1. Winning the New Digital Consumer with Hyper-Relevance
January 2015 In Retail, Insight Is Currency and Context Is
King
2. Study Reveals that Retailers Can Meet Rapidly Evolving
Customer Expectations with Hyper-Relevant, Streamlined Experiences
1 Exponential Change Is Driving Unprecedented Complexity
Exponential change = exponential complexity and disruption. 32
Hyper-Relevance Can Capture the New Digital Consumer Consumers want
experiences that provide savings and efficiency, reflect precise
context of each shopping journey. Hyper-Relevance Demands New
Business Models Win the trust battle. Let context drive innovation.
Deliver dynamic experiences, increase agility.
3. Exponential Change Is Driving Unprecedented Complexity The
Internet of Everything is creating sweeping changes in the shopping
journey, disrupting business models and expanding customer
expectations.
4. Retail Disruption Social Apps Mobile Big Data Mobile
commerce grew 47% in Q2 2014, far outpacing e-commerce (10%) and
total retail (3%) [comScore, 2014] 64% of U.S. shoppers use a
mobile retail app while shopping at least once a week [Cisco
Consulting Services, 2015] 88% of retailers foresee significant
growth of data captured by their networks [Cisco Consulting
Services, 2014] Technology and Evolving Consumer Behaviors Are
Reshaping the Retail Landscape 94% of U.S. omnichannel retailers
had a company Facebook page as of Q1 2014 [the e-tailing group,
2014]
5. Exponential Change Creates a Maze of Shopping Journeys
Source: Cisco Consulting Services, January 2015
6. To Help Retailers Navigate This Rapidly Changing Landscape,
Cisco Conducted a Unique, Three-Pronged Study 1 Surveyed 1240
consumers in U.S. & U.K.* Blind survey / 627 U.S. + 613 U.K. 2
Conducted in-depth interviews with retail industry thought leaders
Doug Stephens, Retail Prophet Consulting Leslie Hand, IDC Retail
Insights Michael Olmstead, Plug and Play Retail 3 Drew upon lessons
learned from Cisco Consulting Services customer engagements to
develop economic model 42% 28% 21% 9% Gen Y Gen X Boomers Silvers
18-34 yrs old 35-54 yrs old 55-64 yrs old 65 and up 79% use
smartphone 50% use tablet 51% 49% Female/ Male *Global findings
from 6000 consumers in 10 countries to be released in March
2015
7. Research Shows that Digital Shopping Is No Longer Just for
Early Adopters Q Which types of shopping apps do you use weekly?
Source: Cisco Consulting Services, January 2015 ber Digitals have
become mainstream Retailer-specific apps (Amazon, Tesco, Walmart,
etc.) Independent shopping apps (Groupon, LivingSocial, Zulily,
etc.) 55% U.S. 53% U.K. 34% U.S. 24% U.K. U.K. U.S. 7% 11% 22% 29%
2014 2012 ber Digitals as Percentage of Respondents
8. Mainstream Mobile Adoption Demands that Retailers Deliver
New Shopping Journeys and Experiences Leslie Hand Vice President,
IDC Retail Insights The consumers smartphone is one of the most
valuable tools that the retailer has as an interaction point.
9. The New Digital Consumer Wants Hyper- Relevance Consumers
want a hyper-relevant shopping experienceconvenient and contextual.
They are less interested in hyper-personalization, which may not
address their needs in the moment.
10. Consumers Expect Hyper-Relevant Shopping Experiences, Not
Just Personalization Hyper-Relevance Defined What It Is A new
paradigm that enables consumers to receive what they want, when and
how they want it. How It Happens Hyper-relevance is made possible
by IoE-enabled solutions and innovative business models that
deliver valueefficiency, savings, or engagementin real time. How It
Is Different Personalization is when the retailer knows your name.
Relevance is when the retailer knows your needs in the moment.
11. if you're prepared to share some information with us as a
consumer, we're prepared to give you an experience that feels very
connected, very customized, very contextualized... Context Is King:
Above All, Interactions Must Be Relevant Doug Stephens Founder,
Retail Prophet
13. favor checkout optimization77% Efficiency There Is High
Demand for Shopping Experiences that Deliver Efficiency, Savings,
and Engagement interested in receiving product recommendations via
augmented reality 57% interested in general in-store entertainment
(not related to context or shopping) Engagement Source: Cisco
Consulting Services, January 2015 favor in-store guidance through
digital signage67% favor in-store guidance through augmented
reality63% 38% would like to view digital signs with special deals
or promotions available to everyone in the store 78% 73% favor
receiving special offers via augmented reality on a
smartphoneSavings
14. SAVINGS $59M 19% of Value at Stake While Consumers Still
Want Savings, Efficiency Promises Greatest Value for Retailers
Reviews [augmented reality] 57% In-store advertising 54% Product
recommender [augmented reality] 48% Top Ten rankings and displays
45% In-store entertainment 38% IoE Retail Concepts Willingness To
Use* *Percentage responding somewhat or very likely to use General
in-store offers [digital signage] 78% Special offers [augmented
reality] 73% Targeted offers [digital signage] 67% Targeted offers
[smartphones] 54% Scan QR codes 52% $312M Gross Benefits [based on
retailer with $20B annual revenue] $45M 14% of Value at Stake
ENGAGEMENT $208M 67% of Value at Stake Checkout optimization 77%
In-store guidance [digital signage] 67% In-store guidance
[augmented reality] 63% Scan-and-pay [smartphone] 60% Drive-thru
pickup 57% Same-day delivery 53% Smart cart / automatic
replenishment 50% Mobile payments 49% Secure locker 49% EFFICIENCY
Source: Cisco Consulting Services, January 2015
15. 39% 26% 22% 13% Process of selecting and purchasing goods
Quality of interactions provided by their store associates Physical
environment in stores Level of personalization of the shopping
experience To Maximize Value at Stake, Retailers Should Focus on
Improving Efficiency The area with the greatest Value at Stake is
also the area most in need of improvement Q In which areas could
retailers make the most improvement? Source: Cisco Consulting
Services, January 2015
16. The Path to Creating Hyper- Relevance Win consumers trust:
Consumers may be willing to share personal information for the
right experience. Turn customer data into actionable insights.
Deliver dynamic experiences to deal with complexity, increase
agility, transform business models.
17. Real-Time Analytics Enable Actionable Insights and Better
Decisions Michael Olmstead Director, Plug and Play Retail The only
way you can predict inventory is if you predict demand. And the
only way to predict demand is to predict the right purchase
behavior .... Its all going to come back to predictive
analytics.
18. 8% 9% 11% 12% 16% 23% 25% 28% 41% 49% 51% None of the above
Web history, social media activity My reviews online Family
information Personal financial information Basic information (name,
age, etc.) Purchase history, loyalty program info Likes/dislikes,
interests, hobbies To Benefit from Analytics, Retailers Must First
Win Customer Trust Information from connected products I am using
Purchase history from other retailers My location NO MAYBE YES Win
the battle for trust here Source: Cisco Consulting Services,
January 2015 Repondents willing to share information to get a more
personalized shopping experience:
19. Retailers Understand the Importance of Real-Time, Edge
Analytics to Maximize Value Source: Cisco IoT Global Study, 2014
Smart store operational analytics Targeted offers Checkout
optimization Retailers lead in recognizing the onset of edge
computing Respondents who believe that in the next three years,
most data will be processed at the edge (mobile devices,
appliances, routers) Source: Cisco Consulting Services, 2015 47%
40% 40% 38% 34% 33% 33% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Transportation Public Sector ManufacturingOil & Gas Utilities
Metals & Mining Retail 9.4% 1.8% 0.8% Potential EBIT* profit
contribution of illustrative analytics-based concepts *Earnings
Before Interest and Taxes
20. By Combining Analytics with Dynamic Processes, Retailers
Will Create the Foundation for Hyper-Relevance Hyper-Aware Mobile
devices, sensors, beacons, and RFID tags help retailers gain true
visibility into what the customer is experiencing in the store
Predictive Intelligence and analytics provide real-time
anticipatory insight into what is happening and what to expect,
enabling hyper-relevant customer connections Agile When retailers
can change their business processes dynamically, they can manage
human, technology, and product resources in real time with
tremendous efficiency Three Key Attributes of IoE-Optimized
Retailers
21. Gross annual value opportunity Net annual EBIT opportunity
$142M + $170M = $312M - $93M = $219M By Implementing Key
IoE-Enabled Solutions, Retailers Can Generate Potential EBIT* Gains
of ~15.6%** Revenue OpEx reduction For an illustrative omnichannel
retailer $20 billion revenue 7% EBIT margin 900 stores 120,000+
employees 113 million square feet of retail selling space Annual
enabling costs *Earnings Before Interest and Taxes **Based on 19
IoE concepts featured in IoE Retail Survey, January 2015
22. Ingredients for Success in the IoE Era 1 Focus on
innovations that deliver hyper-relevance for consumers 2 Forget
everything you thought you knew about the digital
consumertraditional customer segments are breaking down 3 Go to the
edge for visibility into what customers are experiencing in the
moment 4 Build a dynamic infrastructure and create agile processes
that allow you to deliver hyper-relevant experiences 5 Develop new
business models that drive innovation and enable
hyper-relevance
23. Appendix Cisco Retail Solutions
24. Connected Retail Solution Roadmap CiscoValueCapture
Innovation Impacting Shopping Experience Reduce operational costs
Drive revenue growth through targeted/ dynamic promos Improved,
personalized engagement via Omni- Channel Digital Media Store
Experience Enhance customer satisfaction with flexible pickup
schedules Increase foot traffic to store Drive cross/ upsell
Prevent loss on customer premises Operational efficiencies Smart
Locker On premise visibility into shopper behaviour and preferences
Increase app and services adoption Improve marketing/ promo
effectiveness CMX Digital Experience Enhanced shopper experience
Connect with experts Increase avg basket / transaction size
Employee productivity Remote Expert and Mobile Advisor Checkout
optimization Staff optimization Loss prevention Store Operations
Analytics App consolidation (i.e. POS, Loss prevention) Closet
simplification Security & compliance iWAN Energy Management
Store in a Box Shopper Insights & Personalization Behaviour
analytics Checkout optimization Drive conversion rate and increase
customer loyalty Increase average basket size Connected Analytics
for Retail (FY15)