New problems are rarely fixed by applying old thinking. In the last decade, a combination of circumstances has evolved that requires new thinking from marketers. This new thinking takes advantage of the digital environment and transforms business as we know it.
Retailers are too focused on digital technologies as transactions and should instead be looking at how to use digital in-store to deliver better, omni-channel experiences to customers, a Forrester analyst claims.
Speaking during a retail industry session at this year’s Adobe Summit, principal analyst for ebusiness and channel strategy, Adam Silverman, claimed most retailers still haven’t grasped the role digital and mobile have in building more personalised interactions with customers in-store.
“The role of digital is oftentimes just about taking a transaction,” he said. “But the power of digital is really about influences.”
According to a recent Forrester survey of ebusiness leaders, personalisation is at the top of the priority list for retail over the next few years. Unified customer account and order history across channels, along with cross-channel loyalty reward programs, are key areas of investment for the next 12-24 months.
In-store data capture has also skyrocketed, but organisations often don’t know how to action off the back of this data, Silverman said. He also pointed out only 12 per cent of enterprise data is being used for analytics currently.
“If we could get this right for the store, imagine how conversion, engagement and sales in-store will lift and the experience will change dramatically,” he said.
One thing holding retailers back is a lack of strategy around systems that engage customers. “It’s understanding customer needs and then layering on the technology,” Silverman said.
Another gap is integration of retail teams and systems. “You need integrated systems to understand where product is: Inventory, pricing, supply chain all need to be integrated. Teams need to be integrated as well,” Silverman said. “Single P&Ls are a hard pivot, especially in traditional merchant organisations.”
Too many retailers also lack clear measurements of success. “They may jam technology into the store but is it working? How do we measure success?” Silverman asked. “Often, technology is not iterated on or improved upon either.”
Data is the other significant hurdle, and Silverman claimed most retailers don’t have a single view of their customer. He blamed this on two things: Lacking a data warehouse or master customer records; and poor management around how data is syndicated and used in other systems.
“It’s also about creating those hooks – what value will you add so customers self-identify, so you can then create that single view of the customer?” he asked.
There are chinks of light, however, and Silverman noted several retailers bringing digital into the in-store environment with some success. One is fashion retailer, Rebecca Minkoff, which has placed digital screens into dressing rooms, allowing customers to interact with associates and products while they’re trying items on.
Other examples are home improvement retailer, B&Q, which is testing dynamic and personalised pricing as a customer enters the physical store, and Ugg Australia, which has digitally enabled associates with tablet devices and product inventory access in-store in order to drive incremental demand.
At the extreme end of the scale, Acustom Apparel scans a customer’s body then creates a custom pattern to fit over their body shape. “The linear thinking of retail with the customer at the end is then flipped, and the customer is at the front of that supply chain,” Silverman said.
Silverman recommended retailers focus on service and convenience, start setting the groundwork for a single view of the customer, and work on initiatives that make it as easy as possible for in-store associates to access product information and digital tools.
He added a quick win is to expose inventory visibility online. “You need to be doing this for omni-channel fulfilment now anyway; 25 per cent of customers won’t go to the store if you don’t,” he claimed.
Case study: Sport Chek’s digital transformation
One retailer that’s invested heavily in digital in-store is Canadian Tire Corporation’s Sport Chek brand. During the retail session, the company’s VP of digital solutions, Frederic Lecoq, detailed how its ‘let’s get phygital’ program has changed the way its store operates.
The retailer re-opened its West Edmonton flagship Sport Chek store a year ago after a major digital transformation program. Innovations included 470 digital screens showing real-time content and information, integrating touch, gesture and RFID technology into the in-store environment, adding a 21,000 square feet atmosphere ‘store within the store’, medical motion gait analysis, dynamic bicycle fitting, a climbstation treadmill and a golf flight scope simulator.
Since then, the store has posted 50 per cent year-on-year sales growth. The retailer has just opened a second version of the store in Vancouver that’s trending the same way, Lecoq said.
“Why did we do it? Most of the time we’re putting technology into the store and marketing from a ‘why not’ perspective,” he said. “We need to shift our mindset and ask: ‘What are we doing this for?’.
“Digitising the store is about redefining the experience to create value for the customer.”
Lecoq said the first important step was for his team to build relationships with the technology function. His next piece of advice for other retailers was to forget about campaigns and put the emphasis on content.
“Consumers are always on and they’re snacking content. We have been building a content factory and content is one of the initiatives behind this,” he said.
Other key ingredients include measuring everything in terms of ROI and effectiveness around each step of the customer journey, and turning point-of-sales into points of experience.
“The future of retail is all about content, data and connectivity. Be nice to your tech people,” Lecoq added.
Forrester’s top tips for personalising commerce in-store
- Location context is key to success.
- It’s about moments of truth. “You need point solutions to be integrated at a store level and have data integrated around those solutions,” Silverman said. “It’s also about task management and analytics: If I understand Jason is in the kayaks section and I’m an expert on kayaks, I should be instructed to talk to Jason in real-time.”
- Associate-assisted personalisation shines. “They are your personalisation engines in-store – conversion rates double when the associate is involved,” Silverman said.
- Authentic experience means the phone stays in your pocket. “I’ve seen demos where the phone is out and consumers are just looking down at the screen, but I don’t envisage shopping in-store that way,” Silverman said. “It’s about the environment changing around you – lighting, digital screens, for example.”
- Aim for service, not offers. “Most of the beacon interactions today are offers – after the second alert, I might be interested in product, but with third alert my phone is staying in my pocket,” Silverman said. “Instead, why not open a VIP experience with the phone?”
- Pricing becomes dynamic. Retailers have done this for a long time online but it will come to the fore in-store too, Silverman claimed. “Mark down optimisation at a retail level has been happening, but we’re going to see dynamic pricing at store level and even customer level in the store.”
- New digital store platforms will emerge such as mobile point-of-sale and digital experience platforms. These will work need to work alongside operational pieces such as task and labour management in-store, Silverman said. “Retailers need to connect these together for digital operational excellence and customer experience excellence.”
More from Adobe Summit 2015
- Adobe chief: Marketing now encompasses product creation
- Lenovo, Thomson Reuters and Baxter on the road to personalisation
- How NAB, Time Warner cable are tackling digital change
- Adobe CMO shares 3 steps vital in digital marketing transformation
- Adobe announces new Marketing Cloud partnerships with IBM, Accenture
- Adobe extends its Marketing Cloud to IoT and beyond
Nadia Cameron travelled to Adobe Summit 2015 as a guest of Adobe.