top tech investments for retailers - a2z,...

5/31/2017

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© 2017 FORREST ER. REPRODUCT ION PROHIBIT ED.

© 2017 FORREST ER. REPRODUCT ION PROHIBIT ED.

Top Tech Investments For Retailers: The “Hot or Not” List For 2017: What Really Matters To Win Today’s Retail Consumer

Brendan Witcher, Principal Analyst

@BrendanWitcher

5/31/2017

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3© 2017 FORREST ER. REPRODUCT ION PROHIBIT ED. 3© 2016 Forrester Research, Inc. Reproduction Prohibited

4© 2017 FORREST ER. REPRODUCT ION PROHIBIT ED. 4© 2017 Forrester Research, Inc. Reproduction Prohibited

What is the value of a shopping cart?

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5© 2017 FORREST ER. REPRODUCT ION PROHIBIT ED.

Today’s customers are empowered

› Before, organizations owned the experience and the commerce tech.

› Tech in customers hands has given them more choice and more control.

› Customers now demand experiences along their journey that work them.


The ongoing challenge

Brands struggle to separate hot from hype in tech:

› Vendors feel pressure to showcase emerging tech.

› All tools are marketed as “essential” for today’s retailer.

› Media features “next tech” as “new retail standards” without POC, ROI, or a level of common sense practicality.

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Given all the options, what tech investments are retail professionals actually going make in 2017 and why?

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Key takeways

Retailers are focusing on tech investments that align with today’s customer expectations.

› Investing to catch up to the customer

› Looking for tech that solves specific customer pain points

› Letting other parts of the business test and learn new tech before applying them to customer-facing commerce


Hot technologies…Significant retail tech investments that digital business professionals will likely make in 2017

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Personalization

Personalization is the No. 1 investment for eCommerce professionals.

› It includes systems of insight and engagement.

› Organizations believe it will differentiate them more than the products they carry.


Source: Forrester’s North American Consumer Technographics Brand Compass Survey, Q3 ‘15

Source: Forrester's Q2 ‘16 Global eBusiness And Channel Strategy Professional Online Survey

77%of consumers have chosen,

recommended, or paid more for a brand that provides a personalized

service or experience.

89%of eBusiness and channel strategy

professionals plan to invest in personalizing the customer experience in 2016/2017.

Personalization is being prioritized due to its impact on customer experience

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26%

33%

34%

44%

51%

54%

54%

59%

72%

0% 20% 40% 60% 80%

Making the store easy to browse for customers

Ensuring that we always have competitive prices

Providing self service technologies for shoppers

Improving the knowledge of associates

Making it convenient to purchase (short checkout lines,…

Ensuring that we always have the products customers want

Making it easy for customers to find the products they are…

Making the store more engaging

Personalizing the customer experience

For your organization / company, what are the main opportunities for improving the customer experience at your company's stores? (Please choose your top 5 only.)

Source: Base: 61 eBusiness and Channel Strategy professionals Source: Forrester's Q2 2016 Global eBusiness And Channel Strategy Professional Online Survey

This year, for the first time ever, in-store personalization ranks top of the list


Omnichannel› Many companies still need to

invest a robust OMS to optimize omnichannel.

› Additional investments are needed to optimize stores:

• Better tools for pick and pack

• Better tools for ship-from-store operations

› Includes engagement, e.g., accessing online shopping cart while in store

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© 2017 Forrester Research, Inc. Reproduction Prohibited 15

Omnichannel investments are quadrupling

Source: Forrester’s Global eBusiness and Channel Strategy Professional Online Survey, Q4 2016


Analytics

Organizations already have analytics tools, but will continue to invest because they are looking for:

› Real-time analytics and insights

› Business tools with embedded analytics

› Predictive and prescriptive insights

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As retail complexity grows prescriptive –not predictive – analytics will be required

Data – Here is what happened

Insights – Here is what it means

Predictive – Here is what you could do

Prescriptive – Here is what you should do


Digital storeDigital store transformation has been slow, but it is still a priority.

› There are many choices for digital store tech (digital signage, RFID, etc.), but no single investment stands out.

› Digital store investments also have direct ties to the top three investments (e.g., better analytics to personalize in-store shopping).

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Digital store tools

When we look at the tools individually:

› Many digital store technologies are still maturing.

› ROI still needed to prove customer value before they are widely adopted.

Source: TechRadar™: Digital Store Operations Technology, Q3 2016 Forrester report


Maybe, but not so sure. . .Things that retailers are on the fence about for tech investments in 2017.

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Mobile engagement solutions

Table stakes for retailers today, next step is to optimize

› Net new mobile tech is not a top investment priority in 2017.

› Retailers are often bringing mobile development work in-house after setup.

› Retailers who have invested in mobile solutions are refining mobile experiences.


Mobile investments flattening

38%

49%46%

53%

65%60%

50%

58%53%

Increase budget in business units topay for more mobile apps

Expand mobile commerce initiatives Roll out new mobile-based productsand/or services

“Over the next 12 months, how important is increasing your mobile spending?”

2014 2015 2016

-3%+16% -7%+15%-7%

+14%

Base: 445 telecommunications decision makers who classify mobile tech investments as high and critical prioritySource: Forrester’s Global Business Technographics® Mobility Survey, 2016

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Digital payments

Most retailers already invested in payment solutions.

› NFC-ready POS terminals are in-market or invested in already.

› Too early to invest in another emerging payment solution without proven ROI

› Retailers focused on managing risk while monitoring customer expectations.


Chatbots

› Top rated new tech, but still in test and pilot phase

› Chatbots for service purposes have a retail business case, but not for commerce.

› May be owned by other departments (e.g., contact center); not eCommerce professionals

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Source: Forrester’s Consumer Technographics® North American Retail And Travel Customer Life Cycle Survey, Q1 2016 (US)

of online shoppers are very likely to abandon an online purchase if they cannot find a quick answer to their questions.

52%


Artificial intelligence

› Potential disruptor, but not yet in budgets only in pilot phase today

› AI used for operations has a role in retail today, other departments may have on budget.

› AI for customer engagement is not mature enough yet.

• Potential to disrupt retail industry in the future

• Requires significant, long-term investment

Source: Case Study: The North Face And 1-800-Flowers Embrace AI For Conversational Commerce Forrester report

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Source: Forrester’s Q2 2016 Global State Of Artificial Intelligence Online Survey

of leaders who are not ready to invest in AI either feel there is no defined business case,or they are unclear what AI can be used for in their business.

81%


Maybe next year…Retail tech investments that digital business professionals are very unlikely to make in 2017

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The internet of things (IoT)


Kroger’s grocery stores use IoT to improve food quality and lower rates of spoilage.

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What is self checkout?

Self-checkout

What is self-checkout?


Amazon’s “Just Walk Out” Technology

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“Distributed commerce allows shoppers to transact in a way that is platform-agnostic and audience-centric.”

Distributed commerceAKA “BOUNDARYLESS RETAIL”

— Mindy Grossman, CEO of HSNiNRF Big Show 2016*

*Now CEO at Weight Watchers


› Distributed commerce is simply a distraction if the results are unproven.

› Retailers want to stay focused on improving core channels.

› Twitter is not helping the matter.

Distributed commerce is “yet another channel”

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Augmented Reality / Virtual Reality


Why not AR/VR?

› Retail consumers simply do not demand VR/AR as part of the

› Added value remains to be seen

› Opportunities to learn with other teams, like store planning, are lower risk

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VR Will Likely Be Relevant To Commerce in 2020

Base: 4,592 US online adults (ages 18+)

Source: Forrester’s North American Consumer Technographics® Media And Advertising Online Benchmark Recontact Survey, 2015


Worth Noting…New or notable things that are trending

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Honorable mentions

› Total cost of ownership (TCO): The new key differentiator?

› What does Amazon Echo (Alexa) adoption mean for retail?

› Is international online sales the path to midmarket growth?

› Can retail experience shops (RXS) reach “unreachable” shoppers?

› Are CPGs/branded manufacturers (finally) going direct?


1% better but pay twice as much?

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Honorable mentions







Amazon Echo (Alexa)

› Removes an incredible amount of friction from the buying process

› Barrier between customer and mobile device

› General merchandising and commoditized goods

Image Source: Amazon.com

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Honorable mentions







Midmarket going international

› eCommerce ecosystems are maturing and midmarket vendors want a piece.

› Retailers explore global expansion options.

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Honorable mentions







Experience shops

› Brands can connect with customers in new ways

› Relatively low investment

› Serves as a testing ground

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Honorable mentions







Brands Go Direct

› Why not go direct?

› Different mentality than in past years

› Complement, don’t compete.

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“We recently made some changes to the innovation portfolio to refocus our efforts on supporting our core business, both in stores and online, and delivering against our strategic priorities.”


› Digitize your business strategy first, identify and assess the gaps, then invest in tech that solves your customer pain points.

› Uncheck and reassess your tech boxes and get to work optimizing the basics of delivering great customer experiences.

› Your stores don’t need robots, they need digitized, personalized, omnichannel, and value-added shopping journeys that at least meet customer expectations.

Recommendations for retailers

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Thank you© 2017 FORREST ER. REPRODUCT ION PROHIBIT ED.

Brendan [email protected]: @BrendanWitcher

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