April 18, 2007
In-Store Tech Investment Enablers
By Tom Ryan
A recent survey by Retail Systems Alert Group (RSAG) found that retailers overwhelmingly believe in-store technologies are instrumental in improving customer satisfaction rates. But issues around costs, reliability and value are slowing down investments in these technologies.
According to the survey of 65 retailers, sponsored by Microsoft, 90 percent of “retail winners” (those with outperforming comps) believe the primary opportunity to improve customer satisfaction was empowering employees through technology. The second greatest opportunity (picked by 85 percent of the winners) is enabling customers to take care of themselves in the store with self-service technologies.
These in-store technologies even trumped the classic formula for retail success, “Bring the right product to the right location at the right time, for a reasonable price” – rated at 80 percent.
“In the minds of these retail winners, product mix and personalized attention from employees is still important, but they believe primary opportunities lie in using technology to facilitate the in-store shopping experience,” wrote Paula Rosenblum, RSAG’s VP of research and content development, in the report entitled: Technology-enabled Customer Centricity in the Store Benchmark Report.
However, while the survey found retailers moving toward adding “technology-enabled touchpoints” to stores, cost, complexity and overstated value often inhibits adoption. Among the biggest barriers to in-store investments, according to the survey, were the durability and costs of the technology, the need to simplify technologies due to high employee turnover, and difficulties quantifying ROI.
“Retailers are torn,” said Ms. Rosenblum. “They know and have identified clear opportunities associated with bringing technology into the store, but the enemy is within. They fear these investments even as they know they need them.”
Typically, in-store systems projects are planned and budgeted each year but drop to the bottom of priority lists and get moved to the following year. Or projects get to the pilot program only to languish in pilot mode for years.
“If one asks the retailer or selected vendor(s) if the project met required hurdles, the answer is ‘yes’…but still the roll-out is deferred, delayed or otherwise ignored,’ said Ms. Rosenblum.
RSAG believes reducing costs and distractions will help move in-store projects forward. Of the survey respondents, 73 percent said merchandising vendor funding for in-store projects would provide “some value” or was “very valuable” in jumpstarting in-store projects. More than 70 percent agreed end-to-end managed services – from rollout, through hardware, network and software maintenance – would be helpful in achieving implementation. Asking technology vendors to provide success stories and references also rated above 70 percent. In a surprise, ranked on the comparatively low-end of responses were pilot projects (60 percent) and internal project champions (57 percent).
Said Ms. Rosenblum, “RSAG believes retailers have understood that champions may fail, and pilots may languish, but practical solutions that eliminate both cost and distraction are more likely to succeed.”
Discussion Questions: What do you think stands out in RSAG’s findings regarding the adoption of in-store technologies? What do you think it will take to jumpstart the pace of investment in in-store technologies?
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The last line says it all: champions may fail, and pilots may languish, but practical solutions that eliminate both cost and distraction are more likely to succeed.
The most promising in-store technology that meets these criteria right now, in my opinion, is the Web-linked kiosk. It can provide convenience, service, information, sales, and reinforce the store brand. It also encourages consumers to visit the web site before coming into the store, which retailers should use as an opportunity to upsell, cross-sell, and to increase the shopping basket and share of customer.
Tom Ryan’s article talks about how some retailers fear investing in technology. That fear is justified. They should be scared.
I know of a clothing retailer that put in millions of dollars of displays in their stores. Day after day, there were problems. Sometimes the displays would play content that had nothing to do with the stores’ products. Other times they would sit there blank, as if broken. (They were not.)
Instead of enhancing the shopping experience, those displays became a distraction, an annoyance, an eyesore. After a year, the retailer tore them out.
Where did things go wrong? The big problem was one, not of technology, but of strategy.
The retailer put in million of dollars worth of equipment because they thought retailers of their size, in their field, were supposed to do that. In other words, they didn’t have a good, bottom line, business reason for doing what it was they did, and that lack of a good reason showed up in the execution.
Anyone who is thinking of putting technology into their stores has got to start with the right reason. They’ve got to ask themselves why they think they need technology. Is it to sell a service? Is it to move a product? Is it to help their employees in some back-end part of the business?
Once they know exactly what they want the technology to do for their bottom line, then they can put an ROI to it, create success factors for it, and come up with ways of measuring and making sure things are happening the way they should be.
Without the proper up-front thinking, though, going the techno route can be a costly mistake. You can’t base an ROI on “I dont know.”
I agree with Jerry Tutunjian. If a retail executive believes the ROI is good, they want the technology ASAP. Big obstacle: many retailers don’t know how to make a simple return on investment case. So they say things like, “Wow! That’s expensive!” instead of “Wow! I can make $X from that!” It’s hard to ask for funding if you can’t prove the payback.
I am surprised that one of the inhibitors was not: We lack the back end data needed to support the information needed by the customer (or) we lack a clear understanding of the specific use cases we intend to support.
Oh, I don’t want to detract from the discussion, but I can’t let Race’s comment go by. As an analyst, I have long struggled with getting statistically relevant data out of the retail industry. For some reason, and probably directly related to retailers’ general fear of sharing competitive information, retailers just don’t respond to surveys. And don’t forget – especially when you’re operating in the area of $1B+ revenue, there actually aren’t that many retailers out there, globally.
So, while I agree that you can’t make a statement that because 65% of survey respondents said X, therefore 65% of the industry said X, if 65% of retail survey respondents said X, all the way down to a response pool of about 40 respondents, you’re pretty safe in concluding that X is a trend of some significance.
Any data has to balanced against experience – and the collective experience of RetailWire even in response to this one article is pretty strong, let alone all the listening (yes analysts do listen sometimes! 🙂 ) that we industry commentators do when we put our ears to the retail ground and see what our clients are saying. Sixty-five respondents to any retail survey is good – and sure, we’d love it to be higher, but since it’s not, that’s why we always try to be both careful and transparent in the data and the story we put out in the marketplace. It’s so hard to get good data, that I think it’s a disservice to the industry – the retail industry – to discount results when more than 40 retailers get together to share their collective experience, no matter who publishes the report.
It’s not rocket science, folks. Return on investment is, by far, the major question. If you’ve solve that, then you have won more than half the battle. Simplicity of technology used to be an issue, but not longer. The current technology is so simple that even staff from an earlier generation are no longer intimidated by the so called high-tech aspects.
There are some very interesting points here. I would like to see if there were a way to get a bit of a larger sample — a survey of 65 retailers can leave us with statistical error upwards of 10 or 20 percentage points.
Surveys can be very useful, but they also have some limitations. One of them is that respondents are telling you what they think or believe or perceive, which may or may not tell us such things as the best way to do something. In this case, respondents are talking about an area where they may not necessarily know the best practices for achieving high levels of customer service — high financial performance can sometimes occur in organizations with weaker customer service (some of the Fortune 50 are good examples of this).
In my view, there is significant, large-volume data that tells us how high levels of customer satisfaction is achieved. Interestingly, technology plays only a supporting role, according to that data.
It’s no wonder retailers are torn about this topic. They are hit from all sides by mixed messages about the benefits while seeing too few benchmark case studies or accountability measures for success. It’s getting worse as the less enlightened camps on Madison Avenue jump in and support the concept of using this media simply to blast ad messages to shoppers in order to pay for the technology costs.
Another issue is that many suppliers have very little experience designing solutions based on understanding shopper needs, the reality of how the store works and how to create initiatives that work for both while generating financial success. It’s complex to get an in-store technology initiative up and running, but why even do it if you don’t support it with the subject matter expertise to support it from the strategic side? As we say often, it’s not the gun, it’s the bullet!
Strategic insights are contradictory as well, and being that we have more than six organizations in this space operating separately and sometimes contradicting each other on key topics, we’re not helping ourselves.
A lot of time, expense and risk goes hand-in-hand with in-store technology that’s meant to touch shoppers. These projects need an empowered project owner, experienced resources guiding each project phase and the tools to clearly understand what’s working (and what’s not) to hit the bull’s eye for all stakeholders. It’s that simple!
That said, the potential for these tools are thrilling if we can focus on the ultimate goal: using technology to make the shopper happy and measuring our initiatives to ensure that they say that way. After all, happy shoppers = $$$!
Another excellent article today! Small retailers like myself would love to be as techno as we can, but the reality is we can’t afford all of it. An old marketing professor once said, “you can afford anything you want, but not everything you want”….
Back in the 80s, the bottom lines of most retailers were much better than today without all of the faxes, emails, cell phones, and RFID etc…. The fact is, we can share our ideas with other non-competing retailers at our own conventions, which I usually get a lot out of.
Pick and choose with care and use the technology to enable your customers to feel like you care about their needs, whether it is a simple email hello, or a user friendly low cost website. Don’t forget that old-fashioned service is still the best. Greet them with a smile, and go out of your way to make them feel special, all while trying to make a profit.
I agree that key factors in the success of any in-store technologies are simplicity and practicality. Lack of simplicity has the dual effect of being less likely to be adopted by customers and needing a lot of training for store staff to handle. If a technology is not practical, it is a luxury and increases the cost burden to justify its return. Customers may even perceive a luxury technology as something that adds to the cost of their purchase.
“I can’t get no satisfaction!” states the shopper. “So let’s pursue a technology approach” declares the retailer!
This Microsoft research begs the questions: a) Did consumers/shoppers give responses to such technology consumer service approach? b) Who were they, demographically and psychographically; and c) Were the respondents a cross section of all generations that are very different in needs and technology use?
Sure, retailers would love satisfying the shoppers’ needs and give in-store personal attention. But, there is a balance of these two approaches. And, importantly, each retailer’s store would be different on this subject, given the shopper/neighborhood being different in needs, income level, time convenience, and personal service.
This is a great subject to put on the table, if you will.
But, a supermarket (vs. department store, supercenter, coffee and meal shoppe, c-store, home project store, etc.), would have very different consumer needs to address and resolve, relative to service oriented technology and personal shopper care needs!
Sheetz, a well known convenience, gas and “foods to go” operation, has a tech ordering system for shoppers to place for a sandwich or food want. It works well, it’s fast…getting shoppers’ needs solved, the shoppers are in and out of the store.
But, this industry has a “locked in” image of c-store service and its consumer need/satisfaction expediency is very different than Sheetz’s. So for Sheetz, the marketing and hands-on ‘satisfy the shopper/consumers’ needs’ question found a viable answer and competitive advantage. But, would this work well at Starbucks, Lowe’s, Macy’s, or Wal-Mart?
Hmmmmmmmmmmmmmmmm
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The last line says it all: champions may fail, and pilots may languish, but practical solutions that eliminate both cost and distraction are more likely to succeed.
The most promising in-store technology that meets these criteria right now, in my opinion, is the Web-linked kiosk. It can provide convenience, service, information, sales, and reinforce the store brand. It also encourages consumers to visit the web site before coming into the store, which retailers should use as an opportunity to upsell, cross-sell, and to increase the shopping basket and share of customer.
Tom Ryan’s article talks about how some retailers fear investing in technology. That fear is justified. They should be scared.
I know of a clothing retailer that put in millions of dollars of displays in their stores. Day after day, there were problems. Sometimes the displays would play content that had nothing to do with the stores’ products. Other times they would sit there blank, as if broken. (They were not.)
Instead of enhancing the shopping experience, those displays became a distraction, an annoyance, an eyesore. After a year, the retailer tore them out.
Where did things go wrong? The big problem was one, not of technology, but of strategy.
The retailer put in million of dollars worth of equipment because they thought retailers of their size, in their field, were supposed to do that. In other words, they didn’t have a good, bottom line, business reason for doing what it was they did, and that lack of a good reason showed up in the execution.
Anyone who is thinking of putting technology into their stores has got to start with the right reason. They’ve got to ask themselves why they think they need technology. Is it to sell a service? Is it to move a product? Is it to help their employees in some back-end part of the business?
Once they know exactly what they want the technology to do for their bottom line, then they can put an ROI to it, create success factors for it, and come up with ways of measuring and making sure things are happening the way they should be.
Without the proper up-front thinking, though, going the techno route can be a costly mistake. You can’t base an ROI on “I dont know.”
I agree with Jerry Tutunjian. If a retail executive believes the ROI is good, they want the technology ASAP. Big obstacle: many retailers don’t know how to make a simple return on investment case. So they say things like, “Wow! That’s expensive!” instead of “Wow! I can make $X from that!” It’s hard to ask for funding if you can’t prove the payback.
I am surprised that one of the inhibitors was not: We lack the back end data needed to support the information needed by the customer (or) we lack a clear understanding of the specific use cases we intend to support.
Oh, I don’t want to detract from the discussion, but I can’t let Race’s comment go by. As an analyst, I have long struggled with getting statistically relevant data out of the retail industry. For some reason, and probably directly related to retailers’ general fear of sharing competitive information, retailers just don’t respond to surveys. And don’t forget – especially when you’re operating in the area of $1B+ revenue, there actually aren’t that many retailers out there, globally.
So, while I agree that you can’t make a statement that because 65% of survey respondents said X, therefore 65% of the industry said X, if 65% of retail survey respondents said X, all the way down to a response pool of about 40 respondents, you’re pretty safe in concluding that X is a trend of some significance.
Any data has to balanced against experience – and the collective experience of RetailWire even in response to this one article is pretty strong, let alone all the listening (yes analysts do listen sometimes! 🙂 ) that we industry commentators do when we put our ears to the retail ground and see what our clients are saying. Sixty-five respondents to any retail survey is good – and sure, we’d love it to be higher, but since it’s not, that’s why we always try to be both careful and transparent in the data and the story we put out in the marketplace. It’s so hard to get good data, that I think it’s a disservice to the industry – the retail industry – to discount results when more than 40 retailers get together to share their collective experience, no matter who publishes the report.
It’s not rocket science, folks. Return on investment is, by far, the major question. If you’ve solve that, then you have won more than half the battle. Simplicity of technology used to be an issue, but not longer. The current technology is so simple that even staff from an earlier generation are no longer intimidated by the so called high-tech aspects.
There are some very interesting points here. I would like to see if there were a way to get a bit of a larger sample — a survey of 65 retailers can leave us with statistical error upwards of 10 or 20 percentage points.
Surveys can be very useful, but they also have some limitations. One of them is that respondents are telling you what they think or believe or perceive, which may or may not tell us such things as the best way to do something. In this case, respondents are talking about an area where they may not necessarily know the best practices for achieving high levels of customer service — high financial performance can sometimes occur in organizations with weaker customer service (some of the Fortune 50 are good examples of this).
In my view, there is significant, large-volume data that tells us how high levels of customer satisfaction is achieved. Interestingly, technology plays only a supporting role, according to that data.
It’s no wonder retailers are torn about this topic. They are hit from all sides by mixed messages about the benefits while seeing too few benchmark case studies or accountability measures for success. It’s getting worse as the less enlightened camps on Madison Avenue jump in and support the concept of using this media simply to blast ad messages to shoppers in order to pay for the technology costs.
Another issue is that many suppliers have very little experience designing solutions based on understanding shopper needs, the reality of how the store works and how to create initiatives that work for both while generating financial success. It’s complex to get an in-store technology initiative up and running, but why even do it if you don’t support it with the subject matter expertise to support it from the strategic side? As we say often, it’s not the gun, it’s the bullet!
Strategic insights are contradictory as well, and being that we have more than six organizations in this space operating separately and sometimes contradicting each other on key topics, we’re not helping ourselves.
A lot of time, expense and risk goes hand-in-hand with in-store technology that’s meant to touch shoppers. These projects need an empowered project owner, experienced resources guiding each project phase and the tools to clearly understand what’s working (and what’s not) to hit the bull’s eye for all stakeholders. It’s that simple!
That said, the potential for these tools are thrilling if we can focus on the ultimate goal: using technology to make the shopper happy and measuring our initiatives to ensure that they say that way. After all, happy shoppers = $$$!
Another excellent article today! Small retailers like myself would love to be as techno as we can, but the reality is we can’t afford all of it. An old marketing professor once said, “you can afford anything you want, but not everything you want”….
Back in the 80s, the bottom lines of most retailers were much better than today without all of the faxes, emails, cell phones, and RFID etc…. The fact is, we can share our ideas with other non-competing retailers at our own conventions, which I usually get a lot out of.
Pick and choose with care and use the technology to enable your customers to feel like you care about their needs, whether it is a simple email hello, or a user friendly low cost website. Don’t forget that old-fashioned service is still the best. Greet them with a smile, and go out of your way to make them feel special, all while trying to make a profit.
I agree that key factors in the success of any in-store technologies are simplicity and practicality. Lack of simplicity has the dual effect of being less likely to be adopted by customers and needing a lot of training for store staff to handle. If a technology is not practical, it is a luxury and increases the cost burden to justify its return. Customers may even perceive a luxury technology as something that adds to the cost of their purchase.
“I can’t get no satisfaction!” states the shopper. “So let’s pursue a technology approach” declares the retailer!
This Microsoft research begs the questions: a) Did consumers/shoppers give responses to such technology consumer service approach? b) Who were they, demographically and psychographically; and c) Were the respondents a cross section of all generations that are very different in needs and technology use?
Sure, retailers would love satisfying the shoppers’ needs and give in-store personal attention. But, there is a balance of these two approaches. And, importantly, each retailer’s store would be different on this subject, given the shopper/neighborhood being different in needs, income level, time convenience, and personal service.
This is a great subject to put on the table, if you will.
But, a supermarket (vs. department store, supercenter, coffee and meal shoppe, c-store, home project store, etc.), would have very different consumer needs to address and resolve, relative to service oriented technology and personal shopper care needs!
Sheetz, a well known convenience, gas and “foods to go” operation, has a tech ordering system for shoppers to place for a sandwich or food want. It works well, it’s fast…getting shoppers’ needs solved, the shoppers are in and out of the store.
But, this industry has a “locked in” image of c-store service and its consumer need/satisfaction expediency is very different than Sheetz’s. So for Sheetz, the marketing and hands-on ‘satisfy the shopper/consumers’ needs’ question found a viable answer and competitive advantage. But, would this work well at Starbucks, Lowe’s, Macy’s, or Wal-Mart?
Hmmmmmmmmmmmmmmmm