Retail Executive

NOV/DEC 2017

Retail Executive is the trusted advisor to top retail executives from the industry’s most profitable retailers. We help retail executives succeed in their job role and grow their business via exclusive, actionable, peer-driven content.

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Figure 2: MATURITY OF CYBERSECURITY PROGRAMS FOR KEY INITIATIVES: RETAIL Store of the Future Mobile Payments Artificial Intelligence/Cognitive Computing Digital Identity/Presence Consumer Analytics Seamless Integration of Online/Stores 37.9% 34.4% 46.9% 12.5% 42.3% 50.0% 7.7% 42.2% 48.9% 6.7% 43.6% 49.1% 7.3% 52.9% 29.4% 17.6% 62.1% Beginning to think of security risks Preliminary program in place for security risks Mature program in place for security risks However, tapping into digital, augmented, or virtu- al-reality engagements for long-term growth may well hinge largely on consumer trust. Consumers should feel confident these digital interactions not only operate flawlessly, but that they do not develop into new gate- ways for criminal activity. Our research found that more than one-third of retailers surveyed do not feel their cur- rent cyber-risk initiatives and practices around connect- ed stores are effective, and yet few seem to be taking the steps required to alleviate their risk. One only need reference recent headlines, where mil- lions of American consumers continue to have sensitive personal information exposed in data breaches. In some cases, hackers accessed people's names, Social Security numbers, birthdates, addresses, and, in some instances, driver's license numbers. News of successful hacking through these devices may not only threaten sales of a particular product, but may also tarnish broader perceptions consumers have toward the retailer who sold them — potentially jeopar- dizing billions in future sales growth. REIMAGINING CYBERSECURITY AS A COMPETITIVE ADVANTAGE In a highly competitive global marketplace, the impor- tance of building positive, long-term consumer trust and managing brand reputation should not be taken for granted. Staying relevant in today's consumer-driv- en environment often requires businesses to roll out technology initiatives on tight timelines and budgets — where mitigating cyber risk can become a challenge. Retailers should consider how decades of underinvest- ment in cybersecurity will impact long-term growth. Data protection is something many consumers have come to expect, and investments in security are antici- pated to create a competitive advantage in today's world of growing cyberattacks. R many companies seem to be moving full-speed ahead installing digital technologies (e.g., RFID, e-commerce, digital wallets, and platforms), without fully under- standing how cyber-related breaches may negatively im- pact brand reputation, erode consumer trust, and trigger excessive remediation fees. At present, retail store of the future (62.1 percent) and integration of online and physical store (37.9 percent) for consumer experience en- hancements are among the most mature. (See Figure 2.) STORE OF THE FUTURE: CONNECTED CONSUMER EXPERIENCES MAY BUILD TRUST In physical, virtual, and online stores, many of today's consumers are finding themselves in new and unfamil- iar territory. Thus far, demand for many types of experi- ential engagement, whether through mobile phones or other connected devices combined with fitness trackers and smart home devices, remains healthy. At a "Store of the Future" event at London's Design Museum in April 2017, e-commerce brands displayed connected clothing racks, touch screen-enhanced mirrors, and sign-in stations that helped bridge the gap between online and brick-and-mortar retail. For example, customers were able to scan their smart- phones upon entering a retail location to allow sales assistants to view their profiles, including what items they might have previously bought or saved to an online wish list. Connected clothing racks recorded which items customers physically picked up, storing this information in apps that customers could later swipe left or right to edit their selections. Smart mir- rors allowed shoppers to request items in another size, browse online alternatives, and even pay with- out leaving the dressing room. Retailers also demon- strated holographic displays that enabled customers to create and order custom shoes, experimenting with different leathers, skins, and colors. ©2017 Deloitte. Retail sector only analysis adapted from "Cyber risk in consumer business." RETAILEXECUTIVE.COM NOVEMBER/DECEMBER 2017 35

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