This document discusses how Australian retailers can gain a digital advantage. It finds that while Australian consumers are early adopters of digital technologies, retailers are struggling to keep up with evolving customer demands. The document advocates developing a digital maturity by balancing investments in digital capabilities ("what" an organization does digitally) with strong digital transformation management ("how" an organization approaches digital transformation). Only a few "Digirati" retailers have achieved this, demonstrating both a digital vision and measurable business results from integrated digital initiatives. The document argues all retailers should take action now to develop their own digital DNA and close the gap with digitally mature competitors.

1. The All Channel Experience
DRIVING VALUE FOR YOUR CUSTOMERS AND YOUR BUSINESS
Ben Gilchriest & Antoinette Ienco
Digital Transformation Lead, Retail Sector Industry SME
Capgemini Consulting, Australia

2. Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
Australian retail sector challenges (briefly!)
HowdoyourealiseaDigitalAdvantage?
The danger of the “in between”
Digital Maturity Matters

3. 62% active in mobile shopping
On-Line Mobile Social Media
Adoption of mobile as a payment
channel growing rapidly C
Smartphone adoption
Growing subscriber base
High household broadband
coverage A
A leader in internet penetration
5th highest
internet
penetration
in the world
73%
73%
Australia USA
36%
51%
9.74
10.33
11.12
9.50
10.00
10.50
11.00
11.50
Dec
2010
Jun
2011
Dec
2011
Millions
73%
A major part of people’s on-line
time
Facebook is still the #1
social media site
A significant channel for generating
and finding opinions
Leading the world
in social media
usage @7hrs /
month
Nearly half of all
Australian’s on-line
are active in social
mediaA.
Majority are
seeking other’s
opinions
read reviews &
discuss brands
3%
4%
8%
9%
97%
Other
Myspace
Twi@er
LinkedIn
Facebook
*% of Australian social media
users visited
LinkedIn in
growing rapidly;
+99% growth in
2011 d
A -domestic connections., 2011
B – business & domestic broadband connections.
C - PayPal figures – purchases via mobile, 2010 - 2011
% of on-line users that are active in social media
71%
Mobile transactions growing at
430% year on year
20%
Australians with an
Internet
connectionB
90%
Australians >16
years active on-line
81%
48%
0%
10%
20%
30%
40%
<5
min
5-­‐30
min
30-­‐60
min
over
an
hour
no
shopping
20%
26% 11% 5%
38%
Australian consumers are leaders in internet and smartphone
adoption and social engagement
2011 2012

4. The Australian retail sector is facing several challenges
§ Pure play online retailers.
§ International retailers with efficient business models.
§ Traditional channels extension with online
§ Innovative Apps (combining online, user data,
mobility.
§ Shrinking square footage.
§ Technology leveraged in-store to provide
outstanding customer service and increased
personalization;
§ Kiosks;
§ Mobile payments;
§ QR Codes.
§ Supply chains need to accommodate and fulfill
individual customer orders.
§ Collaborative supply chain technology and practices
like shared warehouses are critical for realizing
improvements.
§ Production is based on predictive and actual
demand from consumers.
• More content is generated outside the company –
unstructured.
• Combination of loyalty data and unstructured data
to respond to customer expectations.
• Affinity analysis;
• Sentiment Analysis.
Changing
Marketplace
Supply
Chain
Op4misa4on
New
Store
Formats
Data
Availability
Retail
New technology (digital) is both part of the challenge and the
solution.
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.

5. CUSTOMERCHANNEL
MODEL
INTERACTION
MODEL
Australian shoppers’ expected a dramatically different
experience and they are becoming more vocal in demanding it
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
Yesterday Today
IN THE DARK
Information poor.
Limited choice.
Retail store the preference.
INSIDE-OUT
Call centre centric.
Retail store centric.
“TELLING”
Mass marketing.
Outbound blast marketing.
Reactive, inbound.
INFORMED, EMPOWERED
Benchmark on trust, social responsibility
Constantly changing & sharing.
High trust in peer review.
across industries and geographies
OUTSIDE-IN
Integrated cross-channel.
Customer experience driven design.
“CONVERSING”
Embrace social (P2P).
Co-creation.
On-line at the core.

6. CUSTOMERCHANNEL
MODEL
INTERACTION
MODEL
However, many companies are struggling to catch-up with
rapidly evolving customer demands
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
Yesterday Today
IN THE DARK
Information poor.
Limited choice.
Retail store the preference.
INSIDE-OUT
Call centre centric.
Retail store centric.
“TELLING”
Mass marketing.
Outbound blast marketing.
Reactive, inbound.
INFORMED, EMPOWERED
Benchmark on trust, social responsibility
Constantly changing & sharing.
High trust in peer review.
across industries and geographies
OUTSIDE-IN
Integrated cross-channel.
Customer experience driven design.
“CONVERSING”
Embrace social (P2P).
Co-creation.
Personalisation at the core.
The “in-
between”
“TALKING”
Loyalty and reward schemes.
Social media largely outbound
(minimal integration into org.)
MULTI-CHANNEL
Multiple offerings,
not integrated

7. Despite many attempts, Australian retailers struggle to
bridge the gap to address evolving shopper behaviour
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
§ ABS show $258 billion spent on retail and 9% is estimated
to be on-line with overall growth of 12%.
§ On-line retail sales are expected to reach $18 billion in
2013 and forecasted to grow 39% to $25 billion by 2015.
§ 28% of goods bought by Australians online were from
overseas sites. Down from 43% in 2011,
§ Multiple overseas companies have launched dedicated
Australian sites (e.g. ASOS, Saks, TM Lewin, Nordstrom,
Gap, Wiggle etc.).
§ Companies are introducing experiences developed in
other markets to Australia (e.g. ASOS scan-to-shop)
§ Of the top 15 online retailers, only two have a bricks-and-
mortar offering…..
§ In the US, 13 of the top 15 online retailers had physical retail
outlets.
§ Only 8% of companies use mobile to transform the
customer experience and 14% for operational processes
§ Limited functionality and basic fulfilment
On-line Retail is expected to
grow to $25b by 2015
Australians are
benchmarking their digital
experience against
established overseas brands
Australian retailers are
struggling to respond

8. Digital maturity is a combination of “what” and
organisation does and “how” they approach it
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
Digital Intensity
(the “WHAT”)
Transformation Mngt Intensity
(the “HOW”)
Technology-enabled initiatives in:
• Customer Experience
• Internal Operations
Leadership capabilities including:
• Vision
• Governance
• Engagement
• IT-Business Relationships

9. ‘Beginners’ may be carrying out some experiments though are
largely skeptical of value of digital
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
DIGITALINTENSITY
WHAT
is
the
organisa3on
doing
(digital
investments
&
assets)
TRANSFORMATION MANAGEMENT INTENSITY
HOW
is
the
organisa3on
doing
it
(vision,
governance
&
roadmap)
BEGINNERS
This is not for us!

10. ‘Conservatives’ have a digital vision and strong governance
though have few advanced digital features
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
DIGITALINTENSITY
WHAT
is
the
organisa3on
doing
(digital
investments
&
assets)
TRANSFORMATION MANAGEMENT INTENSITY
HOW
is
the
organisa3on
doing
it
(vision,
governance
&
roadmap)
BEGINNERS
This is not for us!
CONSERVATIVES
Analogue focus

11. ‘Fashionistas’ have many advanced digital features though
they’re run in silos and there is no over-arching vision
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
DIGITALINTENSITY
WHAT
is
the
organisa3on
doing
(digital
investments
&
assets)
TRANSFORMATION MANAGEMENT INTENSITY
HOW
is
the
organisa3on
doing
it
(vision,
governance
&
roadmap)
BEGINNERS
This is not for us!
CONSERVATIVES
Analogue focus
FASHIONISTAS
Digital
Digital
Digital
Digital
Digital

12. ‘Digirati’ have a strong vision, and governance with many digital
initiatives generating business value in measurable ways
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
DIGITALINTENSITY
WHAT
is
the
organisa3on
doing
(digital
investments
&
assets)
TRANSFORMATION MANAGEMENT INTENSITY
HOW
is
the
organisa3on
doing
it
(vision,
governance
&
roadmap)
BEGINNERS
This is not for us!
CONSERVATIVES
Analogue focus
FASHIONISTAS
Digital
Digital
Digital
Digital
Digital
DIGIRATI
Growth; +9%
Profit; +26%
Digitally-mature companies have significantly better financial
performance.

13. Digirati have a common Digital DNA, they invest 100% in the “how”
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
Digital
Service Unit
VISION
IT/
BUSINESS
GOVERNANCE
ENGAGEMENT
• Transformative Vision
• Shared Vision
• Digital Tsar
• Digital Units
• Investment Committees
• Promoting Change
• Employee Participation
• Investing in Skills
• Shared understanding between IT and
business executives on role of IT
Chief Digital
Officer
Digital Year
“The IT Team (...) now work hand in
hand with the Creative Media team.”

14. ..and they make strategic investments on where to excel
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
FOCUS
INVESTMENTS
on where they
Choose to
Excel Digitally
COMBINE
DIGITAL
CAPABILITIES
to Exploit
Synergies
+
Customer
Experience
Social
media
Mobile
channel
In-store
Online
Unified Processes/ Integrated Data
Process
Excellence
Supply-chain
Integration
Centralized
Ordering New biz.
models
Customer
experience
Unified Processes/ Integrated Data
Analytics
capabilities
Personalized Customer
experience
Unified Processes/ Integrated Data
On-premise
Online
BURBERRY
ASIAN PAINTS
CAESARS ENTERTAINMENT

15. As a Digirati, Burberry have demonstrated how a balanced approach on
the “what” and “how” drives real business results
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.

16. There are ‘Digirati’ in every sub-sector
Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
In Australian retail the challenge is that the ‘Digirati’ is often an
overseas company.
* Digital maturity of 391 companies in our sample
DIGITALINTENSITY
TRANSFORMATION MANAGEMENT INTENSITY
BEGINNERS CONSERVATIVES
FASHIONISTAS DIGIRATI

17. Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
DIGITAL MATURITY MATTERS
IT MATTERS IN EVERY SUB-SECTOR
ANY COMPANY CAN BUILD DIGITAL DNA
TAKE ACTION NOW TO
CREATE YOUR OWN DIGITAL ADVANTAGE

18. Transform to the power of digital
Copyright © 2013 Capgemini. All rights reserved.
QUESTIONS?
@BenGilchriest