Huge shopping research lab analyzes customer behavior
At the recent Shop.org conference in Philadelphia, I sat down with Patricia Waldron, IBM’s director of retail and CPG global industry marketing, and Scott Duby, director global retail solutions, to hear about a new "mega shopping lab" that recently opened in Shanghai, China.
The shopping lab is devoted to analyzing omnichannel consumer behavior and is operated by the giant Fung Group (a mega-conglomerate with a strong presence in retailing and operators of Toys "R" Us, Circle K, and Gieves and Hawkes, to name a few, in Asia.), in partnership with IBM (a RetailWire sponsor) and brand activation firm Pico. The "lab" is actually 250,000 square feet of space at Li Fung Plaza, where select members can shop and businesses can observe how consumers interact with new tech, products and environments. There is a plethora of stores and customer behavior is analyzed by beacons and other store-monitoring devices.
The shopping space/lab includes virtual-reality fitting rooms, "magic" mirrors that bring objects to life, and 3D printing to create customized products. Brands can use the Explorium to understand opportunities in China, based on shopper feedback and its analysis. Fung Group chairman Dr. Victor Fung said, "A key advantage for participating brands and retailers is that, with Explorium, they can experiment, incubate and iterate at high speed while minimizing their cost and risk."
Photo: Fung Group
Personalized and location-based offers are available to shoppers and the idea is to rapidly test omnichannel business strategies in a realistic setting. From each experiment tested, those running the Explorium move to the next iteration. The Explorium currently has 12,000 members and it is a closed group, registered from employees and family of the Fung Group, IBM, and Pico, but plans to open to the public at a later date. The typical member spends three+ hours per trip. Children’s products are an initial focus, but the Explorium plans to feature women’s and men’s apparel soon, along with home products, and will increase the number and variety of experiments, to add to the data collected.
Lab director Simeon Piasecki says China was chosen for the experiment partly because Chinese consumers are setting shopping trends globally and are avid users of digital devices and social media.
Through IBM’s Presence Insights solution, the Explorium and its partners can offer consumers timely, relevant offers and discounts as they move throughout the store.
IBM Presence Insights works by detecting and tracking Wi-Fi enabled mobile devices through their =unique message authentication codes (MAC ID). Then, traffic patterns, stopping points, engagement, and the results of specific displays and promotional campaigns are analyzed. Brands participating so far include Fung’s own Stride Rite, Toonsland, Hello Kitty, and Petit Bateau; along with Global Brands Group’s licensed brands including Nautica, Jeep, and New Balance.
Discussion Questions
How well do you think major retailers, as a whole, understand the interaction between online, mobile, and offline behavior? Would it be beneficial for retailers to create shopping labs of their own?
Poll
BrainTrust
Ralph Jacobson
Global Retail & CPG Sales Strategist, IBM
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
It’s great to see investment in research like this. In previous posts and papers I’ve encouraged retailers to start to do their own research and to invest in their own IP with respect to their own shoppers. Whereas suppliers can be category (mega) experts, it would be great to see retailers becoming more scientifically informed about how well (or not) their own stores work. Yes the uncertainty principle applies here but there is plenty of insight to be gained, and lots of service providers willing to help.
Experimentation is the mother of innovation. I applaud the joint effort in this shopping experience. With stagnation of growth in so many malls around the world, this example should serve as inspiration for retailers to push the limits of imagination to achieve that ultimate shopping experience we all talk about.
Major retailers are getting this. They understand how their customers’ buying habits and patterns are changing and are rising to the occasion. They recognize it is what they have to do to be competitive. They also have the funds to do so. It’s expensive and new information is coming at such a rapid pace it is hard for everyone to keep up.
Another thought: It’s not that major retailers are understanding and implementing solutions around customer buying habits. It’s what the smaller retailers have to do to compete. Smaller retailers don’t have the deep pockets necessary to deliver a similar “large retailer” experience. Until it becomes more cost effective, they will compete on other concepts that add value to the customer.
Any company can benefit from creating a “lab” of their own. It doesn’t necessarily have to be as robust as what is taking place in China. But a lab, for lack of a better term, that is focused on the customer experience can only be beneficial for both the customer and the retailer.
This is the pursuit of retail’s Holy Grail. To understand human shopping behavior. Nothing new here. Change is constant. It shifted from arithmetic to geometric to, recently, exponential.
Retailers are onto shopping labs and have been for a while. Some people call them stores.
It all depends upon who is in what silo and what CEO is interested in investing accordingly, and if the learnings will be applied. All within the tyranny of “the urgent versus the necessary.”
Or as we like to say, “retail ain’t for sissies!”
While e-commerce as a segment is growing, the retail market is seeing fewer dollars as time goes by. This is not only an endorsement for indicators demonstrating a clinically ill economy, it also shows how poor retailers and marketing firms are at stimulating interest and buyer behavior.
As we all know well periodicals, radio, Hollywood and television were the most effective consumer influences of the 20th century. These sources of the latest and greatest information have become all but useless and ineffective in the need for consumer awareness. The internet is now a platform from which the consumer extrapolates the necessary influence and information to make buying decisions.
Retailers—including the e-commerce-only group—are struggling to gather consumer confidence and loyalty for many reasons. The chief among these reasons is that we have simply not kept up with the evolution of technology in a leadership role as well as placing executives with very little or no understanding of the media’s abilities and demographics. What to say, how and where to say something is still a roll of the dice at best. This all comes from the elimination and or reliance on third party sales and marketing expertise.
Just as the 20th century tools previously mentioned were used by professional sales and marketing teams to grow the business and economy, so too will these same 21st century experts thrive when and where allowed. People drive and grow a business. The people with the best tools and knowledge of how to use the tools will make the most in terms of sales and real growth.
The store as a lab is a fairly known idea.
The problem with converting the flood of insights that are a byproduct of this type of research into something tangible is less known and when it happens, the reaction is to put on the emergency brake.
The leadership needed to make that culture happen is rare. Yes it’s hugely beneficial and worth pursuing but absent a visionary mindset, it only happens as a reaction to external events.
It is very difficult for major retailers because of the investments needed to observe and bring to action omnichannel interactions. Yes, they have to invest in labs and observations but the main thing is to tie it to execution of strategy. Too many of the new technology are staying in labs and sandboxes and not enough are pushed out to general implementation.
I think these interactions are not well understood, in part because they are rapidly changing. The tech is changing and shoppers are learning, exploring, inventing and adopting. Labs like IBM’s are a cost effective way to explore and understand the leading the edge of this behavior, as well as to try new ideas on a small, low risk scale.
Experiential shopping labs are a great concept and will help retailers better understand and anticipate the needs of their customers. Participating in trials that make use of new digital technologies to expand and connect the omnichannel is an important step for retailers seeking to own real estate in the customer journey.
While there are many large retail lab-like environments taking shape, a retailer can accomplish a lot within their own setting to examine customer behavior in an effort to provide a more seamless omnichannel shopping experience. For example, Target has created the Open Home concept store inside of its own retail space to understand how customers participate in new scenarios that provide engagement beyond both the physical and online store. Minor investments in analytics and mobile strategies will make big differences in capturing and understanding data that allow retailers to engage customers in a continuous dialog. As will expanding an ecosystem to include partnerships that forge new possibilities for clients (think Uber).