Future of Retailing

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Future of Wireless Retailing
Scott Mullinax IBM Wireless Solutions-Americas Mul
ls_at_us.ibm.com 918-493-4412
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Discussion objective

• Outline the importance of high value Contextual
  Experiences and how Wireless Technologies can
  enable the LAST MILE CONSUMER EXPERIENCE.
• Define the Wireless technologies that are the
  vehicle to move from Mass Merchandising to
  Individual Consumer Experiences.

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Agenda

• Wireless Market Trends
• New Market Consumer Dynamics
• Make a difference in the Store Experience
• Technology the tool of Empowerment
• Roadmap to Success

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Wireless Market Trends
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By 2004,130 million customers will be generating
almost 14 billion transactions, yielding 200
billion in revenue, over 75 of which will come
from Western Europe and the United States
Source Strategy Analytics, 2000
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In the U.S. the number of net-enabled phone
owners will also represent about 50 of the
population by 2004
Subscribers (millions)
Source Forrester, 2000, 1999
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We are poised on the verge of a Wireless
e-business explosion every second of every day a
new mobile internet user is born mobile internet
access will surpass PC internet access in 2002
SourceResearch Portal.com, Reuters, EE Times,
Ericsson, 2000
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Agenda- continued

• Wireless Market Trends
• New Market Consumer Dynamics
• Make a difference in the Store Experience
• Technology the tool of Empowerment
• Roadmap to Success

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Current Industry Dynamics

• There is a tremendous growth of perimeter
  businesses in retailing because of changing
  lifestyle attitudes - quick, easy - I am willing
  to pay for convenience
• Reduction in capital asset and labor resource
  spending is mandated by the boardroom
• Point of sale has to be scan-capable and able to
  keep track of more complicated promotions and
  offers
• In-store and channel transactions have to be
  instantaneous and responsive to the customers
  identity
• Merchandising must be specific to smaller
  segments of the population, while being able to
  attract larger segments successfully
• Product allocation, assortment, pricing, and
  promotion must be dead-on in where, when, and how
  it is placed in front of the customer. Every
  time!

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Changing Market Dynamics

• Growing concentration of leading brands and power
  retailers
• Bankruptcies and liquidations closing down the
  non-competitive
• Experimentation with complementary business
  partnerships
• Identification of new points of access for
  consumers, including pervasive and mobile
  technologies
• An increasing need to respond to consumer shifts
  including demographic lifestyle, and buying
  pattern trends

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The Changing Consumer

• More knowledgeable about comparable product costs
  and price.
• More changeable in retail and brand preferences,
  showing little loyalty.
• Self-sufficient, yet demanding more information
• Hold high expectations of service
• Expecting personalization
• Driven by three new currencies time, value, and
  information.

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New Market Trends

• Consolidation in the marketplace continues to
  change the landscape of retail/wholesale,
  manufacturing and service provider sectors
• Industries are positioning by creating global
  alliances (Vertically Integrating)
• It is becoming increasingly important for
  companies to manage their capital efficiently as
  well as controlling their processes
• Consumer Retention is becoming more important due
  to increasing competition
• Customized, flexible products will be the future
  and are expected at the Point of Sale
• NEED TO MANAGE THE FIRST THOUGHT IN THE LAST MILE
  WITH WIRELESS TECHNOLOGY!

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Retailing 2001 is about the End Customer

• The key to multi-channel integration is the
  ability to utilize the information collected from
  all consumer touch points and make the
  information actionable throughout the value
  chain.
• New measurements need to be in place to measure
  performance. Multi-channel retailers must now
  measure the variables that affect satisfaction in
  a specific channel while establishing uniform
  standards across all channels. Regardless of the
  sales channel they are using, customers must feel
  like royalty.

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Agenda- continued

• Wireless Market Trends
• New Market Consumer Dynamics
• Make a difference in the Store Experience
• Technology the tool of Empowerment
• Roadmap to Success

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Positive Contextual Experiences equal Consumer
Loyalty
Contextual experiences (conditions) directly
impact a customers perception of vendor
value. Value experiences include and transcend
monetary value and product-based experiences.
Laying the foundations for the store of the
future is the key to enabling technologies that
will support the total customer experience of
feeling understood, connected, and delighted.
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Making a Difference in Retailing from the
Back-End Systems through to the Consumer - the
Components of Experience
OPERATIONALthe way you manageyour store
STRATEGICthe way customers experience your
business
eCRM
SCM
attentive environment
flow-through management
alternative POS
cash alternatives
self-serve
individualized
TACTICALthe way you sell
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Changing the Retailing Environment
SUCCESS
BUSINESS VISION
What are the core values to the business driving
forward?
How will the value of new technology be realized
and amortized across a centralized business
model through local channels of customer
experience?

• What is the end vision
• to support the
• near term initiatives?

How will the customer experience the benefits of
the new vision?
How will success be measured?
TECHNOLOGY
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The Way You Manage Your Store Experience-Now very
important
(hidden) Store managers can receive remote
real-time product movement updates throughout the
day. POS data can be remotely retrieved and can
be analyzed immediately to allow for
replenishment / replacement where appropriate in
order to immediate customer demand.
(hidden) Lost sales can be reduced as customers
no longer face long POS queues, minimizing
customer abandonment. Responsive environments
effect efficient store / queue management.
Back-Office
Sales Floor
Mass retailing is founded on the premises of
speed, ease of use, and convenience. Managing
the experience means excelling at being a
convenience provider.
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Tickles and Whispers in Mass Retailing drives a
valued experience

• (hidden)
• Responsive environments notify resources how best
  to manage them
• alert me to open up another cash register line
  because of long queues
• tell me to adjust the temperature

• (hidden)
• A more efficient labor force is better educated,
  more assisted in real time, and suffers from last
  turnover
• remind me about cross-sells and up-sells
• remind me about this customers preferences
• help me to be more knowledgeable in front of my
  customer
• help me to be more knowledgeable in front of my
  employees

Tickle Technology
Whisper Technology
Technology becomes ubiquitous as we progress from
fingertip, to voice, to bio-metric, to
human-centric experiences that are human aware
and dialogic, natural, and easy.
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Moving from Mass Service to Individualized
Experiences

• (hidden)
• The responsive environment responds to such
  conditions as
• who are the people in a given space?
• where are they (geographic and proximal)?
• what are they doing?
• The enabled environment delivers on the promise
  of mass retailing based on individuals within a
  space

(hidden) Consumers have more choice than ever
and so mass retailers need to grab and retain
relationships by extending their value, presence,
and opportunity. By using aggregates of
Wireless technology to create dynamic
individualized experience retailers can lead the
market and capture the attention of their
customers. Customer Retention
Responsive Environment
Individualized Service
Mass retailers can now use wireless technologies
to get beyond the last mile and become the
first thought.
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Metrics of Success
Metric
Catalyst/Result
Example Strategy
Operational Efficiency

• Reduce operating assets
• Reduce turnover
• Reduce working staff
• Reduce cost of quality

• More skilled employees
• More efficient and contextual or in the moment
  training
• Require less resources to support the same
  production and client base

• Remote monitoring of employee performance
• Remote store monitoring
• Dynamic environmental awareness
• Ubiquitous employee training / support systems

Improve Existing Customer Revenue

• Increase customer retention
• Improve market share
• Up-sell/cross-sell

• Improve customer satisfaction
• Provide competitive services
• Increase brand strength

• Add wireless channel for ease / efficiency uses
• Integrate with online offering
• Offer unique / personalized services

New Revenue Streams

• New products / services in same business
• New products / services in new business

• Increase revenues from intellectual capital
• New service pricing

• Charge for automated service
• Use connectivity of product to drive traffic to
  service offering portals

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Agenda- continued

• Wireless Market Trends
• New Market Consumer Dynamics
• Make a Difference in the Store Experience
• Technology the tool of Empowerment
• Roadmap to Success

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The Topography of Opportunity

• Aware Environment
• Tickle Environment Support
• Intelligent Environment
• eShelf Labels
• Cartless Shopping
• Smart SKUs

Store-Box
WLAN
BackRoom

• Assisted Sales
• Wireless POS
• Individualized Retailing
• Remote Access to POS

FrontRoom

• Inventory Management
• RFID
• Mobile Field Service Agent
• Mobile Sales Agent
• Barcode Tracking

Aisle
Aisle
Aisle
Aisle
POS
ePOS

• Unattended Sales
• Remote Shopping
• Replenishment List
• Customer Self-Serve
• eCash Payment Options
• Smart Gold Crown Card

• Interactive Sales
• Virtual Activity Centers
• Media Download Centers

• Face to Face Sales
• Whisper Sales Support
• Mobile POS
• Customer Awareness
• Remote Store Management

Parking Lot

• Self-Serve Sales
• Intelligent Kiosks / Vending
• Multi-Channel
• New Vends
• Extended Business Opportunities

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Multi-Channel Retailing
Cellular
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Store Management

• The store will be the place where several
  emerging technologies will be used
• Cellular
• 802.11b
• Bluetooth
• RFID
• Smart Card
• Kiosk/Vending
• The in-store experience will combine customer
  satisfiers such as line busting and location
  based services and enhanced shopping with
  cross/up sales potential.

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Infrastructure for Enablement - Wireless

• 802.11b is a high speed, reliable solution for
  in-store wireless solutions
• Bluetooth is the 10 meter RF solution intended
  for device to device interaction
• Cellular voice networks will incorporate data
  services at higher transfer rates using GPRS
• Existing data services only networks will be used
  for devices like Palm VII and RIM

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Infrastructure for Enablement - RFID

• RFID cost will drop to an acceptable price point
  when multiple uses are incorporated
• Distribution
• Inventory management
• Point of Sale
• Smart Home applications
• An example of cost justification is the use of
  RFID for baggage handling at San Francisco
  Airport
• The ultimate goal of RFID is reliability over
  life of item and pervasive penetration of
  scanners that take advantage of ID. For example,
  RFID embedded in my shirt so that if I drop it
  into washer at home or take it to laundry, it
  will be handled correctly.

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Reasons to use WLANs
Enterprises have many different reasons for
implementing Wireless LAN solutions -- but
network flexibility and mobility are the most
common.

• To extend a wired LAN Network Mobility
• To network difficult-to-wire locations
• Network Flexibility
• To extend a ready-to-use LAN across locations
• LAN-in-a-box
• To provide LAN access to mobile users
• To better understand and know your customers
• To provide location based servicesWhere I am
• Product Location Where do I go

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Redefining the Internet - Redefining Lifestyles
with Cash Alternatives
McDonalds restaurants will test FAST LANE
transponder technology in the some of their
restaurant drive-thrus. "Transponders will allow
our customers to pay for their favorite
McDonalds food like the Big Mac and our French
fries without leaving their car or using cash,"
said Lambrechts. "We expect this new technology
will add to the fun and excitement of McDonalds
by improving the speed and efficiency in our
drive-thru service for on-the-go New England
travelers."
Many People consider a smart card to be a PC in
the pocket. A smart card is a credit card style
card that has an embedded memory chip that stores
data and applications relative to the user - that
can be coupled with an identification feature,
such as PIN, biometrics, or other types of
security checks. Smart cards are portable,
secure, interoperable, and convenient.
The iButton is ideal for any application where
information needs to travel with a person or
object. iButton can grant access to a building, a
piece of equipment, can be used to store cash for
small transactions, such as transit systems,
parking lots, and vending machines.
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IBM Wireless Offerings for Retail
(hidden) Digital Display Boards
(hidden) Environment Tickles Employee Whispers
Dynamic Environments
Responsive Environments

• (hidden)
• Intelligent Vending
• ecash enabled POS
• self-serve POS
• eCash Transactions
• integrated POS
• Customer Self-CheckOut Solutions
• PSI check-out solutions
• integrated intelligent kiosk solutions
• Cart-less Shopping
• consumer barcode devices,
• mobile kiosks

• (hidden)
• Site Survey / WLAN / WWAN
• Individualized Retailing
• profiling database
• smart card loyalty programs
• RFID Supply Management
• RFID SKU Management
• in supply
• on the selling floor
• in the dressing room
• at the POS
• Remote Management - mobile MOD

Unattended Retailing
Efficient Retailing
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Agenda- continued

• Wireless Market Trends
• New Market Consumer Dynamics
• Make a difference in the Store Experience
• Technology the tool of Empowerment
• Roadmap to Success

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IBM Engagement Focus

• Our objective is to optimize the value of
  networked and responsive end-user interactivity
  via the value proposition of the business
  objective.
• The strategic consulting engagement focuses on
  business models, initiative identification and
  user value proposition bound to the overall
  business objective.

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Statement of the Methodology

• Our approach is a systematic method for analyzing
  and delivering mBusiness strategic solutions
  based on core business objectives.
• We are confident that our methodology, people and
  tools can provide the client with a value-add
  solution designed to meet their long-term and
  short-term business objectives.

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Conclusion

• LETS IDENTIFY WAYS WE CAN INCREASE THE VALUE OF
  THE CONTEXTUAL EXPERIENCE.
• DETERMINE THE WIRELESS TECHOLOGIES to SUPPORT
  THIS BUSINESS VISION STRATEGY.
• THEN DRIVE THE FIRST THOUGHT IN THE LAST MILE TO
  REAP HIGH VALUE SERVICE AND CONSUMER LOYALTY.
• THANK YOU!!