Mobile disruption in retail.

Transcription

1 Mobile disruption in retail

2 Agenda Page 1 Mobile overview 1 2 Global Trends 5 3 Mobile payment perspective 18 4 The integrated mobile 27 5 Retailers are having to change 31

3 Mobile overview 1

4 Section 1 Mobile overview Customers are of course doing things differently Consumers are doing things differently Smart phones really are rather smart New Business models 10% of internet traffic is mobile (vs 1% in 2009) We use the web (and increasingly the mobile web) as integral part of our shopping process to research, ask advice and search for better prices we also ask our friends as well as strangers c. 1.5m applications for iphone and Android We use them for work, play, shopping, travel & banking They know where we are, and they are getting smarter Square (founded in 2009), processing payments worth $10 billion annually These factors produce new business models that did not exist 10 years ago, that disrupt traditional businesses, from new ways of shopping through to new payment systems Source: Apple, Google, Square, KPBC 2

5 % UK Active Adult Population Section 1 Mobile overview Customers really are doing things differently Decade of change Traditional Consumer Transitionals Digital Natives Source: UK Up to 2010 Traditional consumer behaviour is the majority Transitional behaviour is the majority 2019 and beyond Digital native behaviour dominates 3

6 Section 1 Mobile overview This has also led to a change in customer expectations Customers expect more Customers are connected Customers are informed Customers have choices Customers value experience Consumers compare experiences across industries and think if I can do that on Amazon, why can t I do this with you? Consumers are ever more digitally connected and expect the same from businesses Consumers are better informed than ever and trust the views of their peers Customers expect more customisation of products and greater opportunity to do things for themselves Customers value the quality of the user experience just the same as they value the product itself 4

7 Global Trends 5

8 Section 2 Global Trends There are a number of key growth trends in mobile Smartphone penetration Mobile Advertising Growth Mobile Payment roll outs Use of Mobile Data/Analytics Smartphone penetration is well over 50% in most mature markets with Smartphones now shipping more than feature phones The use of SMS, MMS, Coupons, vouchers, display and in app advertising taking increased share of add spend Mobile Payments platforms are continuing to roll out from Banks, Retailers, Telecoms operators, and new entrants Mobile data being used increasingly to support business decisions and marketing especially through the utilisation of location based information 6

9 Section 2 Global Trends Worldwide smartphone sales to end users, split by operating systems United States China 21% 72% 39% 55% Japan EU 5 16% 47% 49% 70% 29% 62% Android ios Blackberry Windows Other Source: Kantar, Gartner Australia 7

10 Section 2 Global Trends Smartphone penetration is reaching critical mass, solving a key supply-side issue in m-commerce Smartphone penetration (per total mobile handsets) 60% 50% By 2014, there will be 133m smartphone users in the United States 40% 30% North America Western Europe Nordics will exceed 90% Smartphone penetration by % 10% 0% Global Asia Pacific Latin America In Q2 2012, 56% of new phones shipped in China were smartphones Source: ComScore 2012 Mobile future in focus, sina.com, emarkerer 8

11 Section 2 Global Trends The role of mobile is growing across a number of aspects The effect of mobile vs. online ads on ad awareness Global mobile advertising market ($ billion), Online +4.0% +17.3% Mobile Source: MillwardBrown Global mobile analytics market ($ million), Source: Frost and Sullivan Source: Entertainment and Media Outlook 9

12 Section 2 Global Trends Mobile is also set to transform the advertising market if inventory scale and consistency can be delivered TV Advertising Outdoor Advertising Outdoor Advertising +7% TV is still the dominant form of advertising with 38% share +5% Outdoor advertising has remained stable at 6%-7% market share and is expected to remain that way Newspaper Advertising +2% Decline in newspaper advertising from 25% to 19% market share, expected to decline to 14% by Magazine & Directory Advertising Internet Advertising Mobile Advertising +3% +15% +34% Over last years, magazines and Directories have seen YoY revenue decline of c 5% Internet now has a market share 18% compared to 11% in 2007 Mobile internet advertising spending is due to grow 34% annually until Source: Entertainment & Media Outlook

13 Section 2 Global Trends The global mobile internet advertising market in 2016 will be worth $24.5 Billion Source: Entertainment & Media Outlook

14 Section 2 Global Trends Mobile Advertising revenue 2017 $14.1bn North America $4.1bn Western Europe $0.2bn Middle East and Africa $0.3bn Central and Eastern Europe $8.7bn Asia Pacific $27.4bn Worldwide Total $0.06bn Latin America Source: Entertainment and Media Outlook

15 Section 2 Global Trends Mobile Advertising Revenue in Europe 2017 $4.4bn Overall European Total Top 10 European Markets $233m Denmark $2.6bn UK $288m $195m $65m Spain $73m Belgium France $92m Sweden Germany $282m Italy $64m Finland $82m Turkey $177m Russia Source: Entertainment and Media Outlook

16 ($ billions) Section 2 Global Trends Majority of growth in mobile advertising is expected to come from North America, Asia and Europe Mobile Internet Advertising Forecast % of global Mobile internet advertising revenues by region Mobile advertising is seeing a continued growth across both search, Display and SMS /MMS Global Trend (CAGR = 34%) Europe MEA / Latin America Asia Pacific 10 North America North America Asia Pacific EMEA Source: Entertainment & Media Outlook Growth in Asia & North America has been significant, with considerable growth in Europe. The total global revenue was $5.2bn According to emarketer the Nordics will see a 70% growth in Mobile advertising in

17 Section 2 Global Trends Mobile payments is now growing in a number of forms Mobile payment users by region, 2013 Value of global mobile merchandise payments, $166bn 5.7m 46.5m 29.7m 2.3m 10.4m 70m 102m $49bn Source: Gartner, Analysis 15

18 Section 2 Global Trends Digital advertising, and payment providers are aggressively perusing mobile ad and payments Introduces iad, a mobile advertising platform for ios Launches Wallet which stores cards and offers Launches PayPal Here its own mobile payment solution Samsung Wallet launches as a rival to Apple s Passbook ios 7 without NFC but with ibeacon ebay buys online payments firm Braintree for $800m Square launches its mobile payments solution Google buys the mobile ad firm AdMob Samsung launches its AdHub acting as an ad exchange Apple introduces Passbook, stores coupons and tickets Acquires mobile advertising start-up MoPub for $350m Announces 40% of ad revenue from mobile 16

19 Section 2 Global Trends The global mobile web analytics market in 2016 will be worth* $201 Million * Projections do not include mobile app analytics, spatial analytics, data warehousing and other mobile big data technologies Source: Frost & Sullivan Analysis of the Global Online Analytics Market 17

20 Mobile payment perspective 18

21 Section 3 Mobile payment perspective International NFC mobile payments developments Since 2008 there have been 0ver 200 mobile payment schemes across more than 50 countries North America PayPal and Google have been through extensive trials ISIS has been led by MNO working with Retail Banks, but still remains in trial MCX has been a announced as a retail led consortium Square, Apple, and Amazon are extending into mobile payments Europe UK MNO JV has been cleared by the EU, and Piloted as Weve in Mid 2013 Pilots are being run across most countries, mainly driven by MNOs, however some JVs have failed to reach agreement but this model is expected in many European countries during 2013/4 South America Brazil is by far the largest market with a number of recent entrants including, HP & Nokia, PayPal, and incumbent MNOs Telefonica has partnered with Mastercard to launch wanda across a number of south American countries. Middle East & Africa The middle East and North Africa have a range of operator or partnership based. South Africa is due to see the launch of mobile wallet services in 2013 Asia Pacific Korea and Japan have taken the lead; mobile payments are widely used in these markets A consortium in Singapore consisting of banks, MNOs, mass transit and NFC technology launched earlier in

22 Section 3 Mobile payment perspective We believe that there are 5 core operating models for m-payment market development Bank Networks Innovators Retailers Mobile Operators Collaborations Retail banks/issuers Associations & network Alternative solution providers Retailers Stand-alone merchants Mobile Network Operators (MNOs) MNOs Banks/issuers Associations Other parties Builds on existing network and deploys mobile payment applications or devices to customers, via bank partners Technology-based solution that leverages existing and complementary mobile assets to develop mobile payment capabilities Merchants create independent, closed-loop payment applications that are interoperable with existing POS technology Mobile operator acts independently to deploy mobile payment applications and value added services Collaboration among banks, mobile operators, existing payment networks and other stake-holders in the mobile value chain 20

23 Revenue from processing the mobile wallet payment Section 3 Mobile payment perspective Which opportunities are motivating players Bank Networks Protect their customers Protect transaction revenues Build new experiences Key players believe marketing revenue will be of greater value than payment revenue... Innovators Acquire share Expand market Marketing revenue Retailers Customer experience Reduce payment costs Marketing opportunity Mobile Operators Protect customers Increase Customer offering Marketing revenue Ambition Revenue from marketing to customers via mobile wallets 21

24 Section 3 Mobile payment perspective The mechanism for payments is still emerging with NFC still being the most likely Near field communications (NFC) Bar and QR Codes Facial Recognition Low Energy Bluetooth NFC has become established as the contactless standard, with both retailers and payment systems rolling out extensive systems, but yet to see mass adoption in most markets Has been used by many as the stop gap between other payment mechanisms, very likely to be replaced when other more efficient systems are adopted Trialled by a number of organisations, but still questions remain about feasibility and security The new kid on the block using a range upto 50m, and likely to be part of IOS 7, apple seem to be using these as an alternative to NFC 22

25 Section 3 Mobile payment perspective For Retailers to develop their own wallet platforms, it requires development of complex system Illustrative map of stakeholders in the M-Commerce ecosystem Trusted service Manager Retailer Mobile Transactions Application developer SIM & payment software Payment processor Ticketing & event manager Transit operator Acquiring bank Chip & handset OEM Issuing bank Loyalty services Smart data Payment network Data management platform Coupon issuing service Publisher Mobile Network Operator Data analytics services Operating system & device Ad exchange Location services Trading Desk Supply side platform Demand side platform Mobile Advertising Advertiser / agency Ad network Media Buyer 23

26 Section 3 Mobile payment perspective Mobile is already being disruptive but we believe mobile payments will be transformational It s really quick to pay for things I receive relevant offers when I am near my favourite stores I can browse relevant offers in my mobile wallet I can send gifts straight to my friends mobile wallets I can get my receipts on my phone I can pay for goods up to 15 with a quick tap I can store my favourite loyalty cards on my phone I just enter my PIN for payments over 15 I can choose which card I pay with, and coupons will be applied automatically 24

27 Section 3 Mobile payment perspective What benefits will digital wallets bring to retailers? Data will drive product development, supply chain forecasting and individually targeted offerings Improved customer insight Access the growing market 8% of adults buy through their phone in the UK, 21% intend to in the future Sale cost savings Repeat Purchase Brand Awareness Marketing cost savings Electronic receipts, reduced checkout staff Mobile advertising enables reduced TV & display content Reduced cash management requirement Reduced cash handling in store resulting in cost savings and improved security Servicing Sale The Customer Lifecycle Product Selection Product Search/ Compare Target specific customer segments Leverage MNO/financial institution customer segmentation insight Faster payment, shorter queues Enhanced customer experience More efficient cross-sell Relevant promotion/recommendation push to mobile at point of sale Location-based advertising GPS recognition of customer location 25

28 Benefit Value ( ) Section 3 Mobile payment perspective What justifies the move to digital wallets? Future Return Early return Store Efficiency Cash Replacement Improved Security Targeted Marketing, Offers & Loyalty Improved Customer Insight Total Benefit 26

29 The integrated mobile 27

30 Section 4 The integrated mobile We think the opportunity is greatest for those who capitalise on the strengths of mobile Advertising & Loyalty Deploy content through channels including MMS/SMS, App, Loyalty, Coupons, and Display. With the use of location data and history Using analytics and optimisation to maximise possible inventory whilst maintaining customer relevance, and channel usage Transactions and Interactions Use a closed loop mechanism to measure outcomes, and react in real-time Big Data Combine data from transaction, response, redemption and purchase history with MNO data including permissions, location, call patterns, web logs and interests 28

31 Section 4 The integrated mobile Far more than just an app Mobile payments Mobile Sites Apps In Store Wifi Location Based Ads Mobile POS Mobile coupons/loyalty Physical triggers 29

32 Section 4 The integrated mobile Most leading examples only pull a few mobile capabilities together Mobile Payment and Loyalty Location based Marketing Mobile Coupons & Vouchering Gamification Starbucks Meatpacker shoes Weve Coca cola choc campaign Content Triggers Store Experience Augmented reality Duel Screen Advertising Tesco F&F Burberry IKEA Dominos Pizza 30

33 Retailers are having to change 31

34 There are four transformations within the retail environment Content in Store Mobile as the trigger Transforming store and staff Transforming data, Marketing and loyalty Utilising technology to place content in the physical store The device becomes the mechanism for linking customers online and instore Mobile point of sale will change the in store experience Loyalty, rewards and marketing through the device Retailers are using mobile technology to bring digital content into the store environment via mobile devices Mobile is being used to build a stronger relationship between online and offline behaviour Mobile points of sale on tablets and smart phones are allowing retailers to put sales people back out on the shop floor Using contactless mobile redemption, multiple mobile channels and contextual data 18

35 From Push interactions to Pull o r participations Section 5 Retailers are having to change The old success stories and leaders may not be the leader over the next decade 3 1 Organisations with a limited insight of customers, or the ability to use knowledge will loose relevance, and fail to meet the needs and changing habits of customers (Jessops, HMV, Curry's) Digital channels including mobile, will move many organisations into this space (currently occupied by Tesco), where Insight is used, but to drive decision making which is ultimately around price, margin, and profit Low Some Mostly Everything Customer Insight 3 The future winners those organisations that can use insight to help customers deliver outcomes based on value exchange 33

36 Section 5 Retailers are having to change What are the big considerations Customers With customers becoming visible through mobile, organisations are able to connect customers through both in store and online interactions, and are beginning to develop new customer strategies to meet with changing customer behaviour. Insight & Data Retailers who have limited insight and customer capabilities are expanding the function, to be able to manage customer data and behaviour coming from a range of new digital channels. Marketing & Loyalty Marketing & Loyalty is starting to change dramatically, and is becoming more complex. Particularly as a result of location and contextual marketing which required more complex orchestration than traditional marketing and loyalty. Experience Customer expectations are changing, and retailers are investing in their core systems in order to get the basics right, such as previous orders, stock availability and order tracking all through multiple platforms Capabilities Mobile is not adding a channel, but breaking through them, which means that the core capabilities of retail business are shifting away from channels into what we call a Total Retail model, which is about aligning the operating model around the customers, and not around the channel 34

37 Section 5 Retailers are having to change Summary There is some first mover advantage To really work, it needs value exchange It needs to add a new experience Enhance not replicate Utilise the strengths of mobile Channel strategies need to change Some retailers need to build capabilities to get mobile to work Being Mobile is just part of being a retailer 35

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