MITS 6002 CQU Commbank Retail Business Insights Report Analysis Q1. Carefully Read the “CommBank Retail Business Insights Report FY18” provided with this a

MITS 6002 CQU Commbank Retail Business Insights Report Analysis Q1. Carefully Read the “CommBank Retail Business Insights Report FY18” provided with this
as an attachment and answer the below questions.
i. Comment on the insights report based on the overall features; including the
quality of visualisations, presentability, and the information provided.
ii. List the key information you derive from this insights report and explain how
they will be useful in decision making.
iii. Write an abstract (one paragraph) summarising the insights report.
iv. Suggest improvements to this insights report.
Q2. Regression analysis is a commonly used technique to find relationships among
variables. Answer the below questions based on regression analysis.
i. Provide an example where regression analysis can be effectively used.
ii. Collect height and weight data from 10 friends/relatives of yours and complete
the below table. Every student in class should have a unique set of values.
Height Weight
iii. Draw a scatterplot based on above data. Based on your plot comment on the
relationship between height and weight.
iv. Compute the equation of the regression line.
v. Calculate the R2
value and comment on the goodness of the fit.
vi. Use an analytics tool of your choice to calculate the values for iv, and v. Compare them
with your answer.
Q3 Classification and regression are commonly used processes in business analytics.
i. Briefly explain the difference between classification and prediction.
ii. Give examples for classification methods you know.
iii. The following diagram shows a neural network with one hidden layer.
Write down the algebraic equation for y1 in terms of input values i1,i2 and weights w.
Briefly explain how neural networks are used for classification.
iv. Give at least three examples how clustering can be used in business analytics. In your
answer explain how each business case could be addressed using clustering. MITS6002 Business Analytics
Assignment 3
Q1. Carefully Read the “CommBank Retail Business Insights Report FY18” provided with this
as an attachment and answer the below questions.
i.
Comment on the insights report based on the overall features; including the
quality of visualisations, presentability, and the information provided.
ii.
List the key information you derive from this insights report and explain how
they will be useful in decision making.
iii.
Write an abstract (one paragraph) summarising the insights report.
iv.
Suggest improvements to this insights report.
Q2. Regression analysis is a commonly used technique to find relationships among
variables. Answer the below questions based on regression analysis.
i.
Provide an example where regression analysis can be effectively used.
ii.
Collect height and weight data from 10 friends/relatives of yours and complete
the below table. Every student in class should have a unique set of values.
Height
Weight
iii.
Draw a scatterplot based on above data. Based on your plot comment on the
relationship between height and weight.
iv.
Compute the equation of the regression line.
v.
Calculate the R2 value and comment on the goodness of the fit.
vi.
Use an analytics tool of your choice to calculate the values for iv, and v. Compare them
with your answer.
Q3 Classification and regression are commonly used processes in business analytics.
i.
Briefly explain the difference between classification and prediction.
ii.
Give examples for classification methods you know.
iii.
The following diagram shows a neural network with one hidden layer.
Write down the algebraic equation for y1 in terms of input values i1,i2 and weights w.
Briefly explain how neural networks are used for classification.
iv.
Give at least three examples how clustering can be used in business analytics. In your
answer explain how each business case could be addressed using clustering.
CommBank
Retail Insights.
Edition 9
CommBank Retail Insights Report
Edition 9
Contents
Foreword
4
The last mile – the customer perspective
5
Exceeding consumers’ last mile expectations
6
What shoppers say they want
7
Free deliveries can be a win-win
8
Is a sole focus on speed misplaced?
9
Giving customers choice
10
Delivery preferences differ between generations
11
Case study: Cue Clothing Co.
12
The last mile – the retailer perspective
14
Unlocking the potential of collaboration
15
Innovate or be disrupted
16
Expert view: GRA Supply Chain Consultants
17
Key insights: the retail landscape
19
Key insights: the last mile
20
Key insights: state by state view
21
Sector insights
22
Food & Liquor
23
Take-away Food Services
24
Clothing & Footwear
25
Homewares & Hardware
26
Other Retail
27
Learn more
28
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CommBank Retail Insights Report
Edition 9
CommBank
Retail Insights
The last mile
In this edition of Retail Insights, we explore the dynamics of retail
delivery and pick-up services, including consumer preferences
and behaviours and the opportunities for retailers to optimise
these services to attract and retain customers.
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CommBank Retail Insights Report
Foreword
Many retailers are grappling with how to effectively
provide the delivery and pick-up services that consumers
demand and, in most cases, online shoppers see room
for improvement, particularly the younger generations.
This may be contributing to relatively stagnant growth in
online sales. Our data indicates that online retail sales have
been hovering around 30% of total omni-channel retail
sales volumes since January 2017, defying regular retailer
forecasts for further growth.1
The tepid consumer response isn’t surprising. An estimated
23% to 35% of online deliveries fail on the first attempt due
to customers being absent.2 This correlates with the fact
that 21.6% of people in couple families live in households
where both partners work full-time, and 21.7% with one
person working full-time and the other part-time.3 In these
cases, they are simply not at home to receive deliveries.
When building out delivery services, retailers have tended
to balance the cost of offering deliveries against getting
parcels to their customers as quickly as possible. However,
this doesn’t always align with what consumers want. In
many areas, consumer expectations are significantly
outpacing what retailers offer.
Edition 9
for choice with speed. Consumers in the US, UK and
many European countries have already come to expect
more choice and control when it comes to their deliveries.
Inevitably shoppers here will expect it too. Retailers that
don’t demand innovation in their last mile offering risk
falling further behind their customers’ expectations.
Those that do, have an opportunity to be at the frontier of
last mile excellence.
What consumers look for most are free deliveries and
returns. Greater choice and visibility closely follow. They
want updates on the status of their shipments and the
ability to amend details of their order or delivery address.
Consumers place more value on features like these than on
receiving their parcels within a matter of hours.
It may seem contradictory that while consumers say they
want lower cost deliveries, their satisfaction is more closely
linked to reliability – the fundamental need for items to
arrive when expected. According to retailers, consumers
are in fact bearing the cost of most deliveries, a clear signal
that shoppers are willing to pay when they see the value.
As always, we’d love to hear from you about your own retail
experiences. If you’d like to learn more about how you can
put our insights into practice within your own business,
please get in touch with our team of retail specialists.
So rather than doing more of the same, as most retailers
intend, there is an unrealised opportunity to innovate
and close the gap between current offerings and shopper
expectations.
Jerry Macey
National Manager, Retail Industry
Business and Private Banking
Commonwealth Bank of Australia
Numerous technology solutions such as GPS tracking,
smart lockers and the Internet of Things offer consumers
the choice they’re after. Currently though, only a few
retailers are planning to deploy these solutions despite a
groundswell of Australian consumer trust in many delivery
innovations and evidence of successful adoption in many
offshore markets.
Definition of the last mile
The delivery of retail goods from a store
or transport hub to the shopper.
From my own experience overseas, other markets are
better balancing this under-appreciated consumer need
About CommBank Retail Insights
CommBank Retail Insights is an exclusive, wide-ranging analysis of the Australian retail sector. This edition is based on two surveys conducted by ACA Research on behalf of the Commonwealth Bank.
•
An online quantitative survey of Australian retailers in July
2019, involving 580 decision-makers from small, medium and
large retailers across Australia, with turnover ranging from
less than $1 million to over $500 million. Results have been
categorised into five retail sectors: Food & Liquor, Take-away
Food Services, Clothing & Footwear, Homewares & Hardware,
and Other Retail (e.g. books, games, music, consumer
electronics and computers, etc.).
•
An online quantitative survey of 1,505
consumers in July 2019 who had purchased an
item and had it delivered or picked up in the
past three months, segmented by generation
as follows:
•
Gen Z, aged 16-23 years (9%)
•
Gen Y, aged 24-36 years (26%)
•
Gen X, aged 37-52 years (25%)
•
Baby Boomers, aged 53-71 years (28%)
•
Pre-Boomers, aged 72 years or over (12%)
Consumer data has been weighted to ensure the
results are nationally representative.
All statistics and references to consumers and retailers in this report are based on the responses to the survey unless otherwise stated.
CommBank Retail Insights editions 4, 5, 6, 7 and 8 (these show that online sales as a percentage of multi-channel retailers’ total sales have ranged between 25% and 29% and that retailers’ forecasts for the percentage in the next 12 months have ranged between 31% and 35%)
www.gra.net.au/uploads/resource/126-Last-Mile-Fulfilment-Whitepaper-2018.pdf – Page 4
3
www.quickstats.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/036
Release date: November 2019
1
2
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CommBank Retail Insights Report
Edition 9
The last mile the customer
perspective
Cost matters most to consumers
Getting packages to consumers quickly is a focus for most
retailers. However, cost, choice and visibility of deliveries
trump speed when it comes to consumer preferences.
5
CommBank Retail Insights Report
Exceeding
consumers’ last
mile expectations
The fact that futile deliveries remain a feature of many consumers’ online shopping
experience highlights the challenges facing retailers seeking last mile excellence.
As retailers remain intently focused on getting goods in the hands of consumers as
quickly as possible, shoppers place more value on free deliveries and the choice of when,
where and how they receive their packages.
This misalignment could partially explain why many Australian shoppers are only
moderately satisfied with the delivery service they receive, with 47% saying they are
only somewhat or not satisfied. It may also explain why retailers’ perennial forecasts for
growth in online sales haven’t materialised over the past two to three years.
Edition 9
Online sales from multi-channel retailers
The proportion of online sales volumes among multi-channel retailers has remained
relatively steady since 2017
29%
22%
24%
25%
26%
Aug
15
Jan
16
Aug
16
Jan
17
Jul
17
Feb
18
Delivery and pick-up services on offer
Australian retailers are also contending with last mile advances in offshore markets that
are shaping consumer expectations of delivery. To meet this, and the existing demand for
greater choice and control over shoppers’ deliveries, retailers can benefit from working
more closely with delivery service aggregators and logistics providers.
Deliver to address
provided by the
customer
“The focus on minimising the cost of deliveries is letting down
customers and retailers. Instead, retailers should be seeking
to better understand consumers’ needs and expectations and
their willingness to pay for the features they value.”
Jerry Macey
National Manager, Retail Industry
Business and Private Banking
Commonwealth Bank of Australia
28%
Jul
18
Jan
19
31%
18%
Despite the opportunity to improve the status quo, most retailers intend continuing with
their current offering with a marginal increase expected in areas like parcel lockers and
pick-up from locations other than the store from which their customers order.
Through remaining open to innovative delivery solutions that align with consumer
expectations, retailers have an opportunity to set a new benchmark. This has the
potential to support better customer acquisition and retention and help restore online
sales growth.
29%
Jul
19
Retailers plan to make minimal changes to delivery services in the next 12 months
68%
68%
53%
51%
Pick-up in the store
they ordered from
Pick-up from another
store, but same chain
Deliver to a
parcel locker
Pick-up from
warehouse
25%
28%
18%
23%
15%
18%
Current
In 12 months’ time
6
CommBank Retail Insights Report
Edition 9
What shoppers
say they want
Faced with having to offer last mile solutions to meet customer needs and expectations,
retailers have understandably concentrated on minimising cost while getting parcels to
their customers as quickly as possible. As a result, most delivery options are calibrated
by speed.
However, according to consumers, speed ranks as the least important factor they
consider when choosing a retailer. Shoppers say they are cost conscious first and
foremost, then value having the ability to control the delivery options that support
reliability. Shoppers prioritise these factors as follows:
Delivery service features most important to customers
Cost is the most important delivery factor for shoppers when choosing a retailer
Cost
50%
39%
8% 3%
Cost is extremely or somewhat important to 89% of consumers
This covers free delivery options and free (and easy) returns.
Choice is extremely or somewhat important to 67% of consumers
This category includes features that give customers the ability to access
customer service through different channels, to receive updates about
delivery status and location, to amend purchases and pick-up/delivery
details and to choose preferred delivery timeslots.
Time is extremely or somewhat important to 49% of consumers
This covers fast/express delivery options, plus the ability to have items
delivered after-hours or on weekends.
“The consumer desire for more control over deliveries
is under-appreciated. This presents an opportunity for
retailers to innovate to meet customer expectations and
align the last mile experience with the best of what’s on
offer in other markets around the world.”
Choice
21%
46%
24%
9%
Time
15%
Extremely important
Not very important
34%
34%
17%
Somewhat important
Not at all important
Jerry Macey
National Manager, Retail Industry
Business and Private Banking
Commonwealth Bank of Australia
7
CommBank Retail Insights Report
Free deliveries
can be a win-win
Although free delivery options are the top delivery feature consumers look for when
choosing a retailer, the retailers they shop with report that consumers currently pay for
58% of all delivery costs.
Some retailers have worked hard to understand what is driving their delivery costs and
customers’ propensity to pay. This has enabled them to develop a value proposition that
works for both parties.
Many shoppers spend time and effort looking for free deliveries (and returns) and some
retailers are responding to limit the potential of losing customers to competitors. It’s
no coincidence that more retailers plan to offer free deliveries for loyalty/subscription
members or specific promotions.
Free (and easy) returns also heavily influence consumer choice of retailers. Again, retailers
are aware of the opportunity. Recognising that return policies are a powerful customer
acquisition and retention tool, 78% offer at least some free return options.
Edition 9
Options customers choose to avoid fees
To avoid delivery fees, consumers use a range of tactics at least sometimes
Choose the
standard
delivery option
Monitor for
promotions
and flash sales
Choose a
different
delivery
method
Choose a
different
retailer
Spend more
to reach
free delivery
threshold
82%
79%
64%
59%
59%
Delivery fees charged to consumers
More retailers plan to offer free deliveries for loyalty members and promotions
66%
61%
Above a
certain spend
Retailers report 6% of items are returned on
average. More detailed product descriptions, tools
and better imagery could help customers make
more accurate choices. Only 32% of customers
say items always exactly match the description.
“There is a lot of pressure from a cost perspective, so
I think there will be significant change. I anticipate a
collision between convenience and costs, how that is
measured and ultimately, who bears that cost.”
Shane Lenton
Chief Information Officer, Cue Clothing Co.
For loyalty/
subscription members
19%
28%
For standard delivery
times (not express
deliveries)
18%
18%
Free delivery
with first order
15%
16%
Specific promotions/
flash sales
15%
23%
Current
In 12 months’ time
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CommBank Retail Insights Report
Is a sole
focus on
speed
misplaced?
Fifty-eight percent of retailers offer delivery
timeframes ranging from within two hours to
next-day deliveries. The proportion is set to top
three-quarters of retailers in the coming year.
Edition 9
Flexible delivery timing
Retailers’ focus is on express deliveries, where consumers want to choose timeslots
Ability to choose
preferred timeslots
24%
50%
58%
Fast/express delivery
Weekend delivery
29%
Yet express deliveries sit near the bottom of the
delivery features that consumers consider when
choosing a retailer, and the pursuit of faster
deliveries can add considerably to retailers’ costs.
Across all generations, only 7% of consumers
say they are willing to pay for express deliveries
within a couple of hours and 8% for sameday delivery. As expected, the need for speed
is greatest among Gens Z/Y, but they are the
groups least willing to pay for it.
But far more than speed, consumers want their
items to arrive at a time that is convenient for
them.
The ability to choose their preferred delivery
timeslot is one of several delivery features
that consumers value because it gives them
greater control around their deliveries. Given
that control supports reliability, one of the most
significant drivers of satisfaction with deliveries,
this has the potential to positively influence their
willingness to pay.
After-hours delivery
63%
44%
42%
21%
Consumers deem important
Retailers offer
63%
of consumers say choosing their preferred
timeslot is important. Only 24% of retailers
offer this.
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CommBank Retail Insights Report
Giving
customers
choice
Other elements relating to customer choice
include visibility over the progress of deliveries
and the ability to amend details of the order
once an item has been dispatched.
As we saw earlier, customers value these
features more highly than delivery time (speed
and extended hours). Meeting this underappreciated consumer need for greater choice
around deliveries is therefore a way to improve
the customer experience.
But only a small proportion of retailers offer
their customers these options, the most
significant gap being easily accessible channels
to check on deliveries and provide feedback.
Retailers that outsource some or all of their
delivery service functions are more likely to offer
greater choice. This suggests that the successful
logistics companies and aggregators understand
this consumer need and are investing in systems
and technologies to address it.
Edition 9
Delivery features offered to customers
Few retailers offer the options for choice in demand among consumers
Customer service via
various channels
19%
Updates sent on
delivery status
& location
Ability to easily
amend purchases
Easily amend delivery/
pick-up details
Continuous
GPS tracking
81%
80%
32%
69%
19%
68%
21%
57%
19%
Consumers deem important
Retailers offer
81%
of shoppers value easy access to customer
service to check the status of their delivery and to
provide feedback. Only 19% of retailers offer this.
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CommBank Retail Insights Report
Delivery
preferences
differ
between
generations
Unsurprisingly, younger generations have higher
expectations of delivery services overall. Express
and extended delivery windows are significantly
more important to them, but they are the most
likely groups to expect these services to be free.
They also want more control over deliveries in
terms of information about the delivery’s status
and the ability to amend purchases and delivery
details.
Edition 9
Differences in consumer preferences and behaviours across the generations
Gen
Z
Gen
X
Gen
Y
Baby
Boomer
Pre
Boomer
Very satisfied with
delivery services
45%
45%
49%
60%
71%
Same day delivery
is important
50%
46%
40%
35%
34%
Would opt for
express delivery if free
58%
57%
51%
44%
42%
Control factors are
important (avg)
74%
71%
65%
65%
65%
Trust in delivery
innovations (avg)
53%
55%
45%
40%
36%
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CommBank Retail Insights Report
Edition 9
Case study:
Cue Clothing Co.
Shane Lenton, Chief Information Officer at Cue discusses the roles
of technology, supplier partnerships and the customer experience
that support best-in-class delivery services.
12
CommBank Retail Insights Report
Edition 9
Cue Clothing Co.
Iconic Australian fashion retailer Cue has been innovating
since i…
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