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Twig Lane's view on omnichannel retailing and what the future holds for digital and in-store retail coming together.
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THE FUTURE OF RETAIL
www.twiglane.com
Introduction The retail model has evolved dramatically over the past century with the most significant changes driven by advancements in the digital landscape over the last 20 years since the dawn of the internet. These fundamental shifts have led to shopping behaviors and consumer expectations that will ultimately shape the future of commerce and the evolution of players in the industry. This is an overview of Twig Lane’s perspective on key trends and companies that will begin, or continue, to disrupt the retail market – and the important implications for retailers, brands, and investors.
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Where we are now Current state of the retail industry
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Shopper experience has dramatically shifted
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1900s – walk to mom and pops 1930s – drive to one stop shops 1950s – malls & more choice 1970s – discount trends prevail
1985 – send and check emails 1990 – browse the world wide web 1995 – shop online; Amazon launch 1997 – peer reviews mainstream; 2008 – flash sale mainstream with Groupon
1990 – handhelds & digital networks 1996 – PDA smart mobile devices 2007 – iPhone launch; mobile apps, shop, and pay mainstream 2010 – iPad launch & other advanced mobile features
1994 – first social network launched 1997 – blogging & IM mainstream 2004 – Facebook launch 2008 – social commerce launch 2010 – UGC, crowdsourcing & collaboration
2008 – Relaunch of NikeID sparks trend in customization 2010 – mobile pay flexibility with apps such as Square 2012 – on demand shop services such as eBay Now 2014 – Amazon Fire the first seamless shopping device
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In-store shopping still dominates US retail …
Total Sales Offline Sales Online Sales
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Source: US Department of Commerce
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$MM
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Though e-commerce is driving retail growth
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Source: US Department of Commerce Offline Growth Online Growth
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
YOY
% G
row
th
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Mobile e-commerce sales are surging …
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Source: Javelin Strategy & Research
Mobile contributed $60B to US total e-commerce sales in 2013
$60B
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Social is becoming more influential …
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Source: eMarketer, Forbes, Statista, Experian
93% 87% 55% 17%
YOY growth in retail sales from social channels
% of consumers influenced by
social channels
% of consumers that follow a
retailer on social channel
YOY growth in social media
traffic to retailers
Sales Conversion Engagement Traffic
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And stores evolving to interactive showrooms
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Digital influence on retail is undeniable …
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Source: Deloitte Study 2014 “The New Digital Divide”
36%
64%
Digital interactions influence 36 cents of every dollar spent in the retail store, or approximately $1.1T
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And consumer expectations are clear
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Collaboration
Convenience Credibility
Seamless experience across all consumer touchpoints
Sharing and collaborative interactions and exchanges
Transparent and authentic relationships built on trust
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Where we’re headed The future of shopping
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Convenience will be key to loyalty…
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Flexible Integrated Consistent
50% of consumers desire better in-store,
online and mobile shopping integration
80% of consumers want retailers to let them
shop, pay, and make returns how, when, and
where they prefer
Over 50% of consumers expect product, price, & promotions to be the same across channels
Source: Accenture Seamless Retail Report
Credibility Collaboration Convenience
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And seamless experiences the norm
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Omni-channel customers spend 208% more than those who shop in-store only and 93% more than those who shop online/direct
Source: Deloitte Omnichannel Opportunity Report
Online
Shop Pay
Return
Explore
$ Social
Mobile Store
Credibility Collaboration Convenience
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Given the shift in consumer touchpoints
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Source: Sketch by Jungle Minds
Credibility Collaboration Convenience
Single Channel
Multi- Channel
Cross Channel
Omni- Channel
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eBay tackles convenience head on
16 Credibility Collaboration Convenience
eBay wanted to provide consumers with instant shopping gratification by getting them what they want when they want it The company created a same day shipping service that allows consumers to buy items from hundred of local stores via an app – and receive the product from a courier in less than 1hr
On-demand local shopping service
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Collaboration will take on a new meaning …
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Source: Viision Critical “Sharing is the New Buying” Report
Convenience Credibility Collaboration
Brand-to-consumer Brand-to-consumer; consumer-to-brand;
consumer-to-consumer
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Given consumers’ eagerness to share …
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Source: Vision Critical “Sharing is the New Buying” Report
63% Find sharing services through word of mouth
40% Engage in online sharing services
Are very satisfied with their sharing services 72%
Will recommend last sharing service used 91%
Retail will be driven by brand-to-consumer and consumer-to-consumer sharing and collaborative interactions
Convenience Credibility Collaboration
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And desire to exert more influence
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Source: Insites Consulting
Areas in which consumers are interested in collaborating with brands
64% Improvement of existing product or service
64% Improvement of customer service
Development of a new product or service 59%
Feedback on overall brand strategy 52%
Convenience Credibility Collaboration
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Quirky empowers collaborative inventions
20 Convenience Credibility Collaboration
Quirky seeks to solve the worlds problems through consumer generated & funded inventions With partnerships such as their collaboration with GE – consumers are able to innovate and gain end-to-end support for their ideas
A collaborative innovation platform
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Credibility will be key to differentiation …
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Source: International Journal of Business and Behavioral Sciences
Increases Sales
Increases Advocacy
Retains Customers
Decreases Price Sensitivity
Impact of Brand Credibility on Customer Loyalty
21 Collaboration Convenience Credibility
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In a market overwhelmed by choice
Source: Iillustration based of Barry Schwartz’s, “The Paradox of Choice”
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Dissatisfaction escalates when consumers given more choice Credible retailers can stand out amongst the plethora of options
Decision Paralysis
Number of Options
Happiness Level
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StellaService helps retailers build credibility
23 23 Collaboration Convenience Credibility
Stella is obsessed with service and seeks to help brands achieve it and shoppers find it They created a platform used by hundreds of online retailers to objectively measure and rate their customer service performance metrics Armed with these insights retailers know how to improve – and customers know who they can trust
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Why it matters Competitive implications for industry players
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Some retailers have failed to adapt …
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Source: About.com Retail Industry
Over 5000 major US retail store closings and dozens of bankruptcy filings and going out of business announcements in 2014 alone
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While others have been first to move
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Source: Global Brand Rankings 2013, FastCo Most Innovative Retailers 2013, Fortune Most Admired Companies 2013
A subset of brands that have been praised for their innovation, progressiveness, customer service, and overall brand value
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Market leaders will shape the industry …
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Source: Subjective analysis based on inputs from Interbrand Global Brand Rankings 2013, FastCo Most Innovative Retailers 2013, Harris Poll Reputation Quotient 2013, Fortune Most Admired Companies 2013, About.com Retail Industry Store Closings 2014
First Movers
Early Adopters
Late Adopters
Non-Adopters
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By innovating on the consumer experience
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Connection
Credibility
Convenience
Future of Retail sweet spot
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Twig Lane Group invests in companies who serve the retail and consumer package goods space by offering smart, growth accelerating, capital.
Let’s connect 419 Park Ave, 2nd Fl New York, NY 10016
(212) 744-5088
www.twiglane.com
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