StorefrontBacktalk.com: The In-Store Boomerang Strategy
By Evan Schuman
Through a special arrangement, what follows is an excerpt of a recent article from StorefrontBacktalk.com, a retail technology and E-Commerce blog, presented here for discussion.
American consumers walking around shopping malls this holiday season will start to see the first visible signs of retail merged channel strategies. All kinds of hooks into – and from – online, cell phones and call centers will start to percolate through store aisles and checkout lanes.
But in what could be called the Boomerang Strategy, what consumers will see in-store this season will be quite far removed from the utopian epitome of merged retail channels, with the customer shopping through whichever channel is most convenient and store management apathetic about that customer choice.
No, what stores will be doing is using non-in-store technologies to get consumers into the stores and to make them buy in-store only. In effect, to boomerang them from in-store to the web (or mobile) and then back into the store. It’s the retailer’s paraphrased version of the AAA pledge: “What you see here, what you hear here, what you want to buy here, stays and gets paid for here.”
Consider:
- Some Wal-Mart customers fighting among the throngs for that special something
this season will find themselves with an edge, if they have their cell phone
with them. Customers who opt-in will get text messages alerting them to short-duration
(typically about one hour long) sales on a handful of merchandise. The alerts
may come in through the phone, but it’s only good for in-store purchases.
The people providing that Wal-Mart service – Air2Web – are doing similar
mobile in-store projects for Sam’s Club, Office Depot, Dominos and Footlocker - In Madison, Wisconsin, customers of the Fair Indigo clothing store – the
latest project of the former Lands’ End E-Commerce wizard, Bill Bass – will
be able to walk into a store and grab an item off the shelf. The customer
will be able to walk over to a kiosk, have the apparel’s barcode scanned
and instantly see all of the online user comments about that product. “Online customer reviews are something that our audiences love,” said
Mr. Bass, the store’s CEO.
On the other hand, perhaps an example of poor merged-retail channel strategy is Starbucks, which virtually pioneered the social network concept long before MySpace or Facebook became household names – yet didn’t bring any of that along to its website. The site sells coffee makers and a few jazz CDs but offers nothing in the way of community building.
Last week, Starbucks announced a rare drop in same-store sales. While Wall Street blamed store saturation and Starbucks cited “price increases due to rising milk prices” theory, the troubles could be the coffee chain’s absolute refusal to do virtually any merged channel strategy. Could Starbucks be learning that man doesn’t live by bricks alone?
Discussion Questions: Do you think the retail industry is finally realizing the benefits of merged-retail platforms? What “boomerang” efforts have you seen particularly work well? Which have the most potential down the road?
The desire to drive customers to retail stores comes from a simple impulse. Retailers understand how to evaluate the profitability of retail stores in isolation. What is more problematic is how to evaluate the profitability of stores in a fully integrated, multi-channel world. This is no small consideration given the investment and expenses associated with retail stores. It’s perfectly understandable that they would seek to drive business through the retail channel, rather than ride the technology and let the business come through multiple channels.
We recently met with a few category managers for a major national drug chain in their corporate office to discuss placement of some new items. The first part of our proposal was for an expensive HBC item to be sold initially on their website, which links directly to a time-tested online site under another name. The category manager’s first reaction was, “we never sell anything from the website.”
I controlled my astonishment, but remained puzzled that this large, national, innovative retail drug chain had not yet aggressively explored online sales–especially for high-dollar items that are difficult to stock and display properly in stores. The category manager had a well-rehearsed and quite reasonable rationale for their decision not to pursue sales in the online channel, but it reminded me of this old story: When asked why his store didn’t carry Item X, the manager replied, “Because we never sell any.” And when asked why they never sold any he responded, “Because we don’t carry it.” Retailers who are not actively testing online sales will not, of course, experience significant sales lift from that channel.
This chain has a wonderful opportunity not only to broaden their reach and increase sales, but to partner with their online host to deliver the host’s orders in-store. The “clicks” drug site would benefit from local pickup and the elimination of some shipping charges, and the “bricks” partner would benefit from the addition of a new sales channel. With news everywhere regarding merged platforms of this type, how can a national “bricks” retailer afford to ignore it?
Retailers are still struggling to do the simplest “merge” activities. One major western specialty chain warns that the company cannot accept its own credit card for Web purchases. A major Midwest specialty chain began to accept its loyalty card online only this year. The idea is great…but there will be a significant amount of work between the idea and the execution!
Ron’s got it right. One of Tenser’s Laws states: “A customer service standard that is available anywhere is expected everywhere.”
Fair or not, that’s the reality that shoppers impose on merchants–brick or click.
I do think there is an “annoyance factor” for consumers that comes with some of the new technologies. I believe “opt-in” is clearly the way to go so only those consumers who want these messages will receive them.
Wal-Mart’s idea of providing one hour notice from a cell phone for an in-store sale may not be adequate. It may take more than an hour to find the product in the store and get through the checkout! On the other hand, providing consumers an opportunity to read other customer comments from an in-store kiosk sounds appealing.
Most retailers have a long way to go in integrating in-store and online offerings.
As someone who makes a living out of bringing enhanced business and communication value around the convergence of media, technology and retail..articles like this really get me thinking. I find the possibilities exciting, not because we are pushing the technology envelop (technology should not be the end game) but because we are thinking of new ways to engage the consumer and enhance the shopping experience–regardless if they are in the store or at home on line.
Four screens come into play in these scenarios. First, TV advertising, a passive medium that helps build brand awareness. Second, the internet, where consumers at increasing levels travel to sites of trusted brands to shop. Third, mobile where marketers are now communicating with consumers to message them on the next blue light special or that a Starbucks is just around the corner. And fourth, in-store digital signage that promotes, engages and hopefully moves them to a desired behavior, to buy more, to join their loyalty program or, when at home, to jump onto their web site to shop there.
Retailers and brands need to think about all these possible touch-points and how to best engage consumers. Boomerang or not, these mediums can be powerful marketing tools. But will they be seen as an enhancement or an annoyance? They certainly have the power to be either and the consumer will tell us if we were smart and clever enough, by voting with their feet and their wallets.
Merging online with bricks and mortar: retailers are all over the map. Many retailers’ web sites have no e-commerce. Some retailers made their online assortment almost the same (or better) than their bricks and mortar selection (JC Penney, Barnes & Noble). Some retailers are trying cell phone instant messaging, but most are ignoring it. Many retail executives are technophobes who believe that early adopters take big risks and get burned. There’s a skill to testing new technology quickly (even if it’s “just” marketing technology) without spending excessively and betting your career. In marketing this skill can be very profitable, because new marketing techniques are generally more effective while they are novel, but after they’re widely adopted, their effectiveness declines. Five years from now, cell phone spam will overwhelming and widely resented, not valued as a neat new innovation.
I spoke with Evan about this article on Sunday (or should I say, commiserated with him). What it is going to take, we agreed, are incentives and disincentives, that is to say, basing rewards of both executives and sales staff on their successful adoption and implementation of merged-retail platforms and strategies.
There is nothing wrong with an emphasis on bricks over clicks; retail is still mostly people buying stuff in physical stores. My whole thrust with my retail clients and audiences (and my readers at IntegratedRetailing.com) is to show how merged channel strategies increase traffic, sales, visits, spending and loyalty IN STORES.
A great web site does not compete with your store; it complements and extends consumers’ in-store experience. It’s a resource of information, comparison shopping, and consumer reviews and rankings. Remember: even after years of 25% annual revenue growth, e-commerce sales comprise only about 3% of total retail sales, and pure-play online merchants convert an average of only 2-3% of their site visitors into buyers.
Yet 87% of consumers shop online before buying in stores, and 67% state a preference to make purchases in physical stores.
Therefore, the future is clear: it belongs to integrated, merged-channel retailers, those that use their web sites to reach shoppers, educate them, serve them, earn their loyalty, and drive traffic to their stores.
It’s about time!
Just got back from London, and my new favorite story is seeing a billboard for a Saab 9-3. It was a cool billboard (I think it had motion in it or something), and at the bottom it said “For more information, text 45345” or whatever the number might have been. What a simple solution! They’ve made the impression, and they get the opportunity to get instant feedback. Why NOT do it in stores? It’s simple.
All our surveys to date show that retailers really struggle to get multi-channel right, especially in the US (we’re really not #1 anymore, and it might be time to acknowledge it and get back to work BECOMING #1 again).
I empathize with retailers’ problem. The pace of IT change in retail is still often glacial, especially when dealing with core systems like inventory and customer sales and order history files…Still it has to get better. The consumer is starting to take back control, and retailers have to respond.
One of the challenges for traditional retailers, and even those retailers in the first .com wave is that customer expectations are expanding at a very rapid rate. As soon as a marketing strategy is put into place on the net, in a mobile phone or at a retail location, the customer knows about it, tells other consumers and then wants the next thing. This world of swiftly changing shopping attitudes, some of which are divergent rather than sequential, does create opportunities for retailers willing to take risks that leapfrog the customers’ expectations. Unfortunately, they can leap into a bog no consumers are interested in following them as easily as moving, as The Great One said, to where the puck is going to be.
Certainly the future is starting to be now. The challenge will be whether these traditional bricks retailers can be patient enough to evaluate their holiday ’08 “merged” tactics on another plain. Weekly lifts, return on ad dollars and sales per inch need to be replaced by longer-term loyalty oriented metrics that track customer relationships both in store and online.
I am hopeful that this opportunity for connectivity will also allow lots of customization of the message or the offer. How cool would it be for a text message to also provide the sizes available, that my favorite color is in stock, and that this option is extremely rare but worth the extra effort or $ to purchase it? This is innovative customer service.
No way do retailers seem to get it. Maybe they’ve got too much invested in real estate. Any other sales tool must frighten owners so much they can’t think creatively. They’ve forgotten they’re in the customer service business. Where are show rooms with a limited quantity on hand? Web kiosks with live user opinions, plus fast delivery and credit over the web – order there or from home later?
Where’s the total customer account? Instead of yahoo.com, make it (free) macys.com. Limited/no web push ads. Let people shop fast and easy at Macy’s stores from their accounts. You get a whole store (choose location nearest you). Order something, have it delivered to your store. Reduce store staff, increase warehouse, logistics, build new online staff just for helping special customers – not just with buying Macy’s stuff but with everyday living. The more you buy, the more special. Web 2.0 is here. Real estate is old, pre-web push technology.