apidays New York 2023 - Bridging the Physical and Digital: Innovating in the Retail Industry, Jaideep Singh, Mastercard

apidays New York 2023
APIs for Embedded Business Models: Finance, Healthcare, Retail, and Media
May 16 & 17, 2023

Bridging the Physical and Digital: Innovating in the Retail Industry
Jaideep Singh, Director, Product Management, Mastercard

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Transcript

1. ©2023 Mastercard. Proprietary and Confidential APIDAYS Forum | May 2023 | New York, NY Jaideep Singh Director, Product Management Bridging the Physical and Digital: Innovating in the Retail Industry
2. ©2023 Mastercard. Proprietary and Confidential 2 JANUARY 11, 2023 Introduction
3. ©2023 Mastercard. Proprietary and Confidential 3 JANUARY 11, 2023 What does the future of in-store retail look like?
4. ©2023 Mastercard. Proprietary and Confidential Copyright © 2021 by Boston Consulting Group. All rights reserved. Key in-store trends shaping the future of retail stores, putting customer experience and efficiency centrally Customer experience trends Enabling innovations Video analytics E.g., biometrics Shelf innovation E.g., AI in shelf In-store AI E.g., Amazon GO Mobile Apps E.g., Target App Changing store formats and store network Retail stores are here to stay, but no one-size-fits all approach, role of store is increasingly driven by customer's shopping mission Transactional stores • Shop & Go E.g., AH ToGo • One-stop-shop E.g., Decathlon Experiential • Showroom E.g., Dyson • Elevated service E.g., Nordstrom Local • Brand Immersion E.g., Apple store • Curated assortment E.g., Ikea urban store 1 Technological and digital innovations in-store Tech innovations across customer journey (discover, in-store & after purchase) enable customer experience trends 5 Evolution of supply chain Innovations in supply chain allow to increase speed, availability and transparency, driving convenience for consumers Smart inventory mgmt. E.g., Amazon Ultra-fast delivery E.g., Alibaba Hema Pick-up options E.g., PUDO4 7 Hyper-personalized and localized propositions As data analytics evolved, retailers identified the value of data (loyalty, demographic & transaction data) Personalized offers (pricing & promo) E.g., Nike+ app Aisle navigation E.g., MapsIndoors Assortment customization 3 Partnerships, alliances and ecosystems Formation of alliances & ecosystems add speed capabilities, enabling to compete on core strengths Tech-led E.g., Google Carrier-led E.g., FedEx Retailer-led E.g., Ocado 6 Omnichannel integration and frictionless retail Integration of omnichannel experience in-store and removing any friction allows to take the next step in customer experience All-in-one App E.g., Starbucks loyalty, order & pay app Frictionless checkout E.g., Amazon GO Self-service E.g., self check-in at hotel BOPIS1/ROPIS2/ BORIS3 E.g., GAP 2 Overall efficiency important across the board With limited employee availability retailers need to think how to best deploy employees in-store several solutions, like HR planning, automated inventory mgmt., ... 1. Buy Online & Pick up In Store 2. Reserve Online & Pickup In Store 3. Buy Online Return In Store 4. Pick Up Drop Off points Additional services (incl. BNPL) Retailers continue to move into offering add-on services to customers, diversifying their portfolio Rental of goods E.g., IKEA pilot Financ. services E.g., Carrefour Finance Adjacent services E.g., BestBuy 4 Buyer credit E.g., Klarna BNPL
5. ©2023 Mastercard. Proprietary and Confidential Copyright © 2021 by Boston Consulting Group. All rights reserved. While e-commerce is growing, in-store retail remains the dominant retail sales channel, even after pandemic World spending excl. fuel ($T) While E/m-commerce is growing in share, in-store purchases1 remain relevant, growing at 1% Goods E-commerce penetration differs by vertical, with grocery & personal care being a POS stronghold 1. Only goods are included, excl. hospitality & services; 2. Market weight 2021, other goods at 35% market share incl. but not limited to tobacco, pet supplies, print media, arts & more Note: E-commerce includes mobile commerce Source: Euro monitor (LHS), Forrester data (RHS) Share online of goods retail (%) Goods only 3% 9% 5% 7% 5% 6% 25% 21% 32% 27% 28% 30% 76% 68% 83% 79% 81% 85% 70% 73% 66% 49% 61% 77% 26% 15% 20% 18% 21% 23% 76% 71% 59% 68% 65% 73% 37% 28% 41% 36% 39% 44% Grocery Personal care Homeware & furniture Apparel, footw. & access. Consumer electronics Media Computer HW & access. 2020 2019 2023 2021 2022 2024 Market weight2 35% 5% 5% 10% 5% <5% <5% 28% 35% 38% 36% 40% 43% Appliances <5% POS strongholds Middle mixers Online front runners +2% +1% +12% CAGR Ecom In store Services 12.2 (61%) 20.1 2020 23.1 20.5 5.5 (27%) 2.5 (12%) 12.2 (56%) 2019 2022 2.8 (16%) 3.4 (19%) 11.3 (64%) 3.2 (17%) 11.5 (61%) 4.2 (22%) 2021 3.5 (17%) 11.9 (58%) 21.8 18.9 5.1 (25%) 3.9 (18%) 5.7 (26%) 2023 4.4 (19%) 12.6 (54%) 6.2 (27%) 2024 17.5
6. ©2023 Mastercard. Proprietary and Confidential In-Store, Traditional POS ~77% of all Transactions (2026)* E-Commerce, Remote ~20% of all Transactions (2026)* In-Store, Remote ~3% of all Transactions (2026)* *Estimate – BCG Study – Mastercard: Jan 2022
7. ©2023 Mastercard. Proprietary and Confidential Copyright © 2021 by Boston Consulting Group. All rights reserved. Key pain points facing retail customers 23% 18% 40% 16% 38% 25% 20% 18% in-store Digital 40% of consumers would like to have a hassle-free checkout (% of respondents 3) Sales and secure payment Hassle-free checkout (e.g., scanning items vs. RFID) Helpful employees Ease of Navigation 55% 40% 33% 33% Note 1: Adults WW Age 18+, Capgemini 2019; 2: US adults Age 18+, NRF Oct 2019, 3: US citizens Age 15+, RIS News 2019 Source: eMarketer, Press search, BCG analysis Long queues at checkout as main issue of in-store shopping (% of respondents 1) Long queues at checkouts Out of stock products when visit store Difficulties in locating products in the store No store associate for help Lack of product information 60 % 48 % 40 % 26 % 24 % Checkout considered main pain point for in-store purchases (% of respondents 2) Discovery Decision before purchase At Checkout Post Purchase
8. ©2023 Mastercard. Proprietary and Confidential
9. ©2023 Mastercard. Proprietary and Confidential
10. ©2023 Mastercard. Proprietary and Confidential Mastercard Next-Gen Point-of-Interaction Software PAYMENT NETWORK Point-of-Interaction PAYMENT TERMINAL Merchant backend 1 2 3 4 5 6 7 8 Tokenization 9 10 11 12 What will our API do? New Digital Commerce Indicator • Entity Type • Entity Name • Check-in Method • Unique AlphaNumeric Code
11. ©2023 Mastercard. Proprietary and Confidential Enrollment
12. ©2023 Mastercard. Proprietary and Confidential How It Works
13. ©2023 Mastercard. Proprietary and Confidential
14. ©2023 Mastercard. Proprietary and Confidential Check-in
15. ©2023 Mastercard. Proprietary and Confidential How It Works
16. ©2023 Mastercard. Proprietary and Confidential
17. ©2023 Mastercard. Proprietary and Confidential Why It Matters
18. ©2023 Mastercard. Proprietary and Confidential What’s Next? Your favorite iced coffee on us during your next visit
19. ©2020 Mastercard. Proprietary and Confidential Thank You! Jaideep Singh Director, Product Management Mastercard Jaideep.Singh@mastercard.com linkedin.com/in/singhjaideep1/