January 27, 2015
It’s game on for retailers
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
Beyond all the glittering new technologies on display, the NRF Big Show had a consistent theme to it, and that is that the mass merchandising days of "stack ’em high and watch ’em fly!" are over. There is no longer any argument or real resistance to the reality that consumers are in control of the retail interaction and they routinely use information delivered via consumer-mobile devices to investigate, select, and purchase products to fit their lifestyle needs.
For consumers, the whole world is a store, prices are ubiquitous, and assortments are virtually endless. The challenge for retailers now is that consumers expect services such as buy anywhere/fulfill anywhere, "endless aisle," click and collect, etc. to work. And while many retailers have done what they needed to in the short term with their legacy technologies to make those services available to consumers, they haven’t yet figured out how to perform them efficiently and are probably losing profits as a result.
So it’s "game on!" for retailers — the starting whistle has blown and it’s time to execute within the new customer-centric paradigm. At the NRF show, technology providers such as IBM, SAP, JDA and others showed solutions that focus on optimized and dynamic supply chains that can calculate the optimal fulfillment location for any consumer order, no matter where it was generated.
This year’s show also demonstrated that bringing the store into the digital world remains a top to-do for retailers.
One of the biggest problems that the Internet of Things (IoT) — this year’s shiny object trend — may address is that while retailers can, and do, track consumers’ paths-to-purchase in the digital space, shoppers are invisible to retailers in the store until they get to the checkout counter. The challenge of integrating store selling systems with e-commerce remains, and solutions that addressed the challenge from Toshiba, SAP, Oracle and others were prominently displayed.
Retailers understand that it isn’t enough to merely react better to consumer demand coming from new places. They must predict that demand more accurately and plan their assortments and allocations accordingly. The good news is that there are many new signals coming from consumers that help retailers predict demand — from social media, online search, product affinity analyses, etc. Many of these new signals are what constitutes "big data" and at NRF customer data analysis and planning systems were demoed to interested retailers.
In the end, of course, retailers only make money when consumers pay for goods and services. The Future of Payments was also a big topic at NRF 2015. The U.S. faces a 2015 deadline for EMV (or "chip and pin") compliance, but tokenized and mobile payment systems like those offered by PayPal and Apple were also hot topics.
BrainTrust
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Discussion Questions
What technology solutions highlighted in the article impress you the most? What trends are you encouraged by?
Poll
The focus on omni-channel fulfillment is driving many retailers’ strategies in 2015. Most retailers have realized the importance of being able to deliver the right products at the right time via the consumers’ delivery channel of choice. To that end, retail organizations are beefing up their fulfillment capabilities, which also means beefing up data optimization and analytics.
While the IoT and wearables are cool, hot trends, I think they may take a back seat to getting the foundation in place, at least in the short-term.
The omni-channel consumer behavior of anytime and everywhere changes everything, especially in stores.
Stores are becoming less about being “product showcases” and more about how consumers can “experience” applying and using products.
Results still count. Physical stores still need to convert sales and attach accessories. To do that in an omni-channel world will increasingly require solutions and systems which enable stores to:
- Bring products to life in ways that consumers use them: Experience.
- Show inventory not carried in a particular store: Endless aisle.
- Sell online products from the aisle: Seamless selling systems.
- Enable mobile search and sales in store: Purchase and pay anywhere.
- Follow the consumer home: Seamless CRM and relationship selling.
I’m encouraged that retailers (though not enough of them) are giving consumers options, from how and where to purchase to how to pick up to how to pay. Most of the progress will need to come in the back end: Inventory, delivery, stocking and payments. All of these advances will require technology that rely on big data. Many of these changes will cost a good deal of money to implement, but once done have the potential to yield greater efficiencies and thereby higher sales and profits.
I am particularly interested to see how the payments game will unfold. The ordering and payment process on one level is easy but in a world where shoppers are in control and expectations are evolving and increasing rapidly retailers need to plan—as Wayne Gretzky once said—to where the puck will be, not where it has been. Designing, activating and operationalizing a process that falls short or is not valued by today’s and tomorrow’s shoppers will be costly in both treasure and brand.
These concepts need to be carefully designed to provide a path forward as systems become more integrated and holistic. Deciding to commit to these concepts require quantitative evidence and should not be left to emotional consideration or focus group methods. In-situ testing, measurement and optimization is an absolute must regardless of the enabling technology being considered.
Many of the technologies for tracking the shopper journey have matured greatly, especially for in-store use. Mobile tracking methods in particular (Wi-Fi and beacons) are gaining traction from a technical perspective, but the questions that linger are related to how to track shoppers personally rather than just anonymously. Navigating the value proposition and selling the shoppers on personal tracking throughout their journeys is a tough nut to crack, and will likely be fraught with missteps and false starts.
“Bringing the store into the digital world” is the biggest, and most challenging, opportunity for retailers. There was loads of flashy technologies on display (the 10K television in the Panasonic booth was pretty amazing) but retailers will have to make a commitment to erasing old technologies from their mix to take the best advantage. That will be an issue while executing on EMV and addressing data security issues.
The Internet of Things technology was very exciting at NRF for two reasons. First, it’s in a very early stage but most of the basic “wiring” for iBeacons and Wi-Fi is completed and working. This opens the door to the next phase of development where software companies will figure out how to take advantage of the in-store wireless environment to create exceptional service opportunities.
In The Incredible Dissolving Store, the boundaries that used to separate shopping from the rest of life are becoming more porous. Brian is correct, “the whole world is a store” and shoppers have learned to expect responsive merchandising and personalized services everywhere they go in the physical and cyber realms.
Retailers cannot hope to deliver on this expectation without a program of active listening to shoppers’ behaviors, wants and needs. Performance depends upon sensing, especially within the confines of the physical store where data is hardest to come by. Advanced analytics depend upon a flow of accurate, reliable shopper data. From where I sit, many gaps remain in this area.
Follow the money, particularly how the consumer uses (or saves) their money, which product categories they will be favoring and the payment systems to which they adapt.
The one world retail economy has not fully disclosed the wants and needs of of the still new e-commerce consumer. At the same time brick and mortar retail is rapidly moving in highly unpredictable directions. This discussion’s author is correct with these assessments, but the present day retail approach might wish to consider less speculative options in what means are deployed to capture sales.
When the support data used to calculate any marketing response is still evolving rapidly a static posture is ill advisable. Retailers would do well to consider pricing, logistics and inventory control as the means to make the company more responsive to what we are now facing. Eliminating the pressures of landed costs and replacing this with the total projected costs of putting product in the hands of the consumer is a better read to predetermine product/item viability. Finding, moving and storing inventory needs a lot of work to keep margins form being blindsided by energy tax and transportation costs. Not paying attention to the costs of doing business in today’s economy is why retailers and e-tailers are struggling with in both new ventures and the core business.
Solutions around the three areas of: The Power of Insights,” “The New Storefront,” and “Fulfill on Demand” are spot-on with both retailers and CPG brands. As technology companies continue to develop effective capabilities for organizations to leverage, I see an increase in consumer advocacy for those brands and merchants that offer compelling reasons to shop their stores.
All of the areas shown at NRF and reviewed by the comments here require data and BIG DATA. Big data is not just a catchy marketing term—it is a challenge that retailers have been dealing with for years and that all future retail tech advancements require. Big data being harnessed for many purposes, from SCM to IoT to payment processes, was what impressed me.
Big data is a new retail platform that makes what was once impossible in retail very possible today.
Big Data—the foundation for retail’s future.
Beaconing, mobile device tracking, and video analytics are the technologies that will be most important to retailers as they transition to customer-centric/omnichannel retailing.
I agree, Max. Retailers are looking to get the right back-end systems in place (POS/OMS/ERP) that seamlessly work together so they can have real-time inventory visibility across in-store, fulfillment locations and the supply chain. Retailers are relying heavily on accurate inventory to optimize order routing for all delivery options, meet customer demand, and prevent fulfillment issues before the customer is aware or money is wasted.
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The focus on omni-channel fulfillment is driving many retailers’ strategies in 2015. Most retailers have realized the importance of being able to deliver the right products at the right time via the consumers’ delivery channel of choice. To that end, retail organizations are beefing up their fulfillment capabilities, which also means beefing up data optimization and analytics.
While the IoT and wearables are cool, hot trends, I think they may take a back seat to getting the foundation in place, at least in the short-term.
The omni-channel consumer behavior of anytime and everywhere changes everything, especially in stores.
Stores are becoming less about being “product showcases” and more about how consumers can “experience” applying and using products.
Results still count. Physical stores still need to convert sales and attach accessories. To do that in an omni-channel world will increasingly require solutions and systems which enable stores to:
I’m encouraged that retailers (though not enough of them) are giving consumers options, from how and where to purchase to how to pick up to how to pay. Most of the progress will need to come in the back end: Inventory, delivery, stocking and payments. All of these advances will require technology that rely on big data. Many of these changes will cost a good deal of money to implement, but once done have the potential to yield greater efficiencies and thereby higher sales and profits.
I am particularly interested to see how the payments game will unfold. The ordering and payment process on one level is easy but in a world where shoppers are in control and expectations are evolving and increasing rapidly retailers need to plan—as Wayne Gretzky once said—to where the puck will be, not where it has been. Designing, activating and operationalizing a process that falls short or is not valued by today’s and tomorrow’s shoppers will be costly in both treasure and brand.
These concepts need to be carefully designed to provide a path forward as systems become more integrated and holistic. Deciding to commit to these concepts require quantitative evidence and should not be left to emotional consideration or focus group methods. In-situ testing, measurement and optimization is an absolute must regardless of the enabling technology being considered.
Many of the technologies for tracking the shopper journey have matured greatly, especially for in-store use. Mobile tracking methods in particular (Wi-Fi and beacons) are gaining traction from a technical perspective, but the questions that linger are related to how to track shoppers personally rather than just anonymously. Navigating the value proposition and selling the shoppers on personal tracking throughout their journeys is a tough nut to crack, and will likely be fraught with missteps and false starts.
“Bringing the store into the digital world” is the biggest, and most challenging, opportunity for retailers. There was loads of flashy technologies on display (the 10K television in the Panasonic booth was pretty amazing) but retailers will have to make a commitment to erasing old technologies from their mix to take the best advantage. That will be an issue while executing on EMV and addressing data security issues.
The Internet of Things technology was very exciting at NRF for two reasons. First, it’s in a very early stage but most of the basic “wiring” for iBeacons and Wi-Fi is completed and working. This opens the door to the next phase of development where software companies will figure out how to take advantage of the in-store wireless environment to create exceptional service opportunities.
In The Incredible Dissolving Store, the boundaries that used to separate shopping from the rest of life are becoming more porous. Brian is correct, “the whole world is a store” and shoppers have learned to expect responsive merchandising and personalized services everywhere they go in the physical and cyber realms.
Retailers cannot hope to deliver on this expectation without a program of active listening to shoppers’ behaviors, wants and needs. Performance depends upon sensing, especially within the confines of the physical store where data is hardest to come by. Advanced analytics depend upon a flow of accurate, reliable shopper data. From where I sit, many gaps remain in this area.
Follow the money, particularly how the consumer uses (or saves) their money, which product categories they will be favoring and the payment systems to which they adapt.
The one world retail economy has not fully disclosed the wants and needs of of the still new e-commerce consumer. At the same time brick and mortar retail is rapidly moving in highly unpredictable directions. This discussion’s author is correct with these assessments, but the present day retail approach might wish to consider less speculative options in what means are deployed to capture sales.
When the support data used to calculate any marketing response is still evolving rapidly a static posture is ill advisable. Retailers would do well to consider pricing, logistics and inventory control as the means to make the company more responsive to what we are now facing. Eliminating the pressures of landed costs and replacing this with the total projected costs of putting product in the hands of the consumer is a better read to predetermine product/item viability. Finding, moving and storing inventory needs a lot of work to keep margins form being blindsided by energy tax and transportation costs. Not paying attention to the costs of doing business in today’s economy is why retailers and e-tailers are struggling with in both new ventures and the core business.
Solutions around the three areas of: The Power of Insights,” “The New Storefront,” and “Fulfill on Demand” are spot-on with both retailers and CPG brands. As technology companies continue to develop effective capabilities for organizations to leverage, I see an increase in consumer advocacy for those brands and merchants that offer compelling reasons to shop their stores.
All of the areas shown at NRF and reviewed by the comments here require data and BIG DATA. Big data is not just a catchy marketing term—it is a challenge that retailers have been dealing with for years and that all future retail tech advancements require. Big data being harnessed for many purposes, from SCM to IoT to payment processes, was what impressed me.
Big data is a new retail platform that makes what was once impossible in retail very possible today.
Big Data—the foundation for retail’s future.
Beaconing, mobile device tracking, and video analytics are the technologies that will be most important to retailers as they transition to customer-centric/omnichannel retailing.
I agree, Max. Retailers are looking to get the right back-end systems in place (POS/OMS/ERP) that seamlessly work together so they can have real-time inventory visibility across in-store, fulfillment locations and the supply chain. Retailers are relying heavily on accurate inventory to optimize order routing for all delivery options, meet customer demand, and prevent fulfillment issues before the customer is aware or money is wasted.