Shoppers Set Pace, Direction of Retail Tech Innovation

Discussion
Nov 19, 2013

It’s no secret that more shoppers are bringing their smartphones into stores to help them make purchase decisions. A new Deloitte study shows the number of smartphone owners has increased to 61 percent compared to 42 percent two years ago with over 68 percent of those planning to use their devices to help with shopping. The trend shows no sign of abating.

Obvious in-store smartphone activities include price comparisons, finding deals, special offers and coupons, searching for additional product information and seeing what friends prefer or recommend.

Beyond the obvious challenges for retailers, there are some interesting implications.

Customers are not waiting for retailers to implement new capabilities — they’re charging ahead with their own selection of in-store tools. By bringing their own hardware and apps into the shopping process, shoppers, not retailers, are setting the direction and pace of in-store technology innovation.

This also means customers are choosing where they will get their information and influences which can come directly from brands, deal sites, and curated catalogs or from a competitor, all while in your store. (Here’s a thought experiment: imagine a competitor setting up a kiosk inside your store.)

How can retailers deal with this? Here are some ideas.

First, embrace the fact that consumer behavior — and the purchase decision process — has changed significantly. (This sounds like common sense, but it’s always surprising how many organizations deny real changes in their ecosystems.)

Second, recognize the physical store as a competitive asset. The products are right there for customers to look at, experience and buy, providing instant gratification. Use the smartphone to connect the shopper to the store and personalize the experience. For example, provide product locations or send relevant offers based on their current product searches, shopping lists and past purchases. Let them know about new products that might interest them.

(As a corollary, don’t take a shortcut by providing a mobile-optimized ecommerce experience that takes an in-store shopper online. That’s a gift to Amazon.)

Third, things are changing quickly. Create a design and delivery process that rapidly and continuously tests new ideas, measures them and incrementally improves the shopper experience. Many ideas will fail or require tweaking, so there’s a need to do it fast and move on. A key benefit of digitally connecting with shoppers is the resulting analytics that can be used to improve both apps and in-store processes.

Shoppers using smartphones in-store is a tremendous opportunity for retailers. Take advantage of it or someone else will … in your own store.

How are shoppers who bring their own mobile devices to stores influencing the development of new retail technology? What changes in retail technology do you expect to see as a result of the devices and apps being used by consumers?

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20 Comments on "Shoppers Set Pace, Direction of Retail Tech Innovation"


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Chris Petersen, PhD
Guest
8 years 6 months ago

Outstanding insight and advice from Todd Sherman. The “genie is out of the bottle,” and not going back.

Regarding consumer BYOD (Bringing Your Own Devices and apps to the store) the glass is more “half full” than “half empty.” As Todd suggests in his great advice, bricks and mortar retailers need to see this as advantage.

But retailers cannot afford to be passive! Today’s retailers must aggressively leverage the experience advantage of stores as keystone of their omni-channel strategy, to exceed the expectations of their consumers who are shopping anytime and everywhere.

Robert DiPietro
Guest
8 years 6 months ago

There are many ways that devices and apps will change based on consumer behavior. I think one problem that can be solved with tech is being able to talk with a live person when researching on your terms. What if a shopper can FaceTime with an independent sales agent to talk over the pros/cons of the tablet/washing machine/refrigerator, etc. they’re shopping for? It’s one thing to research price while in the store, but what about being able to ask an independent expert to make an informed decision. Imagine being in the aisle and calling up Walt Mossberg and asking which router you should buy?

Cathy Hotka
Guest
8 years 6 months ago

Conundrums abound here. A large home improvement chain has an app that will help you locate items in the store, but there’s no similar in-store capability for people who don’t carry smartphones.

Customers will use any tool at their disposal to improve the shopping experience and hunt for the best price. While retailers are proving adept at arming associates with handhelds, they’ve been less successful with leveraging customers’ own devices. It will be interesting to see who comes up with the most effective process.

Diana McHenry
Guest
8 years 6 months ago

I went into one of my favorite apparel retailers this year looking for a specific garment, color and size. The Millennial associate was pretty frustrated with non-Millennial me. She was frustrated to not have the tools and in that I could find the item in another location with my smartphone faster than she could help me. In a major electronics retailer, I was likewise better armed than the associate, but in this case, the gentleman embraced this. Together the enthusiastic associate and I found the perfect laptop for my son using my smartphone and their internal inventory system.

I’d look for more tablets and in-store apps to empower associates in 2014. Also, we need to continue to incent behavior and service. Once I am in your store, you don’t want me to leave, really. Engage me, help me, sincerely.

Adrian Weidmann
Guest
8 years 6 months ago

Digitally-empowered shoppers are in control of the process. The sooner retailers come to terms with this reality, the sooner they will begin to design shopper marketing tactics that embrace this new paradigm.

As noted by Mr. Sherman in his aside to retailers, do not waste your time and resources to create a mobile version of your e-commerce site. It is not an effective brand interaction, the customers don’t value it, it’s not relevant AND you’re playing right into Amazon’s hands! Rather, identify your brand zealots and mobile advocates, capture their stories as it relates to your brand and share those stories through all your shopper touch points!

Great storytelling followed by global cross-channel publishing is THE way to engage your valued customers in a relevant and personal way. This strategy will become the foundation for developing and maintaining a “customer-for-life” dialog.

Ben Sprecher
Guest
Ben Sprecher
8 years 6 months ago

Shoppers are already using smartphones in-store for many different tasks (price comparison, finding product info and reviews, searching for deals, etc.), and they are doing so in different ways in different retail verticals (see Google’s Mobile In-Store Research, slides 31-37 for some stats).

To imagine what’s next, I propose building on Todd’s great thought experiment (“imagine a competitor setting up a kiosk inside your store”), and asking: imagine you could have a store associate standing next to every shopper in your store throughout their shopping trip; what would get easier for the shopper? Whatever you answered, assume that someone (maybe you) will build an app to help the shopper with those questions and tasks.

Bill Davis
Guest
8 years 6 months ago
It’s opening up tremendous new applications on the technology side, but much of the challenge is still getting retailers to adopt/support these new technologies. This article from MIT Technology Review highlights one of the major issues impeding adoption. “Coloring the situation is just how badly most large merchants misjudged technology. Back in 2008, Accenture found that retailers invested only 2 percent of their revenue in technology while most other industries invested two to three times that much. As they stood by, Amazon.com has amassed annual sales of $60 billion, six times the online sales of its nearest U.S competitor, Walmart.” In light of what Amazon, eBay and others are doing, most retailers need to rethink their business, and that’s just not an easy thing to do. While there are signs some are doing this, and consumers are driving this, not everything can be managed by the consumer so retailers have to actively support that consumers are using their mobile devices in store for a variety of reasons and as you suggest, recognize that this “is… Read more »
Mohamed Amer
Guest
Mohamed Amer
8 years 6 months ago
In my days as a box-kicker, we always talked about what happens inside the “four walls.” It was an apt metaphor for how we ran the business, we restricted the complexity to that within our own walls and we worked to optimize the heck out of it along with time and labor and making sure all the orders shipped on time. There was a similar mentality on the front end, in the store’s own “four walls.” Promotions brought customer traffic to the stores where you worked to convert them into purchases. Then the Internet came along and we got “eTailers” sprouting everywhere, the dot.bomb bust came and you can hear the traditional retailers’ collective sigh of relief that the world would return back to some normal state. But that turned out to be a mirage. As Todd Sherman put it so well here, “customers are choosing where they will get their information and influences which can come directly from brands, deal sites, and curated catalogs or from a competitor, all while in your store.” The… Read more »
Lee Kent
Guest
8 years 6 months ago
This is what retailers should be thinking about but so far, I’m certainly not seeing that they are. What I see and hear more often is retailers trying to address the mobile devices being used by their customers in store, by countering them. They are not embracing them in any way. Now that said, while the retailer may not be embracing them, let me tell you a story about a sales associate. I walked into Home Depot just last week looking for a specific filter for my fridge. I couldn’t find it on the shelf, so I asked an associate. He looked up the product and found nothing in his inventory so he said this. “Did you look this up online before you came in?” Hmmm, he knew I would more than likely have done that and I am an obvious boomer. I said yes and it showed that HD carried it. I did not check a specific store because I knew if they didn’t have it at my local they could find it for… Read more »
Peter J. Charness
Guest
8 years 6 months ago

The easiest in-store smart-shopper phone capability is a price check. Amazon has made that really easy, right down to the barcode scanner function and the one click purchase. Retailers might as well get over the idea that they can charge (much) more for a commodity item than the online competition and get their prices in line proactively and not lose the sales. After that there is a myriad of other good shopper functionality that a retailer can get, in particular, personalized communications and offers to the shoppers that are meaningful and engaging.

This is probably one of the first times that the shopper has adopted technology way ahead of the retailer, so yeah it’s catch-up time for many.

Ralph Jacobson
Guest
8 years 6 months ago

Shoppers will continue to “showroom” and look for coupons for items that they see in the stores. I agree with Todd that physical store retailers shouldn’t be too quick to have in-store kiosks that drive people online. Store staff need to engage far more than they currently do in most retailers. Lost sales due to shoppers having questions and/or they cannot locate merchandise in the store continues to be a huge drain on revenue growth.

Stores should definitely embrace chopper devices and not make them feel intimidated for researching while in the store. I see progressive merchants highlighting free Wi-Fi, as we have discussed in previous blogs; I also see them helping shoppers whom are online in the aisles by asking if they need assistance, etc.

Karen S. Herman
Guest
8 years 6 months ago

I very much like Todd Sherman’s message for retailers to embrace the fact that shoppers are using smartphones in-store. This fact creates many opportunities for retailers to engage these shoppers, most obviously through geo-fencing and use of predictive analytics.

Yes, shoppers with smartphones showroom. But, they can also be a retailer’s evangelist and use social channels to share what they like in-store, whether it is an interactive display, highly selective content presentation or desirable in-store demonstration.

The most important takeaway is for retailers to step up their game, learn new retail technologies and employ those that best suit their customers. A well educated and customer focused sales staff is also key.

Martin Mehalchin
Guest
Martin Mehalchin
8 years 6 months ago

Great article Todd, I especially agree with the third point that retailers need to develop the capability to rapidly experiment, test and iterate new ideas. We’re seeing some of this with the “Labs” efforts at Sears, Nordstrom and others.

A couple of additional things that I think will be crucial for retailers in this new world. First, when building out the technology offer, don’t forget the store associate. They need to be armed with the information and tools that allow them to remain of service to increasingly knowledgeable and empowered consumers. Second, make sure you get your incentives right. I talk to too many retailers who are afraid to rethink commission driven sales floor models that can undermine the transparency and service levels required to deliver on an omnichannel experience.

Shep Hyken
Guest
8 years 6 months ago

Consumers are a little concerned about privacy and having their phones being tracked as they walk into a store. The answer will be better apps that allow the consumer to opt in by downloading their favorite retailer’s apps. This is a great compromise between the feeling of a store stalking the customer and the consumer showing that he/she is truly interested in doing business with the store.

James Tenser
Guest
8 years 6 months ago

Inside the store – outside the store – online or off – it doesn’t matter where or how the shopper accesses the new retail cloud. Mr. Amer’s comment here is spot on – the four walls are dissolving.

Smartphones in hand, shoppers are navigating a flow-through retail experience, where all the world’s a showroom, and every moment is a moment of truth.

Retailers should forget about short-life-cycle proprietary apps and focus on their efforts on leveraging currently popular tech to reinforce pre-shop, in-store, and after sale service.

Some ideas: Tweak store level assortments using cues from outside the store – including social media and search. Maintain a truly searchable system-wide inventory. Help shoppers locate and obtain what they need faster, in all retail channels. Track competitor prices and maintain competitiveness to preempt the desire to showroom.

It’s not all about defense, either. Retailers should seek ways to be that “kiosk” embedded in their competitors’ permeable retail environments.

Vahe Katros
Guest
Vahe Katros
8 years 6 months ago

These are two really good questions and you raise an important point. I think the call has to also go to the solution providers. Retailers – except for a few – who are relocating their tech development here (silicon valley) don’t have what it takes at this stage of the game to solve this problem technically. The solution providers, like SAP or IBM (I see you in here) have the clout and the know-how to step in and help turn things around. It’s you guys who need to step up big time.

Investments in platforms and consultants implies the hope of future proofing and while this sea change was totally unexpected, it’s troubling that at this point in the cycle retailers don’t have a clear roadmap regarding the consumer and tech.

Arun Channakrishnaiah
Guest
Arun Channakrishnaiah
8 years 6 months ago

I think the obvious answers are related to bringing in technology that enables shoppers and associates easy access to information needed to complete transactions (information that customers for the most part already have access to). The more difficult thing to accomplish however is the cultural shift needed to facilitate this. Retailers (to varying degrees) still assume they know better than their customers (be it knowing product details, where inventory is available, competitor price, product reviews, etc.) and simply refuse to realize that their customers in many cases know it better than them. I see retailers taking steps to change this culture and becoming more open to acknowledging, even using data that their customers already have.

Matthew Keylock
Guest
Matthew Keylock
8 years 6 months ago
I see there being a corresponding digitization of the store. A smart phone in a digital responsive environment is more powerful than in an analogue one! For instance: 1. Retailers will introduce more sensors and communicators to provide higher resolution, personalized service to tech-savvy customers to meet their needs. This might be applied to help customers find the products on their list quickly, manage department orders, find substitutions and make recommendations. It will also enable new and better insights to optimize retail for customers such as the store layout and merchandizing. 2. Manufacturers are also entering this space. It could be as simple as the brand App or loyalty program within the store, but could also include the products themselves being digitized. This could create an interesting dynamic in which the products are selling themselves, finding the right associated products and allowing the customer to buy direct within the portfolio possibly with unique features like personalized products along the lines of the Burberry efforts. Either way, this promises to add a new dimension to the… Read more »
Joan Treistman
Guest
8 years 6 months ago

Todd’s view has struck a chord with us all. Reading the comments leads me to realize that we are not just talking about a new decision making process. We are also acknowledging that creating a great customer experience requires a broader perspective. We have to be aware and plan for all the points of intersection where shoppers and retailers (us and our competitors) may meet. If we believe that the customer experience is the most significant long-term factor, Todd’s advice sets a daunting challenge. However, we best take responsibility for a great shopper experience rather than take the blame for a poor one.

Arie Shpanya
Guest
8 years 6 months ago

Location-based technology will be utilized more (offering deals to customers in the store, helping consumers find items in the store, etc). Mobile checkout is another technology retailers can facilitate.

Retailers should also take this as an opportunity to improve their mobile website and/or apps and combat showrooming. A recent study revealed that of those consumers surveyed, they are nearly as likely to use the store’s own website (70%) as another website (75%) to gather product information.

They are also just as likely to use the store’s own mobile website or app (22%) as a competitor’s website or app (22%) when they choose to purchase online while in a store.

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