Who are most ready? – Can online retailers keep up with consumers? Online retail is here to stay – Get the facts straight Multi-channel dynamics – Online presence leverages offline sales More changes ahead – Consumers will go mobile Crossing the boundary – Six barriers to entering online retail dedicated regional approach to Europe
Online retail seminar A perspective on the development of the online channel – March 2011
From the late 90s to today: A great shift in "who are most ready": The consumers or the retailers? The dilemma Consumer readiness/Online Retail (OR) sales/ number of brands online
The traditional retailer's current budgeted/ planned sales in their stores via openings and/or organic sales growth
Time
Will OR really increase consumption? Have the structural changes been taken into account by the BM retailers? When will the increase in OR result in store closures and less store m2? How will the role shift between BM retail and OR? 2
Time
Let's get some selected facts straight. OR is here to stay‌
30% 10% 50% 10% 85% 19%
has OR grown per year the past six years (3x size) is OR predicted to grow the next five years
of the North European population are frequent internet shoppers
of Scandinavian clothes and footwear sales is sold via OR
of Danes between 20-40 years are frequent internet shoppers
of people looking at a product online ended up buying in a physical store
Apparel has become the largest product category in OR
More and more brands sell directly from own internet store
Convenience/"I save time"/Can shop when I want" are the key drivers
6 3
is the number of barriers we have identified among brands and retailers for entering OR
… and multichannel dynamics emerge The cross-channel research to purchase Started product research …
100%
They searched …
Also researched the product ...
Purchased the product …
Online 54%
Only online 33%
Online 23%
Online presence also leverages offline sales
Offline 9%
Offline 46%
Online and offline /offline only 21%
Online 11%
Offline 10%
35% of consumers that started product research online purchased the product offline
4 Source: How The Net Is Influencing European Offline Sales 2009; Forrester Research
Only offline 33%
Online 1%
Offline 32%
Offline and online /online only13%
Online 5%
Offline 8%
From laptop to mobile: The shopping behaviour is predicted to – once again – change dramatically over the next years Percentage of global retail sales in each channel
2007 Catalogue Mobile Online 2% 0% 3%
2016 (E) Catalogue 0% Online
Mobile
Pay with your mobile phone
13%
28%
Scan the bar code instore and find better prices near you
Groupons and social media 95%
Stores
60% Stores
5 Source: Gapgemini 2009: Future Channel Shopping; Bloomberg News; Datamonitor; Forrester Research Inc.
Location based shopping and promotions
Traditional brands and retailers are facing both mental and tangible barriers for entering online retail … Six typical issues and barriers 1
The strategic purpose
2
Assortment and pricing
• Myths and different viewpoints in management team • Heritage of physical stores
• Coherency between online and BM store assortment
• Pressure from price runners or pure players
• Focused or long tail assortment?
• Share of "clearance", promotions and entrepreneurship
• Price transparency (e.g. cross border)
3
Channel conflict
4
Channel integration
• Finding solutions to the "real" strategic issues
• Reaction from wholesale clients and store owners
• Internal channel conflict from BM retail organisation
• One consumer touchpoint feeling (stores, online, club, ...)
• Search online, pick-up in stores • X-promotions • Out-of-stock
5
Fulfilment
6
Organisation
6
• Unclear, but large-impact business case
• Return rates
• From weekly pallets to daily single items
• In-house or outsourcing?
• Location of OR: "under marketing" or separate legal entity?
• Internal governance and entrepreneurial freedom
• New skills and metrics needed