce Fulfillment 42% 0% 25% 2%

Source: RSR Research, 2011

Consider International Shipping…


One Supply Chain Organization willSupport eCommerce and StoresDo you expect retail organizations in an eCommerce future to have:

19%

Separate SCOrganizations 16%

Overall Non-Food Large and Small Formats



81%

50%50%

84%

Grocery

Convergence or Integration a MustAs eCommerce grows do you expect the roles of supply chain, merchandising andstore operations to:

Converge

Overall



49%

10%3%

38%Converge

Diverge

Remain the Same

Integrate, but RemainSeparate

Multiple Talents Needed to LeadIf these three roles were to come under one head which is best suited to lead allthree?

12%Merchandising

Supply Chain

StoreOperations

16%

42%

42%

Overall Grocery



36%

30%

23%

StoreOperations 42%

44%

37%

19%

Non-Food Large Format

Transition to the Future by DesignDo you believe the transition to omni-channel retail is best done:

Overall

7%

“Integration is mandatory forsuccess across channels and needs

to filter down from the C level”



68%

25%Holisitically with merchandising,store ops and supply chaindeveloped as one strategyGradually with each developingindividually and at their own pace

Other

Most are Prepared for the ChangeAs eCommerce grows from 5% of US sales to 15% do you have:

Overall

31%26%



15%28%

An 18 month strategy to respond

A 3 year strategy to respond

Both

Neither

New Metrics are a Chance to Change

Do you believe measurements of retail performance will:

Overall

25%



32%

44%Remain based on same-storesales growth

Change to same-shopper salesgrowth

Develop new metrics not yet inuse

1) Expect to design a new value chain- Stores, supply network, merchandising and brand

2) Build one organization across channelsto support this value chain

3) Integrate processes from source to sale– think of consumer and shopper as one

4) Find leaders that understand both salesand operations – learn to balance

5) Strategic planning is a must – newmetrics may catalyze new behavior

FACTORSFACTORS

REVOLUTION RETAIL –Organizational Considerations

Summary and Conclusions


1) Expect to design a new value chain- Stores, supply network, merchandising and brand

2) Build one organization across channelsto support this value chain

3) Integrate processes from source to sale– think of consumer and shopper as one

4) Find leaders that understand both salesand operations – learn to balance

5) Strategic planning is a must – newmetrics may catalyze new behavior

FACTORSFACTORS

Connect with Us!@JDASoftware@waynejusie@RTouchPoints@komarah

Join the Conversation on Twitter


Connect with Us!@JDASoftware@waynejusie@RTouchPoints@komarah

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