4 Ways to Disrupt the Retail Model and Engage Customers Differently

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Engaging Customers DifferentlyNew and Potentially Disruptive Experience Models that Drive Traffic and RevenueDave Bruno, Marketing Director

June 25, 2015

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Today’s Panel

Joe SkorupaEditor in Chief

RIS News

Jay ShieldsDirector, Solution Consulting

Aptos

Dave BrunoDirector, Marketing

Aptos

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Nothing Lasts ForeverThe pace of change in retail is accelerating, causing competitive advantage to erode more rapidly than ever before…

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Image: Norton Ip

100Department Stores:

years

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Image: Amanda Bengston

50Category Killers: years

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Image: Mike Seyfang

1995

????

Eventually, reinventionAll models require

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Image: Jim Bowen

New retail models are emergingConstantly

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Image: Sharon Michele Ursno

To differentiate,

People no longer GO shopping…people are ALWAYS shopping

essentialExperience is

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Don't sell! No! That's a turn-off. Build an amazing brand experience, and then selling will just naturally happen.

“-Angela Ahrendts SVP Retail and Online Stores Apple

Image: CGP Grey

experienceRethinking

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Today’s Agenda1.Subscription Boxes2.Mobile Commerce 2.03.Showrooming, Redux4.Lifestyle Curation

Image: Sharon Jan Inge

Potentiallydisruptiveexperiences

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c

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Monthly Subscription Boxes“Discovery Commerce Comes of Age”

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Along legacyin retail

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"Reimagining beauty retail online." 

Image: Jeanna

retailing is born

“Little Box”September 2010:

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Image: Angie Six

Initial e-mail to

40friends

$10/month

A few curated samples

Source: Inc. Magazine

beginnings

humbleBirchbox takes root from

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Image: Angie Six

results

Global subscribers800,000

Annual Sales$96MSource: Forbes

impressiveBirchbox today:

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Image: Angie Six

phenomenonBirchbox spawned a global

US Subscription Services6002013 VC Investments$300M

Source: Subbly

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Virtually limitlessvarietyEverything you need to take a much-needed

getaway without leaving home

Toys, collectibles, t-shirts and other

"geeky" things

4-5 carefully selected products & presents from Austin, Texas every month

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shoppers

“It's like Christmas! I’m never sure what's going to be in

there.”

The Thrill of the Hunt

“I get exposed to things I wouldn’t know about. I recently got a bronzer that I’m addicted

to.”

Personalized Curation

“If I end up liking the whole box, then I’ve hit the jackpot.”

Value Potential

“If you walk into a big-box store, there are aisles and aisles...

It can be overwhelming.”

Decision Fatigue

The appeal to

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investorsThe appeal to

“Acquiring a transaction means acquiring a customer for the long

term, rather than a single purchase.”

Greater Lifetime Value

“You have a very close idea of how much stock you need,

shipping costs, the spread of delivery destinations, and likely

future income.”

Greater Predictability

“Customers automatically ‘buy’ each month, without the need to

bring them back via display retargeting, social, email, etc.”

Lower Retention Spend

“A company built on recurring revenue is usually viewed as more attractive than the same company

without the near-guarantee of income.”

Company Value

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TargetNordstromAmazonCVSBergdorf GoodmanDrugstore.com

Not surprisingly, big brands have begun toinvest

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First 5 Enabling Technologies to Consider• Recurring order functionality• Commerce• Recurring billing• Order management

• Integrating via the store• CRM/Clienteling

• Analytics-driven Personalization/Curation• Related items month-to-month• Build a story via a series of boxes• Measure monthly boxes (“baskets”)• Inventory management/forecasting/staging

• Commissions for high-performing stylists• Loyalty/CRM/Point tracking

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Do you consider monthly subscription services to be hip…or hype?

o Hipo Hype

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Has your organization ever offered a subscription service?

o Yes, we have investedo Planned investment 12 -

24 moso No plans

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Subscription Service Poll Results: Aptos CIO’s

Hip Hype Have Invested Plan to Invest No Plans

67%

33%

Hip…or Hype?

78%

11%

11%

Investment Plans?

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c

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Mobile Commerce 2.0“Back to the Future?”

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“Mobile Retail” is on a roll

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Retail trucks arrived

Fashion Truck PioneerStacey Steffe

circa 2010

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Now more than in the USSource: American Mobile Retailing Association

400 trucks

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In allshapes & sizes

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In countless categories

High fashion Toys and tees Footwear

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“It’s very cute and inviting. It’s just

so adorable how it’s set up, it makes you just want to go

inside.”

The Treasure Hunt

“Truck-hopping is a fun, stress-free way to go shopping

with your girlfriends.”

It’s Fun and Social

“I love the quirkiness of the fashion trucks and it feels a lot more personal than going to a

traditional store.”

It’s Personal

“I like the convenience of fashion coming to me.”

It’s Convenient

shoppersThe appeal to

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entrepreneursThe appeal to

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“Invest a few thousand in a truck to have it retrofitted and you have a mobile boutique that can go anywhere.”

Low Barriers to Entry

entrepreneursThe appeal to

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“Facebook and Twitter are integral to our business, but we've also made it inviting for walk-in customers. I set out a Welcome sign, along with a few items...”

CheapMarketing

entrepreneursThe appeal to

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No Rent to Pay

entrepreneursThe appeal to

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investingNot surprisingly, big brands are

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First 5 Enabling Technologies to Consider• Mobile POS/Cloud POS• Assortment Planning• Analytics/CRM to drive location/mapping• Micro-level analytics • Similar to using catalog/commerce deliveries to drive store needs?

• Enterprise Inventory (endless aisle)• Omni-channel considerations?• Store versus showroom?

• Promotion Planning/Mgmt

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technologyEnabling

Mobile POS (Cloud)Assortment Planning

AnalyticsCRM

Endless Aisle

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Do you consider mobile retail outlets to be hip…or hype?

o Hipo Hype

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Do you have any current or planned investments in mobile retail outlets?

o Already investingo Planned investment 12 -24

moso No plans

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Mobile Retail Poll Results: Aptos CIO’s

Hip Hype Have Invested Plan to Invest No Plans

78%

22%

Hip…or Hype?

45%

33%

22%

Investment Plans?

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c

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Showrooming, Redefined?“Bricks Like Clicks”

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TUPPERWARE PARTIES

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showroomHow to shop a

1.Browse the collections

2.Try on/sample the merchandise

3.Make assisted online purchases

4.Head home and wait for purchases to arrive

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Bonobos GuideshopsThe benchmark:

Web site visitorconversion rate5%Store shopperconversion rate83%2xSuits sell the online rate

Sq. ft. showrooms1,500Sources: Retail Wire 2014, Forbes 2014

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Indochinosews up space

Custom suits for men100%Weeks, under4 $500

150,000Online customers

6profitable stores today

On-site “Style Guides”Fabrics to explore Custom fittings

Pop-up strategy evolved into permanent location plan

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showroomWhy open a

1.Additional saleschannels

2.Wider assortment, smaller footprint

3.Product testing labs

4.Return locations & help desks

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Birchbox“hybrid” store builds brand

Store Carries Inventory, but Shopping Experience

Mirrors their Web SiteInstead of arranging

products by brand, they sort them by

category

The “Cheek” shelf, where all blush options are in a neat row, is like

clicking “Cheek” in a drop-down menu

Touchscreen simulates the algorithm

Birchbox.com uses to send monthly samples

The store exists to create a brand experience that builds loyalty, brand and

buzz.“

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Enabling Technologies• Omni-channel• Commerce• Store-centric Micro site• Self checkout

• Order Management/Fulfillment• Enterprise Inventory• Drop ship option

• Warehouse Management• Clienteling/CRM

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Has your organization ever considered opening a showroom?

o Already investingo Planned investment 12 -24

moso No plans

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Showroom Poll Results: Aptos CIO’s

Have Invested Plan to Invest No Plans

86%

14%

Investment Plans?

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c

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Stores as Points of Experience“Lifestyle Curation”

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Lifestyle Curation defined

Offering related services and experiences that go beyond products to foster deeper connections with shoppers

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pioneerA true lifestyle

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shoppersThe appeal to

“Our relationship to our favorite retailers

is built on this idea that their products and ethos

embody our own values and

outlook.

We rely on these shops to bring our point of view to

life be it through

product, decor, or otherwise…

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Significant successMany experience pioneers have achieved

$400M$600M$2.2B

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experienceA look at several recent attempts to transform the store from errand to…

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Massage SpaGarden Paths

Design ClassesFarm to Table Cafe

Private EventsCoffee Shop

Wine Tastings

Terrain

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GalleryLibrary

Floral BoutiqueCinema Room

Wine BarBilliards Lounge

Sculpture Garden

Restoration HardwareFormer Museum of Natural History

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Expert TipsTraining Classes

Shoe RentalLockersShowers

Adidas

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Store managers host monthly supper club

parties for the “Creative

Community”

“What’s one thing you’ve done that you’ve never told your parents?”

REAL TALK

Kit & Ace

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Retail StoresPop-Up ShopsPerformance

SpaceArt GalleryRestaurants

Films & Concerts

Space 15 Twenty

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Integrated & Interactive

Internet of Things Studio

Home SecurityFitness

AppliancesGrillsTools

Heating/Air

Sears3,900 sq. ft. demo home

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Enabling Technologies•Marketing driven • Deeper Analytics into customer• Customer influencers and who they influence• Likes/dislikes• Art/music

•Mobile POS for open spaces• Tools to connect differently

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Do you think curated lifestyle experiences are relevant to your

target customer?

o Very relevanto Somewhat relevanto Not relevanto Not sure

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Do any of your stores offer curated lifestyle experiences?

o Some storeso All storeso Planned investment 12 -24

moso No plans

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Lifestyle Curation Poll Results: Aptos CIO’s

Hip Hype Have Invested Plan to Invest No Plans

78%

22%

Hip…or Hype?

45%

33%

22%

Investment Plans?

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c

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Engaging Customers Differently

How Aptos Can Help

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Enabling Solutions from Aptos

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c

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Q&A

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Thank you