future of shopping - orosy and company -- march 8, 2013, meng meeting
TRANSCRIPT
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The Future of Shopping
AKA: The Toughest Race on Earth
Gary Orosy, O&CO
March, 2013
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Topics
• The Premise
• The Race is On!
• Stage 1: Future Shopper Types
• Stage 2: The Customer’s Equipment
• Stage 3: The Retailer’s Equipment
• Who Will Win?
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THE PREMISE IS SIMPLE
THE SOLUTION IS COMPLEX
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Up until very recently, shopping was a
common experience, shared by all
Everyone went to a store
and got their stuff
But now multiple
technologies are shape-
shifting the marketplace
…folks are getting their
stuff in different ways
This development has started “the greatest race on earth”
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THE RACE IS ON!
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The race is on…two groups of contestants
The Customer
A customer wants to:
Make better decisions,
Save time,
Live better
The Retailer
Retailers want to:
Acquire more customers,
Increase lifetime value,
Make more money
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For customers/shoppers, the race is for time
Source: TimeUse Institute, 2011
Weekly Time Allocation for Grocery Shopping
33 to 36 hours/year,
almost a complete work
week
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For retailers it is about the prize
To win the shopper’s heart, mind and
pocketbook…is a big prize for retailers
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How big is the prize, you ask?
Total US Retail Sales
$4.4 Trillion Source: Department of
Commerce, December 2012
Total Global Retail
Sales
$14.3Trillion Source: Canadean, 2011
Total US GDP
$15.1 Trillion Source: The World Bank
Group, December 2012
Total Global GDP
$67.3Trillion Source: CIA World Fact
Book, 2012 Est.
/
/
= 29%
= 21%
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But…what it takes is not easy
Retrofitting an industry:
HUGE technology integration issue +
new, smart supply chains =
multiple options for purchase and
delivery
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That is why it is the toughest race in the world
The Antarctica Desert Race:
One of the official “four” desert races in the world, but
clearly the toughest.
Antarctica is the great last desert - a polar region with little
precipitation, no lakes and no rivers.
Fifteen competitors completed 250 kilometers – 168
miles in three locations: Esperenza, Deception Island
and King George Island.
Competitors are delivered to each stage by zodiacs.
Equipment must be transported in waterproof bags
Pretty much analogous to the toughest sport race in the world
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Retailer: what does this have to do with me?
• Are you one of these five brands…as researched by Forbes,
2012? Customers were asked, “which will be defunct?”
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Major problem…
Here’s where retail buyers live Here is where the race is run
Market conditions for success:
•Affluent customer population
•Low unemployment, deflationary
economy
•Pursuit of luxury goods and
perception of better lives
Market conditions for success:
•Thoughtful customers chose products
carefully
•Economic conditions can be
unpredictable and shift geographically
•Customers are value-sensitive and
SMART
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Welcome to the future of shopping
• It’s the greatest race of all time
• For the biggest prize on the planet
• A zero-sum game
• Winners will take home the entire prize
• Losers will be in line at the soup kitchen
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RACE: STAGE I -- ESPERANZA
FUTURE SHOPPER TYPES
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ESPERANZA BASE
Esperanza (Spanish "Hope Base") is located in Hope Bay,
Antarctic Peninsula. It is one of only two civilian settlements on
Antarctica (the other being Chilean Villa Las Estrellas)
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From the data, change in shopping
approach is underway
Source: TimeUse Institute; projections are for further trends in the same direction
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Shoppers shift to use time to research
and learn about lifestyle solutions
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How customers research solutions
50% of consumers spend 75% or more of their total shopping time
conducting online research.
– From 2010 to 2011, these numbers doubled!
Other findings:
• 1 in 3 shoppers (34%) spends a few days conducting research about important
products such as computers, appliances, and TVs before purchase.
• More than 4 in 10 of shoppers (44%) start online product research process with
a search engine.
Source: Hubspot, 2011
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Customers are forming new shopper segments
Four types of shoppers are solidifying their behavioral
affinity or lack thereof for the experience…
Interest in Shopping
Val
ue
of
Tim
e Bankers
Savers Splitters
Investors
High Low
High
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Definitions – How customer segments are defined…
• Time Bankers: highly value the time they would normally spend shopping to
do other things of interest to them. This category is growing.
• Time Savers: know they can “order online or automatically” and not have to
trundle off to a brick and mortar, but will do so when necessary. This segment
is growing.
• Time Splitters: buy everything they can automatically (toilet paper, toothpaste,
etc.) and shop only for those items of significant interest or investment. This
segment is forming and is rapidly developing.
• Time Investors: “we like to shop and shopping is what we do” types who enjoy
the experience…this segment is declining and is the source of growth for other
segments
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STAGE II: DECEPTION ISLAND
THE EQUIPMENT OF CUSTOMERS
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DECEPTION ISLAND
The derelict hangar
The destroyed British base
Remains of the whaling
station’s boilers
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What shoppers “pack”
Some say in a few years retail stores will exist
for a "touch and feel" experience, but no actual
sales.
By Alejandro Gonzalez, USA TODAY
The convergence of smartphone technology, social-media data
and futuristic technology such as 3-D printers is changing the
face of retail in a way that experts across the industry say will
upend the bricks-and-mortar model in a matter of a few years.
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Customers are armed to shop >>
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With an invaluable tool for shopping
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Global shoppers have access to Internet resources
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Smart devices as fashion statements
Project Glass. Interactive glasses superimpose virtual data onto real-world environments. Deeply integrated to Google’s other services—such as Google Maps, Google +and Google Talk (Snap a picture with the built-in camera, for instance, and you can share it with your Circles instantly.) Whether you see the glasses as bane or boon depends on where you stand on privacy. Until you turn them off, you can give up any illusion of solitude—you’re plugged into the hive mind all day, all the time.
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Why not shop at home?
• Samsung Galaxy Beam projects
images
• Within years these could be
immersive, such as like being in-store
• Interactive functionality allows for
product examination – opening
package – and “touch ordering”
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Why not just print it out at home?
The Urbee is the
world’s first totally
“printed” car
Strong as steel, half
the weight
What’s in your printer ink supply? Food ingredients by chance?
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Why Leave Home? Fate of brick and mortar?
Within 10 years, retail as we know it will be unrecognizable, says Kevin
Sterneckert, a Gartner analyst who follows retail technology.
Big-box stores such as Office Depot, Old Navy and Best Buy will shrink to
become test centers for online purchases. Retail stores will be there for a
"touch and feel" experience only, with no actual sales.
Stores won't stock any merchandise; it'll be shipped to you. This will help them
stay competitive with online-only retailers, Sterneckert says
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STAGE III: KING GEORGE ISLAND
THE EQUIPMENT OF RETAILERS
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KING GEORGE ISLAND
In the mid-1990s Patriarch Alexius II of Moscow gave his
blessing for this audacious project. The church was
constructed in Russia and transported to its present
location. One or two monks from Troitse-Sergiyeva Lavra,
considered the most important Russian monastery as it is
the spiritual center of the Russian Orthodox Church,
volunteer to man the church year-round.
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Big data = Competitive advantage
Companies that have taken
on big data initiatives have a
4 percent greater rate of
customer growth year-over-
year than their counterparts
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Retailers appeal to specific customer needs
"The first 15 years of online
shopping was about making it
easier for people to find and
purchase items they were
looking for," says David Fisch,
director of platform partnerships
at Facebook, which is working
closely with retailers.
"Now, it's about helping you
find what you may not know
about, based on your social
(media profile)."
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Big Data: making stores smarter Merchants know what you plan to buy
next.
Target combs shopping data via
purchases, e-mail, activity on Target.com
accounts and more to determine which
customers are pregnant, so it can sell
goods popular to them such as orange
juice
Target spokeswoman Molly Snyder
acknowledges it uses "research tools that
help us understand guest shopping trends
… (but) we take our responsibility to
protect our guests' trust in us very
seriously."
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Enhanced store experience with AR
Augmented reality technology adds a visual layer of information on top of
surfaces such as a mirror.
AR displays are being tested to show video a curved wall at the NASCAR
Museum and in Charlotte within subways and airports.
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AR: Intel’s magic mirror
Parametric technology
simulates body type and how
fabrics fit — based on weight,
height and measurements.
A digital fitting room.
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Store of the future, new formats
Stores will become more
theatrical, more immersive,
and more of a life experience
rather than simply a place to
get something
Selling products will be
selling a good time, a
lifestyle."
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Store layouts = Competitive advantage
Apple applies for patent on centralized floor plan invention
The patent filing, named "System and
method for planning layout of a retail
store," combines a number of
interactive features such as dynamic
product displays, floor plan blocking
and a centralized management system
ensuring customers have a consistent
experience when visiting any Apple
Stores in the world
The core of the patent filing is a
central server that mete interpret data
and manage dynamic product
signage.
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Alternative Store Formats Mattel, WalMart test virtual pop-up store in Canada
QR code-based shopping
experience for commuters
and gift-givers. Located in
the PATH, Toronto's
underground walkway, the
virtual toy store will run for
four weeks
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“Smart Shelves” Shelves That Talk Back
Retailers have begun embedding near field
communication (NFC) chips, quick response (QR)
codes, or other interactive enabling technologies.
Technologies such as smart lamps from
Massachusetts Institute of Technology's Media Lab
users will be able to access a trove of relevant
information about a product, without a mobile
device.
Smart-lamp technology senses when a user has
picked up a product from a shelf and can project
images and interactive video onto the shelf (where
a normal, paper tag once was).
Each lamp has its
own internet
address
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Shopping carts will become your NBF
Carts programmed to understand shopper buying
patterns.
Reveals the speed of the shopper, how long it
takes to make a selection, preferred route, and
order in which items are placed in the cart.
Equipped with a GPS, plugs into the
supermarket’s mainframe computer, making it
possible to pinpoint, within inches, exactly where
the shopper is, all the while building up a
personal shopping profile.
Shopper is promised specially customized
discounts, available only to them.
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Store Service Robots Carnegie Mellon University
AndyVision — a robotic inventory system — takes the form of
an autonomous robot patrols and scans the aisles and shelves.
The robot generates a detailed aisle/shelf-level interactive store
map that is displayed on an in-store digital sign for customers to
browse the virtual world of the store using gestures on a touch
screen interface.
Store staff doesn’t always know where all of the items are
located.
Real-time product location and inventory information puts
product info into shoppers' hands as well as store staff's hands."
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VR Codes embed additional information VRCodes, Viral Spaces, MIT Media Lab
Envision a world where inconspicuous and unobtrusive
display surfaces act as general digital interfaces which
transmit both words and pictures as machine-
compatible data.
VRCodes present the design, implementation and
evaluation of a novel visible light-based
communications architecture based on undetectable,
embedded codes in a picture that are easily resolved by
an inexpensive camera.
This design of a visual environment rich in information
for both people and their devices
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Indoor navigation Meridian "glowing blue dot" feature
Macy's 150,000 square-foot flagship store in New York
City.
Meridian's turn-by-turn navigation system at Macy's.
Shoppers get utility to get around in stores,
Retailers send targeted offers to them based on where
they are standing.
In 2-3 years out indoor as big as outdoor GPS
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Is this the store of the future?
Tesco has landed 50% share of
the market for food ordered on
the web.
The highly-automated, 115,000
square foot warehouse aims to
cover a catchment of 980,000
registered households
A "virtual store“, with no
customers.
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WHO WILL WIN?
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Who will win? Customers first and foremost will use their shopping time they way
they want
Retailers who cater to the four dominant shopping behavior
segments will appeal to shoppers
Within each segment there will be winners who adopt the
technologies that most thrill and super please their
customers…some of these will be bricks and mortar but more and
more so, virtual models will prevail
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The OmniChannel Retailer Winning retailers interact through countless channels—
websites,
physical stores,
kiosks,
direct mail and catalogs,
call centers,
social media,
mobile devices,
televisions,
networked appliances,
home services, and more.
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By the way, here’s the race end…
Don’t run into a Lion Seal,
they bite!
You can tell by the
inscription on the
Cairn stone