Batc New Retail Model

Today, 2010 and beyond: a market perspective

Presented by Tom FriedmanPresident and Founder,

Retail Systems Alert Group Inc.

Agenda

• Today’s Market Dynamics• Today’s Value Propositions• Today’s Retail Process• Today’s Limitations• Today’s Best Practices• Tomorrow’s New Model

Market Dynamics in 2004

Danger Quarter for Fashion – Why?

High Margin, High Expense Quarter –

Enough?

High Volume, Low Margin Quarter –

Efficient?

Maslow’s Hierarchy of Needs(Sustainment – Security – Belonging - Esteem - Wisdom)

COMPLEX

Danger Quarter for

Basics – How?

Squeezable Center

Value Propostions in 2004

Convenience Exclusivity and Service

Accessibility and Price

Maslow’s Hierarchy of Needs(Sustainment – Security – Belonging - Esteem - Wisdom)

COMPLEXBASIC

Balance

Smart, Quick and Innovative

Today’s Retail Process

• Marketing and merchandising• Buying, assortment, and allocation

planning• Customer service• Returns and complaint resolution• Pricing and promotion• Inventory and shelf management• Warranty and rebate management

Current data practices hindering the retail business

process

• Flood of POS data• Islands of data• Lack of data integration• Lack of access to data

How to Return to Fundamentals

• Customer Behavior• Key Performance Indicators (KPIs)• Basic Analytics• Operational Staff Support• Information Sharing

How to Return to Fundamentals:CUSTOMER BEHAVIOR

• Fundamental retailing lets customers tell retailers what they want through their actions in stores.

How to Return to Fundamentals:BASIC ANALYTICS

• Simple analysis of KPIs will enable retailers to quickly identify and resolve basic problems and inefficiencies in their strategy and execution.

How to Return to Fundamentals:OPERATIONAL STAFF SUPPORT• Fundamental retailing enables easy access to

the best and most appropriate information for all members of the retail team, enhancing the actions they take day in and day out.

How to Return to Fundamentals:INFORMATION SHARING

• The approach also turns suppliers and customers into partners in retailers’ success by sharing information that will increase their confidence in the business and encourage their active participation in its improvement.

The New Fundamental Retail Model

• BASIC RETAILING is the core function of the retail organization and includes such activities as merchandising, promotion, and pricing

• NETWORK refers to the operational support required to execute the retail business process

• FULL CYCLE encompasses the collaborative aspects of the retail business process

The New Fundamental Retail Model:BASIC RETAILING

RETAILINGSales/Store

Assortment

Pricing

Promotion

Merchandising

Marketing

Timely knowledge of customer behaviorImpact of promotional activity

Price adjustmentsOverstock, stock outs

Need for rapid analytics

INTEGRATION CHALLENGES

Bi-directional flow of data between functions

Rapid dissemination of data from checkout line to functions

KPI and analytics Exchange of information with Network and Full Cycle

INFORMATION FLOW

The New Fundamental Retail Model:NETWORK

BASIC RETAILING

Sales/ Store Ops

Assortment

Pricing

Promotion

Merchandising

Marketing

NETWORK

Sourcing

Logistics

Receiving/Distribution

Warehousing

Product Planning

Lack of awareness of basic retailing initiatives

Lack of connection to customer activityLack of forward visibility

Timely access to KPIsAdvance alerts to changes and decisions

taken on the flyExchange of information with vendors

INFORMATION FLOW

The New Fundamental Retail Model “The Full Cycle”

Customer Service

Store Management

Supplier Collaboration

Operational Improvement

BASIC RETAILING

NETWORK

Assortment

Pricing

Promotion

Merchandising

Marketing

Receiving/ Distribution

Warehousing

Logistics

Sourcing

Sales/ Store Ops

Product Planning

The New Fundamental Retail Model:FULL CYCLE

Distrust among partiesResistance to change

Loss of customer focusLack of information

The New Fundamental Retail Model:FULL CYCLE

Timely exchange of information between retailer and suppliers

Easy customer access to informationAccess to appropriate KPIs and analytics

INFORMATION FLOW

The New Fundamental Retail Model “The Full Cycle”

Customer Service

Store Management

Supplier Collaboration

Operational Improvement

BASIC RETAILING

(Gross Margin)

NETWORK (Expense)

Assortment

Pricing

Promotion

Merchandising

Marketing

Receiving/ Distribution

Warehousing

Logistics

Sales/ Store Ops

Sourcing

Product Planning

CONCLUSION: Fundamental Retailing Pays Off

1) enables retailers to focus on actual customer behavior by leveraging POS transaction data across the retail business process

2) extends data access and/or analysis to customers and suppliers

3) enables analysis with key suppliers for increased accountability and responsibility

4) enables customers to directly engage in the process

5) Serves as a strategic differentiator in the effort to compete and ultimately thrive in a challenging competitive environment

For more information please visit:

www.retailsystems.com

Batc New Retail Model

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