2. Multi Channel Retailing Sandana Kichenane Microsoft EMEA EMEA RETAIL INDUSTRY MANAGER sandanak@microsoft.com

3. Agenda 1. Multi-channel Retail business challenges 2. Where is the market going? 3. Microsoft MCR proposal 4. Proof by References 5. OTTO 6. Call to actions

4. Some things in retail never change … Right merchandise in the right place at the right time at the right price

5. While others seem to continually change … Customer Demands Competitive Pressures Technology Changes Regulation Efficient collaboration with Suppliers

6. Multi-channel retailing enables a retailer to provide a coordinated, customized and integrated shopping experience across multiple customer access points including the store, web site, catalogue, TV, new smart devices, and call center In order to successfully deliver a multi-channel strategy, retailers must: Target most valuable customers Invest in integration Align organizational structure Streamline partner communication What is Multi-Channel Retailing?

7. Multi-channel Retailing : definition  Ability to sell products/Services through multiple channels like stores, catalog, on- line, via TV and other devices (mobiles)  Digital photo printing at stores, in kiosks or via internet  Music cd/Video DVD in stores, loading portable MP3/WMA readers at kiosks, on- line/TV  Enable customers to switch from one channel to another seamlessly, using the same loyalty card and better experience …  For Retailers, it’s the integration time between different channels into a single back office system, reducing multiple silos…and increasing profit through MCR! It ’ s all about customer smarter shopping experience, through multiple devices and channels (kiosks in store, ordering on-line and picking in stores or specific delivery points, ordering in store but delivery at home or via internet for specific sku ’ s etc … )

8. Increased Technology Engagement Increased Technology Engagement Customer Self-Service Customer Self-Service Market Insight & Product Info Market Insight & Product Info Channel Resource Optimization Channel Resource Optimization Increased Integration Investment Increased Integration Investment All Customer Interactions Valued All Customer Interactions Valued Multi-Channel Industry Trends

9. PwC CONFIDENTIAL 99Confidential- Microsoft Internal Only Customer have access to these devices

10. What Customers Expect Look for Referrals Smart Device Wish List 1.Headphone 2.MP3 Player 3.Monitor 4.CD 5.Battery Product Research In Store Pick-Up Pick Up Immediately Store Favorite Items Community Referral List One Single Customer Transaction! Flexible Customized Transparent Coordinated

11. Leveraging the Internet in a broader fashion than simple e-commerce. Web sites of the future should be extensions of a retailer's other channel efforts, creating an environment for customers that allows them to research, shop, buy, track orders and return whatever they want, wherever they want – Analyst, Gartner (2005) Retailers are being challenged to integrate the data they collect on customers as they shop across channels. This requires a level of organizational and technological integration that recent research indicates many retailers have yet to achieve. - Analyst, eMarketer Outlook “…The exponential growth in customer touch points means that an understanding of customer interactions is as critical to cross -channel strategy as are transactions for the following two reasons: 1) there is important behavioral information impounded in a customer interaction even if (or perhaps especially if) it does not result in a transaction; and 2) organizations that do not tightly enforce consistency across every channel…risk compromising their brand equity.” - MetaGroup (2004) Multi-channel shopping has truly arrived – 65% of consumers have researched a product online and purchased that product offline. Of those people, 51% have cross-channel shopped in the past three months, influencing in-store sales of more than $100 billion.” - Analyst, Forrester (2004) “Multi-channel retailers’ Internet sales are growing faster than that of Internet-only retail sales. This suggest that synergies among channels have a stimulating effect on sales.” - VP Industry Analysis, comScore Networks (2005) “Retailers that cater to multi-channel shoppers report major benefits. These retailers posted an aggregate year-over-year sales growth rate of about twice that of other retailers in the2004 holiday period.” – Analyst, AMR (2005) “To execute any multi-channel strategy, retailers must have a baseline of integration between core systems. This means that it’s unrealistic to plan for multi-channel features like sites that display real-time, in-store inventory or order status information if your inventory and order management tools are siloed across channels.” - Analyst, Forrester (2004) The Industry Perspective Confirmations…

12. Multi-channel IPSS building blocks, Scope

13. Multi-Channels for Retailers Internal Store Employees Call Center IT Support WebMaster Business Activity Monitoring Business Intelligence Data Warehousing Tools Customer Order Data Customer profiles ClickStream Data Supply Chain Data Suppliers Financial Institutions Customers Logistics Multi-Channels for Customers External eCommerce Call Center Catalog Store Smart Devices EmployeesAnalyticsSystemsPartners Customers Employees Analytics Systems Partners Store eCommerce Call Center Catalog Multi-Channel Across the Enterprise

14. Commerce Server 2006 Architecture

15. eCommerce Call Center Smart Devices Management & Monitoring MS Multi-Channel Retail Solutions “Connected Enterprise” “Connected Customers” “Connected Partners” Store Catalog Inventory Management EAI Business Process Automation B2B Virtual Catalog B2B Automated Messaging Vendor Managed Fulfillment Partner Supported Selection RFID Multi-channel Retail solutions

16. PwC CONFIDENTIAL 1616Confidential- Microsoft Internal Only 3000 orders/Hour 150 000 orders/week 1,4 B$ in 2004 from 286 M$ in 2000 Customers are satisfied Adding RFID and other innovations Microsoft ecommerce platform, Microsoft.Net environement Microsoft SQLserver 2000 Started e-commerce in 1997 Wanted to start small and growth Integrated with the store business Wanted a flexible, innovative E- commerce platform “ SQL Server has scaled with our growth and is consistently reliable. It has become an enterprise wide mission critical tool that we couldn ’ t do without. ” Jon Higgins, Head of IT, Tesco.com Reliable and Scalable Technology Becomes Mission-Critical Tool for World Leading Online Grocery Retailer

17. PwC CONFIDENTIAL 1717Confidential- Microsoft Internal Only FNACMusic.com Innovation in business Close to consumer tastes Develop new channel Contribute to the growth Support of artists 1 M titles in 2005 On Microsoft.NET platform Using CS2002 Developed with VS.NET MS Music download technologies (MS WMA) Capacity to fight piracy (MS DRM) CSC as partner

18. New consumer channel Up-selling and customer satisfaction Growth of the on-line business Microsoft Media Center PC technology Microsoft ecommerce platform Microsoft.Net environement Microsoft SQLserver 2000 Develop online business Make it simple and easy Bring more value for customers Bring innovative ideas and services ….…. Using Microsoft Media Center PC we’re bringing the power of TV and computers together for our customers and enable them with greater shopping experience

19. PwC CONFIDENTIAL 1919Confidential- Microsoft Internal Only Smarter Retailers Store Managers Workbench and item velocity monitoring ”Right people at the right place at the right time” Online music download service Integrated browsing, purchase, download and listening Multi-channel integration using Windows XP Mediacenter Easy shopping using the TV remote control Highly scalable food traceability platform Responses in minutes instead of days Build and manage central data warehouse ”For the first time we’re actually on top of the business”