Está en la página 1de 32

Retail Marketing 2013:

Organizational Drift
Benchmark Report 2013
Nikki Baird & Steve Rowen, Managing Partners
August 2013



Sponsored by:




Supported by:




ii
Executive Summary
Retail marketing has received a tremendous amount of attention over the last 18 months. It has
gone from its own department doing its own thing - down to its own technology purchases - to the
center of attention in an enterprise-wide omni-channel transformation. Big, rapid changes mean
lots of new challenges, and this year's benchmark report shows that retailers are feeling the
pressure.
Key findings
Retailers appear to be turning the corner on uncertainty about the economy and
uncertainty about what role marketing should ultimately play within the enterprise -
secondary to merchandising? Or primary function that stands on its own?

Laggards seem to be on the cusp of leaving behind price as their only competitive
differentiator. This has enormous implications for marketing, as they attempt to move
from price-only strategy and communications, to more brand-oriented marketing.

Marketing has a lot on its plate already, and the retailers who are moving quickly to
consolidate digital and traditional marketing are creating enough pressure on their
marketing departments that key digital strategies are getting left behind.

Marketing is much more important to the retail enterprise, and thus marketing tools have
increased in their perceived value to the retailers participating in our survey, almost
across the board. However, a showdown is coming as to which platform will
ultimately be the single customer interaction platform that retailers are looking for:
will it be CRM or will it be the digital marketing platform that ultimately wins?
BOOTstrap Recommendations
Because retailers are focused on so much organizational and process change within the
marketing department, our recommendations focus on helping retailers ensure they minimize the
disruptive nature of their transformation. Most important, retailers need to remember that a shift in
strategy - from cost cutting to growth - also necessitates a shift in both marketing strategy and
tactics. Such a shift also has big implications for technology investments - if retailers can
successfully navigate the uncertain future of retail marketing platforms.


iii
Table of Contents
Executive Summary ........................................................................................................................ ii
Research Overview ......................................................................................................................... 1
Big Changes in Process for Retail Marketing .............................................................................. 1
Defining Winners and Why They Win .......................................................................................... 2
Methodology ................................................................................................................................ 3
Survey Respondent Characteristics ............................................................................................ 3
Business Challenges ....................................................................................................................... 4
Back to the Future ....................................................................................................................... 4
Answering the Question ............................................................................................................... 5
Containing the Excitement ........................................................................................................... 6
Opportunities ................................................................................................................................... 7
The Barriers Have Fallen ............................................................................................................. 7
As Goes the Strategy, So Go the Channels ................................................................................ 8
Speed is Not Always Good, Even in Marketing ......................................................................... 10
Organizational Inhibitors ................................................................................................................ 13
Old vs. New ............................................................................................................................... 13
Two Different Takes ................................................................................................................... 14
Whos Driving This Thing? ......................................................................................................... 16
Technology Enablers ..................................................................................................................... 19
No Shortage of Interest .............................................................................................................. 19
Great, But ............................................................................................................................... 20
BOOTstrap Recommendations ..................................................................................................... 24
Returning to Growth Means Changing the Strategy .................................................................. 24
When Strategy Changes, So Should Tactics ............................................................................. 24
Consolidation Means "Bring Together" ...................................................................................... 24
Platforms Require Careful Evaluation ........................................................................................ 25
Appendix A: RSRs Research Methodology .................................................................................... a
Appendix B: About Our Sponsors ................................................................................................... b
Appendix C: About RSR Research ................................................................................................. c


iv
Figures
Figure 1: Knowing More but Doing Less ......................................................................................... 1
Figure 2: Doing More - A Winning Behavior .................................................................................... 2
Figure 3: Turning the Corner ........................................................................................................... 4
Figure 4: Some Turn Slower Than Others ...................................................................................... 5
Figure 5: Settling the Ownership Question ...................................................................................... 5
Figure 6: Consensus around Data Is Easy ...................................................................................... 6
Figure 7: Surprise! You Can't Compete On Price Alone ................................................................. 7
Figure 8: A Glimmer of Hope for Laggards ..................................................................................... 8
Figure 9: Things Have Changed While You Were Away ................................................................. 9
Figure 10: Dipping a Toe into Digital Waters ................................................................................... 9
Figure 11: Slow and Steady Wins? ............................................................................................... 10
Figure 12: It's Never Enough ......................................................................................................... 11
Figure 13: Laggards and Strategic Value - Who Knew? ............................................................... 11
Figure 14: The More Things Change, the More They Stay the Same ........................................... 13
Figure 15: Winners Tread Lightly Around Org Change and Culture ............................................. 14
Figure 16: Platform and On-Demand Rule the Roost ................................................................... 15
Figure 17: Laggards Swear They Need To Get Strategic ............................................................. 15
Figure 18: CEO And CMO Win The Customer Experience Battle... ............................................. 16
Figure 19: ...But Have They Won the War? .................................................................................. 17
Figure 20: Winners Say Yes, Laggards Undecided ...................................................................... 18
Figure 21: The Value Stampede ................................................................................................... 19
Figure 22: Winners Have a Different Value Emphasis .................................................................. 20
Figure 23: Still a Lot of Gaps to Fill ............................................................................................... 21
Figure 24: Uneven Adoption .......................................................................................................... 22
Figure 25: Big Appetites, Small Plates .......................................................................................... 22



1
Research Overview
Big Changes in Process for Retail Marketing
In retail, the marketing message has long been the front line of customer centricity and omni-
channel transformation. When retailers first realized they needed "one face to the customer"
across channels, the marketing messages were the first (and easiest) to change. That didn't
mean they were good at it, or that they could at all deliver on the cross-channel promises they
were making, but that didn't stop them from making those promises. And many retailers, when
choosing to take on consolidation across channels, looked to marketing as the starting point for
that process - looking to combine traditional and online marketing teams.
At the same time, the relative importance of marketing within the retail enterprise has rapidly
been rising, driven largely by the need to actually keep a lot of those cross-channel promises. As
RSR found in our last two benchmark surveys on marketing topics, retailers are busy
consolidating their marketing activities and elevating marketing leadership from a supporting role
for merchandising to a genuine seat at the executive table.
However, just because the future looks bright for the marketing department, retailers are not
necessarily well-positioned to deliver on customer expectations, whether in terms of the brand
promise, the product value proposition, or the shopping experience. As this year's benchmark will
show, while marketing is still the first internal organization to respond to the transformational
pressures of omni-channel retailing, it still has a long way to go, and a lot of pitfalls along the way.
As a case in point, we asked retailers to rate the degree to which they agree or disagree with a
series of statements related to their overall marketing sophistication. In 2013, more respondents
agreed more strongly that their customer loyalty program - a foundational element to collecting
and understanding customer data - is critical to their marketing strategy. They also more strongly
agreed with the idea that they know who their best shoppers are. But when it comes to execution,
the story changes (Figure 1).
Fi gure 1: Knowi ng More but Doi ng Less

Source: RSR Research, August 2013
18%
22%
32%
15%
28%
36%
My company is proficient at targeted
marketing across channels.
My company knows who our best
shoppers are.
Our customer loyalty program is a
foundational element of our marketing
strategy.
Marketing Sophistication:
"Strongly Agree"
2013 2012


2
It seems that the more retailers feel like they know their customers and have the ability to deepen
that understanding, the less confident they are in their ability to act on that information - as
indicated above in their response to the idea that their company is proficient at targeted marketing
across channels. It's as if retailers know what needs to be done and even know the specific
tactics and steps they need to pursue, but haven't quite gotten to where they can do it. And that
sums up the theme of this research report: marketing is on the cusp of becoming something
different than we've seen in retail before. But the question remains: will retailers get there? Or will
their existing culture, process, and technology hold them back?
Defining Winners and Why They Win
RSRs research always focuses on a category of retailers we call Retail Winners. Our definition
of Retail Winners is straightforward. We judge retailers by year-over-year comparable
store/channel sales improvements. Assuming industry average comparable store/channel sales
growth of five percent, we define those with sales above this hurdle as Winners, those at this
sales growth rate as average, and those below this sales growth rate as laggards." It is
consistent throughout much of RSRs research findings that Winners dont merely do the same
things better, they tend to do different things. They think differently. They plan differently. They
respond differently.
The Natural Response
The natural response, when you know more, is to do more. And Winning retailers quickly
differentiate themselves from their peers through their confidence in their companies' ability to
target marketing messages across channels (Figure 2).
Fi gure 2: Doi ng More - A Wi nni ng Behavi or

Source: RSR Research, August 2013
Ironically, as we'll see in this report, they achieve this confidence not from having a more
consolidated marketing function, but from approaching marketing consolidation slowly, and with
careful attention to both the processes that will be impacted by this consolidation - especially
when it comes to activities in digital channels - and to the cultural barriers to change that naturally
exist.
12%
18%
35%
11%
33%
36%
24%
32%
36%
My company is proficient at targeted marketing
across channels.
My company knows who our best shoppers
are.
Our customer loyalty program is a foundational
element of our marketing strategy.
Marketing Sophistication:
"Strongly Agree"
Winners Average Laggards


3
The end result is that Winners do more marketing across channels, and yet are more confident in
their ability to do that marketing well - with a single face to the customer.
Methodology
RSR uses its own model, called the BOOT Methodology
SM
, to analyze Retail Industry issues.
We build this model with our survey instruments. Appendix A contains a full explanation of the
methodology.
In our surveys, we continue to find differences in the thought processes, actions, and decisions
made by retailers who outperform their competitors and the industry at large Retail Winners.
The BOOT model helps us better understand the behavioral and technological differences that
drive sustainable sales improvements and successful execution of brand vision.
Survey Respondent Characteristics
RSR conducted an online survey from May - July 2013 and received answers from 122 qualified
retail respondents. Respondent demographics are as follows:
Job Title:
Executive/Senior Management (CEO,
CFO, COO, SVP) 19%
Middle Management
(VP/Director/Manager) 54%
Internal Consultant/Staff 20%
Other 7%

2011 Revenue (US$ Equivalent)
Less than $50 Million 24%
$51 - $249 Million 17%
$250 - $999 Million 26%
$1 - $5 Billion 17%
Over $5 Billion 16%

Products sold:
Fashion / Short Lifecycle / Seasonal 30%
Basic / Replenishment Goods 26%
Durable Goods / Consumer Electronics 27%
Perishable / Food 17%

Headquarters/Retail Presence:
USA 70% 73%
Canada 6% 30%
Latin America 0% 16%
Europe 7% 17%
Middle East 4% 13%
Africa 4% 11%
Asia/Pacific 10% 23%

Year-Over-Year Sales Growth Rates (assume average growth of 5%):
Better than average (Retail Winners) 38%
Average 46%
Worse than average (Laggards) 16%


4

Business Challenges
Back to the Future
Retail respondents to this year's marketing benchmark indicated some significant shifts in their
perception of their business challenges. And the decreases in challenge areas are just as
important as the increases.
Top three on retailers' lists of business challenges include difficulty with customer retention and
loyalty, keeping up with the new ways consumers are using technology (new to the list in 2013),
and a tie between too many communication channels with unproven effectiveness and keeping
up with all the new ways to engage with customers (Figure 3).
Fi gure 3: Turni ng the Corner

Source: RSR Research, August 2013
Customer retention and loyalty, and the challenges with maintaining both, have long been on the
top-three list for marketing business challenges, but every year it appears to grow in importance.
However, the driving reasons behind those increases seem to be shifting. For example, while
retailers may be scrambling to keep up with consumers - whether in technology-driven ways or
not - they certainly aren't scrambling to deal with a tough business environment: in 2012, 47% of
survey respondents said that the uncertain economy constrained their marketing budget. In 2013,
that number fell to 30%, putting it second from the bottom of the list.
Looking at business challenges by performance, it would appear that laggards are singing the
same sad song they have been singing since the economic downturn began - laggard
respondents are the driving factor behind both the difficulty with customer retention and loyalty
and challenges differentiating their brand, while their forward-looking Winning peers are much
more interested in the challenges posed by consumer use of technology (Figure 4).
23%
47%
41%
28%
29%
51%
26%
30%
41%
42%
42%
49%
61%
It's hard to differentiate our brand from our
competition
The uncertain economy constrains our marketing
budget
Customer segments are fragmenting, making it
harder to reach our consumers
We can't keep up with all the new ways to engage
with consumers
Too many communication channels have unproven
effectiveness
We cant keep up with the new ways consumers
are using technologies
Customer retention has become more difficult
and building customer loyalty is challenging
Top 3 Marketing Business Challenges
2013 2012
N/A


5
Fi gure 4: Some Turn Sl ower Than Others

Source: RSR Research, August 2013
However, as we'll see in the Opportunities section, what laggards are choosing to do about their
business challenges appears to have taken a significant shift.
Answering the Question
The biggest question over the last two years of RSR's marketing benchmark has been "Who
owns the customer experience?" In the past, that answer has been muddled - even in 2012, over
a third of respondents said "no one" in answer to that question.
In 2013, the answer has grown much more definitive. Those answering "no one" fell from 35% to
19%, and it wasn't just the CMO who benefited - almost every retail executive has stepped up
ownership of the customer experience (Figure 5).
Fi gure 5: Settl i ng the Ownershi p Questi on

Source: RSR Research, August 2013
61%
50%
24%
45%
59%
22%
31%
88%
44%
We cant keep up with the new
ways consumers are using
technologies
Customer retention has become
more difficult and building
customer loyalty is challenging
It's hard to differentiate our
brand from our competition
Marketing Business Challenges
Winners Average Laggards
8%
35%
6%
8%
8%
11%
25%
28%
19%
19%
23%
24%
25%
35%
38%
43%
eCommerce Executive
No explicit owner
Chief Merchant
COO
Chief Customer Experience Officer
VP Stores
CEO
Chief Marketing Executive
Customer Experience Owners
2013 2012


6
The only cautionary tale that exists in looking from 2012 to 2013 is that if retailers are going to
have collective leadership and responsibility for the customer experience, then they need to
ensure that everyone is working off of the same vision for what that customer experience should
be. Otherwise, "everyone" yields the same results as "no one."
Fortunately, retailers appear to be putting in the foundational elements to make that shared vision
possible - certainly, they are consolidating control over that most valuable resource, customer
data. The percent of respondents reporting that Marketing is the primary owner of customer data
internally nearly doubled from 2012 to 2013, from 33% to 61%, and those reporting "No explicit
owner" fell from 33% to 17% (Figure 6).
Fi gure 6: Consensus around Data I s Easy

Source: RSR Research, August 2013
Other internal areas also have increased ownership over customer data - store operations,
eCommerce/direct, and merchandising all showed increased ownership over 2012. However, this
increase appears to be driven more from a recognition of the value of customer data that is
generated in all aspects of the business (especially customer-facing ones), rather than a
diversification of ownership over consolidated data sources.
Containing the Excitement
When looking at the winds of change stirring around retail marketing, it's easy to get excited. The
impact of the economic downturn is fading away, and while retailers are just as challenged by
customer loyalty and retention as ever, it appears to be more in the context of keeping up with
their changing expectations and new technology-driven behaviors. At the same time, retailers are
getting focused when it comes to their marketing strategy - they are marshaling their executive
team to focus on the customer experience, and they are defining that customer experience based
on one view of the customer, owned by marketing and fed by all aspects of customer
engagement. As we'll see in the next section, the Opportunities are bright. But there are still
significant head winds that could blow retailers' marketing plans drastically off course.
5%
33%
7%
13%
14%
19%
33%
33%
10%
17%
20%
20%
22%
23%
34%
61%
Supply Chain / Fulfillment
No explicit owner
Merchandising
eCommerce/Direct Channels
Store Operations
Customer Service / Call Center
IT
Marketing
Customer Data Internal Owners
2013 2012


7
Opportunities
The Barriers Have Fallen
Retailers' top marketing opportunity remained relatively unchanged from 2012 to 2013: more
effective targeting by capturing more detailed customer preferences. Second on the list also held
steady: a greater focus on customer experience, less on product. But after that, all bets were off
(Figure 7).
Fi gure 7: Surpri se! You Can' t Compete On Pri ce Al one

Source: RSR Research, August 2013
Most dramatic was the shift at the bottom of the list, where interest in raising barriers to entry for
competition fell from 35% in 2012 to a measly 8% of respondents rating it a top-three opportunity
in 2013. Along with that, the percent of respondents believing that customers themselves could
help identify differentiating products, for example through things like crowdsourcing, fell almost by
half - from 44% in 2012 to 23% in 2013. And more practical and less ambitious opportunities, like
using digital channels to drive traffic to stores, increased from 28% of respondents in 2012 to
44% in 2013.
The result appears to be that retailers now recognize that price and/or product are not enough to
differentiate their brand. They need to focus on the customer experience to win, and they need to
use digital channels not to build a separate customer experience, but to create links between the
physical experience and digital realms.
This shift is where laggards really shine. Winners and laggards both reported an overriding
interest in focusing more on the customer experience and less on product (Figure 8).
35%
44%
41%
38%
40%
28%
48%
52%
8%
23%
25%
28%
31%
42%
44%
48%
53%
Raise the barriers to entry for competitors
Develop better products and services through
more direct customer input (i.e., crowdsourcing)
Switch our company from primarily traditional
marketing tactics to primarily digital marketing
Become more focused on our company's brand
promise to consumers
New marketing channels enable us to truly
differentiate our brand
Turn customers into brand advocates through
social media
Use digital channels to drive traffic to stores
A greater focus on customer experience, less on
product
More effective targeting by capturing more
detailed customer preferences
Top 3 Marketing Opportunities
2013 2012
N/A


8
Fi gure 8: A Gl i mmer of Hope f or Laggards

Source: RSR Research, August 2013
But laggards took it one step further, putting emphasis on becoming more focused on the
company's brand promise to consumers and developing more customer-focused products. No
laggards reported wanting to raise the barriers to entry for competitors, and they were much more
skeptical than peers on new marketing channels' ability to help them differentiate their brand.
We're going to take this as a positive sign for laggards, who, since the economic downturn, have
been in near-panic mode about conserving existing business and not focusing on trying to grow
or acquire new customers. In our most recent Pricing and Store benchmarks, laggards were
particularly pessimistic, pursuing low-price-at-any cost pricing strategies, and looking forward to a
future where they were closing stores rather than opening new ones.
Given how much the economy has diminished as a business challenge for retailers, it appears
that laggards are shifting their strategy from maintain/cut to grow. The question remains - is this
because the economy is improving, or is it because they have lived with pervasive economic
uncertainty long enough that they've just decided it's time to stop waiting? It's too early to tell, but
we will be watching this apparent shift to growth closely to see if it lasts.
As Goes the Strategy, So Go the Channels
The biggest caveat to laggards' shift in strategy (from maintain existing customers to acquire new
ones) is that their tactics will also need to change. The biggest question remaining from the
economic downturn is how much lasting impact will it have on shopper behavior? That's a difficult
question to answer when so much shopper behavior was also impacted by technology. Winning
retailers appear to recognize the second half of consumer behavior shifts (to more technology
0%
31%
44%
19%
13%
44%
50%
44%
56%
6%
19%
27%
38%
25%
46%
44%
56%
35%
13%
24%
24%
29%
32%
37%
42%
53%
61%
Raise the barriers to entry for competitors
Develop better products and services through
more direct customer input (i.e., crowdsourcing)
Become more focused on our company's brand
promise to consumers
New marketing channels enable us to truly
differentiate our brand
Switch our company from primarily traditional
marketing tactics to primarily digital marketing
Turn customers into brand advocates through
social media
Use digital channels to drive traffic to stores
More effective targeting by capturing more
detailed customer preferences
A greater focus on customer experience, less on
product
Top 3 Marketing Opportunities
Winners Average Laggards


9
use) and have moved to expand the digital communication channels they use to engage with
customers. Laggards have not moved to nearly the same degree (Figure 9).
Fi gure 9: Thi ngs Have Changed Whi l e You Were Away

Source: RSR Research, August 2013
Winners and average performing retailers have shifted their focus from traditional media like print,
TV, and radio, to search advertising, Facebook or other social networks, Twitter, and even mobile
advertising to a lesser extent. Laggards are still primarily focused on traditional media, direct mail,
and email. In other words, they are not necessarily in all the places where their shoppers engage.
However, even that is changing to some degree. When we look at the percent of retailers
reporting "no plans" to leverage a type of communication channel, we see that laggards are
consistent about avoiding digital channels - with one exception, Facebook (Figure 10).
Fi gure 10: Di ppi ng a Toe i nto Di gi tal Waters

Source: RSR Research, August 2013
62%
72%
68%
72%
57%
69%
56%
39%
55%
51%
69%
59%
49%
56%
39%
24%
92%
83%
75%
77%
42%
54%
42%
33%
Traditional
media
(print, TV,
radio)
Direct Mail Email Online
advertising
(display,
video)
Search
advertising
Facebook or
other social
network
Twitter Mobile
advertising
Communication Channels
"Longer Than 1 Year"
Winners Average Laggards
10%
7% 7%
10%
14%
3%
7%
11%
10%
19%
2% 2%
15%
10%
20%
17%
8%
8%
0%
15%
33%
0%
17%
25%
Traditional
media
(print, TV,
radio)
Direct Mail Email Online
advertising
(display,
video)
Search
advertising
Facebook or
other social
network
Twitter Mobile
advertising
Communication Channels
"No Plans"
Winners Average Laggards


10
When it comes to moving into digital channels, for some reason lagging retailers feel most secure
about pursuing Facebook as the entre into digital customer engagement. Oddly, they are least
enamored with search advertising - professing no plans there at over twice the rate of their peers.
We'll see in the Organizational Inhibitors section that there are reasons why laggards are slow to
move into these digital channels - it has a lot to do with their capacity to manage marketing
innovations - but it may also have a lot to do with who owns which communication channels, and
that is an area still in flux.
Speed is Not Always Good, Even in Marketing
It appears that laggards have moved the fastest when it comes to consolidating their cross-
channel marketing activities under the umbrella of corporate marketing. Winners have moved the
slowest (Figure 11).
Fi gure 11: Sl ow and Steady Wi ns?

Source: RSR Research, August 2013
Retailers have a difficult balancing act to maintain here. Customers aren't going to wait around for
retailers to figure out how to use digital channels to engage with them. In fact, by the time
retailers figure out one digital channel, consumers are off to the next new one. One of the
advantages of having the eCommerce team and/or a digital marketing specialty team focus on
some of these emerging channels has been that retailers have been able to engage in a lot of
innovation quickly.
The downside has been that retailers haven't been very consistent about telling their brand story
across channels, and this confuses customers - thus the move to consolidate marketing channels
so that it's easier to present one face to consumers.
If retailers move too fast to consolidate marketing, they risk missing important new engagement
channels. And thus, laggards are more highly consolidated into central corporate marketing, but
are less involved in more emerging digital channels.
66%
59%
45% 44%
43%
41% 41%
34%
66%
68%
64%
58%
62%
50%
48%
40%
75%
83%
67%
82%
73%
67%
64%
55%
Traditional
media
(print, TV,
radio)
Direct Mail Facebook or
other social
network
Email Twitter Online
advertising
(display,
video)
Mobile
advertising
Search
advertising
Communication Channel Owners
"Corporate Marketing Owns"
Winners Average Laggards


11
This is reflected in where retailers perceived their marketing departments are spending their time
- "not enough time" clearly outweighs "too much time" in the chart below (Figure 12).
Fi gure 12: I t' s Never Enough

Source: RSR Research, August 2013
And here again, laggards have a lot to say about how their marketing departments need to shift to
growth-oriented tactics (Figure 13).
Fi gure 13: Laggards and Strategi c Val ue - Who Knew?

Source: RSR Research, August 2013
7%
13%
14%
17%
18%
18%
23%
36%
49%
56%
46%
55%
39%
55%
57%
38%
30%
37%
27%
44%
22%
Acquiring new customers
Engaging customers
Driving sales
Driving traffic (stores, website)
Building the brand
Building customer loyalty
Communicating promotions
Marketing Dept Time Spent
Too Much Time Right Amount of Time Not Enough Time
46%
46%
62%
23%
69%
46%
100%
21%
27%
38%
17%
43%
32%
48%
27%
27%
27%
28%
33%
40%
52%
Building the brand
Driving sales
Engaging customers
Communicating promotions
Building customer loyalty
Driving traffic (stores, website)
Acquiring new customers
Marketing Dept Time Spent
"Not Enough Time"
Winners Average Laggards


12
An amazing 100% of laggard respondents report that their marketing departments are not
spending enough time acquiring new customers. This is a dramatic shift from what we've seen in
the past, where laggards were overly focused on communicating promotions, driving traffic, and
driving sales. Now, they want to focus on building customer loyalty, engaging with customers, and
building the brand.
However, as admirable as these goals are, they too are at risk from moving too aggressively to
consolidate cross-channel marketing activities.
Dictionary.com defines "to consolidate" as 1) to bring together separate parts into a unified whole
and 2) to discard unused or unwanted items and organize the remaining.
1
If retailers treat cross-
channel marketing consolidation cutting instead of reorganizing, they're putting themselves at risk
of over-balancing more towards not doing enough innovation to keep up with consumers.
Marketing consolidation needs to tend more towards definition #1 - bringing together disparate
marketing resources so that they can more easily tell a single brand story across multiple
touchpoints. But Marketing, as we'll see in the Organizational Inhibitors section below, already
has too much on its plate to reduce the number of resources focused on marketing activities while
bringing them all under one umbrella.









1
http://dictionary.reference.com/browse/consolidate?s=t


13
Organizational Inhibitors
Old vs. New
At the beginning of this report, we talked about how marketing is on the cusp of becoming
something different, but expressed concern that retailers existing culture, technologies and
processes may have the power to hold them back. Figure 14 confirms just how plausible that
concern is.
Fi gure 14: The More Thi ngs Change, the More They Stay the Same

Source: RSR Research, August 2013
Last years top three organizational inhibitors take their exact place at the top of the list again
only this time, all three (difficulty getting IT resources, a lack of resources to manage new
opportunities, and difficulty proving ROI in the first place) are even greater obstacles to retailers.
In fact, at a time when respondents to many of our most recent topic-specific benchmark reports
are telling us that the need to prove ROI is waning, it appears that marketing functions still require
quite a bit of convincing and education when pushing them up the ranks. For some retailers
(some more than others, as well see in just a moment), just because Marketing now has a space
at the big table doesnt mean everyone there has bought in yet.
We were also very surprised to see that in, aggregate, we dont have an innovation and research
strategy for marketing a first time option, was identified as a roadblock by 1 in 3 retailers.
However, when viewed by performance, we can see that laggards are the driving force behind
many of these trends (Figure 15).
23%
33%
28%
27%
37%
38%
28%
29%
29%
30%
33%
41%
48%
55%
Our company doesnt a unified vision of what effective
marketing looks and feels like in the new digital era
Marketing activities are splintered across too many
different departments
The merchandising organization does not understand
the digital strategies we need to support marketing
Our culture and processes are too product-oriented
We dont have an innovation and research strategy for
marketing
ROI is hard to quantify
We don't have enough marketing resources to manage
all the available opportunities
Difficulty getting IT resources for marketing projects
Top 3 Organizational Inhibitors
2013 2012
N/A
N/A


14
Fi gure 15: Wi nners Tread Li ghtl y Around Org Change and Cul ture

Source: RSR Research, August 2013
While difficulty getting IT resources for marketing project remains ubiquitous for retailers of all
kinds, laggards are most likely to report that their marketing resources are already overstretched
and that they need help proving the ROI is there in the first place. It is also worth noting that more
than twice as many laggards as winners report that need for an innovation and research strategy
for marketing. Its going to be tough for them to get anywhere without that.
By contrast, Winners are more likely to report that their culture and processes are too-product
oriented indeed, theyre making a conscious effort to tread lightly around changing their internal
culture and processes, for fear of upsetting the entirety of their day-to-day operations too quickly.
At the same time, Winners readily admit that their marketing activities are splintered across too
many different departments. This, too, signifies that they understand the need for systematic
change in order to bring a new level of marketing to a new type of consumer, but that their
existing infrastructure will need to be coaxed along: gently.
Two Different Takes
But just as important as identifying these roadblocks are the ways retailers plan to get past them
(Figure 16).
47%
33%
13%
47%
20%
33%
53%
53%
39%
32%
34%
41%
25%
20%
48%
55%
21%
24%
26%
38%
38%
41%
47%
56%
We dont have an innovation and research strategy for
marketing
The merchandising organization does not understand
the digital strategies we need to support marketing
Our company doesnt a unified vision of what effective
marketing looks and feels like in the new digital era
ROI is hard to quantify
Marketing activities are splintered across too many
different departments
Our culture and processes are too product-oriented
We don't have enough marketing resources to manage
all the available opportunities
Difficulty getting IT resources for marketing projects
Top 3 Organizational Inhibitors
Winners Average Laggards


15
Fi gure 16: Pl atf orm and On- Demand Rul e the Roost

Source: RSR Research, August 2013
In aggregate, retailers point to better coordination between the marketing department and selling
channels, solutions that dont further strain the IT department, and increased investment in a
streamlined marketing technology platform as the best ways to overcome the inhibitors they
identified in Figure 15. However, this data becomes even more interesting when viewed by whos
saying what (Figure 17).
Fi gure 17: Laggards Swear They Need To Get Strategi c

Source: RSR Research, August 2013
Winners identify at an inordinate rate that an executive tasked with managing and improving
the overall customer experience is key to ensuring new marketing techniques have relevance.
26%
19%
48%
46%
31%
35%
30%
43%
16%
17%
39%
40%
43%
45%
45%
47%
A savvy cross-channel agency to help manage our
brand
Case studies/success stories in my vertical
Design a more differentiating value proposition
and customer experience
An executive tasked with managing and improving
the overall customer experience
More experimentation with new technologies
Investment in a streamlined marketing technology
platform or infrastructure
Solutions that don't burden our IT department
More coordination between selling channels and
marketing
Overcoming Inhibitors
2013 2012
52%
39%
36% 36%
50%
30%
27%
33%
73%
An executive tasked with
managing and improving the
overall customer experience
More experimentation with new
technologies
Design a more differentiating
value proposition and customer
experience
Overcoming Inhibitors
Winners Average Laggards


16
They know that absent this role, there is no master set of eyes at the front of the house. Theyve
already told us theyre cognizant of the fact their internal organizational structures were built at a
time when product-focused marketing was king. Theyve also told us they cant upend those
fractured systems and processes overnight without risking the dynamic thats already made their
culture and team members successful. What they can do, however, is ensure that even if the left
hand cant always see what the right hand is doing, this master set of eyes sees the finished
product from the customers point of view. It is their absolute best chance of rectifying
imperfections while they transition to newer marketing techniques.
By way of comparison, laggards say their best chance is to get strategic: 73% say that the ability
to design a more differentiating value proposition and customer experience is what will get them
over their organizational inhibitors. While it was encouraging to see laggards finally abandoning
the notion that price could be their ultimate competitive differentiator earlier in this report, here we
see a return to their more familiar territory: using hope as a strategy. Winners know that a
differentiated customer experience is an outcome not an ingredient.
Whos Driving This Thing?
At first blush, it appears marketing leaders have been steadily reclaiming control of setting
marketing strategies (Figure 18).
Fi gure 18: CEO And CMO Wi n The Customer Experi ence Battl e. . .

Source: RSR Research, August 2013
However, it is important to determine who is driving this change. In fact, this data is heavily driven
by the worst-performing retailers, who, as weve already seen, are far more likely to have
consolidated their marketing departments (in the poorer definition of the word) beyond reason
(Figure 19).
7%
17%
25%
16%
28%
23%
71%
52%
8%
13%
21%
23%
27%
32%
68%
73%
Supply Chain Leader
CIO
CFO
eCommerce/Direct Channels
COO/Store Operations
Merchandising Leader
CEO
Marketing Leader
Marketing Strategy Influencers
2013 2012


17
Fi gure 19: . . . But Have They Won the War?

Source: RSR Research, August 2013
In fact, 85% of laggards say their marketing leader influences their marketing strategy (compared
to Winners 72%), but at the same time, 62% of laggards say their merchandising leader
influences their marketing strategy (compared to only 28% of Winners). This begs the
question: when both Winners and laggards told us one of their top marketing opportunities was to
focus more on the customer experience and less on product, how is it that only laggards are
enabling merchandising to continue to play such a dominant role in determining marketings
direction?
The answer only becomes even clearer when we ask our retail respondents about who needs
more influence in the overall marketing strategy: to no surprise, Winners have little interest in
handing control over to anyone beyond marketing leaders and the CEO. Laggards are all over the
road, though, with 33% wanting to get merchandising more involved than they already are, and
another 33% saying that eCommerce and direct channels should have more say in marketing
initiatives than they do today (Figure 20).
8%
15%
0%
38%
62%
15%
85%
54%
7%
26%
10%
17%
26%
29%
69%
64%
10%
17%
24%
24%
28%
31%
72%
79%
Supply Chain Leader
CFO
CIO
eCommerce/Direct Channels
Merchandising Leader
COO/Store Operations
Marketing Leader
CEO
Marketing Strategy Influencers
Winners Average Laggards


18
Fi gure 20: Wi nners Say Yes, Laggards Undeci ded

Source: RSR Research, August 2013
This is a misstep on the part of retailers whose sales are already struggling. If marketing functions
are to move forward not backwards its going to take strong leadership from the person who
knows the most about marketing, in the first place: they should be charged (and held
accountable) for marketings overall effectiveness, with an eye towards providing one view to the
customer. Haphazard marketing techniques by varying departments - who will undoubtedly take a
product-focuses approach - will only hurt this cause, as will attempts to achieve big-picture
consensus by committee.


11%
0%
33%
0%
33%
33%
33%
56%
3%
10%
31%
15%
23%
31%
44%
51%
7%
14%
14%
14%
21%
32%
39%
50%
CFO
CIO
eCommerce/Direct Channels
Supply Chain Leader
Merchandising Leader
COO/Store Operations
CEO
Marketing Leader
Marketing Strategy Influencers
"Needs More Influence"
Winners Average Laggards


19
Technology Enablers
No Shortage of Interest
The increase in perceived value of virtually all marketing technologies is somewhat staggering;
another clear indicator of the breakout moment marketing is poised to have. For the most part,
the order of priority for individual technologies remains fairly constant (with customer purchase
analytics, retargeting, and CRM software winning top honors): the scale of magnitude of this
interest, however, has skyrocketed in the last year alone (Figure 21).
Fi gure 21: The Val ue Stampede

Source: RSR Research, August 2013
But when viewed by performance, some serious indicators of whats to come arise (Figure 22,
below).
Winners are far more interested in the value a digital marketing platform could provide (58% to
laggards 43%), even though, as well see in a moment, very few have yet to implement one.
Winners are also much more interested in customer segmentation software (52%): they know in
order to attain their earlier goals of delivering targeted messages across channels its going to
take more insight and ways to segment those insights into actionable information to get there.
32%
24%
33%
24%
29%
33%
37%
42%
32%
57%
42%
44%
49%
50%
51%
52%
54%
59%
60%
72%
Customer segmentation software
Content management system / Digital asset mgmt
Promotion planning solution
Digital Marketing platform
Social media analytics
Predictive analytics
Revenue attribution and campaign ROI analysis
Customer relationship management software
Retargeting / personalized offers
Customer purchase analytics
Marketing Technology Value
"Very Valuable"
2013 2012


20
Fi gure 22: Wi nners Have a Di f f erent Val ue Emphasi s

Source: RSR Research, August 2013
But laggards place an inordinately low value on these same customer segmentation tools (14%),
begging the question, How can one expect to deliver a targeted and personalized message to
shoppers when you cant even segment those shoppers on the most basic level? It is a prime
example of how laggards tend to prioritize the end goal (a more relevant and differentiated
customer experience) over the required means to attain it.
Great, But
As Figure 23 shows, retailers are still a long ways off from deriving the value from new marketing
tools; the standard ratio of the gap from valued to implemented is roughly 2 to 1.
14%
43%
50%
57%
14%
64%
64%
43%
43%
71%
53%
53%
55%
49%
44%
52%
60%
46%
64%
70%
43%
45%
48%
50%
52%
52%
53%
58%
61%
74%
Content management system / Digital asset mgmt
Promotion planning solution
Predictive analytics
Social media analytics
Customer segmentation software
Revenue attribution and campaign ROI analysis
Customer relationship management software
Digital Marketing platform
Retargeting / personalized offers
Customer purchase analytics
Marketing Technology Value
"Very Valuable"
Winners Average Laggards


21
Fi gure 23: Sti l l a Lot of Gaps to Fi l l

Source: RSR Research, August 2013
Earlier, we noted that very few retailers have yet to implement a digital marketing platform (only
21%). But it is worth noting that of that 21%, Winners are the driving force behind any
implementations whatsoever (47% to laggards 7%, Figure 24 below). In fact, Winners have
already adopted CRM and ROI analysis tools slightly faster than laggards, but they are
implementing analytical tools (both social media and predictive analytics), content management
systems, and digital marketing platforms at a much faster rate than their underperforming peers
(Figure 24).
23%
27%
30%
21%
37%
26%
28%
36%
25%
47%
42%
44%
49%
50%
51%
52%
54%
59%
60%
72%
Customer segmentation software
Content management system / Digital asset mgmt
Promotion planning solution
Digital Marketing platform
Social media analytics
Predictive analytics
Revenue attribution and campaign ROI analysis
Customer relationship management software
Retargeting / personalized offers
Customer purchase analytics
Marketing Technology Value vs. Use
Very Valuable Implemented


22
Fi gure 24: Uneven Adopti on

Source: RSR Research, August 2013
What is problematic, however, is that for all retailers, the list of planned projects that have yet to
be backed with real money is still quite long (Figure 25).
Fi gure 25: Bi g Appeti tes, Smal l Pl ates

Source: RSR Research, August 2013
7%
21%
57%
21%
7%
14%
29%
7%
50%
29%
26%
26%
19%
26%
26%
26%
36%
10%
47%
34%
26%
30%
32%
32%
32%
33%
39%
42%
45%
45%
Customer segmentation software
Content management system / Digital asset mgmt
Promotion planning solution
Revenue attribution and campaign ROI analysis
Retargeting / personalized offers
Predictive analytics
Customer relationship management software
Digital Marketing platform
Customer purchase analytics
Social media analytics
Marketing Technology Use
"Implemented More Than 1 Year"
Winners Average Laggards
11%
17%
18%
19%
20%
21%
22%
23%
24%
29%
11%
16%
11%
10%
20%
13%
18%
15%
13%
9%
Customer purchase analytics
Content management system / Digital asset mgmt
Promotion planning solution
Social media analytics
Retargeting / personalized offers
Predictive analytics
Customer segmentation software
Revenue attribution and campaign ROI analysis
Customer relationship management software
Digital Marketing platform
Marketing Technology Plans
Budgeted Project Planned, Not Yet Budgeted


23
What all of this data tells us is that when it comes to the next generation of technologies designed
to take retailers from old-world marketing into the digital age, technologists wont have a very
hard time leading them to water its the getting them to drink part that will be the challenge. Per
usual, Winners already have a jump start on their competitors, putting higher priority on more
useful technologies, making sure their internal marketing departments have the required ability to
take on new systems, and in small part, theyre already starting to roll those technologies out.
What will be interesting to see next year is this: If retailers perception of the economic outlook
finally has turned a corner, will the loosening of budgets serendipitously line up timing wise
with the other half of the equation: the unavoidable easing of internal challenges (consolidation,
culture, and old-world marketing processes) that must occur in order to facilitate real progress?
If that answer is indeed yes, we may be looking at a brand new, digitally-enabled world of
marketing sooner than we anticipated.




24
BOOTstrap Recommendations
The retail marketing organization is at the center of a lot of internal and external challenges all at
the same time. The good news is, retailers are aware of the challenges, and they know that
something needs to be done. But as they embark on transforming their marketing organizations,
the pitfalls, as ever, are more cultural and change-related than technological. Our advice? Take it
top-down, one step at a time:
Returning to Growth Means Changing the Strategy
Even retailers who typically are focused on growth (a.k.a., Retail Winners) had to take a breather
during the economic downturn. Especially during the darkest depths, everyone was focused on
preserving the customers they already had, not on acquiring new ones.
Times have changed, according to our survey respondents, and growth is back on the menu. But
that means that everything else must change as a result, and it all has to start at the top, with the
retailer's marketing strategy. A focus on growth means re-evaluating the brand value proposition
and making sure that it's aligned with the overall objective. An easy example: for the last five
years, the housing market has been miserable. DIY retailers responded with "make your home
livable." Now that the housing market is coming back, DIY isn't about living in your existing house,
it's about fixing it up to maximize your opportunity to sell it. A DIY retailer focused on growth
needs to shift the message - and the tactics that spread that message - in order to stay aligned
with what consumers need.
A growth strategy means shifting from an emphasis on retaining existing customers to a focus on
acquiring new ones. And in this day and age, acquiring new customers may actually mean that
you can't afford to take your eye off the target when it comes to keeping existing customers
happy - because they can so easily share their dissatisfaction in social spheres and thereby
chase new customers away.
When Strategy Changes, So Should Tactics
The environment where retailers are going to execute this shift in strategy has changed too - the
same tools that were effective in acquiring new customers twenty years ago are not going to be
as effective today, because there are a whole slew of new tools waiting to be leveraged. The
good news is that no one else really knows how to leverage them any better than anyone else,
certainly not in a holistic sense.
The bad news is, no ROI exists for a lot of these new tools, or when retailers talk about benefits,
it's still not certain whether those benefits are unique to that retailer or repeatable across brands.
For laggards, this is particularly problematic because they are the least likely among our survey
respondents to have an innovation program that helps them experiment with new channels and
marketing tools.
The bottom line is this: You won't know which tools work best for you if you don't try them. You
can't win if you don't play. And if you wait for someone else to figure out what works and what
doesn't, you'll have missed the boat.
Consolidation Means "Bring Together"
On the organizational side, this year's benchmark presents a cautionary tale. Does universal
consensus exist that every marketing activity ought to be owned by the marketing department?


25
According to our survey respondents, that verdict is not yet in. The reality is that retailers need to
manage a balancing act between a unified face to customers and marketing campaigns and
tactics that take advantage of the unique elements of the communication channel being
leveraged - Pinterest requires a different objective, content, and approach than Twitter, and trying
to tell the exact same story through both channels won't resonate with consumers.
Unfortunately, it appears that some retailers (laggards in particular) have moved almost too
quickly to consolidate their marketing teams. When traditional corporate marketing was
constrained to begin with, consolidation without consideration for the team that is truly needed
leads only to balls being dropped and opportunities missed. "Marketing consolidation" needs to
be about expanding corporate marketing to absorb new capabilities that might have once lived on
an eCommerce team. The retailers who yank channels away without bringing along the people
who know how to use those channels are building a road to disaster.
Platforms Require Careful Evaluation
Finally, retailers in this year's benchmark expressed a lot of frustration with existing IT
departments and the need to "single solutions" like digital marketing platforms. However, there
are two big horses already in that race: traditional CRM tools, and digital platforms. Which one
should be the platform that carries forward a retailer's goal of one face to the customer, one view
of the customer? The answer is, it's too early to tell. Each system knows something different
about customers, and can enable different things based on what it knows.
For retailers trying to navigate this solution space, the implication is that they are not going to find
everything they're looking for out of one box. And so they must be prepared to evaluate vendors
not just on what they can do today, but where they're headed for the future. If a solution provider
can't see beyond improvements to existing capabilities as part of their roadmap, they're not going
to be a platform provider that is prepared to cross the bridge between traditional and digital
marketing.
That bridge will need to be crossed - not today, and not tomorrow, but soon. The retailers who
have struck partnership relationships with their solution providers will have an easier time
navigating to that future than those with arms-length transactions.




a
Appendix A: RSRs BOOT Methodology
SM

The BOOT Methodology
SM
is designed to reveal and prioritize the following:
Business Challenges Retailers of all shapes and sizes face significant external
challenges. These issues provide a business context for the subject being discussed
and drive decision-making across the enterprise.
Opportunities Every challenge brings with it a set of opportunities, or ways to
change and overcome that challenge. The ways retailers turn business
challenges into opportunities often define the difference between Winners and
also-rans. Within the BOOT, we can also identify opportunities missed and
describe leading edge models we believe drive success.
Organizational Inhibitors Even as enterprises find opportunities to overcome their
external challenges, they August find internal organizational inhibitors that keep
them from executing on their vision. Opportunities can be found to overcome these
inhibitors as well. Winning Retailers understand their organizational inhibitors and
find creative, effective ways to overcome them.
Technology Enablers If a company can overcome its organizational inhibitors it
can use technology as an enabler to take advantage of the opportunities it identifies.
Retail Winners are most adept at judiciously and effectively using these enablers,
often far earlier than their peers.

A graphical depiction of the BOOT Methodology
SM
follows:




b
Appendix B: About Our Sponsors

Revionics delivers the industrys most powerful End-to-End Merchandise Optimization solution,
enabling retailers of all sizes to execute a fact-based omni-channel merchandising strategy
utilizing the most comprehensive set of shopper demand signals to enhance financial
performance with improved customer satisfaction. Revionics solutions leverage advanced
predictive analytics and demand-based science to ensure retailers have the right product, price,
promotion, placement and space allocation for optimal results across all touch points in the omni-
channel shopping episode online, in-store, social and mobile. Revionics has been recognized
as a 2012 Deloitte Technology Fast 500 company and has more retail locations under
optimization management than any other vendor. Visit us at www.revionics.com.

Teradata products and services provide retailers with the ability to analyze, predict and act
quickly on big decisions related to market conditions or a variety of little decisions, the kind sales
associates encounter with customers daily. Built on the powerful foundation of a Teradata
Database, Teradata provides insight into:
1. Supply and demand patterns so that you can quickly respond to out of stock or overstock
situations
2. Customer segments so that you can better understand who they are and which ones are
valuable to your business
3. Promotions and offers so that you can optimize for higher redemption and response
4. Assortments so that the you can localize for different markets and customer segments
5. Key cost drivers in your operation, so that you can operate more efficiently

For more information, please visit http://www.teradata.com/industry-expertise/retail/








c
Appendix C: About RSR Research


Retail Systems Research (RSR) is the only research company run by retailers for the retail
industry. RSR provides insight into business and technology challenges facing the extended retail
industry, providing thought leadership and advice on navigating these challenges for specific
companies and the industry at large. We do this by:
Identifying information that helps retailers and their trading partners to build more
efficient and profitable businesses;
Identifying industry issues that solutions providers must address to be relevant in the
extended retail industry;
Providing insight and analysis about a broad spectrum of issues and trends in the
Extended Retail Industry.












Copyright 2013 by Retail Systems Research LLC All rights reserved.
No part of the contents of this document August be reproduced or transmitted in any form or by any means without
the permission of the publisher. Contact research@rsrresearch.com for more information.A