This document discusses retail innovation from a strategic perspective, with a focus on customer-centric innovation. It argues that traditional formats of retail innovation are limited and that 97% of innovations fail. It advocates taking the customer's perspective in order to better understand their needs and emotions throughout their journey. The example is given of how Apple was able to break retail rules and achieve remarkable success and growth by focusing intently on customer experience, segmentation, and lifestyle marketing rather than just product sales.
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Customer Centric Retail Innovation - Bucharest May 29, 2008
6. FUTURELAB
COPY MODIFY CREATE DEGREE OF
INNOVATION
Introduce global Modify existing Develop new
formats that already concepts to better concepts, targeting
exist match local needs specific local
segments and needs
4. INNOVATE LIKE ONLY ROMANIANS CAN
8. THEN, GO TO WORK
BRANDS RETAILERS/INVESTORS
Be the first to become friendly with your Be first to bring a (modified) format into the
new customers market
Help your existing distribution to Come with something « unique » which
« make the jump » internationals can’t offer
Pro-actively say goodbye to those who Get out of the way and sell as expensive as
can‟t or won‟t innovate. possible.
FUTURELAB
9. BUT WE WILL START WITH INNOVATION FROM A STRATEGIC PERSPECTIVE
And to be more precise:
« customer centric retail innovation »
Source: IBM Business Consulting Services – The Retail Divide, 2004
FUTURELAB
10. Think Beyond the Store
Broaden Your Innovation Horizon
FUTURELAB
11. Why Customer Centric?
• Traditional Innovation is Broken
• Competition is Changing
• There‟s not much to be done at retail anyway
23. FUTURELAB
Apple Retail 2001
Sorry Steve, Apple Stores Won‟t Work
(Business Week)
Apple Retail 2004: Watch video on
Fastest retailer ever to reach the http://www.youtube.com/watch?v=
$1 billion mark a year m-Y7vZMEPrU
Apple Retail 2006
Fastest retailer ever to reach
$1 billion/quarter mark
Apple Retail 2007
Sales per sq.meter = $ 30,176
(as comparison: BestBuy = $10,643)
HOW DID THEY DO IT?
24. DRIVERS FOR RECOMMENDATION IN ICT
Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008 FUTURELAB
25. • Careful segmentation and focus on students, educators and
creative professionals (even now consumer appeal broadens)
• A retail experience differentiated by service before, during and
after sales (Genius bar)
• Scenario or lifestyle Marketing & Sales vs. Product « What do
you want to do ? »
• Style & design
THE RESPONSE
Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008 FUTURELAB
26. BREAKING ALL THE RULES
• No commissions
• Team bonuses
• Focus on experience
• Fashion & design people to run computer retail
• Hire for personality, attitude and customer fit
… train the rest
Ron Johnson • High identification: Tshirts, iPod, discounts, …
Target
• 3 week immersion at start of job ONLY on
customer relationship skills and understanding
customer needs/lifestyle
• All product training is online (except
geniuses)
• Training on store computers or borrowed
MickeyDrexler laptop
The Gap
FUTURELAB
27. RESULTS
Apple: 2007 Net Promoter Performance and 5 Year Trend vs. Overall
B2C High Tech Computer Hardware Manufacturers
FUTURELAB Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008
28. RESULTS
Total Customer Value of an Apple advocate is almost twice that
of the industry average
FUTURELAB Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008
29. Revenue Growth % 2007 vs 2008
Source: Fortune Magazine, May 5,2008
24,3
13,8
8,4
6,5 6,2 5,5
0,8
HP Dell Apple Xerox Sun NCR Pitney
Bowes
RESULTS
FUTURELAB
30. HOW ABOUT YOU?
5
To Customer
Centric Retail
Innovation
steps
FUTURELAB
31. Image by : Zombiefactory, CC-license 2.0
#1 TAKE THE CUSTOMER PERSPECTIVE
FUTURELAB
32. HOTSPOT HOTSPOT
Building Use &
Awareness Purchase Repurchase Loyalty Advocacy
Preference Service
THE CUSTOMER JOURNEY – BRAND/RETAIL PERSPECTIVE
FUTURELAB
33. Flipchart Time
Which are the steps in the
customer journey when
booking a holiday?
How could you innovate
on them?
THE CUSTOMER JOURNEY
CUSTOMER PERSPECTIVE
FUTURELAB
34. THE CUSTOMER JOURNEY
CUSTOMER PERSPECTIVE
1. I dream of going on holiday
2. I research my holiday
3. I plan my holiday
4. I select my holiday
5. I purchase my holiday
6. I receive travel documents & tickets
7. I anticipate departure
8. I prepare my trip
9. I travel to my destination
10. I discover my destination
11. I experience my destination
12. I record my memories
13. I share my experience How Can You Innovate Now?
14. I travel back home
15. I share my memories
LVMH - AOL Time Warner
UBS - Richemont
FUTURELAB
35. THE CUSTOMER JOURNEY
CUSTOMER PERSPECTIVE
How About You?
TRAVEL CARS BANKING FOOD
Photo Nils Bremer, cc. 2.0
FUTURELAB
36. FUTURELAB
Photo: Joeannenah, cc: 2.0
#2 GET THE CUSTOMER HEARTBEAT
37. 1. I dream of going on holiday
2. I research my holiday
WHAT DO YOUR CUSTOMERS 3. I plan my holiday
REALLY CARE ABOUT? 4. I select my holiday
5. I purchase my holiday
6. I receive travel documents & tickets
7. I anticipate departure
8. I prepare my trip
WHICH EMOTIONS ? 9. I travel to my destination
10. I discover my destination
ARE ALL EMOTIONS
EQUALLY STRONG? 11. I experience my destination
12. I record my memories
13. I share my experience
14. I travel back home
15. I share my memories
FUTURELAB
42. AIRLINES BANKS
COMPUTERS
INNOVATORS SEEM TO DISAGREE
PHARMA
UTILITIES PROCESSED FOOD
Source: The Doblin Group
FUTURELAB
43. THIS ALSO APPLIES TO CUSTOMER CENTRIC INNOVATION
1. I dream of going on holiday
2. I research my holiday
3. I plan my holiday
4. I select my holiday
5. I purchase my holiday
6. I receive travel documents & tickets
7. I prepare my trip
8. I travel to my destination
Observation 9. I discover my destination
Most of the travel 10. I experience my destination
industry focuses on 11. I record my memories
those areas which have 12. I share my experience
least or most negative 13. I travel back home
emotional involvement 14. I share my memories
FUTURELAB
45. CROSS YOUR INNOVATION LANDSCAPE WITH THE CUSTOMER ENGAGEMENT
High
Opportunities for Areas to keep up
meaningful or stay ahead
Customer Engagement
differentiation
Copy when
Look at the niches proven only
Low
Low Innovation Intensity High
FUTURELAB
47. perception
80% of CEO‟s believe of
believe their brand provides a
superior customer experience
8 % of their customers agree
(Bain & Company)
FUTURELAB
48. Watch video on:
http://www.youtube.com/watch?v=xa
aAYVUWP0I
We show that we value our
customers by serving them
well, putting their needs and interests
at the center of everything we do.
(from the AOL mission statement)
FUTURELAB
50. FUTURELAB
ONLY 5% OF THE WORKFORCE UNDERSTANDS THE
STRATEGY (when innovating this gets even worse).
Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005
51. WHILE THEY NEED TO DELIVER THE
RETAIL (INNOVATION) PROMISE.
FUTURELAB
52. 76% of consumers don‟t believe that
companies tell the truth in advertisements
Yankelowich,2006
FUTURELAB
57. 5
To Customer
1. Take the Customer Perspective
Centric Retail
2. Get the Customer Heartbeat
Innovation
3. Focus Your Efforts
4. Make Sure your People Are With You
steps 5. Start Swimming
FUTURELAB
61. Internet Mobile In-store
Digitally Augmented Retail
THREE PRACTICAL OPPORTUNITIES
FUTURELAB
62. “Out of 35 European
premium brand dealers 2007 Retail Study for Customer Focused Excellence
(N = 300 large online retailers)
only 1 responded to an
email enquiry from their • 61% do not offer any information on the product page regarding
own website … after 2 in-stock availability
weeks”
• 38% of sites have difficult to read fonts
• Only 58% correctly answer an e-mail question within 24 hours
• Only 33% offer customer reviews.
• 24% do not allow customers to enlarge the product image
Source: FutureNow, 2007
INTERNET
IF YOU PLAY, GET THE BASICS RIGHT
FUTURELAB
63. Hi Joel,
Sorry if we weirded you or your friend out by US Online Review Users Identifying Review as
following you on twitter. @JetBlue isn‟t a bot, it‟s
merely me and my team keeping our ears to the
Having Significant Influence on their Purchase
ground and listening to our customers talk in open
forums so we can improve our service to them. It‟s Category %
not marketing, it‟s trying to engage on a level other
than mass broadcast, something I personally Restaurant 79%
believe more companies should try to do.
Hotels 87%
Because corporate involvement in social media is a
Travel 84%
new and evolving discipline, I also take a specific
interest on conversations revolving around our role Automotive 78%
here. I‟d have DMd you and Lisa directly if you
allowed DMs, so please also forgive me for following Home 73%
the link on your twitter page here to send you this
note. Medical 76%
You and Lisa are no longer being „followed‟ as you
seem to indicate. Legal 79%
Again, my apologies Source: Comscore Inc., the Kelsey Group, Oct. 2007
Morgan Johnston
Corporate Communications
JetBlue Airways
INTERNET
LISTEN AND REACT
FUTURELAB
64. FUTURELAB
KEEP IT SIMPLE ON THE
MOBILE FRONT
On-Demand
SMS push
Location Based Push
!
RELEVANCE
PERMISSION INFORMATIONAL
(PART OF EXPERIENCE) PROMOTIONAL
65. IN-STORE INSPIRATION
Watch video on
http://www.youtube.com/watch?v=gQBFaVfBi9w&feature=related#
FUTURELAB
66. WATCH THE CONTENT
Queen‟s Arcade (Cardiff) McDonalds Amsterdam Veritas Antwerp
INSTORE
LESSONS IN NARROWCASTING
FUTURELAB
67. ROMANIA IS ON THE VERGE OF SOMETHING BIG
Turnover of Retail Trade in Romania 2001-2007, 2010
(€ billions)
COPY MODIFY CREATE DEGREE OF
INNOVATION
FUTURELAB
When you look at the various aspects that drive recommendation in ICT markets, you find the product, yet also key experience variables like Reputation (trust), meeting needs (personalisation), ease of doing business, …Apple has addressed each of these elements with a number of unique elementsCareful segmentation allows them to better match the needs of opinion leaders The retail experience with highly knowledgeable staff who literally « lives » the brand has shifted focus from « the sale of a PC and after-sales » to a « hangout for sales, and after sales support + community building)Scenario and lifestyle marketing & sales has further allowed them to package and tailor their offer around computer usage rather than function (e.g. music, video, …)They have stuck to their own styling, which has enhanced the prodcut experience (you cannot live without a good product)
When you look at the various aspects that drive recommendation in ICT markets, you find the product, yet also key experience variables like Reputation (trust), meeting needs (personalisation), ease of doing business, …Apple has addressed each of these elements with a number of unique elementsCareful segmentation allows them to better match the needs of opinion leaders The retail experience with highly knowledgeable staff who literally « lives » the brand has shifted focus from « the sale of a PC and after-sales » to a « hangout for sales, and after sales support + community building)Scenario and lifestyle marketing & sales has further allowed them to package and tailor their offer around computer usage rather than function (e.g. music, video, …)They have stuck to their own styling, which has enhanced the prodcut experience (you cannot live without a good product)
As a result, the number of Apple Advocates trends well above that of the B2C technology companies
As a result, in spite of already being the third largest computer and office equipment company in the Fortune 500, Apple still captures growth rates will in excess of any of its competitors.
So as consultants always like to do graphs I would summarize this in a framework which takes a bit broader perspective yet in broad terms says the same things.
Mass value: Aldi, ikeaSolver: vodafone storeOpportunitist: apple store, zara, virgin megastore, Lifestyle: Nespresso, Lexus,