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Who are most ready? – Can online retailers keep up with consumers? Online retail is here to stay – Get the facts straight Multi-channel dynamics – Online presence leverages offline sales More changes ahead – Consumers will go mobile Crossing the boundary – Six barriers to entering online retail dedicated regional approach to Europe

Online retail seminar A perspective on the development of the online channel – March 2011


From the late 90s to today: A great shift in "who are most ready": The consumers or the retailers? The dilemma Consumer readiness/Online Retail (OR) sales/ number of brands online

The traditional retailer's current budgeted/ planned sales in their stores via openings and/or organic sales growth

Time

Will OR really increase consumption? Have the structural changes been taken into account by the BM retailers? When will the increase in OR result in store closures and less store m2? How will the role shift between BM retail and OR? 2

Time


Let's get some selected facts straight. OR is here to stay‌

30% 10% 50% 10% 85% 19%

has OR grown per year the past six years (3x size) is OR predicted to grow the next five years

of the North European population are frequent internet shoppers

of Scandinavian clothes and footwear sales is sold via OR

of Danes between 20-40 years are frequent internet shoppers

of people looking at a product online ended up buying in a physical store

Apparel has become the largest product category in OR

More and more brands sell directly from own internet store

Convenience/"I save time"/Can shop when I want" are the key drivers

6 3

is the number of barriers we have identified among brands and retailers for entering OR


… and multichannel dynamics emerge The cross-channel research to purchase Started product research …

100%

They searched …

Also researched the product ...

Purchased the product …

Online 54%

Only online 33%

Online 23%

Online presence also leverages offline sales

Offline 9%

Offline 46%

Online and offline /offline only 21%

Online 11%

Offline 10%

35% of consumers that started product research online purchased the product offline

4 Source: How The Net Is Influencing European Offline Sales 2009; Forrester Research

Only offline 33%

Online 1%

Offline 32%

Offline and online /online only13%

Online 5%

Offline 8%


From laptop to mobile: The shopping behaviour is predicted to – once again – change dramatically over the next years Percentage of global retail sales in each channel

2007 Catalogue Mobile Online 2% 0% 3%

2016 (E) Catalogue 0% Online

Mobile

Pay with your mobile phone

13%

28%

Scan the bar code instore and find better prices near you

Groupons and social media 95%

Stores

60% Stores

5 Source: Gapgemini 2009: Future Channel Shopping; Bloomberg News; Datamonitor; Forrester Research Inc.

Location based shopping and promotions


Traditional brands and retailers are facing both mental and tangible barriers for entering online retail … Six typical issues and barriers 1

The strategic purpose

2

Assortment and pricing

• Myths and different viewpoints in management team • Heritage of physical stores

• Coherency between online and BM store assortment

• Pressure from price runners or pure players

• Focused or long tail assortment?

• Share of "clearance", promotions and entrepreneurship

• Price transparency (e.g. cross border)

3

Channel conflict

4

Channel integration

• Finding solutions to the "real" strategic issues

• Reaction from wholesale clients and store owners

• Internal channel conflict from BM retail organisation

• One consumer touchpoint feeling (stores, online, club, ...)

• Search online, pick-up in stores • X-promotions • Out-of-stock

5

Fulfilment

6

Organisation

6

• Unclear, but large-impact business case

• Return rates

• From weekly pallets to daily single items

• In-house or outsourcing?

• Location of OR: "under marketing" or separate legal entity?

• Internal governance and entrepreneurial freedom

• New skills and metrics needed


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