Successful Retailers are those that use technology to reach new customers
Theres a stat that every retailer should sit up and take notice of. Its this: half (49.5%) of total U.S. retail sales today are impacted by the web in some way.
What this means is that although online sales represent roughly 10% of all retail, a large majority of your customers interact with your brand online as part of their unique customer journey.
This raises a particular question about in-store tech. Are we about to see a convergence of point of sale (POS) systems and ecommerce platforms?
Thats essentially the nub of this article. Will retailers start to see no difference between online and off-, in terms of data, logistics, shipping and ultimately customer experience? Do some consumers, or even retailers, already think this way?
Ive been looking at the results of a survey of 200 retail business and technology executives in the US and Europe, conducted by The University of Arizona in association with the National Retail Federation and Demandware.
To add some perspective, here are some of the findings in the context of five fallacies of bricks and mortar retail. Five arguments for a changing customer who is driving many retailers to consider a single platform.
Fallacy one offline is more valuable than online
Myriad touch-points set the scene. Heres that stat again. 49.5% of total U.S. retail sales today are impacted by the web.
The web is also more of a nebulous place than ever. In Q3 2013, online consumers spent 44% of their time on retail sites via smartphones and another 15% via tablets, according to comScore.
So, customers are better connected, using more mobile devices, whether out and about or in lean back mode, and interacting with brands in different places (in store, on social, over the phone, on websites, through advertising etc.). Research has shown that multichannel customers are worth up to four times that of single channel shoppers. This paints a picture of online as a powerful enhancer of retail sales in their totality.
In a 2013 study again by University of Arizona, the digital diva was coined to sum up this type of connected customer in apparel (see the second chart below for definition), engaged with fashion and technology.
These hyper-connected consumers comprise 22% of fashion shoppers, yet represent 69% of purchasing power, a combination of their direct spend (29%) and influenced spend (40%).
This loosely fits with the Pareto principle of a small percentage of customers delivering a large percentage of sales. Ive written about this previously, the triangulation of data (best products, best customers, most profit).
Fallacy two connected customers dont cherish physical stores
Your most valuable customers are your most connected, but they still love the store.
The aforementioned divas visit an average of 3.4 destinations to shop, primarily shopping at physical retail stores (70%) and retailer websites (51%).
Its clear that even the most connected customers value the tactile nature of the in-store experience (perhaps particularly these customers, as they are more engaged with the brand).
These connected consumers expect fluid and highly relevant interactions, where their context with the brand is never lost. If we posit that no single channel defines the total experience, retailers will benefit from connected data sources and integrated technology in-store and online.
Fallacy three: stack it high
In-store retail is changing. More and more brands are selling direct to consumer both online and by opening branded stores. The pursuit of enhanced customer experience and enhanced store assistant productivity is notable in the examples of Apple and Nespresso, but many more, too.
In these stores, there is less stock on the shop floor as the space is used for assisted selling and product showcase. Digital capability is used for both showcasing products, ordering and taking payment.
Clientelling and assisted selling becomes possible when stores are designed in this way and customer data is joined up across channels, and crucially, accessible to store assistants.
This level of interaction allows customers to be transformed from simply high value individuals to brand champions. The U.S. and European retailers surveyed rated guided selling (63% in US) and clientelling (50% in Europe) as some of the most important digital functionalities to increase loyalty and conversion in brick-and-mortar locations.
Accordingly, 80% of retailers surveyed in the NRF study expect to maintain or increase store technology investments over the next three years.
Fallacy four: one store knows whats going on in the next
Retailers rated inventory search (73% in the U.S. and 49% in Europe) as another important in-store functionality.
I visited Uni Qlo on Londons Oxford Street to enquire about HeatTech socks for a friend. There werent any in stock and the store assistant said I could try the Regent Street store. There was no offer to check the stock levels remotely, or even to call the other store (which inevitably, when I walked over there, was out of stock, too).
This may have been poor service (or perhaps acknowledgement that something in limited supply is often hard to find in store), but the fact is that with many of these requests, the ability to seamlessly assess stock levels is absent.
Legacy systems in this case are often systems originally implemented to solve specific problems for specific channels. This can lead to the following:
Redundant data that increases total cost of ownership and operational inefficiencies.
Inaccurate customer information that manifests itself in order, payment, and service miscues.
Siloed systems that stifle retailers ability to respond to market dynamics.
Stifling innovation e.g. creating a platform on which to add further customer interaction in-store (e.g. via mobile).
Over the past 15 years, ecommerce architecture that was designed for online shopping has surpassed store POS applications. As a result, traditional POS and call centre tech is increasingly being supplanted by ecommerce to establish a single consumer transaction platform.
According to the NRF survey, nearly 40% of retailers are considering a single consumer platform to manage interactions and transactions across channels.
Fallacy five IT in store is the domain of operations
Retail leaders surveyed globally cited the following top priorities (in order of importance) that IT must enable in retail:
Improved efficiency (automated processes and simplified operations across channels).
Attracting and retaining new customers (data and intelligence to provide relevant and personalized interactions).
Reduced enterprise costs (simplifies environment to remove redundancy and sustain margin).
Increased enterprise growth (supports new brand, channel, and geographic expansion allowing financial scale).
Its clear from point two that supporting consumer strategies is a very important criterion for IT in retail.
Almost half of the US (48%) and EU (47%) survey respondents stated that information technology must enable retailers to attract and retain new customers.
Its clear to me that part of retaining customers is providing the same customer experience across store and web. Look what happened when I couldnt return Doc Martens in-store.
Attracting customers to more touchpoints, whether its attracting in-store visitors to browse online, or vice versa, is another consumer strategy for increasing the value and loyalty of a particular customer. Having a single commerce platform may better enable this cross channel messaging.
This survey shows retailers regard store fulfillment (60% in the U.S. and 50% in Europe) as an important digital functionality in stores.
Conclusion
Advantages of a single commerce platform providing synchronized data, and real-time intelligence in-store include:
A single view of customer data (preferences, order history etc).
Consistent product data across touchpoints.
Accurate inventory (enables pick up in, or ship from, store).
Order visibility.
Optimization of promotions across channels.
Retailers are obviously cogniscent of these end goals, with the survey showing twice as many retailers globally plan to leverage e-commerce (38%) over traditional POS (19%) for their next-generation store software.
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