Retailing now and onwards

7 must-win battles
IMPLEMENT RETAIL EXCELLENCE

2
Find relevant
growth opportunities
in customer journey
management

Seek new ways

of sourcing to
ensure a dynamic
cost base

Identify new
sources of income to
add more value for
the customers

1
Move from
multi-channel to
omni-channel

Reinvent network
planning and store
formats

Transform big
data into customer
intelligence

5
Manage
category growth

The retail industry is transforming rapidly

The traditional industry boundaries are changing manufacturers sell directly to customers, retailers
manufacture their own brands. We see retail in wholesale and aftermarkets grow into independent
industries with standalone service offerings. Todays competition is about agility and time-to-market.
It is about differentiating service concepts and focusing on adding value for the end-user. The
traditional value chain is transforming into customer journey retailing.
Retail is no longer an industry but a function to be pursued by all parties.
From traditional value chain ...

Durables/
electronics

r / service p
tue
ac holesaler rov
f
u
W
rs
fte a

Generate demand for category

Apparel/
luxury goods

End
user

Generate traffic
and create interest

Leisure/
toys

FMCG

Gaming/
entertainment

IT/telco

Sliding sector barriers in retail

For years, vertical integration has been a power game
between manufacturers and retailers. It has also been
a way to kill complexity in the value chain and slim the
processes towards a seamless customer offering across
channels.
Slimming the traditional value chain from manufacturing
to end-usage is the core of building profit and increasing
the end-to-end efficiency and resource utilisation.
Direct customer contact is no longer only a retailers
privilege. Customers choose where and how to purchase.
The need for one-point-of-contact decreases relative
to their online shopping frequency, while there is an
expectation of full transparency across channels.
At the same time, local means global to customers
as supply systems and logistic capabilities open up to
delivery around the globe.
As a result, future market definition is set by the
customer and defined by their behaviour. Suppliers and
retailers have to adjust, and the winner is the one who is
in alignment with the customers needs.

Create awareness
and build attitudes

le

Retailer

er
id

Fashion/
clothing

Ma
n

Furniture/
design

... to customer journey retailing

Facilitate and
activate purhase
Build relations to
ensure repurchase

Functional retailing end-to-end

Retailing is about generating traffic and demand. It is
about influencing as many processes in the customer
journey as possible.
No part of the journey is willingly left to others, and both
manufacturers and retailers aspire to win this game and
gain full control of the end-to-end supply chain.
Retailing today is about being a front-runner on the
technological scene to reach end-users as seamlessly as
possible it is also a matter of sourcing and procuring
at the lowest possible costs.
The winners of tomorrow need to know how to
navigate across different channels and platforms
with a uniform message.
Understand the needs of the customer and tailor
value-adding services to the market place.
Combine the virtual service offerings with the
physical presence throughout the value chain
end-to-end.
The core product of the future is more than an
SKU

 defining new MWBs to succeed in the future

Implement has defined 7 must-win battles (MWBs) which support a customer-centric approach
and new supply chain thinking to succeed in retailing in the omni-channel era.
Customer-centric approach
As customers expect to be recognised across channels
and be remembered for their previous behaviour, it
increases the demand for retailers to move from multichannel to omni-channel delivering one brand to one
customer across channels.

The key to growth lies within the customer. A

comprehensive customer insight sets the direction for
increased customer satisfaction and willingness to pay.
Winning will also require the ability to transform big
data into customer intelligence and make it the focal
point for new service offerings in retailing.

An omni-channel approach forces retailers to be

present and interact simultaneously in many channels.
It increases demands for new structures and processes
internally. To prevent costs from escalating, retailers
must find relevant growth opportunities in their
customer journey management and choose where to
play and how to win to ensure profitable transformation.

New supply chain thinking

Industries, and through them also product categories,
are changing. Therefore, category growth is not just
about doing more of the same in a more efficient manner.
It is about shaping a new category and meeting new
demands in the market. It is about merging industries
and bundling service offerings in retailing. It is about
untraditional thinking in category growth management
and beyond.

The future customers are not loyal to products or brands.

They are only loyal to themselves and seek continuously
to fulfil their own needs. The phrase customer is king
is more true now than ever.
Both retailers and suppliers have to be open to
complementary services to increase the customer
experience, as customer needs do not follow
traditional market definitions. If needed, they have
to build partnerships to deliver on critical customer
requirements. They have to identify new sources of
income to add more value to customers.

Seek
new ways of
sourcing to ensure
a dynamic cost
base

Find
relevant growth
opportunities in
customer journey
management

Move
from multi-channel
to omni-channel

Identify
new sources of
income to add
more value to the
customers

Transform
big data into
customer
intelligence

Reinvent
network planning
and store formats

Manage
category growth

Stores appear in new shapes and are no longer forced

to be stock-keeping or even physical. Formats are
changing and must be flexible to population size and
market dynamics. The brand = format equation is
changing, and retailing is about reinventing network
planning and store formats. In the end retailing is about
moving goods or providing profitable services to the
end-user. New store formats, flexible delivery options,
differentiated offerings and uniform digital presence
force us to seek new ways of sourcing to ensure a
dynamic cost base.

Move from multi-channel to omni-channel

Find relevant growth opportunities

in customer journey management

Identify new sources of income to

add more value to the customers

Transform big data into customer intelligence

Manage category growth

Reinvent network planning and store formats

Seek new ways of sourcing to ensure

a dynamic cost base

Implement Consulting Group

Going from multi-channel to omni-channel

The digital era sets new standards in retailing, and the different players are forced to apply to the
new rules with instant and uniform solutions across channels. The retailers need to build up a new
infrastructure, both in terms of processes and platforms in order to meet customer expectations
in the future.
YESTERDAY

TODAY

TOMORROW

FUTURE WINNERS

Single-channel
commerce

Multi-channel
commerce

Cross-channel
commerce

Omni-channel
commerce

Customers experience a
single touchpoint

Customers see multiple

touchpoints acting
independently

Customers have multiple

touchpoints operating
together

Customers see one brand

and multiple touchpoints
operating together

Retailers operate in
independent technical and
functional silos

Retailers have a single view

of a customer but operate
in functional silos

Retailers coordinate and

operate in a differentiated
manner across channels

Retailers operate in single

channel

Why is it a MWB?
Customers experience the benefits of cross-channel
and omni-channel services such as time efficiency and
higher individualisation in all touchpoints.
Suppliers and retailers need to adapt to the changes
and integrate their services across channels.
Furthermore, the digitalisation is a game changer due to
price transparency, high convenience and fast fulfilment.
The end-users are increasingly aware of the benefits
of direct access to suppliers. Globalisation makes it
possible for them to see the world market as their local
market.

Important issues to address?

We need to increase the value streams and ensure cost
efficient solutions across channels.
We have to exploit our brick and mortar establishments
to optimise the customer experience throughout the
customer journey without compromising on their digital
opportunities and vice versa.
We need to interact in the future to meet customers
demand for individualised solutions and relevance in all
touchpoints.
We need to be prepared to organise differently in order
to interact with customers in different channels at the
same time with a uniform message.

Few retailers or service providers practice an omni-channel approach today. Still we see some very good
examples of seamless retailing where customers are viewed as a single customer and met with a uniform service
offering in different channels simultaneously. These companies often have a strong heritage in viewing customers
as relations instead of transactions.

Danske Bank

SAS

IKEA

Apple

Nordstrom

Walmart

 forces retailers to reorganise

and rethink their service offerings
Key answers
We must have a full understanding of our customers
needs in all touchpoints throughout the customer
journey
We have to identify gaps in our delivery model by
matching our existing service offerings with
customers needs
Our business model has to be adjusted to new
market dynamics, if needed both in terms of
service offerings and execution in all touchpoints
We need to be prepared for change in our
organisational and governance structure and redefine
roles and responsibilities

to meet the demands of a uniform service offering in

all channels simultaneously
We need to find ways to gain the financial power to
ensure full implementation and sometimes be open
to new partnerships to do so
We will have to review our supply structure and store
formats and be open to new and flexible ways to
reach the end-user. No one fits all solution is
expected to win in an omni-channel world
We have to review our KPIs and move from
measuring omni-channel impact on transactions to
measuring on a customer relation basis such as
customer lifetime value

We have to rethink our technological infrastructure

Maturity ladder: Level of customer-centric coordination

Low

Level of
customerHigh
centric
coordination

Digital channels

Physical channels
Lived
Clear common strategic
focus

Low

Leaded
Top management leads
change

Structured

Engaged
Top management
attention

Ad hoc
Not organised
Experiments
No alignment (budgets/
KPIs)
No role assignments
across channels

Management drives
selected initiatives
Pilots
Some common activities
organised

Align budget and KPIs

Defined targets and

performance objectives

Dedicated management
responsibilities

Daily management of
resources/activities

Selected development
projects

Dedicated roles and

responsibilities assigned

Free flow of resources

across channels
Integrated solutions for
marketing, sales and
business intelligence
Organise in crosschannel business units

Channel roles assigned

Targets and commercial
planning across
channels

Cross-channel resources
deployed

Low involvement from

top management

Implement Consulting Group

Identify growth opportunities in

customer journey management

Customer journey management opens up to new thinking in designing service offerings in retailing.
The purchase funnel often starts long before customers appear on the retail scene. The many moments
of truth in customers decision patterns force retailers to be present throughout the customer journey
and adjust their service offerings accordingly.

EL

E C TIO

BU

YI N G

RA

N SPOR

U SAG E

N
H A NEL

R C HIN

L
VA

U AT I O
N

EA

I R AT I O

SP

IN

Customer Journey

FOCUS

Create category
need and brand
attitude

Establish
intention to buy

Drive traffic

Guide to
purchase

Generate sales

Hand out and/or

delivery

Usage
satisfaction

Encourage
repurchase

EXAMPLES
of KSFs
and KPIs

Brand image
measures
Trends/life
cycles
Need fulfilment

Google
searches
Unaided
awareness
Price/value
perception

Web visits/foot
fall
E-mail open
rates
Accessibility

In-stock
metrics
POS response
rates
Mystery
shopping

Targeting
segments
Basket value
Transactions

Delivery lead
times
On time
delivery
Quality in
delivery

Product review
ratings
Number of
customers
interactions
Complaints

Share of wallet
Frequency
metrics
Net promoter
score

Why is it a MWB?
Customers do not buy products they buy solutions
to their problems or needs. Their journey very often
exceeds the defined value chain of suppliers and
retailers.

Our customer promises should address the most

important customer needs to ensure willingness to
pay.

Retailers are under pressure and have to reinvent

themselves to play a more important role in all
relevant touchpoints.

Our go-to-market strategies and communication

tools have to be integrated and seen across all
touchpoints to ensure a uniform message across
channels in all moments of truth.

Suppliers also need to find alternative ways to

interact directly with end-users in order to influence
and strengthen customer preferences in their
decision tree.
The lack of value innovation and differentiation in the
market results in high price sensitivity, which again
puts pressure on margins and cost structures.

Important issues to address?

We have to add true value to customers throughout
the customer journey to increase lifetime value and
profitability even if it exceeds our existing business
model.

We need to define our role in all moments of truth to

ensure purchase and repurchase.

We have to change from product orientation to

solution thinking and build ownership in the
organisation of customer segments and customer
journeys instead of products and services and
reorganise if needed.
We have to revisit our KPIs in all moments of truth in
order to optimise our impact across channels.
The supplier-retailer relationship has to be revisited
and redefined as the industry slides. No one can
afford to stick to the old norms.
It is all about fulfilling customer needs the best way at
the lowest cost in all touchpoints across channels.

 and open up to new sources of income

with value-adding services to customers

It is extremely complex for even the most established brands to be present in all moments of truth
across channels. The diversification in service offerings requires unbundling, complementary services
and partnerships. Retailing of the future is about increasing customers perceived value and even
strengthen their own delivery in the value chain with partnerships, if that is what it takes. Strong
customer relations are the entry ticket to open up to new sources of income in the value chain
through partnerships and thereby increase profit per customer.
Even strong brands open up to partnerships to increase customer value

Nescaf
Disney

Apple

Facebook

McDonalds

Telenor

H&M

Matas
Harley
Davidson

Why is it a MWB?
The overall need fulfilment on core offerings is high,
and it is perceived as difficult to innovate further on
existing offerings to increase customer satisfaction
and basket size.
Market dynamics are under pressure, and it is
increasingly more difficult to maintain pricing levels
of the core products.
Customers willingness to pay increases relative to
the perceived need fulfilment and forces companies
to look into attached products and services.
The agenda is shifting from brand focus to customer
focus, and in order to increase customer preferences
companies seek partnerships.
Many companies have an extensive customer base,
which could be of interest to other companies to tap
into.

LEGO

Important issues to address?

We need to differentiate our services and increase
the relative value perception to disrupt the market
standards and maintain the price levels.
The differentiated services put pressure on our cost
structure and force us to think differently to prevent
reduced profitability.
We have to revisit our branding platform and be
open to partnerships to build new value streams and
new sources of income.
The customers who visit our stores or buy our brands
are our real asset. We need to be adaptive and
innovative to optimise customer satisfaction.
We have to see partnerships as a possibility of
increasing our brand value in the eyes of the
customers and make our customers accessible to a
third party if a partnership increases the total
customer satisfaction.
We have to be open to the cultural impact of
introducing new value streams and to reorganise in
order to ensure implementation power if necessary.

Implement Consulting Group

Transform big data into customer

intelligence management

Retailing generates a lot of data. But generating big data without converting them into customer
intelligence is a waste. Customer intelligence management is about fuelling our sales engines and
optimising our sourcing and processes. It is about increasing our cash flow in the supply chain and
allocate resources to the right focus areas. It is about getting a better picture of our business.

Why is it a MWB?
Digital platforms help retailers to better analyse their
customer relations and lifetime value to optimise
marketing and enhance competitiveness.

A better understanding of what happens when

is a valuable input to business planning and resource
allocation in retailing even in brick and mortar
stores.

New insights enable retailers to move away from the

classic push model to the pull model where pipeline
management and replenishment is the same, which
again has a positive impact on cash flow
management.
Big data are on everybodys lips, but financial impact
only occurs when we turn data into intelligence and
intelligence into action.
Important issues to address?
It is not just about lots of new data, it is about
assessing new insights into our existing data and
developing guidelines and strategies to capture,
analyse and utilise future data.
New insights will develop new ways of doing
business. When increasing the companys
understanding of customer needs and behaviour,
new skills need to be adapted such as dynamic
pricing, personalised recommendations, shopperspecific discounts and adapting customer service to
the customers needs.
It is critical to build interfaces and integrate data to
be able to optimise processes and make the supply
chain more cost effective.
Customer intelligence management is a sales engine
as well as a business model optimiser. How do we
organise and formalise to get the maximum impact?

@
@

TARGET
How Target Figured Out A Teen Girl Was Pregnant
Before Her Father Did
Forbes.com
Every time you go shopping, you share intimate
details about your consumption patterns with
retailers. And many of those retailers are studying
those details to figure out what you like, what you
need, and which offers are most likely to make
you happy. The US retailer Target for example, has
figured out how to data-mine its way into finding
out whether a customer is expecting a new family
member long before they start to buy diapers, just
by looking into their online behaviour.

 and use them as input to manage

category growth

Category management is about optimising service offerings within the category with the objective to
grow the category. But new technologies make traditional categories grow into new categories. The
category disruption has been the entry point for new players in the market, but has also been the
stepping stone for other retailers to new market opportunities and growth.
Why is it a MWB?
Category management has traditionally focused on
optimising profitability within the scope of the
existing category.
As categories see declining growth rates, there is a
need to widen the scope of category management to
optimise the current business and moreover to shape
the future of the category.

Important issues to address?

We need to understand the most efficient growth
levers to ensure scale and ROI on our initiatives.
We need to work cross-functionally and address new
trends and demands in our service offerings.
We have to be open to product cannibalisation if it
brings more value to the customer.

New technologies open up to category innovation

and even make categories grow into new industries.

We have to be open for collaborative solutions and

selectively choose suppliers to drive and finance a
joint profitable growth agenda.

New categories force the existing players to revisit

their business model. It opens up to new players in
the market and causes some to exit the market, if
they do not adapt.

We need to sharpen our innovation initiatives in

branded goods and electronic services to explore the
full potential of category drivers.

Category
growth
strategy
Share gain
strategy

We have to free capacity and kill complexity to be

agile and flexible and to be able to respond quickly
on competitive actions, if needed.

Netflix is an example of a player entering a

category by using new technologies and trends to
grow the category. Renting movies has moved
from a brick and mortar solution (Blockbuster) to
an online service offering, where we can stream
and download everywhere at any time. The
category has grown and opened up for new
players to enter.
Amazon started out as a pure online book store
and is now one of the largest retailers dealing with
all kinds of products and services. They are
servicing their customers on all platforms. They
were one of the first companies to open a market
place for private sellers and other retailers and
introduce a share gain solution to traditional
retailing. They are now building up postal services,
and their lockers are a physical sign of their
presence and innovative category management.

Implement Consulting Group

Reinvent network planning

and store formats

Network and store formats change in order to meet new behavioural patterns, cut costs and increase
customer experience in key locations. As e-commerce tears down local market boundaries, it is time to
reinvent the classic growth formula of distribution, rethinking store formats and network planning
Why is it a MWB?
E-commerce growth shapes the role of the physical
store, and customer expectations of physical stores
are changing.
The cost base and operating models of physical store
networks are challenged, and the distribution path to
growth in many sectors is obsolete.
Local market fragments and the ability to charge
premium local mark-ups are diminishing as the
competitive landscape turns national and sometimes
global.
Retailers need to rethink their physical distribution to
align with customer expectations, reduce costs and
define the role of brick and mortar businesses.

Important issues to address?

We need to ask ourselves to what extent the digital
formats are shaping customer expectations and what
the key requirements for developing the physical
stores are.
We have to look into the key commercial benchmarks

for the sector and define the levers for customer

preferences and behaviour.
We have to decide on store formats and set
standards to deliver true customer value and ensure
brand building impact.
We need store networks to be optimised to enable
growth and leverage competition on target prices
with a competitive cost base.
We need to define the role of the physical stores as
an integrated and unique channel in an omni-channel
and e-commerce-driven business environment.
We have to look into the value aspects of todays
network and formats and set critical standards (no.
of stores, operating costs, expected plan for the
future).
We need to look into the customer journey and set
requirements for each channel.
We have to build metrics to evaluate and reconfigure
our store network and the shape of different formats.
We need to motivate our organisation to be prepared
for adjusting and adapting to changes.

Format and network planning framework

Primary driver
Drive time population
Number of competitors
Distance to other parks
Number of multiples

Pr
i

Easy
access

High
street

Parade
ity
im

r
Va

Secondary driver
Geodemographics
Neighbour outlets
Access public transport

Retail
park

ie
ty

Secondary driver
Competitor floor space
Geodemographics

ce

COMPARISON
Primary driver
Number of multiples
Mix of multiples
Population of area
Pedestrian flow

10

Co
nv
e

en
ni

ce

Secondary driver
Geodemographics
Conforming values

Primary driver
Drive time population
Traffic flows
Visibility
Distance to competitors

BULKY PURCHASE

x
Pro

PORTABLE PURCHASE

CONVENIENCE
Primary driver
Walking distance pop
Geodemographics
Secondary driver
Competitor floor space
Geodemographics

 and rethink the supply chain to ensure

high availability and a dynamic cost base

Omni-channel retailing is not about delivering everything to everybody in all channels at the same
time, but rather to have the right products and services in place for the right people at the right time. It
is also about being in control of all processes and being agile in relation to new trends and demands.
Furthermore, it is about thinking of sourcing and supply in a new perspective to keep a dynamic and
efficient cost base despite the omni-channel complexity.
Why is it a MWB?
The customers demand for instant delivery forces
companies to revisit their sourcing and supply
structure

Important issues to address?

We need to work with differentiated supply of goods
and services and be able to find alternative sourcing
of less demanded goods and services

The supply chain is no longer a chronological end-toend process as customers are not following the same
path to a purchase anymore

We need to ensure transparency in our flow of goods

to optimise forecasting and improve cash flow

Customers demand availability of goods and instant

delivery at the same time, which force both suppliers
and retailers to integrate vertically and gain control
of as many steps of the supply chain as possible

We have to deal with new standards within delivery

times and be open to new ways of sourcing via
sourcing engagement partners and online supplier
communities

New store concepts with virtual display of goods

open up to new kinds of locations, moving online
advantages to a physical environment

We have to rethink supply chain management and

move away from only optimising the existing one and
instead design with structural flexibility to handle
changes even the ones we cannot foresee

Challenged cash flow requires extreme cost focus

and value chain efficiency at the same time as omnichannel retailing makes sourcing more complex

We need to be open to vertical integration or to

entering into close partnerships in order to ensure
full control of the sourcing of goods
We have to focus on structural flexibility in the
supply chain to meet the complexity of
omni-channel sourcing

Yesterday, supply chain was important. Tomorrow it will be mission critical

MANUFACTURER

Cisco is working with a virtual supply

chain. They control the processes from
manufacturing to delivery without having
physical contact with any part of the
product. The products are assembled at
a third party and delivered directly to the
customer.

RETAILER

Tesco traditionally has a strong bond with

their customers. But they are vulnerable if
suppliers change their business model and
deliver direct-to-customer. To preempt
the possible risk, they are going upstream
in the value chain to go into partnership
with key suppliers.

Implement Consulting Group

11

Key questions to ask yourself to address the MWBs

Is your business model built to deliver seamless products and services across channels?
Is your organisation prepared to enter into a new era, and do you have the right people in place?

Do you have an overview of all relevant customer touchpoints in the customer journey?
Do you know what products and services to offer in order to increase customer value?

Are you prepared to share your customers with partners to find new sources of income?
Do you know the industries and/or brands to team up with to increase customer preferences?

Are you utilising the information you have about your customer to generate growth?
Do you have the right systems in place to be prepared for the future omni-channel demands?

Are you addressing the key growth drivers in your category with products or services?
Do you know which innovations will drive the development of your category?

Are your online channels expected to generate sales or are they seen as a complementary to other
marketing initiatives? Do you have a performance model that maximises sales across channels?

Are you in control of your supply chain and able to design a sourcing solution for the future?
Are you prepared to source and supply directly to become more efficient and reduce costs?

For more information, please contact:

Martin Lyngaa Simonsen
mls@implement.dk, +45 2338 0036

Joachim Lupnaav Johnsen

jojo@implement.no, +47 9264 8336

Charlotte Wandorf
cwa@implement.dk, +45 4074 5727

Johnny Ottesen
jo@implement.no, +47 9823 4201

implementconsultinggroup.com