Omnichannel IS: A commitment to delivering a seamless, compelling and personalized shopper experience, regardless of where or how your customer is engaged with you

1. Shoppers Disrupted:
Retailing Through the Noise
An Omnichannel Point of View
April 2015

2. © 2015 IBM Corporation2
Thinking Omnichannel
A Disrupted Industry
The Shopper’s Perspective
The Retailer’s Imperatives
How IBM Can Help
Agenda

3. What is Omnichannel?
3.
Omnichannel IS NOT:
• A software or hardware solution
• A marketing or CRM initiative
• A new app or website
Omnichannel IS:
• A commitment to delivering a seamless, compelling and
personalized shopper experience, regardless of where or how your
customer is engaged with you
• A mindset; a cultural transformation that permeates every facet of
the retail enterprise and associated ecosystem
• A catalyst for endless innovation, demanding agility
• Unwavering and becomes embedded in your brand’s DNA

4. Where are you on the Omnichannel spectrum?
4.
Single Channel Multi-Channel Cross-Channel Omni-Channel
• Consumers experience a
single type of touch-point
• Retailer has a single type of
touch-point
• Consumers see multiple
touch-points acting
independently
• Retailer’s channel
knowledge and operations
exist in technical & functional
silos
• Consumers see multiple
touch-points as part of the
same brand
• Retailer has a “single view
of the consumer” but
operates in functional silos
• Consumers experience a brand,
not a channel within a brand
• Retailer leverages its “single
view of the consumer” in
coordinated and strategic ways
across the enterprise
The Legacy The Nirvana

5. © 2015 IBM Corporation5
Thinking Omnichannel
A Disrupted Industry
The Shopper’s Perspective
The Retailer’s Imperatives
How IBM Can Help
Agenda

6. © 2015 IBM Corporation
The biggest trend in retail today is “DISRUPTION”
6.

7. Mobile is at the epicenter of change
7.
The average mobile phone
user checks their phone
150 times
a day
80%of apps are
used once then
deleted
In 2015, 2/3 of the
workforce will own a
smartphone and
40%of the
workforce will
be mobile
5 petabytes of data
are generated every day
by mobile phone
subscribers around the
world
By 2020, 90%of new
passenger cars will have
some form of vehicle mobile
platform, up from 10% in
2012

8. 8.
Social media has become the great influencer
Influencers of purchase behavior
Source: IBM IBV 2013 survey, n= 30,554. Q40 decision influencers

9. 9.
Do you recognize these faces? You should…they’re Millennials
• Ages 13-32
• Over 80 million strong
• 25% of the US population
• Over $200 billion in annual
spending power
They are the future of everything and
they are changing the face of the
Retail industry

10. Data is overwhelming and even crippling some Retailers
10.
32%
30%
15%
12% 12%
It’s a whole new
way of thinking
about the value
in data that
requires new
analytics and
leverages some
new
technologies
It’s an
extension of
existing
analytics and BI
practices suited
for data that is
larger or faster
than we are
used to
The term “big
data” is very
confusing; not
sure what it
means
It’s a bunch of
hype with little
substance and
few new ideas
It’s about new
technologies
that allow us to
handle more
data
More than a quarter of Retailers and CPG brands are
confused by, or dismissive of Big Data
Source: Forrester’s Business Technographics Global Data And Analytics Survey, 2014 Base: 65 retail IT decision makers

11. Cyber crime has become the largest security challenge for Retailers
11.
50%drop in retail
cyber attacks since
2012
61 million records
stolen from retailers in 2014;
a 43%
increase since
2013
• Hackers are becoming more pointed and sophisticated, using new
techniques to obtain massive amounts of confidential information
• Perpetrators are able to impact a far greater number of victims with
fewer attacks
Source: IBM MSS Research and Intelligence Report January 6, 2015

12. Meet the biggest disruptor
12.
Dear Amazon Shareholder,
…Look inside a current textbook on software
architecture, and you’ll find few patterns that we
don’t apply at Amazon.
We use high-performance transactions systems,
complex rendering and object caching, workflow
and queuing systems, business intelligence and
data analytics, machine learning and pattern
recognition, neural networks and probabilistic
decision making, and a wide variety of other
techniques.
In 2012, when asked if Amazon would develop
brick-and-mortar stores, Jeff Bezos said he
would love to, but only if Amazon had a "truly
differentiated idea.“

13. The model for “customer experience” now transcends Retail
13.
“The last, best experience that anyone has
anywhere becomes the minimum expectation for
the experiences they want everywhere.”
Paul Papas,
IBMiX Global Lead

14. © 2015 IBM Corporation14
Thinking Omnichannel
A Disrupted Industry
The Shopper’s Perspective
The Retailer’s Imperatives
How IBM Can Help
Agenda

15. From years of disruption, shoppers have emerged with clear, new messages for
retailers
15.

16. 16.
“Anticipate and service my shopping needs”
Use what you know about me to deliver a seamless and
interconnected engagement regardless of where I am shopping
“Make it convenient and easy to interact with you”
Consistently capture my history and profile and deliver relevant
information and services to me through my preferred channel
“Be there when I need you, in real time”
Empower me with real-time updates, proactive communications
and choices before, during and after I shop
“Remember all of our interactions”
Understand me and my preferences through our past
interactions
Shoppers have little interest in retailers that don’t meet their expectations

17. Source: IBM IBV surveys 2013- 2015, n= 78,163 Q:21: Last Purchase Channel
% Last purchase by channel across
examined categories
14%
86%
28%
72%
2013 2014
Store
29%
71%
2015
Digital
Affection for online shopping is still growing
1
17.
Does Not Describe Me
Neutral
Describes Me
2014 2015
32% 30%
28% 27%
40% 43%
% of respondents agreeing “I prefer to shop online”

18. Preferred Fulfillment Method
2011 2015
Purchase at store and leave store with the item 60% 49%
Purchase online, have delivered 23% 36%
Purchase online and pick up in the store 6% 6%
Purchase at store and have it delivered to my home (same day) 12% 8%
Online shopping is changing the perception of
convenience
Source: IBM IBV surveys 2011 & 2015, n= 59,124 Q:32: Preferred fulfillment method 18.

19. Shoppers are more open to communicating with preferred retailers
24%
Location
Source: IBM IBV surveys 2014- 2015, n= 59,054 Q:14 Willingness to share with trusted retailer
28%
32%
Social Handle
38% 38%
Mobile for
Text
42%
64%
Email
64%
2014 2015
% of respondents indicating they would share contact
information with a trusted retailer
19.

20. Shoppers are willing to do the initial work as long as they get something
in return
20.
Average time willing to spend in set up = 20 minutes
are willing to put in time with a retailer to set up
preferences, with the expectation that offers and
communications will be personalized9 out
of 10
Use my prior purchasing to
offer me promotions
59% 51%
Use my prior purchasing
to recommend new
products
Invite me to special events
49%
Involve me in new product ideas
44%
Source: From Transactions to Relationships: Connecting with a Transitioning Shopper Study (n = 2598, US Non-Grocery shoppers). IBM IBV Retail (2013).

21. Shoppers want to be able to “control” how and when they receive personalized
communications
Offers
personalized
promotions to
me while I am
in the store
Source: IBM IBV surveys 2014- 2015, n= 59,054 Q:41OTH_8,10,11 NonGrocery Capabilities
Provides me
the option for
“on demand”
personalized
promotions
when I am in
the store
Provides me
the option for
“on demand”
personalized
promotions
when I am
online
30% 30%
40%
44% 45%
48%
2014 2015
21.
% of respondents indicating the ability is
important in the selection of a retailer

22. Shoppers expect digital benefits to cross over into the physical store
Source: IBM IBV surveys 2014- 2015, n= 59,054 Q:41OTH_8,10,11 NonGrocery Capabilities
60%
say being able to see whether or not an
item is in stock before going to the store is
important in the selection of a retailer
22.
46%
say the ability of a sales associate to solve
an out-of-stock issue via a mobile device is
important in selecting a retailer
41%
say a sales associate’s ability to access
purchase history/preferences to offer
personalized promotions is important in the
selection of a retailer

23. Shoppers are looking past the sales associate to get product information
Source: IBM IBV surveys 2011 & 2015, n= 59,124 Q07: Trust ranking, product info
2011 2015
Friends/Family 1 1
Reviews on independent sites 2 4
Product Experts 3 2
Reviews on retailer websites 4 3
Manufacturers 5 5
Sales Associates 6 6
Trust rank, source for product information
23.

24. There is great divide between companies’ perceptions of themselves and what
customers actually experience
24.
69%
of companies say they offer a
superior online experience,
81%
of companies say they are close to
having a holistic view of their
customers,
47%
of brands say they have a “strong
capability” for providing relevant
communications,
89%
of brands are satisfied with their
ability to resolve conflicts with
customers,
but 51%
of customers who left a company
that failed them, blamed their exits
on bad online experiences
but only 37%
of consumers say their favorite
retailer understands them
while only 35%
of consumers say communications
from their favorite retailers are
“usually relevant”
but only 28%
of consumers who had a significant
customer service issue in the last
twelve months say the company
resolved their conflict “very
effectively”
Source: “Listening to the Customer; 7 New Research Findings”, IBM and Econsultancy Study

25. © 2015 IBM Corporation25
Thinking Omnichannel
A Disrupted Industry
The Shopper’s Perspective
The Retailer’s Imperatives
How IBM Can Help
Agenda

26. Retailers need to re-imagine everything about the way they do business to
engage shoppers and create omnichannel brand value
26.
Aware - engage, listen, and nurture open
relationships with customers
Analytical - gain insight, assess, and adjust
to attract and maintain customers
Aligned - engineer an organization that
stays in step with growing expectations of
the empowered consumer
Agile - embrace emerging innovation ahead
of consumer needs
Required characteristics
Current view of the customer is based on
past transactions rather than interactions
An inability to effectively integrate
analytics to run the business
Siloed organizations are aligned around
channels rather than the customer
A formulaic approach to the business
inhibits opportunities to be innovative
Common Gaps
88%
of marketers agree that their company’s
growth depends on personalizing the
customer experience,
37%
believe they have the tools they need to
deliver exceptional customer
experiences
while
only
Source: “Listening to the Customer; 7 New Research Findings”, IBM and Econsultancy Study

27. Innovative retailers will need to invest in 5 strategic imperatives to become truly
omnichannel and thrive in their markets
27.
Embed data & analytics throughout the
enterprise to become essential to
shoppers
Leveraging Intelligence
Building the Right Team
Create an organization willing to break
down silos and dedicate itself to
building an authentic brand experience
Merging Physical & Digital Experiences
Add features, benefits and processes to
the front and back office that leverage
the best of both worlds
Drive out costs to enable investment in
customer experience and expansion
Executing With Ruthless Efficiency
Embrace and enable long term
disruption and new ways of solving
short term critical issues
Innovating Continuously

28. Every area of the enterprise must put the customer first and ask some tough
questions
28.
Master Data Management
Are we bringing the pieces of the customer puzzle together as a single point of
reference with accuracy and strict governance?
Customer Insight/Engagement
Are we leveraging insights to approach customers with messages and offers at
any point in time that reflect the fact we really know them?
Assortment Planning
Are we creating frequently refreshed, local market and micro-site assortments
that tailor merchandise offerings to consumer and local market demands?
Financial/Unit Planning
Are we creating top down and bottom up financial plans that ensure the right
level of inventory is purchased based on customer demand?
Merchandising
Are we quickly identifying shifting trends and consumer sentiments and helping
buyers make the right choices in response?
Supplier/Vendor Ecosystem
Are we driving agility across the supply chain to ensure the right products and
services are moving from the source to the customer?
Pricing & Promotion
Are we providing customers with accurate and consistent pricing across all
channels based on relevant data from the merchandising system as well as ever-
changing market conditions?
Point of Sale
Are we creating a shopping environment that is consistent with how customers
live…connected, with real time information?
Order Management
Are we making the best decisions about how to promise and fulfil customer
orders, resulting in improved profitability and customer satisfaction?
Inventory & Replenishment
Are we meeting customers’ expectations to be able to buy, receive and return
practically anywhere through connected front-office and back-office processes?
Human Resources
Are we leveraging our talent in the right places and hiring the right people so our
workforce truly understands how to deliver for our customers?
ApplytheStrategicImperativestoeveryareaoftheorganization

29. Game Changers
29.
Zappos builds customer relationships like no other
Why it's revolutionary: Zappos has made massive strides in "relationship marketing," building
an incredible reputation for customer service. With the rise of social, Zappos continues to set
the standard and find ways to augment its loyal customer base. Flickr / kedjadlen
ShoeDazzle takes buying shoes to a whole new level through a personalized "showroom“.
Why it's revolutionary: Every month, the ShoeDazzle system reviews its new inventory and
selects a collection of shoes into the user's personal "Showroom." The selections are based,
initially, on a survey the user fills out to establish their taste profile. Over time, the
recommendation algorithm gets more sophisticated as it takes into account the user's actual
purchases. The approach is working - the retailer went from 3 to 13 million customers in 2012.
Fast Company, March 2012
Converse is enabling fans to let their creativity flow and be rewarded for their work
Why it's revolutionary: Converse’s ‘Made by Facebook’ app allows Facebook fans to
design their own Converse tennis shoe, sell them to friends and even open their own
storefronts. In return the creators are rewarded with free shoes. Fans are in essence
becoming Converse’s salesforce. Social Commerce Today, December 2011
Leveraging Intelligence

30. Game Changers
30.
Building the Right Team
Macys hires Chief Omnichannel Officer and restructures around Omnichannel
Why it's revolutionary: has made massive strides in "relationship marketing," building an
incredible reputation for customer service. With the rise of social, continues to set the
standard and find ways to augment its loyal customer base.
Finish Line hires Chief Omnichannel Officer“.
Why it's revolutionary: Every month, the ShoeDazzle system reviews its new inventory and
selects a collection of shoes into the user's personal "Showroom." The selections are based,
initially, on a survey the user fills out to establish their taste profile. Over time, the
recommendation algorithm gets more sophisticated as it takes into account the user's actual
purchases. The approach is working - the retailer went from 3 to 13 million customers in 2012.

31. Game Changers
31.
Merging Physical & Digital Experiences
Threadless' crowd-sourcing merchandising caught the attention of America's largest retailers
Why it's revolutionary: Threadless is an apparel company that lets artists submit designs for t-shirts,
housewares and more. The designs with the most votes become available for purchase. The
company recently got the attention of Gap, which started carrying Threadless t-shirts.
Pinterest is changing how companies present their products
Why it's revolutionary: Pinterest is a platform where people share things they like. It's proven to be
a boon for retailers including Etsy and Whole Foods. Retailers from Saks and Gap to Target have
altered their marketing campaigns to include the platform.
David Jones developed a multi-channel platform generating new revenue streams and cross-channel
spend optimization
Why it's revolutionary: 12 month implementation from vision to launch of first release drove a 288%
increase to online sales making David Jones the first major Australian retailer to provide a true cross-
channel shopping experience. They were the first to market with same day delivery, ship from store
and reserve online pick up from store

32. Game Changers
32.
Executing With Ruthless Efficiency
Bonobos embraces showrooming by creating a store front
Why it's revolutionary: Bonobos was an online-only men’s clothing shop. As much as CEO and co-
founder Andy Dunn wanted to remain online only, he realized that about half of would-be customers would
not order online because they wanted to feel the merchandise. The solution? Guideshop, a store front that
delivers personalized service to those wanting to experience the brand in-person. Make an appointment,
try on what you want, place the order online while in the shop, and it shows up at your home. The space
has minimal inventory and uses the website as a virtual back room.
Zara replenishes twice a week with totally new products
Why it's revolutionary: Zara's revolutionary strategy includes stocking light and replenishing the store twice
a week with totally new products. This encourages customers to come back to the store often and it creates
a sense of urgency to buy since it may not be available for long. Zara is creating brand-right content on
YouTube, Facebook, Pinterest and using Twitter for talking to customers directly and for customer support.
Zara's fast-fashion outlook is appropriate for the short attention span of today's consumer.
Business Insider, November 2012

33. Game Changers
33.
Innovating Continuously
Hointer is taking humans out of stores
Why it's revolutionary: Led by former head of supply chain and fulfillment tech for Amazon, Nadia
Shouraboura, Hointer is changing the way you shop for clothes by using a robotic sales staff. You
download an app, go to the showroom, and scan the QR codes of the clothing you'd like to try. The
clothes are delivered automatically right to the fitting room, customers swipe their card on the tablet,
and walk out.
Kroger wages war against long lines with infrared cameras
Why it's revolutionary: Long used by the military and law-enforcement to track people, these
cameras, which detect body heat, now sit at the entrances and above cash registers at most of
Kroger's roughly 2,400 stores. The technology, which is paired with in-house software, determines
the number of lanes that need to be open. Kroger has reduced the customer's average wait time to
26 seconds - compared to an average of four minutes before Kroger used the cameras in 2010.

34. © 2015 IBM Corporation34
Thinking Omnichannel
A Disrupted Industry
The Shopper’s Perspective
The Retailer’s Imperatives
How IBM Can Help
Agenda

35. IBM’s omnnichannel solutions help retailers deliver world class shopper
experiences
35.
Leveraging Intelligence
Building the Right Team
Merging Physical & Digital
Experiences
Executing With Ruthless
Efficiency
Innovating Continuously
• Advanced Customer Insights and
Analytics
• Marketing and Consumer
Analytics
• Digital Analytics and
Benchmarking
• Human Resources Solution
Design & Delivery
• Interactive Experience and Design
• IBM Mobile First
• Future State Roadmap
development and implementation
• IBM Presence Zones
• IBM WebSphere Commerce
• Sterling Order Management
• Payment Systems
• Commerce as Service
• Innovations as as Service
• Enterprise Transformation
• Next-Generation e-commerce
Software Solutions
Process
Improvement &
Implementation
Services
Managed Services
Technology
Platforms

36. Our end-to-end approach is built on strategy and supported by operations
36.36
Customer Insight &
Analytics
Consumer Driven
Strategy
Customer Engagement Operate & Optimize
Define Your Customer’s Experience Deliver Outcomes
Manage all customer
interactions to maximize
effectiveness and grow
customer intimacy and
advocacyApply advanced analytical
tools and techniques to
dynamically understand
customers' needs and
expectations
Leverage digital, mobile and
social consumer insights to
identify growth opportunities
and new paths to value
Manage the solution
in house, through
outsourcing, or through
an outcomes-based
model
Omni-channel Transformation
Envision
Evaluate
Enable
Define Roadmap for
Change
Understand Your Customer’s
Behavior & Expectations

37. IBM is consistently atop analysts rankings
37.
Magic Quadrant for Digital
Commerce, Sept 2014
MarketScape
Worldwide Digital
Commerce
Applications, 2014B2C Wave, Q1 ‘15
Web Analytics, Q2 ‘14
OM Wave, Q3 ‘14
IBM
IBM
IBM
IBM

38. IBM has one of the largest and most widely recognized retail practices in the
world
38.
170 countries
Number of countries where
IBM operates. We are a global
company that understands
global retail.
70 out of Global Top 100
Number of retailers that are IBM
GBS clients.
$6B
IBM’s annual research budget.
IBM has the world’s largest
retail industry research group.
10+ years
Average experience of
900+ retail specialists in
IBM USA.
10,000
Number of retail
consultants in IBM globally.
#1
IBM’s Retail Consulting Practice
rank in IDC’s MarketScape Vendor
Analysis Report
.

39. IBM keeps good company
39.Data and Customer list from 2014 Internet Retailer Top 500 Report