Marketechnics 2006: Technology and the shopping experience
By Ronald Margulis, Managing Director, RAM Communications
(www.rampr.com)
The nature of retailers is that they want to sell stuff that appeals to customers and they want to sell it in a manner that appeals to customers. The Food Marketing Institute’s Marketechnics Conference in San Diego this week featured both workshops and vendors that talked up the use of technology to make this happen.
One of the better-attended sessions was on using technology to improve customer experiences while shopping. Three specific tools were discussed by three retailers – Spartan Stores is using a variety of kiosks; Wegmans is developing a comprehensive, interactive web site; and Loblaw’s is installing self-checkouts.
The first of the presenters spoke of the results they are having. “Kiosks definitely enhance the shopping experience,” said Dave Couch, CIO of Spartan Stores. “For us, it’s been a very positive experience.”
The second spoke of the importance of technology to expanding the shopper base. “Your web site is a strategic communications vehicle to your multi-channel customers,” said Josh Culhane of Wegmans.
And the third gave a warning. “It is important to allow all of the same activities to be done by customers in self-check as cashiers can do in their lanes,” said Kevin Koehler of Loblaws.
On the exhibit floor, several vendors were hawking solutions designed to enhance the shopping experience. Galleria Retail Technology’s booth featured solutions that help right size the center store, so supermarket operators can expand the area devoted to the more exciting perishables departments. StoreNext showed Electronic Shelf Labels that offer expanded information available to the consumer. And there were many more.
Moderator’s Comment: How can technology best be used to enhance the shopping experience?
While technology can help automate certain customer centric activities like checkout and offer generation, it is best used in conjunction with a knowledgeable,
enthusiastic and motivated sales team. No technology can replace the good feeling a fellow human being can deliver in a time of need. –
Ronald Margulis – Moderator
Yesterday’s article, Trendy 2006, seems to missing the same thing this article is missing: customer service (and this should never be a trend, it should always be a concrete standard). I know this article is dealing specifically with Technology, but I agree with Ron.
Retailers should never replace personable service with a machine(s) alone. Retailers will benefit from combining human service with technology concurrent to their customers’ wants.
I don’t believe there is one specific technology on the rise that will transform the shopping experience. This is evident in the above Instant Poll (what about biometric and contactless payment options?). Companies must learn how their current technology performs for their customers and apply those conclusions to the decisions regarding implementation of new technology. Kiosks might work in one arena but not another. Customers could perceive self-checkout as extremely beneficial in one industry but cumbersome in another.
There seems to be an implicit assumption here that “enhancing the shopping experience” will also enhance profitability. But the reverse may not be true: some of the most profitable initiatives may not be aimed at customer experience, per se. For instance, I think there’s incredible upside to the use of electronic shelf tags (and the smart use of dynamic pricing). It will drive some consumers crazy (and will likely spawn a PR backlash), but it will have a far greater impact on long-run retailer profitability than some of the more faddish experiential activities that are receiving much attention today.
Ron’s right — the best retail technologies are transparent and just reinforce the total customer experience. That said, I think we need to expand our current view of retail technologies. Why shouldn’t loss prevention technologies be used to enhance merchandising for example? Why doesn’t POS data actually benefit consumers? Why can’t we use kiosk technology to help lower income shoppers plan meals instead of just running closed loop advertising? And why do we still have so many stand-alone, proprietary systems operating independently in so many stores? One answer may be that (as evidenced by this discussion) we still talk too often in terms of technology and retailing as though they were inherently separate activities rather than integrated tools for safely and efficiently selling product and enhancing both margins and the consumer experience.
“How can technology best be used to enhance the shopping experience?”
Simple. Tune into the head of your customer. First talk about human behavior, human needs and human experiences then apply technology onto that. Good retailers know their customers and know a good retailing experience is not about technology at all. Technology can enhance the shopping experience but only when its supporting the experience. Realize that the shopping experience starts way before a customer enters your store.
Simple…well it should be like that. It gets better.
Mobile media (cart-based information) is the way to go. Although nothing can replace great customer service, this technology will become loved by most. It can be used to scan an item (price & additional product info pops up). It can have a search feature where you input the item you are looking for and the aisle number pops up. You can even put in what aisle you are in and all items on sale in that aisle pop up. If the supermarket allows customers to store their shopping list on their website, the customer can then pull up their shopping list so they don’t forget anything. You can pull up recipes to make sure you have all the ingredients to make a certain dish. The possibilities are endless. Suggestions for Super Bowl snacks or holiday dishes can all be made available at the touch of a button. That’s the way I want to shop…
Lets talk technology at Roundy’s and Marsh when it comes to telephone systems.
I was recently at a Pick’n Save, Rainbow Foods and Marsh Supermarket that all took a step back with in-store communications. I work for a large 5000+ RX chain and all of ours stores currently have Nortel Meridian phones, and so do countless other retailers from Borders to TJX to Safeway. We use the phone system for in-store communication (paging/internal calls) and for outside calls and voice mail. Marsh and Roundy’s are currently buying phone systems and separate intercom systems, as noted in the most recent Pick’n Save store I visited. Someone at these retailers needs to realize they are wasting BIG money by buying two systems, plus inconveniencing the customers due to lengthened customer wait times and basically showing they are an outdated retailer. These separate intercom/telephone systems were eliminated by many big retailers such as Kmart, Jewel-Osco, Walgreens and others in the 1980’s. I cannot understand why there is such a resurgence of this outdated technology at these otherwise innovative retailers Roundy’s and Marsh. Is someone in their IT department not getting a clear picture?
Secondly, I find that the two way radios at Target are extremely annoying, esp. mixed with the lack of overhead music. It provides for an extremely annoying environment which sounds more like a police station conveying police calls. Wireless handsets connected to the phone system would be the way to go in my opinion. Paging, internal calls and maybe even a direct connect feature could be implemented. I find that if you train the employees properly, an overhead paging system can be a way of defining classiness in your store, i.e. Nordstrom and Borders. Target really needs to rethink their annoying walkie talkie technology.
Those are my IT thoughts!
Technology certainly has a role in the retail experience. However, as many panelists have pointed out, it should not be to replace the human experience, but rather to enhance it. Doing so profitably is the other part of the coin. Taking advantage of in-store broadcasting to inform and relax the customer (both audio and video) are a great example of doing this. Alternatively, RFID and electronic shelf tags are not quite ready for profitable deployment. When examining a technology alternative, Retailers must look at how technology would improve the shopping experience.
Clearly, technology has a place in enhancing the consumer experience, and it can help take costs out of the system. The Future Store, a Smart Store in Germany owned by Metro, is a great example of what technology can do: you can put anything on a produce scale and it knows what it is and it is priced accordingly; you can have wines selected for your meals and spotlights will direct you to the location, and they will even offer a comparable store brand selection. All the tags are electronic and you can use personal shopper technology in your cart to help you shop and find products. Pretty neat stuff! Now the real answer – find out what the consumers/shoppers want and then build and assemble the technologies to support those concepts. And, we see this in almost every column – there is no substitute for great customer service.
What technology would enhance the shopping experience the most? It’s always the technology you don’t have yet. If you aren’t staffing using technology, customer service isn’t being maximized. If you haven’t got electronic shelf labels, suspicion of price errors will be greater. If you have a mediocre web site, your marketing leverage is poor. Will you wait until your primary competitor offers cart scanning so that people can see what they’re spending as they shop, or will you offer it first and get the recognition?
We are in the most exciting time in retail, ever, in my opinion. No longer are retailers focused on cutting costs at all costs. We are giving thought to how to cut costs WHILE either enhancing, or at a minimum, not negatively impacting the consumer experience. Also, the technology is not necessarily aimed at the high end consumer, we are taking a more holistic approach.
Personally, the most enjoyable shopping experiences I have are ones that mix the traditional with technology. Someone in the aisle cooking a flavorful dish? It is likely I will buy the ingredients and try it at home. Kiosks with recipe ideas, again, if it sounds good, I’ll try it. Self-check out, again, if it saves me time, I’m there. These are a mix of cost cutting and sale generating activities that enhance the shopping experience for everyone. If we could just get over the privacy hurdle (both from a technology and a public policy point of view).
Interactive technologies spawn massive amounts of data, as exemplified by scan data. Each new technology has the potential to add another layer of data, and each layer can provide a richer, more actionable view of the other layers. Comprehensive management of shopper intelligence, generated by technology, is the key to enhanced shopper experience (read: more profits for the retailer.) This is the key, too, to wider adoption of more technologies.
It’s easier to imagine ways in which cart-based information might be helpful to shoppers than it is to actually do something helpful for shoppers. The more the shopper is asked to alter their own behavior, the less successful the technology will be – unless the payoff perceived by the shopper is huge, as, for example, with self checkout.
There are many ways in which technology can enhance the customer experience, but the best applications depend on consumer needs and expectations, product characteristics, and the
retailer’s brand equity. Indiana University’s Center for Retailing published a study with KPMG on this topic in 2000 (click
here for study) and many of the conclusions are still valid today. For a more recent look at approaches for enhancing the shopping experience, see our report on measuring and
managing retail shoppability, which appeared in the book "Future Retail Now: 40 of the World’s Best Stores," published by the Retail Industry Leaders Association (click
here for PDF).
Just because someone says that a piece of technology “worked for them” or that you “should do something” doesn’t mean it will enhance your profitability or the consumer’s shopping experience. Have you spent time observing your consumers? Where and when are they frustrated? What about your current systems are issues with your consumers – good or bad? What about your current technology works or doesn’t work for your consumers? What do your consumers want from their experience? What would make your consumers have a more pleasant shopping experience? Then choose the technology to enhance the experience. As with other technology decisions — decide what you want technology to do and how it will integrate with your current systems and then adopt the best version.
One can appreciate the belief that technology may help the shopper experience; especially in the younger generations that are impatient and want everything yesterday.
But, it isn’t true with the Boomers and generations that want more than what tech gizmos offer. The richest generation is into the human factor of the shopping experience that many retailers and businesses still don’t GET!
So these retail corporations and owners look at second and third level activities that they deem important; especially to their data information program… what about to the consumer? Have you asked them? Hence, everyone thinks Boomers will flock to a retailer that has the list of tech activities, at the beginning of this subject today.
Wrong, wrong, wrong. Until the executive culture changes, and importantly, starts to initiate a consumer centric attitude; benefits; and atmosphere in the outlets; as well as its organization, like better:
a) information, for example, about dinners and wines availability, and how to cook a certain meat in a sauce, on their
web site; and
b) then, have a friendly, greetings pre and post shopping; wider aisles; and check out efforts in the perishable departments; you can have all the tech programs you want…all for naught!
You might as well forget the shoppers who will go to the local butcher, produce, floral, and catering shops, to spend on products, deli, foods, wine and meals with high gross margin dollars. In these shops, a shopper feels that they will:
a) be serviced better;
b) secure information about product;
c) have someone available if they can’t find an item; and
d) —
most critical — feel like it isn’t a hassle shopping at any of these stores.
One might say, shoppers WITH the dollars to fatten the grocery’s G.P.M., are willing to make a number of stops, or shop 5 outlets, to secure their needs.
And, feel good, without hassle issues to bother them!
Side bar point: Is one-stop-shopping antiquated, as well as the football stadium size, grocery outlet?
Does the grocery trade want 1 or 2 cents, before taxes, as many are getting? Or do results signaling 7 to 12 cents shows a base of happy shoppers?
Oh well, let’s blame the multi-competitors, and new non-grocery types, for getting the food dollar.
It is time to realize that it is in the Industry’s hands to include all the public chains and wholesalers with corporate stores, too; & privately owned chains and independent groups’ corner! When will we realize that the old ways don’t work as well, or fail, in today’s consumer world. Do we have to go through more learning lessons like in the recent two major national chains’ horrible experiences? By the way, each of these retailers used the old grocery operations formula to cut back /rebuild its business and dominance in its respective geographic areas.
And, the unhappy consumers, from day one, were left out of the their business equations.
Happy shoppers today, (not like our grandparents or parents), don’t result from price, hassles to shop, minimal help to serve their needs; an unproductive checkout effort, especially, in the high margin perishable arena; and a football field to shop/exercise around.
If it was my business, I spend these tech dollars for consumer centric and engagement programs. Thank you to the owners and grocery operations that listened, and got it.
Hmmmmmmmm
Yes, Stephan, if I read you correctly.
Unfortunately, the technology the industry is focusing on is a huge distraction from a fundamental problem: customers’ basic expectations are met poorly in the grocery industry. Data on that in a moment. Meet customer expectations better, and customers will shop more, they will be more loyal, they will spend more, they will be less sensitive to price, etc.
The studies we have conducted indicate that shoppers become more sensitive to price — focus on it and make it more important — the lower their other expectations are met. This dynamic, poorly understood in the industry, has led to the terrible black spiral we are in: grocer’s have seen consumers say price is more and more important, so they focus more on lowering prices and put less investment into meeting other expectations, consumers become more unhappy and so price becomes more important, etc.
If you take the price sensitivity out of the data, you are left with key weaknesses in how grocery meets shoppers expectations. Below are ten of them (not in order) — here are the things that shoppers complain about most often and with the most depth of feeling (based on over 7000 interviews nationwide):
– You can’t find what you need quickly (especially items you seldom buy or new items).
– It’s too difficult to get around the store. Obstacles in the aisles. Aisles too small for the number of shoppers. No aisle cut-throughs.
– I don’t see any sign that the store is glad for my business, except that they take my money at the checkout.
– The checkout lines are too long, take too long to get through, and are too impersonal.
– I have to bag and carry out my own groceries. (This applies not to all organizations, but when it DOES apply, boy does it.)
– There is too little room between the aisles and checkout — the lines are too long and the space is too narrow. I can’t get through.
– There are few or no staff on the floor to help you as you shop. If there are any there, they are unfriendly or inattentive.
– The store is cluttered or dirty, or both. Bathrooms especially.
– The only way to get the specials is to present the card. (Doesn’t apply to all, but again, when it applies, it is with great depth of feeling.)
– The items I need are out of stock or aren’t carried at all.
The data is quite clear that these are some of the most infuriating elements to consumers. These aren’t necessarily easy to correct, but they are all correctable.
The even bigger question is: why doesn’t the industry focus on improving the basics? Why does it focus on peripheral elements, as mentioned in this discussion?
More data as to the reasons:
– The Industry executives we have interviewed have very little data, if any at all, on basic shopper expectations and how their stores meet/don’t meet those expectations.
– Why? They say that it is because it is uncomfortable information. It paints a picture that is not pleasant to look at.
– They also say that it paints a picture regarding things they are not sure they can do anything about. Executives say they believe some items would cost too much to implement, and some things are too hard to do — maybe even impossible.
– When we show them our data, the executives have said they don’t believe it. We ask them if they would undertake their own studies to disprove our data. Answer: no.
– Why not? “Because we are doing a pretty good job on this already. Why spend the time and money to study it?”
– What do they base this conclusion on? “Would we be making any money if we weren’t meeting basic expectations pretty well? Would we have all this traffic in our stores?”
– All of this comes down to: “We assume we are doing a good job, and it is too uncomfortable to find out otherwise.” “Look at this COOL technology! Wow! I wonder what it would look like in our stores.” That’s a lot more fun. I can be the same way — when I’m confronted with two choices, one of which is to look at uncomfortable but important information about myself and the other is a chance to go to a movie or play on the computer, I do sometimes, ahem!, choose the second.
I would some day like to open up a topic for all of us on this question: Is it true that grocery (or retail) operates at a low level? If it does, is it because the industry as a whole has a difficult time looking at and accepting the uncomfortable information that says it operates at a low level? And if so, what can we, as advisors and individual executives, do about it? What can we do to bring real awareness of basic problems?
Just want to toss in my tuppence in support of Ron’s comments. The best way for technology to enhance the customer experience is to recognise it as one part of an overall, comprehensive mix of customer services. It is not the be all or the end all but it is an important and significant contributor to customer satisfaction when it is viewed in context and offered up as a choice that customers can make as and when it suits their requirements.