Retail - Cisco - Global Home Page · >50B things connected to the internet by 2020, Machine-to-machine (M2M) data traffic will increase 22-fold between 2011 and 2016 to reach 508

Cisco Confidential © 2012 Cisco and/or its affiliates. All rights reserved. 1

Retail Where It’s Going and Why

Cisco Internet Business Solutions Group Retail and Consumer Products

November 2012

Lisa Fretwell, Bharat Popat, Paul Schottmiller, Ronald van Zanten, Jon Stine

© 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2

• Irrevocable changes to where, to whom, how, what you’re selling

It’s digital, with evolving shopper expectations, and life through screens… All accelerated for retailers by an age wave.

It’s global, faster and more precise.

The mid-market is disappearing. New business models are winning share.

• Ever-accelerating technology evolution – personal and enterprise

Pervasive connectivity

New speed, precision, and levels of actionable insight

New depth of engagement with shoppers and new ways of interaction

New opportunities as we enter the Big Data era

• The Rules of Retail Continually Being Re-Defined

Differentiation now demands the

Intimate, orchestrated, anticipatory customer experience.

Automated, integrated, predictive operational efficiency

Networked, virtualized business and technology architectures

Cisco Confidential 3 © 2012 Cisco and/or its affiliates. All rights reserved.

The Re-Shaping of Retail


In Where

you’re selling

Digital Commerce

Life Thru Screens

In Who you’re selling to

Internet-Shaped Expectations

Digital Natives

In How you’re selling

The Contextual Relationship

Speed, Visibility, and Precision

In What you’re selling

The Disappearing Middle

New Business Models

New Storefronts

Source: Cisco IBSG


Where

Sources: Cisco IBSG :Catch ‘Em and Keep ‘Em, 2012; NRF, 2012; Bloomberg, Oct. 2011; racked.com, 2012

Digital Commerce

65+% shoppers oft research online

Global E-commerce double digit growth

The “65-90” Question: 65% online research; 90% in-store buying

New Storefronts

Pop-ups

Virtual fronts in Physical Worlds

Small and urban

Automated retailing

Digital malls

Daily Life with

Eight Screens

Home

Computing

Public

Mobile

Content

Mirrors

Mobile

Auto-

mated

Retail

Dashboard


Internet-Shaped

Expectations

Access to better values

Transparency to pricing, promotions, ratings-reviews

Everywhere access to decision-making information

The Digital Natives

All-the-time, everywhere connected; mobile shoppers

By 2015: Gen Y the largest demographic group in the US

Now entering prime employment, household formation years

Who

Sources: Cisco IBSG Research, 2012; US Census Bureau, 2012


It’s Personal and Predictive, for:

Who you are, where you are

What is important to you

Your standards of value, quality

Now: analysis of huge volumes, new types of data;

Micro-merchandising and deep trend analysis

Proactive demand management

The New Contextual

Relationship

Big Leap in Speed,

Visibility & Precision

How

Sources: Cisco IBSG :Surfing the Data Deluge, 2012


Commoditization of product quality

Acceleration of private label, global sourcing, trend copying

Experience and Efficiency are the new winning positions

Fast innovation, global reach

Virtual enterprises: outsourced merchandising, fulfillment

Rental and leasing

Orchestration services as a critical capability

The Vanishing Middle New Business Models

What

Sources: Cisco IBSG, 2012


Technology Transitions


Perv

as

ive

Co

nn

ecti

vit

y

Increased Precision and Relevance

Ric

h E

ng

ag

em

en

t

Big Data

Analytics

Semantic

Search

Mediated

Realty

Digital

Interaction

Video Internet of

Things

Smart Mobile

Devices

Social

Networks

Cloud

Architectures

Location

Awareness

Source: Cisco IBSG


Pervasive Connectivity

Smart Mobile Devices ‒ Everywhere, all the time personal compute

connectivity, BYOD flexibility >1B smart phones today, >10B mobile devices by 2016, entry level device by 2015, iPad

adoption growing at 3X rate of iPhones after introduction

Social Networks ‒ Personalization, influence, collaboration, the

“social genome,” and crowdsourcing Global Internet is 2.3B users. EVERY MINUTE = 400B Facebook users share 684,478

pieces of content, and 140M active Twitter users send 100,000 tweets

Internet of Things ‒ Intelligent things, pervasive sensing, Mesh

networking and the relationship of things, M2M learning >50B things connected to the internet by 2020, Machine-to-machine (M2M) data traffic will

increase 22-fold between 2011 and 2016 to reach 508 petabytes per month

Cloud Architectures ‒ Digital product and services delivered on

demand. New enterprise models yielding increased computing

efficiencies—faster, smarter, and less expensive. 47,000 App downloads from the Apple Store every minute.

Source: Cisco IBSG


Increased Precision and Relevance

Semantic Search ‒ Personalization, relevance, anticipation - who you are, where you are, where you have been, where you are going, what you have, what you like/dislike (physical and digital) Brands and organizations receive 34,722 “Likes” on Facebook, Google receives over 2M search queries every minute

Location Awareness ‒ Real-time physical context, interaction at the point of need 2,083 Foursquare “check-ins” every minute, 3 meter location precision via wi-fi

Big Data Analytics ‒ Speed and precision via massive increases in volume, velocity, and variety of data - structured and unstructured data, intelligent services, massive real-time event processing

1.6 trillion gigabytes of information was created and replicated in 2011, the amount of data with retailers will grow 800% in next five years, out of which 70%-80% will be unstructured, the retail industry has the potential for >50% margin increase

BIG DATA

VOLUME

VELOCITY VARIETY

VALUE

Source: Cisco IBSG


Rich Engagement

Video ‒ Preferred communication medium, content analytics

48 hours of video content uploaded to YouTube every minute, advanced capabilities exist for facial recognition, behavioral recognition, gender, age, and ethnicity, enabling on-demand rich “in-person” collaboration without geographic boundaries, new models for collaboration, education, and training

Mediated Reality ‒ Augmented Reality and Virtual Reality “mashing up” the digital and physical worlds—richer and more informed experiences Emerging technologies include wearable computing, holographic displays, virtual personas, and 3D interactive web technology – HTML5, WEbGL, X3D

Digital Interaction ‒ Digital tools for interacting and transacting—redefining shopping—what, where, and how Next generation of interactive “vending,” digital wall, digital malls, voice, touch, gesture, mobile payment, QR codes, NFC

Source: Cisco IBSG



Ever-Accelerating Evolutions

Value Delivery Value Creation Value Capture Your differentiation Monetizing differentiation Optimizing monetization

Success in the Cross-Channel Journey

Catch ‘Em Keep ‘Em

Success in the Hourglass Market

Experience and/or

Efficiency

Success amidst Hyper Change

Rapid Innovation

Source: Cisco IBSG


Experience or Efficiency

Lowest

Price Better Best

quality

personal

Higher prices

Lower quality

The Vanishing Middle New Business Models

Good Best

Preferential Market Position

discount luxury

Better

Highest

value

Preferential Market Positions

The Bell Curve Market Segmented By Price Point, Quality When Quality is Commoditized

Re-Shaped by Demographics

Segmented by Value

The Hourglass Market

Source: Cisco IBSG


Catch and Keep?

65% of US shoppers regularly

begin the journey on line (2012)

17% are interested in doing so

≈ 90% of all non-grocery US retail

transactions occur in the store

52% of US shoppers report that online customer reviews on retailer sites

are the top source of information for making purchasing decisions

Service–Support Transact The

Shopping

Journey

Channel

Preference

Online

(all screens) Store

Call Center CATCH AND KEEP

The Dangerous Transition Online

(all screens)

Research—Decide Aware

65% 90% TODAY’S STRATEGIC ISSUE

Source: Cisco IBSG primary research, 2012; Forrester, 2012; National Retail Federation, 2012


Rapid Innovation:

Rapid Innovation is a Process,

Not an Event From Sense to Dollars:

Key Agile Innovation Principles

Clarity of WHY and WHAT

EXPERIMENT fast

Develop the successes for SCALE

Use SENSING TECHNIQUES

Use a broad ECOSYSTEM

Innovate EXPERIENCES plus products & services

OUTCOME driven approach

Use AGILE methodologies

Excellence in COLLABORATION ways of working

Only 24% of 2011 US Fortune 500

companies were there 25 years

ago……but 62% of US Fortune 500

companies considered innovative

were there 25 years ago.

Top 64 innovative firms have

created US$ 780B in shareholder

value in the last 6 years, while

rest of the firms have lost value.

Networked Infrastructure

Applications and Services

Business Process

Business Strategy

Innovation Strategy

Sense Ideate Select Design Commercialize

Enables

Supported by

Source: Cisco IBSG, “21st Century Corporation,” June 2012


The New Best Practices


Customer Experience

Engagement Creation of an emotional bond with the retail brand, surprise through innovation, go beyond what is expected

Omni-Channel Ensure a continuous

experience that flows across the entire shopping journey

New Storefronts Seek and win shoppers in new locations, formats, and business models

Intimacy Data-driven personalized and

predictive interactions between shopper and retail brand

Touch-points Consistent delivery of the brand promise across storefronts, screens, and service centers

Orchestration Aggregation and assembly of

products and services; Education on what’s possible and how to do it

TWO

ONE

FOUR

THRE

S I X

F IVE

Source: Cisco IBSG


Home & Living

Source: Cisco IBSG, 2012

Jan and Nick are planning to remodel their living

room. They choose from the online catalogue, using

the design application to create their own “mood

boards” and see ratings, reviews and comments from

their friends.

Jan uses the AR

app on her mobile

to see sofas in her

living space.

Research Store

Relationship

Tammy picks up the

vase the next day from

the secure lockers.

Jan takes a trip to the

store to look at the

range. Tammy sees her

check in on Facebook

and joins her in the store

to look together.

As Jan arrives at the

store her mobile

connects her to the

store wi-fi, and sends

her some personal

offers and suggestions.

At the store Jan and Tammy

access her mood board and

browse through the

collections and suggestions

that suit their taste.

Jan and Tammy aren’t sure

what they want – their

indecision is picked up by

the camera analytics and an

alert is sent to sales

assistant who joins them

with her tablet.

Jan Instagrams and Tweets her new project and gets an offer to add a

friend…

Tammy wants to buy Jan a gift and

scans a vase o the shelf to see colour

choices and stock info.

The Sales Assistant shows Jan the in store

design center to how she can choose and

order what she needs.


Home & Living

Jan and Nick are planning to remodel their living

room. They choose from the online catalogue, using

the design application to create their own “mood

boards” and see ratings, reviews and comments from

their friends.

Jan uses the AR

app on her mobile

to see sofas in her

living space.

Tammy picks up the

vase the next day from

the secure lockers.

Jan takes a trip to the

store to look at the

range. Tammy sees her

check in on Facebook

and joins her in the store

to look together.

As Jan arrives at the

store her mobile

connects her to the

store wi-fi, and sends

her some personal

offers and suggestions.

At the store Jan and Tammy

access her mood board and

browse through the

collections and suggestions

that suit their taste.

Jan and Tammy aren’t sure

what they want – their

indecision is picked up by

the camera analytics and an

alert is sent to sales

assistant who joins them

with her tablet.

Jan Instagrams and Tweets her new project and gets an offer to add a

friend…

Tammy wants to buy Jan a gift and

scans a vase o the shelf to see colour

choices and stock info.

The Sales Assistant shows Jan the in store

design center to how she can choose and

order what she needs.

Research Store

Relationship

Secure

Infrastructure,

Analysis, & Action

Fast Data

Processing

Action

Enablement

Fast Data

Processing

Mesh/ Big Data Identity/ Analytics/ Rich Media Video/Big Data

Systems integration Cloud apps

Social Media, Identity, Big Data

Big Data, Cloud apps, Rich Media



Tablets & Screens for finding info,

availability and location

(Nordstrom, JCP, many others)

Burberry Regent Street:

The Shop that Thinks for you

Macys Backstage Pass

Video Advisors at

the Home Depot

John Lewis StyleMe™

Virtual Fashion Mirror

Virtual Storefronts at Tesco,

Pão de Açúcar, etc.



Operations

Organizational Virtualization

Laser focus on innovation, agility, flexibility and speed to create new business models, revenues, differentiation.

Next-Gen Labor Competencies

Reward, retain, and virtualize expertise. Sense

and develop new capabilities.

T

WO

O N E

Omni-channel Organization

Break down the channels.

From demand to delivery.

From silo’d to integrated.

Edge Visibility, Decision & Action

Data into information into decisions into action. Mobility

and Big Data the enabler.

F

O

U

R

T H R E E

Visual, Virtual Collaborative

Virtual store visits, global collaboration with customers & suppliers. Travel less, do more.

Pervasive Automation

Self-service for shoppers.

Autonomic inventory counts.

Internet of everything. Step change in operational efficiency.

S

I

X

F

I

V

E

Digital Content Strategy & Mgt

Digitized assets, services, marketing and operations. For all shoppers, associates, call center, marketing, operations.

Embedded Innovation

Constant re-invention of brand promise delivery through all touch-points.

E

I

G

H

T

S

E

V

E

N

Source: Cisco IBSG


Home & Living

Store

Demand Chain Headquarters

Assortment planners

receive autonomic

notice of clearance

through Long Beach

Marketing Team links Atlanta, San

Francisco, and New York offices

together in digital collaboration

suites; new ads, in-store displays

designed in one day, no travel

Typhoon in South China

disrupts shipment of glass

screens to Dongguan factory;

sourcing office, and merchants

alerted automatically.

Assortment planners prepare

potential revision

Decision made to rush-ship

finished products to stores to

gain market advantage. Factory

packs per-store allocation pre-

Customs. RFID per pallet

enables fast transit through

Hong Kong, Long Beach

District Manager “visits”

stores from her home office,

sees and evaluates key

promotion sets via streaming

video, web collaboration.

Central Digital Content

Management enables a

single source of knowledge

to all touchpoints – including

call center

Merchants meet virtually

with sourcing office,

factory reps via high-

definition video to discuss

shortage, review options.

Product and usage experts in

store and call center are

available to all associates via

streaming video-data-voice links

Vending-like automation on

fast-turn, low-margin items

reduces shrink, reallocates

staff to higher-value

interactions

Marketing, merchandising

correlates social media buzz

by region; demand is skewing

young ethnic male

Assortment planners see

real-time location of per-

store shipments with 3PL;

redirect s20% of

assortments to higher-

potential stores

Items chosen in store

delivered to shoppers home

in automatically booked 30

minute time slot



Visual, virtual collaboration (head office,stores customers,

contact centre, distribution centres)

US Big Box, Tesco, John Lewis, P&G

Omni-channel organization: in store

pick up, last-mile and in-store fulfillment,

vending Best Buy, Amazon

Pervasive automation; autonomic

intelligent data capture and analysis:

Wal-mart, Macy’s, DHL, Ocado

Digital content management thru

product lifecycle, marketing and customer

engagement) IKEA, H&M

Edge Visibility, Decision and Action: New data analysis

techniques to utilize the data explosion

+


The Road to Omni-Channel:

Customer Experience

& Interaction

Disparate

Owned by function,

managed in silos

Delivery channels

managed, measured

separately

Single Customer

Experience framework

Stores designed

around digital; sites

create physical like

experience via AR-VR

Targeting conversion

opportunities based on

shopper flow

Delivering unique

space, product &

associate interactions

Integrated Optimized

Operations Decision

Making &

Execution

Silo’d data collection,

analysis, limited,

delayed actions

Silo’d sourcing,

pricing, fulfillment

Data to and from all

touch-points

Integrated sourcing;

services- based and

digitally enabled

supply chain

Anticipates and

influences every

interaction

Ecosystem of partners

innovating the customer

offer & experiences

Established Retailers Beware:

Legacy Ways of Working are Built-In Barriers

to Innovation and Speed New entrants have even greater opportunity

Source: Cisco IBSG



Networked

Infrastructure

Storage

- NoSQL - Unstructured

-Semi-structured -In-memory

Compute

- Distributed / Grid

- Multicore - Multiprocessor

Analysis

Action

UI - Multi-touch Surfaces - Heads Up

- Contactless Gesture - Wand

Visualization

- 3D -Animation

Collaboration - Human-Human - Human-Machine - Machine-Machine

Media Processing

- Video analysis

- STT, NLP & Semantics

Integration & Automation

- EAI - BPM - Workflow

Intelligence Extraction

- Data Mining - Machine Learning

- Rules Engines

Se

cu

rity

& D

ata

In

teg

rity

Fog

Computing Identity

Filtering

Autonomic

Response QoS

Mesh

LBS

Transcoding

Not just high-performance

computing…

…but smart use of the

wisdom of the Crowd…

Enabled by collaboration,

visualization, and

response capabilities

With 21st Century

business process

The New Customer Experience

The Virtualized Retail Corporation

Merchandising Marketing Omni Channel

Operations Fulfillment

Business

Services

Inn

ova

tio

n

At

Sp

ee

d

Cloud Corporate Apps & Data Event Streams Rich Media



1

Occupy Middle Ground Good value for middle-class shoppers

Win customers at the end points

Differentiate with Efficiency and/or

Experience Even at medium price points

Mobile We better create an app!

Interactive Screens and Touch-points Theirs. Yours. With the decision-shaping content they

expect. Access 24 X 7

Fast-Follower Innovators & New Entrants

Re-Define Markets How can you fast-follow when the rules change?

2 Multi-Channel Invest according to sales volume.

3

The Era of Digital Commerce Cross-channel, search-driven

4

5 IT is a Cost Center Do what you do and do it for less

Visibility, Speed, Precision, Quality IT is a Strategic Weapon to deliver outcomes


Yesterday Today’s Strategy


It’s Back to the Future

Contextual Personal Efficient

You know and care for me. You anticipate my needs.

Yesteryear Today-Tomorrow Yesterday – Today

Source: Cisco IBSG



Cisco’s Point of View in Retail:

Seamless delivery of web-based content to

consumer, associate, store, and HQ screens

The robust-secure-endless network

Data virtualization, Cloud Services

Digital commerce online, in-store,

and to your screen strategy

Content Distribution Networks Rich wireless Interactive Services

Retail operations: efficiently lean,

automated effectively persuasive

Applications delivered via the network Thin clients, expertise at the edge Digital collaboration, virtual visits

Sooner-faster merchandising & sourcing;

Supplier and partner collaboration

Intelligence at the edge Virtual, visual collaboration, Cloud Services 24X7 ways of working

Which Means Which Requires

It’s a cross-channel journey

It’s multi-screen and touch-point engagement

It’s differentiation by experience

Source: Cisco IBSG


Delivering Tomorrow Today:

Data Center

POS

Lean Retail

Employee

Optimization

Back Office Servers and

LAN and VXI

Customer Experience

Transformation

PCI/Secure Store

ATMs/Third Party Devices Connecting to

Private Networks

Physical Security

Digital Signage

Video Surveillance

Mobile Employee Devices & BYOD

Kiosks

E-Commerce

Telephone System

Connected Retail Platform

Mobile Customer

Devices

Common services to all devices and applications

Virtualized Workspaces

HQ and Call Centers


New

Store-Fronts

Global E-Commerce: Advanced Multi-Channel Expectations in Highly Developed Markets, Dec. 2011

Digital Malls: the Next Generation of Self-Service Shopping, Sept. 2012

http://www.cisco.com/ibsg

Future Thinking Available to You:

Technology

Innovation

Achieving Retail Agility: Is Cloud the Answer?: March 2012

Surfing the Data Deluge: How Retailers Can Turn Big Data Into Big Profits, Aug 2012

IN WORK: Unlocking the Value of Big Data: Readiness Assessment January 2013

Today’s

Customer

Experience

Re-Shaping Retail with Mobility: How to Benefit From Changing Consumer Behaviors, Nov. 2011

Catch ‘Em and Keep ‘Em: Revitalizing the Store in a Cross-Channel World, January 2012

Orchestration Services: Music to Retailer’s Ears, Sept. 2012

IN WORK: Next-Generation Digital Experiences, Jan 2013

Source: Cisco IBSG


Future Thinking Available to You:

Catch’em and

Keep’em: differentiating

through omnichannel

customer experiences

Future ways of

working: tech enabled

capabilities and

processes to step

change organziational

productivity

Smart Operations:

using sensing data and

next gen analytics to

drive and automate

operational and customer

benefits

Cisco Consulting Services in Retail

Source: Cisco IBSG


Industry Research & Insights

Best in Class Products/Software

Market firsts, leading capabilities

End to end services

Build, Implement, Transfer / Run

Partner Ecosystem

Architectural Approaches

Strategic, Business and IT Consulting

Thank you.

Documents

Retail - Cisco - Global Home Page · >50B things connected to the internet by 2020, Machine-to-machine (M2M) data traffic will increase 22-fold between 2011 and 2016 to reach 508