Retailers turn to High Tech Solutions

The Holy Grail of marketing is delivering the right content at the right time and in the right context. Online retailers, such as Amazon.com and Netflix, are well ahead of others in that respect. Although their systems—and the underlying algorithms—aren’t perfect, they go a long way toward creating a more relevant consumer experience.

Unfortunately, brick-and-mortar retailers have lagged far behind. Although store layouts and displays have changed considerably in recent years, they still lack the ability to interact with products on shelves, it’s often difficult to obtain information and technical specs about goods without venturing online, and personalized offers and incentives delivered on smartphones are few and far between. It’s no wonder that showrooming has emerged as a huge challenge, with many retailers scrambling to remain relevant and viable.

“Although retailers have a better idea than ever who their customers are and what they are buying, most have done very little to act on it. They’re doing business the same way they’ve always done it,” said Peter Krasilovsky, a vice president at retail consulting firm BIA/Kelsey, in an interview with CMO.com. However, he believes the situation is about to change. “There are incredible opportunities in the new digital retail environment,” he added. “Businesses have an opportunity to connect to customers in a way that wasn’t possible in the past.”

Indeed, consumers are increasingly looking for retailers to bridge the gap between channels and improve customer satisfaction, said Michael Klein, director of industry strategy at Adobe (CMO.com’s parent company). “Retailers must continue to break down internal siloes, but also invest in technology and data infrastructure to deliver on customer expectations revolving around inventory, buying online and picking up in a store, price consistency across channels, and electronic coupon redemption in any channel,” he told CMO.com.

Breaking away from the one-size-fits-all approach could fundamentally alter retailing. In the coming years, big data, real-time analytics, geolocation information, social media, and a spate of interactive tools and technologies—including facial recognition, augmented reality, and electronic product tags that transmit data to smartphones—will provide marketers with capabilities that promise to revolutionize retail. The technology will likely create an in-store experience that surpasses features currently available online.

But this Brave New World of retail requires new thinking and entirely different approaches. “There’s a need for CMOs to work closely with CIOs to create a more compelling and captivating in-store experience,” stated Bob Goodman, senior vice president and director of user experience at Arnold Worldwide, a Boston-based advertising agency that works with American Eagle Outfitters, CVS/pharmacy, McDonalds, Volvo, and many others. “As retailing at the point-of-sale changes, organizations must keep up in order to remain competitive.”

Off The Shelf
Tech solutions and innovation have always played a key role in retailing. In recent years, companies have adopted sophisticated point-of-sale terminals and begun to use e-payment tools, such as Square and PayPal Here. They’ve also integrated databases and created real-time visibility into inventories. And many have adopted RFID tagging for increasingly sophisticated supply chain operations. However, few of these advances have translated into any major change for customers perusing aisles, touching merchandise, and weighing buying decisions.

But the landscape has shifted. Today, “it’s all about authentic and relevant content that looks to engage your customer versus delivering just another ‘ad’ message,” said Stephanie Fischer, president and CEO of the Global Retail Marketing Association, in an interview with CMO.com. Not only must stores break through the growing clutter of marketing messages and advertisements, they must find ways to create a holistic shopping experience that spans loyalty programs, promotions, payment methods, in-store data, and more. “It’s all about closing the loop and being at the intersection of hyper-real time and hyper-local,” she said.

Not surprisingly, the task of creating a more personalized in-store experience is complex. No single tool or technology is available to address the task—and today’s multichannel environment adds layers of complexity to an already complex undertaking. A fundamental problem, says Michael Redding, global managing director at Accenture Technology Labs, is that CMOs and other executives remain in a “transactional marketing” mind-set rather than a “nonstop customer experience model.” He pointed out to CMO.com that “everything that takes place outside the store leads a consumer to the store and, ultimately, the shopping experience defines the purchase.”

As a result, it’s critical to focus on designing a seamless and fluid retail experience across channels, devices, and locations, Redding said. This means optimizing the Web, mobile, and in-store experiences by concentrating on what each channel does best, creating an environment where channels complement one another, and using multiple rich data sources to deliver a highly personalized consumer experience. In order for this model to work, Redding said businesses must build Web sites that plug in search terms, cookie data, survey results, and past purchases to customize and tailor content.

But the challenge doesn’t stop there. Organizations must also discover relationships between data points and make the data accessible to customers and salespeople in stores. For example, a person searching for dinner recipes might require help in planning meals or benefit by receiving suggestions for how to use food or cooking products more effectively. Someone who glances at blood-pressure devices online may require deeper lifestyle and wellness information. The key is obtaining enough data to ensure that the subsequent marketing message is on target.

The result might be a notification or alert offering suggestions and promotions via a smartphone when a customer walks into a grocery store or other retailer. A business might also engage in a private conversation with the customer or arm salespeople with information so they can make suggestions for customers. Already, Apple, REI, Home Depot, and Lowes have begun to provide staff with tools—including iPads and iPod Touches—that tap into product information, customer records, and more. Fischer said that, in the end, it’s all about creating “authenticity and value.”

Into The Pocket
In order for this emerging model to work, Redding said, organizations must break down silos and find ways to spur innovation and creativity. In some cases, it’s not enough to tweak processes—it’s necessary to blow them up and completely rethink things. Organizations must also coordinate marketing messages, pricing, and promotions across channels so that glaring differences—and gaps—don’t exist. Finally, there’s a need to rethink what channel integration actually means. For instance, “if a customer places items in an online shopping basket, it should be possible to complete the order in the store,” he noted.

Greater integration of information technology is a cornerstone of this business model. QR codes can serve as a starting point for connecting the physical and digital worlds. Likewise, apps such as Shazam and social-media sites such as Facebook and FourSquare foster cross-channel integration. But Goodman said that businesses must also consider touch-enabled POS devices, kiosks in stores, and systems that route product data and specs to smartphones on demand. They also should build apps that tie together all the elements of the customer life cycle—from marketing and promotions to buying history and loyalty. Added Klein: “Mobile apps that keep customers engaged are the most effective way to combat showrooming.”

To be sure, customer loyalty programs play a key role in unlocking this new world of marketing and retailing. They’re especially valuable because customers opt in and are willingly to share their data—which makes it easier to personalize messages and promotions—while sidestepping key privacy issues. Krasilovsky said the ability to plug in customer preferences and track buying patterns through an integrated app, including an e-wallet, go a long way toward capturing data and creating a mechanism to deliver a one-to-one relationship. Social media can extend data collection and channel integration.

Next-generation technology is also entering the picture. For example, some retailers are now experimenting with facial-recognition technology to identify customers based on age, gender, and other criteria. For example, in Europe Amscreen now offers a system that displays ads on an in-store LCD based on who is in the store at any given moment. These systems can plug in an array of variables, including weather data and time of day, to further refine marketing messages and link them to the types of purchases these individuals are likely to make. For now, the concern is that many consumers find facial recognition “creepy” and undesirable, Klein said. “Shoppers like to remain anonymous while browsing a store, and they don’t want to feel like they are being ‘sold to,’” he added.

There’s also growing interest in interactive shelves. Intel, for instance, is developing a technology called Shelf-Edge that connects a smartphone to Bluetooth displays in stores and allows customers to interact with smart products through the handheld device. The future system could deliver product information and even alerts based on food allergies and lifestyle preferences. Meanwhile, next-generation coupon-dispensing machines on store shelves could be equipped to interact with customers and their smartphones. “Once you know who a person is and they walk into a store, you can begin to print or electronically deliver relevant coupons on demand,” Redding said.

Accenture Technology Labs is also exploring augmented-reality capabilities that could further bridge the gap between the physical shopping world and online experience. For instance, its WeShop prototype app supplements traditional product labels and information cards with additional data from a variety of sources. It can display social activity related to the product, loyalty program offers, buying recommendations, and other information. When a consumer holds a smartphone or tablet over a product label, the system delivers personalized information for the specific shopper.

What’s more, the WeShop tool tailors product descriptions to the knowledge level and preferences of the consumer. For example, a description of a TV or computer would appear different to someone who is tech-savvy versus someone with limited knowledge. Likewise, product recommendations, ratings, and reviews of friends and “People Like Me” features would provide external validation and generate more accurate buying suggestions and gift recommendations.

The bottom line, Goodman said, is that marketers must think more holistically about retail spaces. “There needs to be much better store awareness about customers, and stores must be arranged in entirely different ways to accommodate digital technology and the customers that rely on it.”

In this emerging environment, those who understand the changing dynamics will gain a competitive advantage. “The dividing line between online and offline retailing must blur,” he added.“The technology will bring us back to the concept of old-fashioned commerce, where the shopkeeper knew who you were and what your preferences were as soon as you walked through the door.”