2. Mobile Retailing – New Technology & New
Opportunities
Today„s Agenda
I. Current State
II. Trends favoring Mobile Retailing
III. Marketing Strategy Proposals
IV. Technological Impact
V. Financial Impact
VI. Conclusion
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3. Clements is a general merchandise retailer with a
focus on female customers
Clements Company Profile
Clements provides the best possible customer service,
Vision & products, and customer experience in the market
Values Clements gives back to the society, the community and the
environment
20 – 45 year old suburban and ex-urban women with a
Core family income of $45k-80k
Customer
Profile Buys branded, stylish, high quality products at reasonable
prices in a convenient shopping experience
Product
Groups
Clothing & Beauty Personal Care
Jewelry Products Electronics
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4. Financial crisis had a significant impact on
Clements‟ expansion and growth
Financial Highlights
Sales and Store Development Financial Highlights in 2009
$ 18 bn 1200 Net Sales $ 16,921 m
$ 16 bn 1000
Net Income $ 892 m
$ 14 bn 800
$ 12 bn 600
# of Stores 1006
$ 10 bn 400
Gross Square Footage 88 m
Revenues # of Stores
Average Store Size 8,125 m²
► Clements business model is based on strong expansion
► Financial crisis hit the company‟s growth hard
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5. Customer service has been one of Clements major
differentiators and success factors
Current state Customer Service
“We aim to treat every customer fairly and equally with the respect they
Service
deserve and make every attempt to provide them with a memorable
Proposition experience.”
Customer Continuous measurement and evaluation of customer satisfaction based on
Satisfaction post purchase surveys, call center and CRM data
“No hassle” Return Policy
Continuous employee training on customer engagement, new initiatives,
Service and fashion trends
Policies
Clements Card – Loyalty Program
Clements in the Community
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6. Although E-Commerce accounts only for 2% of
sales, its impact is constantly increasing
E-Commerce – Key Performance Indicators
Clements
Sales 2009 $ 360 m
Total Users 2009 300 m
Unique User 2009 60 m
Ø Basket Size $ 80
Conversion Rate 1.5 %
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7. Clements faces certain internal and external
developments favoring mobile retailing
Developments favoring Mobile Retailing
Mobile Retailing
Trends in Customer Economic Downturn
Change in Customer
Behavior & and Impact of
Focus
Preferences Customer Loyalty
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8. Changing environments supported a
reassessment of the customer focus
Change in Customer Focus
Strong commitment to family & community
The modern Increasing interest in fashion, lifestyle and technologies to leverage family
Customer Focus
Home Maker recognition and social contacts
Buying patterns influenced by family & friends
Current
Chief breadwinner and decision-maker both at home and at work
The Business-
High affluence to technology due to strong usage at work
Mother
Willing to spend the earned money in her spare time
Increasing wealth and desire for social recognition
Customer Focus
The Latina
Additional
Increasing interest in adapting American standards
The University Early influence on young customer groups as an essential factor to ensure
Student future business
8 Source: Clements Visioning Proposal
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9. Latinas and college student will further
strenghten Clement‟s customer basis
Additional Customer Focus Backup
The Latina The College Student
Purchasing Power Growth
“Reaching college students is a
investment into the future.
2008-2013
If you don‟t win them
2000-2008 now, they are gone.”
Matt Stautberg, Macy’s
0% 50% 100%
Non-Hispanic Hispanic
Hispanics currently account for 15.3% of the Nationally, students spend more than $5
population billion a year on clothes and shoes.
Their purchasing power is the strongest By the time they reach college, full-time
increasing of all groups in the US which students represent over sixty billion dollars in
provides great opportunities for Clements buying power
future
9 Source: Selig Center for Economic Growth, University of Georgia; Expert Interviews
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10. Technology and the demand for value
added services changes the market
Trends in Customer Behaviour and Preferences
Spread of Mobile Phones
Technology Driven
Innovation
Mobile Social Media
Information as a Service
Evolution of
Social Media
Self-Service is better Customer Service
Customer advice Customer
Value Added
Customer Service
Geo-Tagging
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11. Increase of loyal customer base as key
strategy to mitigate economic downturn
Economic Downturn and Impact of Customer Loyalty
Non-grocery retail sales development Basket Size
6,00% Illustrative
4,00%
2,00%
0,00%
2005-06 2006-07 2007-08 2008-09
-2,00%
-4,00% Loyal Customers New Customers
► Financial crisis hit the non-grocery retailing market hard
► Increasing competition makes differentiation a key success factor
► Value added services to increase loyal customer base allows turnaround
11 Source: Euromonitor – Non-grocery retailing USA
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12. Clements needs to react on recent developments
by integrating mobile and C2C services
Adjusted Marketing Strategy
Retail & Marketing Channels Marketing Methods
Store B2C
Consistent
Strategy
Internet C2C
Mobile
Clements must include the growing mobile channel in its portfolio
Customer 2 Customer contact is increasingly important and needs to be considered
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13. Mobile retailing offers diverse
opportunities for value adding services
Mobile Retailing – The 4th Distribution Channel
Mobile Retailing
Mobile Marketing Mobile Commerce Mobile Operations
I. Advertisement & Payment I. Mobile POS
II. Customer Service II. Workforce
III. Product Management
Information III. Internal
IV. Loyalty Programs Communications
V. Promotion & IV. Mobile Approvals
Coupons
Focus of this strategic evaluation
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14. Development of a mobile application is a
key success factor
Clements Mobile App - Overview
Value added services to increase shopping experience
and thereby basket size and shopping frequency
Clements Home
Increased customer information and thus future CRM
Stores & Clements
More In-Store
Coupons
C-Card
& More
Partnerships with GoogleMaps, FourSquare & Wildcard
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15. Decreasing information asymmetries drives
more customers to Clements POS
Clements Mobile App – Stores & More
C
C
Home
Stores & More Check availability and reserve products
Shopping List
Store inventory synchronization
Clements In-Store
C-Card Store Infos Locations and store hours
Coupons & More
Finds store nearby via address or geolocation
Directions
C Opens directions via GoogleMaps
Home Stores In-Store C-Card More
Drives more customers to POS
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16. Diverse product information allow increase
in basket size and shopping experience
Clements Mobile App – Clements In-Store
a) Check availability & order possibility
b) Product Matching
i. Outfit Idea incl. customized coupons
QR Product Info
ii. Color Identification
Home
c) Clements Runway & Closet
Stores & More d) Additional Pictures, Runway videos & Infos
Clements In-Store Up-Selling Customer experience
Increase of non-stock sales High-fashion branding
C-Card
Coupons & More Locates items in the store regarding the
Spirit Shop chosen/closest university
C Includes Clothing & Accessories
Home Stores In-Store C-Card More
Attracts university students
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17. An integrated loyalty program is a key
measure to reach a turnaround
Clements Mobile App – Clements-Card
a) Mobile registration, identification, points
redemption and customer profile management
Loyalty Program b) Wish Lists and Gift registries (social network
Home integration)
Stores & More
c) Wildcard app integration
Clements In-Store Increased participation Customer decision data
Increased customer satisfaction Increased redemption
Clements-Card
No wallet share
Coupons & More
Home
C
Stores In-Store C-Card More
Clements Card
Anna Beautiful
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18. Mobile coupons are cheaper, more
customized and highly successful
Clements Mobile App – Coupons & More
Home
Use data tracking and CRM to create customized
Stores & More
Coupons coupons depending on buying habits, time, weather
and other influence factors
Clements In-Store
Clements-Card
Increased coupon redemption
Coupons & More
Increased impulse buying
C
Home Stores In-Store C-Card More
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19. Social media allows the controlled leverage
of customer to customer marketing
Use of Social Media
Clements Fan Page with daily status about exclusive discounts and “what‟s hot”
Monitor customer feedback and respond to negative postings immediately
Gain fans by advertising in store and including Facebook logo on all print/electronic
publications
“Tweet” daily (gradually more often) about deals/items in stock
Hashtag (#) with Clements name to become a “trending topic”
Gain followers by advertising in store and including Twitter logo on all print/electronic
publications
Add Geolocation Tags for Clements
Encourage shoppers to check in through their Foursquare account
Rewards for the “mayor”
Shop-Alerts – Delivers SMS when customer reaches shop “geo-fence”
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20. Research indicates increasing influence of
social media on buying habits
Recent research results Backup
“If you had to choose one information source
Facebook and Twitter Addicts
for a purchase decision, what would it be?
Almost 40% of women aged 18 to 34 admit they
Mail from a company
are “Facebook addicts”
Reasons for moms following business on Twitter:
TV commercial
To get deals for cheaper
products
Print advertisement
Because they are
Consumer review or already customers of the
rating business
To find out about the
Recommendation from company's products or
friends/family services
0% 10% 20% 30% 40% 0% 20% 40% 60% 80%
20 Source: North American Technographics; Lightspeed Research
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21. Redesigning its stores allows Clements to
leverage sales by customer experience
Store Layout Redesign
2
In-Store Music
1 3
New Colors Use different styles and Announcements
speeds of music to leverage
shopping experience Use speaker system to
promote deals, social
networking events and other
initiatives
4 5
Window Displays Boutique Design
Use large windows at each Create a personal, Use dividing walls and low
entrance filled with mixed exciting store ceilings to create different
media and art to inspire environment boutiques
customers and create Design boutiques
excitement individually reflecting the
products for sale
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22. 22
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23. Limited significance of mobile commerce
due to high cannibalization rate
M-Commerce
Non-store & catalogue retail sales
100%
1% 8%
80%
60%
100% 92% M-Commerce
40% Mobile commerce with
E-Commerce increasing influence on
20% retailers
0%
2009 2015f However market growth
currently mainly caused by
cannibalization of E-
Commerce offers
“Establishing mobile commerce Later reassessment
creates high upfront and maintenance recommended
costs, however, sales are mainly a
cannibalization of the
retailers own E-Commerce
Matt Stautberg, Macy’s
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24. Mobile payment is a significant future trend
Clements has to be aware of
Mobile Payment
Benefits Costs
The mobile payments market for physical goods Upgrade of current systems will cost at least
is forecasted to be worth $100 billion by 2014 $200 per check-out
50% of the smartphone owners have strong High functionality only with NFC phones given –
interest in having mobile phones replace the however by 2014 only 1/6 of the smartphones in
functionality of their credit cards use will have NFC technology
Mobile payment significantly decreases check-
out time and might reduce check-out personnel
Higher security for customer as she does not
need to carry credit cards anymore
► Mobile payment will offer more convenience to the customers
► Technology still improving
► Considering a first-mover advantage Clements should reassess mobile
payment with its next technology upgrade
24 Source: Juniper Research; Marconi Pacific
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25. Cross-channel advertisement supports spread of
new value added customer services
Advertisement
Television Advertisement
Nationwide TV commercials to introduce
Clements new value added service approach
Adapt change in customer base to commercial
design
Internet & Mobile Advertisement Test the new
Clements Mobile App
Announcements and advertisements for new
mobile application on the Clements website
Direct mobile customer advertisement to
increase spread of new mobile service platform
Place target group customized ads on social
networks
Consistent cross-channel advertisement to increase penetration and to
spread innovativeness and customer service approach of Clements
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26. A strong and consistent cross channel approach
enables broad customer penetration
Cross Channel Integration
Stands with info about promotions and “QR
QR Code
codes” or other new ventures located
Stands strategically throughout the store
Store
Posters within the dressing rooms
Dressing Room announcing mobile and social media
initiatives and provide QR codes
E-Commerce
Buying or reserving products on the internet
Special Check-
or mobile allows customer to pick up their
Outs products at special check-outs in the store
Mobile
All mobile features have to be adopted on
E-Commerce
the website and social media entries have to
Adjustment be linked
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27. Mobile application should be based on
technological circumstances in the market
Customer Technology and mobile IT strategy
Customer Technology Special purpose
mobile software
US Smartphone Spread
Smartphones
Thin-Client
21% Architecture with
adapted Apps for
79% Non- Apple OS and
Smartphones
Android
Smartphone OS in the US
Use of ARTS XML
RIM OS and OpenID
Apple OS standard
Windows Mobile
Android
Other Integration of QR
Code Reader
27 Source: comScore, Tech Crunchies
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28. High IT integration allows a maximal leverage of
the benefits of new services
IT-System Map Backup
Management
E-Commerce
CRM Information
Infrastructure
System
Supply Chain Mobile
ERP
Management Infrastructure
Enterprise Service Bus
► Mobile Infrastructure becomes the 6th IT area in the organization
► IT systems throughout the organization have to be increasingly
integrated to fully leverage the benefits of the technology
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29. Despite significant upfront investments the project
already has a one year NPV of $4 million
Financial Impact Estimate
Benefits Costs
Added value services and an Programming and design of the
$ 5.0 m
increase in Clements loyal mobile app
customer base lead to an $ 56.6 m
estimated store sales increase
of 0.9% Technology $ 8.0 m
Store Layout Redesign $ 40.2 m
Increase in non-store service
and penetration increases $ 15.5 m
online conversion rate by 0.2% Advertisement and other costs $ 10.0 m
Total Benefits $ 72.1 m Total Costs $ 63.2 m
The one-year NPV of this project is $ 1.18 m (WACC = 12%)
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30. Associated risks can be mitigated by several
measures across the development
Risk Assessment and Mitigation Strategies
Risks Mitigation Strategies
Rental of smartphones in-store to
Lack of customer technology
enable customer experience
Keep it simple
Lack of customer understanding of
Employee training and workshops
new services
Hotlines, help-pages & In-store
explanation posters
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31. Mobile retailing offers great opportunities for
Clements
The Big Picture
Marketing Measures Technology
Clements
Mobile App
Social Media
Initiative
Financials
$80 m
$60 m
Store Layout $40 m NPV
Redesign $20 m $ 1.18 m
$m
Benefits Costs
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32. Thank you all for providing this amazing
opportunity to compete!
Acknowledgement
Jerry O‟Brien, University of Wisconsin-Madison
T
H Angie Badura, University of Wisconsin-Madison
A
Sarah Conrad, NRF Foundation
N
K Matt Stautberg, Macy‟s
John Kubo, Wetseal
Y
Kristen Malavolta, Toys R Us
O
U Amy Parker, Sears
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33. Clements Inhouse Consulting employs experts
across all functions
Consulting Team
Lisa Duckrow Caitlin Clements Michael Stallsmith
IT Expert Store Operations Expert Customer Service Expert
Sara Beth Sullivan Timo Trumpp Trevor Hinske
Marketing & Sales Expert Finance Expert E-Commerce Expert
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