Platt Retail Institute: It's Time for Retailers to Transform Their Stores
Through a special arrangement, presented here for discussion is an excerpt of a current article from the Platt Retail Institute Quarterly Retail Analytics report.
The rapid growth of e-commerce sales, heightened consumer expectations for self-service, increased consumer time and budget constraints, and new web-based, pervasive and analytical capabilities portend that now is the time for retailers to transform the store shopping experience.
Why is e-commerce outpacing in-store retailing in sales growth and customer experience satisfaction?
1) E-commerce provides shopping advantages over in-store environments. It enables rapid product feature comparisons based on criteria provided by the consumer. The store shopping experience is mostly dependent upon sales associates' knowledge and motivation to provide consumers with similar product information. E-commerce provides superior product context via videos and 360-degree product views. Price/feature comparisons allow consumers to rapidly "design" the "solution" that is best for their needs. Out-of-stock occurrences are also much lower.
2) Consumers are becoming increasingly comfortable with self-service (web-based) capabilities. A typical day could include interacting with self-service to obtain the price of an item in the store, buying groceries, filling the car with gas, getting cash at the ATM, checking in for flights or hotel stays, purchasing stamps, ordering photos and assessing health conditions.
3) Consumers have great access to e-commerce and e-commerce capabilities at home and at work, but not at the store. The proliferation of home-based and work-based broadband has enabled e-commerce providers to add more graphics-intensive features to their websites, including the use of video to improve the value of product information and product context (selling "bundles").
4) E-commerce provides management advantages as compared to stores. Retail management is able to measure consumer behavior during every step of the shopping process with e-commerce, including the conversion performance from entry, to search, to selection, to checkout. Measuring conversion in a store environment is imprecise as it is dependent upon people-counting at the entrance, point-of-sale data, and market basket analysis. Retailers are also able to quickly test alternative products, messages, promotions, and placement to establish consumer reaction and sales performance results (A/B testing).
One of the simplest ways to bring the advantages of the web into the store will be to provide web access that is easy to find and easy to use. Retailers will also find ways to enable rapid product comparisons via self-service devices in selected departments such as home electronics and appliances.
Shopping is declining as a source of entertainment for consumers. The main tool for improving a store's entertainment value is the deployment of digital media and large digital display screens. A few retailers have successfully tested coupling an e-commerce- based kiosk with a large digital display screen, enabling consumers to tailor the content they want to see (i.e., product information, product comparisons, product context and bundling).
Beyond e-commerce availability, retailers can improve the store experience with touch-enabled customer interaction within the store, and employing other in-store self-service transactions. Consumers are rapidly migrating toward a touch interface as their preferred method of interaction, thanks to the iPod, the iPhone, other touch-based smart phones and touch-based self-service kiosks. This is a longer-term effort, but one that can successfully create a positive difference in a retailer's customer experience satisfaction.
Discussion Questions: Why aren't we seeing more stores simply providing web access to consumers at the store level? What's holding back the overall use of web-technologies at the store level? Which web-technologies appear to have the best ROI in the short term and which ones appear particularly viable in the long term?