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THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
SAP Industries White Paper | Retail

THE INTELLIGENT
ENTERPRISE
FOR THE
RETAIL INDUSTRY

Delivering experiences
consumers can trust
THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
SAP Industries White Paper | Retail
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                  2
THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
WELCOME
                                                                  Dear Customers:                                       The path forward is clear. It requires a
                                                                                                                        single-minded focus on understanding the
                                                                  The past 15 years have been marked by
                                                                                                                        needs of consumers and creating
                                                                  an unrelenting and disruptive consumer
                                                                                                                        distinctive and delightful experiences that
                                                                  revolution – a search for convenience, price,
                                                                                                                        exceed customer expectations.
                                                                  and customer experience that has moved
                                                                  consumers online.                                     We have identified five strategic priorities
                                                                                                                        that will keep retailers on the path forward:
                                                                  The next five years will require retailers to
“The imperative for a                                                                                                   ▪ Be customer centric across the value chain
                                                                  unify the online and offline worlds, a
                                                                                                                        ▪ Serve the segment of one
single, intelligent, and                                          challenge dependent on both technology
                                                                                                                        ▪ Implement digital supply chains
digital core is essential                                         and that most human of elements: trust.
                                                                                                                        ▪ Run smart stores
to future growth. From                                            Looking ahead to 2025, consumers will                 ▪ Develop new business models
crafting a personalized                                           expect retailers to be deeply enmeshed in
customer experience                                                                                                     By 2025, we expect the majority of retail
                                                                  their lives as trusted partners. The consumer
                                                                                                                        revenues will be based on insight derived
on the fly to helping                                             and the retailer will have a shared set of
                                                                                                                        from customer data, predictive analytics,
business users make                                               values. Retailing will shift from a product-
                                                                                                                        and the ability to monitor customer use
informed, real-time                                               centric approach to customer-centric,
                                                                                                                        with sensors.
decisions, retailers                                              experiential retail. Experiential retail will blend
need to instantly                                                 products, services (both physical and digital),       Subscriptions, pay-per-use, and outcome-
connect historical and                                            personalization, and unprecedented levels of          based models will move from being “add-
                                                                  convenience. Experiences will be measured             ons” to becoming offerings in their own right,
transactional data
                                                                  and improved. Stores will become brand                with separate revenue streams. They will
across the enterprise.”                                           experience and innovation centers.                    evolve into multibrand services beyond
                                                                                                                        current product categories.
Achim Schneider                                                   Robotics and artificial intelligence will be
                                                                  central to all aspects of the business –              This paper takes a deep dive into the trends
                                                                  from automated warehouses to robotic                  shaping our industry over the next five years
                                                                  store associates and driverless car delivery.         and the path to innovation. In it we propose a
                                                                  Automated and real-time models for service            set of priorities that will drive transformation
                                                                  and fulfillment will become the standard              and the tools that will make it possible.
                                                                  consumer expectation.
                                                                                                                        Consumers are not looking for a digital
                                                                  Physical stores will remain an integral part          experience or a real-world experience.
                                                                  of the retail shopping experience, but they           They are looking for a seamless shopping
                                                                  will be dramatically transformed to offer             experience, one that bridges the online and
                                                                  an array of experiences, from highly                  offline worlds. To provide it, retailers must
                                                                  personalized services to show rooms,                  embrace emerging technology, think
                                                                  fitting rooms, and even brand extensions              creatively about the services they can
                                                                  that could include classes and                        uniquely provide, and, most important, earn
                                                                  entertainment.                                        their consumers’ trust to become a part of
                                                                                                                        their lives.
                                                                  The transition is already well under way, but it
                                                                  will not get far without building consumer            Welcome to the experience economy.
                                                                  trust. Trust will be the ultimate currency –
                                                                  trust in treating data safely, trust in delivering
                                                                  the right quality of product at exactly the right
                                                                  time and the right experiences from shopping
                                                                  to consumption and returns. Building that             Sincerely yours,
                                                                  trust will require an unprecedented level of
                                                                  transparency and delicacy as retailers collect
                                                                  more and more consumer information to help
                                                                  create personalized experiences.
                                                                  The winners will be retailers who are truly
                                                                                                                        Achim Schneider
                                                                  open to new ways of thinking and radical
                                                                                                                        Global Vice President
                                                                  innovation. They will be those who best adapt
                                                                                                                        Retail
                                                                  in this fast-changing environment by
                                                                                                                        SAP SE
                                                                  developing new skills and acquiring the right
                                                                  tools to be even more agile and responsive.

SAP Industries White Paper | Retail
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                               3
THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
TABLE OF
                   CONTENTS
                    3        Welcome

                    5        Our Place in the New World

                    6        The Need for Change

                    8        Five Priorities for Success

                  10         Be Customer Centric Across the Value Chain

                  12         Serve the Segment of One

                  14         Implement Digital Supply Chains

                  16         Run Smart Stores

                  18         Develop New Business Models

                 20          Key Technologies
                  22         Getting There: A Phased Approach
                 24          Early Digital Adopters Lead the Way

                 26          SAP’s Framework for the Intelligent Enterprise
                 28          How to Plan Your Path to the Intelligent
                             Enterprise

                 29          Comprehensive SAP Ecosystem Orchestrating
                             the World to Deliver Value Faster

                 30          SAP Is Committed to Innovation

                  31         Resources

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                             this document.

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SAP Industries White Paper | Retail
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
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THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
OUR PLACE IN
                                                                  THE NEW WORLD

Our Place in the New World
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                  5
THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
THE NEED
FOR CHANGE
The world is undergoing a profound
transformation – one that has upended how
people, companies, and governments interact.

We believe that successful                                        unexpected rivals are forcing a       Mini Cases: Data, Artificial Intelligence,
retailers in 2025 will be those                                   strategic reevaluation of the         and Experience Action
that understand every aspect of                                   fundamentals of their business.
the customer experience and can                                   Forward-looking retailers are         StitchFix makes 100% of sales using
leverage emerging technologies                                    already building new capabilities     recommendation, Rather than up-selling
to transform their customer                                       that will enable a new relationship   based on past purchases, it makes unique
engagement.                                                       with their customers rather than      and personal selections by combining data
                                                                                                        and machine learning with expert human
                                                                  cause them to be left behind.
                                                                                                        judgment.1
The Internet has reversed the
information gap, and the consumer                                 The need for change is                Warby Parker has discovered how
is now in charge. The shift has put                               underscored by macro forces           recommendations and options powered by
retailers under intense pressure,                                 in play, including the transition     AI can be geared toward specific locations
yet it is also providing opportunity                              from a linear economy to a circular   and can even connect the customer's
for those who can reimagine their                                 economy, the globalization of         online and in-store experiences. The result
place in their customers’ lives.                                  supply chains, and the explosion      is an extraordinary customer experience
                                                                  of cities as the dense center of      that makes each customer a raving
For retailers, demographic                                        populations. These, coupled with      fan of the brand.2
changes, the rise of the                                          the need for sustainable energy
smartphone, the ubiquity of the                                   and the increased strain on global    Nike and Levi’s have opened “concept”
                                                                  health systems, are testing           stores, which are flagships for their brands
Internet, the changing role of
                                                                                                        and an attempt to dissolve the boundaries
stores, and competition from                                      consumers’ trust in institutions.
                                                                                                        between online and offline shopping. They
                                                                                                        represent a shift happening in the way
                                                                                                        both companies sell their products,
                                                                                                        putting a heavy emphasis on one-to-one
                                                                                                        connections with customers and
                                                                                                        customized products. Being physical
                                                                                                        spaces that surround you, these stores
                                                                                                        can be immersive in a way that an online
                                                                                                        experience can’t.3

Our Place in the New World
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                6
THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
CONSUMER TRUST
IS THE KEY TO
PERSONALIZATION
Data, analytics, and predictive intelligence will become
retail assets like no other, providing the fuel to power
every aspect of the business.

                                                                                                             59%
Converting Big Data into predictive                               We expect that robotics and
insights that drive automated                                     artificial intelligence will transform
promotion, replenishment, and                                     all aspects of the business.
                                                                                                             Of shoppers now expect personalized
marketing activities will be a                                    Automated warehouses, robotic
                                                                                                             offers delivered in real time4
competitive differentiator required                               store associates, and driverless
to exceed customer expectations.                                  car delivery will introduce new

The experience will be at the heart
                                                                  levels of efficiency into the last mile.
                                                                  Machine learning algorithms will           73%
of customer engagement. In 2025,                                  help uncover unspoken needs                Of shoppers say they agree or agree
retailers will be immersed with their                             and create more-relevant,                  completely that it’s important for a
consumers’ lives. Consumer retail                                 personalized offers.                       retailer to give them the flexibility to
interactions will be transformed –                                                                           control how their personal information
with browsing and buying                                          While physical stores will remain          is used to tailor their experience 5
opportunities delivered exactly                                   an integral part of the retail
where the customer is – physically,                               shopping experience, their function
digitally, and socially. Consumers                                will be dramatically different. New
will expect retailers to “know me”
and “meet me where I am,”
                                                                  technologies will be integrated
                                                                  into physical stores to provide
                                                                                                             60%
transforming traditional marketing                                unparalleled levels of engagement          Potential increase in net margin for
approaches into more personalized,                                and service. Augmented and virtual         retail companies that are using Big Data
experience-driven offerings                                       reality will provide the ability to        analytics6
                                                                  try on any color, style, or size.
To be successful, however, retailers                              Beacons, RFID, and mobile devices
will have to build unprecedented                                  will deliver real-time product
levels of trust with their customers.                             information, availability, and other
This trust will start with keeping                                digital services that enhance the
customer data private and secure.                                 overall experience.
Without that, customers will not
share the data needed to create                                   This, of course, requires
personalized shopping experiences.                                reimagining the role of the store
                                                                  and the ability to seamlessly unify
But trust is also earned and lost                                 the offline and online worlds,
through consistent and on-time                                    perhaps the biggest challenge
delivery, a seamless shopping                                     facing retailers over the next
experience, the right quality                                     five years.
products, and ethical and
sustainable sourcing.

Our Place in the New World
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                        7
THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
FIVE PRIORITIES
                      FOR SUCCESS
                       We have identified five strategic priorities
                       necessary for retail companies to
                       transform their business.

                                              BE CUSTOMER CENTRIC ACROSS THE VALUE CHAIN

                                              SERVE THE SEGMENT OF ONE

                                              IMPLEMENT DIGITAL SUPPLY CHAINS

                                              RUN SMART STORES

                                              DEVELOP NEW BUSINESS MODELS

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                           8
THE INTELLIGENT ENTERPRISE FOR THE RETAIL INDUSTRY - Delivering experiences consumers can trust - EnterpriseTalk
Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                  9
BE CUSTOMER CENTRIC
                      ACROSS THE VALUE CHAIN
                      In 2025, retailers will be able to create deep data and
                      predictive insights from data generated at every customer
                      touch point – physical, digital, and social.
                      These insights will drive a forward-looking               The result will be tailored, immersive experiences
                      understanding of consumer trends and allow                that anticipate customer needs, supported by
                      retailers to preempt changes in taste and style,          seamless omnichannel interactions.
                      as well as design the right experience and service
                      offerings to create hyperloyal customers. (See            To get there, retailers must develop a new
                      Figure 1.)                                                culture, one that is relentlessly focused on the
                                                                                customer. Successful retail cultures already put
                      It starts with optimizing existing processes by           a premium on providing convenience, whether
                      creating and using a deep understanding of                online or offline, based on insights garnered
                      customer needs to offer targeted assortments              from customer and supply chain data. They
                      and campaigns. These processes will be                    obsessively protect customer privacy. The next
                      extended by responding to real-world data                 generation of retail culture must start at the very
                      input (search data and consumption data from              top, modeled by the leadership of the company,
                      sensors and home devices) and changes in                  and must empower every employee to act on
                      usage and consumption to make relevant offers             behalf of the customer.
                      for products and services when consumers need
                      them.

                      Figure 1: The Vision of Customer Centricity
                      Focus all elements of the end-to-end experiences designed around the customer

                                                                                       Designed
                                                                                       experience

                                                  Understanding                                         Empowered
                                                 of your customer                                       front line

                                                          Customer-                                     Metrics
                                                            focused                                     that
                                                          leadership                                    matter

                                                                                       Customer feedback and
                                                                                       continuous improvement

                      79% of retailers consider it important to quickly and efficiently change assortments and adapt pricing
                      across channels based on current trends and customer insights, but only 27% are able to do so.7

                      Carrefour Group is the first mass-merchandising player to open up its Web site to local producers interested in
                      reaching a new public: people who shop using their computers or the Carrefour app and who are on the lookout
                      for authentic products – thus responding to changing preferences in the company's customer base. 8

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                        10
FROM BACKWARD FOCUS
     TO BEING FIRST TO SERVE
     TOMORROW’S DEMAND
     What do my consumers really want? With this end-to-end integrated
     scenario, leverage the power of social insights, sentiment analysis,
     and search data to improve your assortment planning and have in
     store today what your shoppers demand tomorrow.

      TRADITIONAL SCENARIO
                                                                                                                                                                             ?

     ▪ Central assortment planning                      ▪ No integration to execution,        ▪ Demand review after the fact                       ▪ Delayed visibility to sales,
       based on historic data                             requiring manual, error-                                                                   profitability, and inventory
                                                                                              ▪ Manual stock adjustments
     ▪ Manual, home-grown                                 prone work                                                                                 leads to late and costly
                                                                                              ▪ Slow-moving inventory leading to a                   decisions
       spreadsheets with siloed data                    ▪ Assortments not localized
                                                                                                high level of clearance markdowns
     ▪ Little to no use of predictive                   ▪ Items purchased and listed                                                               ▪ Limited ability to preempt
                                                                                              ▪ Out-of-stocks resulting in missed                    customer needs and
       science or external or                             in regions with no insight
                                                                                                revenue and dissatisfied customers                   preferences
       forward-looking data                               into regional demand
                                                          added to ERP                                                                             ▪ Risk of markdowns and
                                                                                                                                                     reduced profitability

      NEW-WORLD SCENARIO
     Market demand understood                         Smart store clustering             Plan launch            Profitability monitoring            Rapid response

      ▪ Demand signals, consumer                    ▪ Analysis of performance        ▪ Ability to predict       ▪ Integrated, end-to-end            ▪ RFID-enabled store
        sentiment, product search,                    and trends of categories,        demand and optimize        planning process from               processes, helping store
        and social media data                         products, attributes,            how much to buy both       merchandise and                     associates control
        enabling real-time                            locations, and customer          preseason and in           assortment planning to              inventory
        understanding of market                       segments to inform               season                     execution with allocation         ▪ Automated stock
        demand                                        planning decisions                                          and purchase order                  transfer to rebalance
      ▪ Customer segment and                        ▪ Intelligent store clustering                                creation                            supply across stores
        social media sentiment                        based on customer                                         ▪ Real-time monitoring in             and eliminate
        analysis                                      demographics and                                            season of plan and forecast         markdowns
      ▪ Combination of search                         category insights to drive                                  to actuals and the ability to     ▪ Product experience
        rankings and marketplace                      localized assortments                                       quickly respond                     feedback combined with
        view with internal                          ▪ Advanced analytics for                                    ▪ Visibility into real-time           operational data sets to
        assortment data to                            decision support around                                     item-level profitability            help merchandise
        intelligently identify                        products to keep or drop                                  ▪ Retailer ability to trigger         planners understand
        possible additions to the                   ▪ Assortment optimization                                     customer feedback to                what drives product
        current assortment mix                        to maximize revenue and                                     understand the emotions             uptake for the target
      ▪ True omnichannel planning                     margins using predictive                                    and sentiments related to           customer segments and
        for retail and digital                        analytics                                                   product offerings                   help create more
        channels as well as the                                                                                                                       targeted assortments
        wholesale channel on a
        single planning solution

      TOP VALUE
      DRIVERS*
                                              30%
                                              Increase in
                                                                                               60%
                                                                                               Reduction of
                                                                                                                                                  30%
                                                                                                                                                  Reduction of inventory
                                              revenues                                         markdowns                                          write-offs

      Source: SAP Performance Benchmarking

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                                                    11
SERVE THE
                      SEGMENT OF ONE
                      While customer centricity is meant to serve all customers,
                      the next generation of personalization will serve the
                      segment of one.
                      In 2025, retailers will use large data management                  Critically, retailers will need the explicit consent
                      platforms to gather big sets of sales, service, and                of their customers to gather data and put it to
                      marketing data to build a 360-degree customer                      work, which requires a new level of transparency
                      profile and understand and predict individual and                  and a new level of collaboration between
                      contextual customer needs. (See Figure 2.)                         customer and retailer.

                      As a result, real-time interactions will create                    However, to meet this vision of serving the
                      the context for marketing, assortment, pricing,                    segment of one, retailers must also be able to
                      and promotional offers. Algorithms will be                         individualize their offerings and optimize their
                      commonplace throughout every retail business                       existing processes to allow for single-item
                      process and will power recommendations and                         sourcing and delivery.
                      tailored experiences for consumers. Augmented
                      and virtual reality will offer a personalized                      Retailers who offer consumers the chance to give
                      dressing room experience, furniture display,                       feedback to their products, brand, and shopping
                      or digital store walkthrough that will take the                    experience will be able to create winning customer
                      individual shopping experience to a new level                      experiences. A new software category, which com-
                      of personalization. Sensors will monitor use,                      bines experience management with operational
                      consumption, wear, and freshness, alerting                         systems and review brand, as well as product and
                      consumers to replace, replenish, or repair.                        customer experience feedback, is already starting
                                                                                         to redefine customer engagement.

                      Figure 2: The Vision of Serving a Segment of One
                      Individual and customized    5                                                                    1     Individual product design
                      services                                                                                                ▪ Extend the configured-to-
                      ▪ Deliver personalized                                                                                    order and made-to-order
                        service and support                                                                                     portfolio
                      ▪ Offer tailor-made services                                                                            ▪ Manage modular product
                      ▪ Use Internet-of-Things and                                                                              concepts
                        sensor data for service                                                                               ▪ Integrate digital capabilities
                        optimization and
                        automated replenishment
                                                                                                                        2     Contextual omnichannel
                                                                                                                              marketing
                                                                                                                              ▪ Segment customers
                                                                                                                                intelligently
                                                                                                                              ▪ Run targeted campaigns
                      Lot-size-of-one sourcing                    4                                                           ▪ Engage in a personalized way
                      and production
                      ▪ Source or produce
                                                                                                                        3     Personalized selling
                        individual products in a                                                                              ▪ Convert individual needs into
                        cost-effective way                                                                                      opportunities and orders
                      ▪ Run a smart, integrated,                                    Sales                                     ▪ Configure products and
                        and flexible factory
                                                                                                                                solutions flexibly
                      ▪ Manage an adaptive and
                                                                                                                              ▪ Use all sales channels
                        responsive supply chain                                                                                 consistently

                      73% of retailers consider it important to deliver a fun, relevant, and personalized experience that is
                      convenient and unique to customer sentiment, history, and preferences, but only 10% are able to do so.9

                      SPAR Handels AG (SPAR Switzerland) has created a loyalty program that gives its customers immediate benefit during checkout.
                      Besides very attractive weekly offers, a SPAR Friend member is eligible to win the whole purchase when it is the 1,000th purchase
                      in any of the roughly 160 outlets counts. Validating the SPAR Friends 1,000th purchase at checkout is done in real time. Havi ng a
                      central system to steer and control the loyalty program is key. SPAR Switzerland also wants to have the flexibility to furthe r
                      develop the program with new offerings and features, which can be introduced swiftly.

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                                 12
FROM MASS MARKETING TO
     PERSONALIZED, IMMERSIVE
     EXPERIENCES
     By connecting to your customers’ lifestyle, you are able to create an
     immersive shopping experience for your consumers – one that earns
     lifetime loyalty and also delivers significant efficiencies and new
     business opportunities to the retailer.

      TRADITIONAL SCENARIO

      ▪ Consumer recognizes                        ▪ Consumer looks up             ▪ Consumer chooses retail        ▪ Consumer decides and               ▪ Opportunity to
        accelerated wear and                         information about               store                            pays                                 maintain
        tear in product                              running shoes online          ▪ Associate advises              ▪ Anonymous sales data is              consumer
      ▪ No sensor data is made                     ▪ No personalized offers          unknown consumer, no             imported to ERP system               contact and build
        available                                    are made                        connection to online offers                                           consumer loyalty
                                                                                                                                                           is lost
                                                   ▪ Cumbersome execution          ▪ Associate has no access
                                                     happens between                 to sales history, sizes, or
                                                     channels                        functional needs

      NEW-WORLD SCENARIO
                                                                                                                                    Hyperpersonalization with
         Flawless execution of service promises                       New levels of customer proximity and understanding
                                                                                                                                  Internet of Things technology
                                                                  Consumer                        Consumer

      • Consumer is part of •             Smart automation           • Consumer is offered       • Consumer is notified that   • Foot scan data           • Consumer keeps
        an avid community of              notifies consumer            the choice of a             order is ready for pickup     generates a custom         on running for
        runners                           when shoe is nearing         personalized one-time       and is also offered to        printed sole directly      life, feels a
      • Integrated sensors                end of life                  replacement or              book a same-day online        from in-store 3D           positive
        in shoes continually •            Marketing intelligence       continuity program for      foot scan for the custom      printer                    connection, and
        stream use and                    determines                   each 500 miles run          sole                        • Foot profile helps         perceives real
        fitness data,                     personalized product       • Consumer opts for         • Consumer checks in to         create custom shoe         value for
        augmenting both                   recommendations              continuity program,         store for pickup and          recommendations            continued lifelong
        product                           based on product use,        along with a custom         fitting                       for an even better         experiences with
        manufacturing                     customer profile, peer       sole add-on and                                           fit for future shoe        the brand
                                                                                                 • Associate recognizes and
        intelligence and                  groups, trends, and          completes the               greets consumer in store,     recommendations
        consumer profile                  social media inputs          purchase with Apple         provides pickup order,        and potential make-
      • Based on explicit                 using machine                Pay for nearby store        and guides customer to        to-order shoes
        consent, consumer                 learning                     pickup                      foot scan                   • Aggregate foot
        has valuable real-                                           • Retailer fulfills order   • Foot scan information is      profiles help R&D
        time visibility on                                             and delivers same           automatically added to        for new product
        product use, wear                                              day for store pickup        consumer profile, thereby     development
        and tear, and insights                                         from closest                further enhancing
        on running patterns                                            microfulfillment center     relevance of future
                                                                                                   recommendations

      POTENTIAL
      BENEFITS
                                              17%
                                              Increase in revenue
                                                                                             40%
                                                                                             Increase in subscription
                                                                                                                                               20%
                                                                                                                                               Reduction
                                              for experience leaders                         revenues                                          in logistics costs

      Source: SAP Performance Benchmarking

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                                                 13
IMPLEMENT DIGITAL
                      SUPPLY CHAINS
                      In 2025, customers won't come to the retailer, the retailer
                      will come to them. All the factors that drive demand –
                      promotions, seasonality, events, weather – will be
                      dynamically taken into account to predict demand.
                       With drones and driverless cars, real-time                To get there, retailers will use predictive analytics
                      product delivery at a low cost will offer a                and machine learning to predict demand and
                      significant competitive advantage. Robotics                supply of the individual household. Subsequently
                      and artificial intelligence will drive efficiency          extending their business processes, retailers will
                      in retail warehouses. (See Figure 3.)                      connect to the point of consumption – such as
                                                                                 the fridge – and automate replenishment. Lastly,
                      Consumers will expect their needs to be met                scalable, efficient, and convenient source-to-
                      automatically. Consequently, retailers will                consumer services to the place of need will build
                      become more vertically integrated, connecting              brand loyalty and allow retailers to develop brand
                      the end-to-end supply chain to automate                    extensions, such as food preparation services.
                      replenishment of consumer demand. Consumers
                      will expect transparency into the supply chain,            Ultimately, winning retailers will deploy a highly
                      with a focus on sustainability.                            flexible and highly efficient robotics supply chain
                                                                                 that is able to serve dynamic individual needs
                                                                                 anywhere and anytime.

                      Figure 3: End-to-End Connected Digital Supply Chain

                      69% of retailers consider it important to have visibility into the global inventory pool and optimize it
                      for a “source anywhere, fulfill anywhere” model, but only 15% are able to do so.10

                      How did a leading Swiss retailer improve its supply chain agility through digitalization? Migros offers product freshness
                      and a better shopping experience for supermarket customers.

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                  14
FROM MANUAL, ERROR-PRONE
     SUPPLY TO HANDS-FREE
     SUPPLY CHAINS
     With this integrated, end-to-end scenario, you are able to create an
     automated, connected, hands-free supply chain that delivers new
     levels of speed and efficiency as well as superior value to your
     shoppers and consumers.

     TRADITIONAL SCENARIO

     • Manufacturer sends • Delays in                                 • Often manual and        • Issues align the           • Goods can arrive     • Customer faces
       product to a retail  traffic are not                             error-prone goods         supply chain                 too late or            empty shelves
       distribution center  accounted for                               receipt occurs          • No visibility on             damaged without      • Store associates
     • No inventory                                                     with paper or             status on the road           warning                have no
       visibility on the                                                scanner-based             is available                                        information on
       road is available                                                lists                                                                         upcoming arrivals
                                                                                                • There is no chance
     • No information on                                                                          to react
       delivery status is
       available

     NEW-WORLD SCENARIO

     Real-time supplier collaboration                             Real-time alerts and automated response           Supply chain automation         Consumer safety

     • Online order confirmation • Smart rerouting                      • Goods receipt in       • Real-time alerts on         • Goods receipt in   • Fully stocked
       based on collaborative      in case of issues                      distribution             issues such as cold           store with RFID      shelves
       demand planning and         along the route                        center with RFID         chain violation, theft,     • Secure supply      • Customer getting
       order forecast                                                                              and delays                    chains supported     detailed
                                                                                                                                 by blockchain        information on
                                                                                                                                 transactions         pedigree,
                                                                                                                                                      ingredients, cold
                                                                                                                                                      chain compliance,
                                                                                                                                                      and more

     POTENTIAL
     BENEFITS                                 30%
                                              Reduction in supply
                                                                                             40%
                                                                                             Reduction in damage
                                                                                                                                            25%
                                                                                                                                            Reduction in total
                                              planning costs                                 and waste                                      logistics cost

      Source: SAP Performance Benchmarking

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                                          15
RUN SMART STORES
                      Consumer-centric retail stores will use experience
                      management technology to turn their customers into
                      advocates, their employees into ambassadors, and
                      their brands and products into obsessions.
                      To stay relevant, even more flexible supply chain        With customer identification, smart fitting, endless
                      processes will be needed. In addition, retailers         aisles, and gamification, the opportunities will drive
                      need to become increasingly self-aware and               loyalty as well as new revenue opportunities.
                      connected, providing a constant feedback
                      loop to the consumer downstream and to the               The journey will start with empowering the front-
                      manufacturer upstream. (See Figure 4.)                   line sales staff with real-time customer, product,
                                                                               and inventory data to serve their customers
                      In 2025, the online and physical shopping                better – regardless of channels, This will be
                      experiences will merge by leveraging the best            extended through sensor-based customer
                      disruptive technologies, turning stores into             identification, store interaction, and checkout as
                      “brand experiences.” Virtual reality, the use            well as automated store processes. The result
                      of digital technology to create immersive                will be more productive, knowledgeable, and
                      simulations, targeted marketing with AI, and             happy store employees that focus on selling
                      augmented reality that lets users interact with          versus stocking or administrative tasks.
                      digital content overlaid on real-world content
                      will allow retailers to create differentiating           Ultimately, stores will be transformed into
                      shopping experiences. Customer interaction               experience centers with highly personalized
                      will be captured to optimize assortments,                services backed by unified digital experiences.
                      pricing, and promotions.

                      Figure 4: Turn Stores into Brand Experience Centers

                                                                                  Instant recognition         “Clienteling”

                                                                                  Self-services               New trials

                                                                                  Endless aisles              Augmented reality

                                                                                  Instant delivery            Exclusive offers

                                                                                  Ultraconvenience            Restaurants

                                                                                  Gaming                      Instant personalization

                       74% of retailers consider it important to equip store associates with real-time product and inventory
                       information to help them serve shoppers better, but only 30% are able to do so.11

                      Tommy Bahama is a brand that is constantly innovating – expanding from apparel to furniture to restaurants.
                      However, the company is committed to letting consumers interact with the brand any way they want to, in
                      whatever channel they desire. A commerce solution is what enables the company to deliver a personalized
                      experience to each of its consumers.

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                        16
FROM DISCONNECTED
     STORES TO BRAND-
     BUILDING EXPERIENCES
     Create a smart store to deliver brand-building store experiences. With this
     integrated, end-to-end scenario, you can manifest your brand, create new
     store experiences, and capture changing needs by running your stores like
     an online business.

     TRADITIONAL SCENARIO

   • Shopper enters story                  • The interaction is     • Store is run by point-of- • Staff has no access to     • No personalized offers • No ability to
     anonymously                             captured only            sale transactions           real-time inventory        • No convenience           differentiate the
   • No history is available                 upon checkout          • Customer sees only          information or               options                  customer
                                           • No interaction is        what is sold                incoming deliveries                                   experience or offer
   • No insight into the                                                                                                     • No help when items
                                             sensed                                                                                                     service that drives
     shopper’s needs,                                               • Valuable interaction data • Staff can’t guide            are not available
                                                                                                  customers                                             loyalty
     preferences, or buying                                           is lost                                                • No ability to provide
     behavior is available                                                                                                                            • Stores exposed to
                                                                    • Customer preferences                                     feedback
                                                                                                                                                        price competition
                                                                      are not discovered
                                                                                                                                                        from online pure
                                                                    • Decisions are made after                                                          plays
                                                                      the fact

     NEW-WORLD SCENARIO
      Relevant offers and                    Empowered staff         Product and experience feedback         Compelling shopping experience          New customer loyalty
      promotions

     • Shopper is recognized • Interaction is from                • Real-time response       • Real-time inventory         • Real-time inventory      • Combined insights
       and approached           smart shelf heat                    to relevant customer       and product                   information and            from both
       according to their       maps                                demand signals             information                   endless aisles             experience and
       privacy settings       • Sensor technology                 • Accelerated              • Ability to use              • Frictionless checkout      operational data
     • Smart “clienteling” is   helps optimize                      replenishment              geospatial data to                                       sets, enabling
                                                                                                                           • Convenient service
       enabled based on         store layouts,                                                 identify nearby stock                                    understanding of
                                                                  • Triggered product                                        options
       history and known and    assortments, and                                               locations                                                the key drivers of
                                                                    transfer with RFID                                     • Instant shopper
       predicted preferences    price points and                                                                                                        customer loyalty
                                                                    enablement to            • Price differences             feedback to optimize
                                enables better                      balance stock              eliminated and shelf                                   • Ability to drive
                                                                                                                             the experience and
                                understanding and                   between stores             stock controlled with                                    shopper and
                                                                                                                             drive new revenue
                                predicting shopper                  flexibly                   advanced scanner                                         consumer loyalty
                                                                                                                             opportunities
                                preferences                                                    technology                                               and increase
                                                                                                                                                        shopper share of
                                                                                                                                                        wallet

     POTENTIAL
     BENEFITS
                                              25%
                                              Increase in revenue
                                                                                           50%
                                                                                           Reduction in
                                                                                                                                             30%
                                                                                                                                            Increase in inventory
                                                                                           markdowns                                        turnover

      Source: SAP Performance Benchmarking

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                                             17
DEVELOP NEW
                      BUSINESS MODELS
                      In 2025, the majority of retail companies' revenue will come
                      from services developed from the insight from consumer
                      data. New business models will include subscription, pay -
                      per-use, or outcome-based models.
                      These services will move from being product                 To make it work, retailers will need a deep
                      add-ons to offerings in their own right, with               understanding of their customers’ consumption
                      separate revenue streams, and they will not be              habits and must occupy a trusted position in their
                      restricted to the companies’ own products but               lives.
                      will rather evolve into multibrand services beyond
                      current product categories. The intelligent                 With this in place, they can use experience and
                      retailers are the ones willing to chart new                 operational data to create new offers and services.
                      territories that are adjacent to their business.            By extending current business processes to
                      (See Figure 5.)                                             connecting with consumers, retailers can offer
                                                                                  use-based services enabled by sensors. The
                      The next wave of retailers will think of their              ultimate transformation will be moving from
                      brand as a scalable platform, allowing for brand            selling products to selling outcomes, facilitated
                      extensions and creative partnerships into                   by “no ownership” and subscription services.
                      telecommunications, travel and entertainment,
                      and financial services.

                      Figure 5: Extending Existing Business Models and Innovative Customer Engagement

                                                                  Automated
                                      New offerings                                 Pay per outcome           Personalized nutrition
                                                                  replenishment

                                                                  Automated
                                      Pay per use                                   Zero-click ordering       Management of the
                                                                  replacement
                                                                                                              fridge
                                      Subscriptions               New trials        Fashion curation          No ownership models

                      61% of organizations consider it important to leverage strengths (customers, assets, core competencies)
                      and work with partners to drive successful business models, but only 25% are able to do so.12

                      Tata CLiQ helps connect Indian consumers in 900 cities and 10,000 villages to modern retail. SAP ® Customer
                      Experience solutions help offer hundreds of brands and thousands of items – all on one platform. Now people
                      everywhere – from large cities to small villages – can get deliveries to their doorsteps or local stores.

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                        18
FROM TRADITIONAL RETAIL
     TO SELLING OUTCOMES
     AND LIFESTYLES
     With this integrated, end-to-end scenario, gain a superior understanding of
     your customers’ needs and use it to create new revenue-generating offers
     and services, such as personalized meals with ingredient and recipe meal-kit
     service. Reimagine customer engagement to deliver better health outcomes.

     TRADITIONAL SCENARIO

                                          ?                             ?                                                                                    ? ?
                                                                                ?                                                                              ?

               • Consumer shops for                               • Lack of information                 • Items for a meal can be                        • No added
                 groceries with a few                               for store staff to make               incomplete                                       consumer value
                 meals in mind, at best                             recommendations                     • Key items can be forgotten or                  • No way to
                 equipped with a                                  • No customer history, no               out of stock                                     differentiate
                 shopping list                                      insight on preferences                                                                 retail services
                                                                                                        • Leftovers and excess
                                                                  • No recipes, no information on         packaging can result
                                                                    nutritional values, no way to
                                                                    match with consumer lifestyle

     NEW-WORLD SCENARIO
      New levels of customer proximity and understanding                                 Selling balanced and healthy nutrition                 Hyperpersonalization

                                                                                                    Nutrition expert      Food and nutrition experts help consumers
                                                                    Consumer                                              discover matching items based on their
         Consumer subscribes to meal-kit service,                                                                         personal preferences and buying history
                 which provides cooking and taste
            preferences and physical and exercise                                                                           Through machine learning, the back-end system
       information per their individual preferences                                                                         determines recipe recommendations based on
                                          and goals                                                                         consumer data, preferences, and history,
                                                                                                                            including data from social media

                                                                                                    Home                    Trend analysis from Web searches helps make
                  Feedback and machine learning
                                                                                                                            recommendations that drive demand
                  can be used to improve recipes,
               recommendations, and the overall                                                                             Meal kits are assembled and shipped directly to
              offering, and the next delivery cycle                                                                         consumers based on shipping preferences
                                      is kicked off
                                                                                                                       Home delivery or pickup of selected meal kits are
                                                                                                                       according to specs, with the right size, amount, and
                        Consumer profile and preferences are                                                           nutritional values, and with reduced, sustainable
                          enhanced based on structured and                                                             packaging
                                   nonstructured feedback
                                                                                                Consumer prepares meals and provides feedback

      POTENTIAL
      BENEFITS
                                              3x
                                              Increase in shopping
                                                                                             40%
                                                                                             Reduction in logistics
                                                                                                                                          30%
                                                                                                                                         Increase in repeat
                                              basket value                                   cost per item                               purchase rate

      Source: SAP Performance Benchmarking

Five Priorities for Success
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                                              19
KEY
                 TECHNOLOGIES
                 The current pace of technological advancements has the most
                 profound impact on enabling how retailers transform themselves
                 to respond to their customer needs and to the market trends.

                 Intelligent technologies promise to bring great benefits such as
                 productivity and efficiency gains, enabling innovative new business
                 models and new revenue streams. The following intelligent
                 technologies are instrumental in helping retailers respond to the
                 market trends. Each of these priorities will be enabled by emerging
                 intelligent technologies.

                 Artificial Intelligence and Machine Learning           Data As a Strategic Asset and Advanced
                 Businesses can leverage these capabilities to          Analytics
                 eliminate repetitive manual tasks and drive the next   The recognition that data is a strategic asset
                 level of intelligent business process automation.      is a fundamental shift for most businesses.
                 Today, advances in speech and visual recognition       Retailers that curate their data and aggressively
                 are dramatically changing how consumers interact       acquire data from external sources will have
                 with retailers – for example, shopping by voice with   significant advantage over their more traditional
                 a personal home assistant or using visual search to    competitors. Empowered users can get real-time
                 find a product. Robotic process automation             visibility into their changing environment, simulate
                 streamlines repetitive, rule-based processes and       the impact of business decisions, mitigate risk, and
                 tasks in an enterprise and reduces cost through the    achieve better customer outcomes.
                 use of software robots by replicating specific tasks
                 or keystrokes.

Key Technologies
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                               20
The Internet of Things (IoT) and
                                                                                                             ~50%
Conversational AI
Voice interfaces will be the go-to                                In-Store Technologies
technology for the next generation                                Retailers are using IoT capabilities       Of new mobile apps use voice as a primary
of applications, allowing for greater                             to bring digital capabilities to the       interface, and 50% of the consumer-facing
                                                                                                             G2000 use biometric sensors to personalize
                                                                  physical world. The IoT through
simplicity, mobility, and efficiency                                                                         experiences by 202013
                                                                  product-level RFID is being used to
while increasing worker productivity
                                                                  transform the store, from basics,
and reducing the need for training.
In customer interactions, they will
                                                                  such as inventory management
                                                                  with the IoT, to more advanced
                                                                                                             40%
                                                                                                             Of retailers will have developed a customer
transform customer engagement                                     experiences such as smart mirrors.         experience (CX) architecture supported by
and allow targeted and fully                                      The checkout process continues to          an AI layer by 2019 14
informed exchanges anytime,                                       evolve to meet customer demands
                                                                  with technologies such as self-
                                                                                                             30%
anywhere.
                                                                  checkout, self-scanning and smart
Blockchain                                                        checkout. Fully automated stores           Increased conversion rate and up to 25%
                                                                  are already established in parts of        higher revenues from a CX architecture
A relatively recent breakthrough                                                                             supported by an AI layer15
                                                                  Asia and are being introduced in
technology, blockchain is
                                                                  other markets.
revolutionizing the movement and                                                                             Up to
storage of value by creating a chain
of unaltered transactional data. The
                                                                  Virtual and Augmented Reality
                                                                  Virtual reality (VR), the use of digital
                                                                                                             25 %
                                                                                                             increased inventory turns through 2021 for
blockchain model of trust, through                                technology to create immersive             retailers that leverage AI, AR, and the IoT for
massively distributed digital                                     simulations, was once the stuff of         employee and customer engagement to
consensus, has the possibility                                    science fiction. So was augmented          respond to stakeholders’ experience
                                                                  reality (AR), which lets users             expectations16
reshape supply chains and
commerce across the entire digital                                interact with digital content that’s
economy.
In the near term, blockchain based
                                                                  overlaid on the real world. They will
                                                                  become the standard way to                 20%
                                                                  demonstrate a product, whether             Improved customer satisfaction for retailers
solutions are satisfying consumer’s                               that is furniture or paint in the          that leverage AI, AR, and the IoT for employee
                                                                                                             and customer engagement to respond to
demand for solutions to support                                   consumer’s home, beauty products           stakeholders’ experience expectations 17
global traceability and sustainability                            applied to the consumer’s face, or
in food and agricultural products.                                fashion worn virtually by the              Up to
                                                                  consumer
Solutions to validate authenticity
and to fight counterfeiting are also                              .                                          15 %
perfect use cases for blockchain                                  Data Platform to Manage                    employee productivity for retailers that

technology.                                                       Experience                                 leverage AI, AR, and the IoT for employee and
                                                                                                             customer engagement to respond to
                                                                  Leaders are interlocking the               stakeholders’ experience expectations 18
                                                                  operational performance data from
                                                                  companies’ business systems
                                                                  (what is happening) with the
                                                                  experience data coming from
                                                                                                             58%
                                                                                                             Of human task hours will be automated
                                                                                                             by 202519

                                                                                                             99%
                                                                                                             Accuracy in voice and video recognition by
                                                                                                             202020

                                                                                                             20.4 billion
                                                                                                             Connected devices will be in use by 2020 21

Key Technologies
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                         21
GETTING
                                                                  THERE:
                                                                  A PHASED
                                                                  APPROACH
                                                                  Companies will become
                                                                  intelligent enterprises on
                                                                  three distinct tracks as they
                                                                  evolve their strategic
                                                                  priorities to match their
                                                                  company’s vision. They will:

                                                                         1. Optimize what they already do by
                                                                            implementing a stable and
                                                                            scalable digital core to make
                                                                            processes more transparent and
                                                                            integrated

                                                                         2. Extend their current processes by
                                                                            connecting them to the real world
                                                                            using IoT technologies

                                                                         3. Transform their business using a
                                                                            constant stream of data enabling
                                                                            new service-driven business
                                                                            models. (See Figure 6.)

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                22
Figure 6: Strategic Priorities Across the Maturity Framework

                                                                  Optimize             Extend                Transform           Be immersed in consumer lives
                                                                                                                                  through trusted experiences
                                                                                                                                       delivered at scale.

                                                             Leverage deep                                 Create tailored,      ▪   Tailored assortments
                Be customer                                                        Respond to real-
                                                            understanding of                                  immersive          ▪   Seamless omnichannel
                                                                                    world data and
               centric across                               customer need to                                 experiences             interactions
                                                                                  changes in use and                                 Preempted changes in
              the value chain                                 drive winning                                   predicting         ▪
                                                                                    consumption                                      preferences
                                                              assortments                                  customer needs

                                                                                  Identify moments of      Mass-customize
                       Serve the                            Understand and
                                                                                   need and respond       product and service    ▪   Mass customization
                                                            predict individual
                        segment                                                      with timely and       bundles to single     ▪   Zero-click ordering
                                                             and contextual                                                          Customer-for-life relationships
                          of one                                                   relevant offers and        customer           ▪
                                                            customer needs
                                                                                        services              outcomes

                                                                                                                                 ▪   Hands-free robotics supply
                    Implement                             Digitalize the supply                                                      chain
                                                                                    Extend to point         Gain source-to-
                                                             chain from the                                                      ▪   Connected homes and smart
                 digital supply                                                   of consumption for       consumer delivery         products
                                                            customer to the
                         chains                                                    instant response       to the place of need   ▪   Flexible delivery anywhere,
                                                             manufacturer
                                                                                                                                     anytime

                                                                                    Enable sensor-        Create experience
                                                           Empower the front
                                                                                    based customer        centers with highly    ▪   Unified digital experiences
                      Run smart                            line with real-time
                                                                                  identification, store       personalized       ▪   Ultraconvenience
                         stores                             insights to serve
                                                                                      interaction,            services and       ▪   Experiential retail
                                                             their customers
                                                                                     and checkout          ultraconvenience

                                                                 Leverage                                                        ▪   “No ownership” and continuity
                  Develop new                                 experience and       Enable new use-        Move from selling          business models
                     business                                operational data     based services with     products to selling    ▪   Platform scale created,
                       models                              to create new offers        sensors                outcomes               expanding into adjacent and
                                                               and services                                                          new businesses

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                                       23
EARLY DIGITAL
                                                                  ADOPTERS
                                                                  LEAD THE WAY
                                                                  How do you achieve these
                                                                  strategic priorities?

                                                                  Start with reimagining your business together with
                                                                  your customers. Then build a path for even more
                                                                  optimization and intelligent automation to simplify
                                                                  your business and free up resources to invest in even
                                                                  more digitaltransformation programs and find new
                                                                  business models and revenue streams.

                                                                  According to a July 2018 study by Forrester
                                                                  Consulting that was commissioned by SAP,
                                                                  innovative retailers focus on digital priorities to help
                                                                  them achieve digital transformation more than other
                                                                  retail companies. (See Figure 7.)

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                             24
Figure 7: Innovators Focus More on Digital Priorities Than Others22

          Be customer                                   Innovators                                             95%
         centric across
        the value chain                                 Others                                    78%

                 Serve the                              Innovators                                      86%
                  segment
                    of one                              Others                              69%

                                                        Innovators                                             95%
              Implement
           digital supply
                                                        Others                           67%
                   chains

                                                        Innovators                                            93%
                Run smart
                   stores
                                                        Others                     61%

            Develop new                                 Innovators                                       89%
               business
                 models                                 Others                              69%

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                     25
SAP’S
                                                                  FRAMEWORK
                                                                  FOR THE
                                                                  INTELLIGENT
                                                                  ENTERPRISE
                                                                  The Intelligent Enterprise
                                                                  framework is
                                                                  a suite of intelligent business
                                                                  applications that use
                                                                  intelligent technologies and
                                                                  can be extended on a digital
                                                                  platform. (See Figure 8.) This
                                                                  enables next-generation
                                                                  business processes to deliver
                                                                  breakthrough business value
                                                                  on our customers’ journey to
                                                                  becoming intelligent
                                                                  enterprises.

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                    26
Figure 8: The Intelligent Enterprise Framework

                                                                               Digital
                                                            Manufacturing       Core         People
                                                            & Supply Chain                 Engagement

                                  Customer                                                            Network & Spend
                                  Experience                                                           Management

                                                                             Intelligent
                                                                                Suite

                                                                   Intelligent Technologies

                                                                      AI/ML | IoT | Analytics

                                                                              Digital
                                                                             Platform

                                                               Data                         Cloud
                                                            Management                     Platform

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                        27
HOW TO PLAN
                       YOUR PATH TO THE
                       INTELLIGENT ENTERPRISE
                       In the digital economy, intelligent technologies and integrated
                       business processes are now driving digital transformation.
                       To do this effectively requires an end-to-end plan for becoming an intelligent enterprise. This includes
                       creating an intelligent enterprise road map and implementation plan with proven best practices and
                       deployment options that optimize for continuous innovation with a focus on intelligent outcomes.

                       The End-to-End Journey to Becoming an Intelligent Enterprise

                       Plan                                       Build and launch               Run                         Optimize
                       well to manage                             with proven best               all deployment              for continuous
                       expectations                               practices                      models                      innovation

                       Simplify and innovate                      Standardize and innovate       Run with one global         Optimize to realize value
                       ▪ Reimagined business                      ▪ Model-company                support                     Continuously captured and
                         models, business                           approach to accelerate       ▪ One global, consistent    realized benefits of digital
                         processes, and work                        adoption with model            experience                transformation
                                                                    industry solutions
                       ▪ SAP Digital                                                             ▪ End-to-end support –
                         Transformation                           ▪ Design thinking and            on premise, in the
                         Framework                                  rapid, tangible prototypes     cloud, or with a hybrid
                         methodology as                                                            approach
                                                                  ▪ Coengineered industry
                         a guide for digital
                                                                    innovations delivered
                         transformation
                                                                    with agility
                       ▪ Value-based innovation
                         road maps

                        To move forward with speed and agility, it helps                          They are built on preconfigured SAP solutions
                        to focus on live digital data and combine solution                        based on best practices supported by SAP, along
                        know-how and industry-specific process                                    with the business content that encompasses our
                        expertise with data analytics so that the right                           experience and expertise relevant for the
                        digital reference architecture is defined and                             industry. They provide a comprehensive baseline
                        delivered. In that context, a model-company                               and come with the accelerators to jump-start
                        approach is aimed at simplifying and increasing                           digital transformation projects.
                        the speed of the digital transformation journey.
                        Model companies represent the ideal form of
                        standardization for a specific line of business or
                        industry.

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                            28
COMPREHENSIVE SAP
                      ECOSYSTEM
                      ORCHESTRATING
                      THE WORLD TO
                      DELIVER VALUE FASTER
                       SAP partners play a key role in helping organizations like yours succeed.
                       These experts can help you identify, buy, build, implement, service, support,
                       and run the SAP for Retail solutions that best fit your unique needs.
                       Our comprehensive retail ecosystem offers integration into:
                       ▪     A wide range of business services              ▪   Complementary and innovative third-party
                             (merchandising, point of sale, supply chain,       solutions – accessible via SAP App Center
                             analytics, omnichannel, and more)
                                                                            ▪   Broad reach through partners to serve your
                       ▪     Open architecture with a choice of hardware        business of any size anywhere in the world
                             and software
                                                                            ▪   Forum for influence and knowledge
                                                                            ▪   Large skill sets

                      Our partner ecosystem includes, among others:

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                             29
SAP IS COMMITTED
                    TO INNOVATION

                      10-Year Innovation Vision                              Comprehensive Industry                Proven Services Offering
                      SAP delivers fully intelligent                         Coverage                              By bringing together world-
                      business solutions and networks                        SAP enables comprehensive             class innovators, industry
                      that span across company                               coverage of the complete              and emerging technology
                      boundaries and promote purpose-                        retail value chain across the         expertise, proven use cases,
                      driven businesses. These solutions                     enterprise. With its clear            and design thinking
                      will be the most empathic symbiosis                    industry road map, SAP is             methods, we help retail
                      between machine intelligence and                       the partner of choice for the         companies develop
                      human ingenuity.                                       Retail industry.                      innovations that deliver
                                                                                                                   impact at scale.

                       ▪ Self-running enterprise                             ▪ More than 13,400 retail             ▪ Proven methodologies
                         systems                                               manufacturers in 121                  to drive innovation, from
                       ▪ Self-organizing business                              countries innovating with             reimagining customer
                         ecosystems                                            SAP solutions                         experiences to enhancing
                       ▪ New markets and business                            ▪ 99% of retail companies in            operations
                         models                                                the Forbes Global 2000 are          ▪ Innovation that is fueled
                                                                               SAP customers                         through a managed
                                                                             ▪ All lines of business are             innovation ecosystem
                                                                               supported on a single                 from SAP
                                                                               platform                            ▪ Ability to build your own
                                                                                                                     innovation capability and
                                                                                                                     culture

                  SAP supports retail companies in becoming intelligent enterprises – providing
                  integrated business applications that use intelligent technologies and can be
                  extended on SAP Cloud Platform to deliver breakthrough business value.

                                                         Learn more

                                                         ▪    SAP.com for Retail                   ▪   SAP Digital Business Services
                                                         ▪    SAP Leonardo                         ▪   SAP Design Thinking

Getting There: A Phased Approach
© 2020 SAP SE or an SAP affiliate company. All rights reserved.
                                                                                                                                                  30
RESOURCES

                       Outlined below is external research that was used as supporting material for this paper.

                      1. “Stitch Fix’s CEO on Selling Personal Style        13. “IDC FutureScape: Worldwide IT Industry 2018
                      to the Mass Market,” Harvard Business Review,         Predictions,” IDC, October 2017.
                      November 2018.
                                                                            14.–18. “Executing Digital at Scale: IDC’s Digital
                      2. “The Fascinating Ways Warby Parker Uses            Use Case Map for Retail – A Three-Horizons
                      Artificial Intelligence and AR to Change Retail,”     Approach,” IDC sponsored by SAP, 2018.
                      Forbes, April 18, 2019.
                                                                            19. “The Future of Jobs Report 2018,” World
                      3. “In the Era of Online Shopping, the Retail Store   Economic Forum, 2018.
                      Is Immersive Theater,” Quartzy, November 18,
                                                                            20. Michael Brenner, “Disruption and Opportunity:
                      2018.
                                                                            Advanced Analytics, Automation, and AI in Digital
                      4. John Maxwell, “Total Retail 2017: 10 Retailer      Media,” Digitalist Magazine, March 26, 2019.
                      Investments for an Uncertain Future,” PwC, 2017.
                                                                            21. “Gartner Says 8.4 Billion Connected ‘Things’
                      5. “2019 Shopper Vision Study: Exploring              Will Be in Use in 2017, Up 31 Percent from 2016,”
                      Shoppers’ and Retailers’ Divergent Views of the       Gartner, February 7, 2017.
                      In-Store Experience,” Zebra, 2019.
                                                                            22. “Emerging Opportunities for Retailers to
                      6. Lucas Roh, “The Retail Apocalypse Is Not           Deploy Industry Processes in the Cloud,”
                      Happening: Why Retailers That Innovate Will           Forrester Consulting commissioned by SAP, 2018.
                      Never Go Extinct,” Forbes, September 28, 2018.
                      7. SAP Performance Benchmarking, 2017.
                                                                            Note: All sources cited as “SAP performance
                      8. “Carrefour Starts Selling Local Products           benchmarking” are based on our research with
                      Online,” Carrefour, August 1, 2018.                   customers through our benchmarking program
                                                                            and other direct interactions with customers.
                      9.–12. SAP Performance Benchmarking, 2017.

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