March 12, 2009
Platt Retail Institute: It’s Time for Retailers to Transform Their Stores
By Natt Fry, Retail
Solutions Sales Leader, IBM
Through a special arrangement,
presented here for discussion is an excerpt of a current article from the Platt
Retail Institute Quarterly Retail Analytics report.
The rapid growth of e-commerce sales, heightened
consumer expectations for self-service, increased consumer time and budget
constraints, and new web-based, pervasive and analytical capabilities portend
that now is the time for retailers to transform the store shopping experience.
Why is e-commerce outpacing in-store retailing
in sales growth and customer experience satisfaction?
1) E-commerce provides shopping advantages
over in-store environments. It enables rapid product feature comparisons
based on criteria provided by the consumer. The store shopping experience
is mostly dependent upon sales associates’ knowledge and motivation to
provide consumers with similar product information. E-commerce provides
superior product context via videos and 360-degree product views. Price/feature
comparisons allow consumers to rapidly "design" the "solution" that is
best for their needs. Out-of-stock occurrences are also much lower.
2) Consumers are becoming increasingly comfortable
with self-service (web-based) capabilities. A typical day could include
interacting with self-service to obtain the price of an item in the store,
buying groceries, filling the car with gas, getting cash at the ATM, checking
in for flights or hotel stays, purchasing stamps, ordering photos and assessing
health conditions.
3) Consumers have great access to e-commerce
and e-commerce capabilities at home and at work, but not at the store.
The proliferation of home-based and work-based broadband has enabled e-commerce
providers to add more graphics-intensive features to their websites, including
the use of video to improve the value of product information and product
context (selling "bundles").
4) E-commerce provides management advantages
as compared to stores. Retail management is able to measure consumer behavior
during every step of the shopping process with e-commerce, including the
conversion performance from entry, to search, to selection, to checkout.
Measuring conversion in a store environment is imprecise as it is dependent
upon people-counting at the entrance, point-of-sale data, and market basket
analysis. Retailers are also able to quickly test alternative products,
messages, promotions, and placement to establish consumer reaction and
sales performance results (A/B testing).
One of the simplest ways to bring the advantages
of the web into the store will be to provide web access that is easy to
find and easy to use. Retailers will also find ways to enable rapid product
comparisons via self-service devices in selected departments such as home
electronics and appliances.
Shopping is declining as a source of entertainment
for consumers. The main tool for improving a store’s entertainment value
is the deployment of digital media and large digital display screens. A
few retailers have successfully tested coupling an e-commerce- based kiosk
with a large digital display screen, enabling consumers to tailor the content
they want to see (i.e., product information, product comparisons, product
context and bundling).
Beyond e-commerce availability, retailers
can improve the store experience with touch-enabled customer interaction
within the store, and employing other in-store self-service transactions.
Consumers are rapidly migrating toward a touch interface as their preferred
method of interaction, thanks to the iPod, the iPhone, other touch-based
smart phones and touch-based self-service kiosks. This is a longer-term
effort, but one that can successfully create a positive difference in a
retailer’s customer experience satisfaction.
Discussion Questions: Why aren’t we seeing
more stores simply providing web access to consumers at the store level?
What’s holding back the overall use of web-technologies at the store
level? Which web-technologies appear to have the best ROI in the short
term and which ones appear particularly viable in the long term?
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Discussion Questions
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Retailers aren’t listening to the customers on e-commerce. They are so caught up in their demand issues that they don’t have the time or skill to do it. If you examine how most retailers are organized, it is all about store operations and supply chain. E-commerce efforts are consistently isolated. Very few retailers even have the capability to evaluate side-by-side the performance of consumer-direct channels vs, physical stores. When they can, they see clearly that e-commerce is a consistent predictor of wide-spread results.
When they talk to their shoppers, they see the powerful changes they are involved in. Traditional methods of reaching consumer–newspapers, radio, magazines, and TV–are rapidly giving way to social networks, on-line ads, podcasts, and YouTube.
At the very least, retailers should be offering shopper access to their own web site. It might help the store associates get on the same page.
I read a prediction recently that the next and newest generation of technology will replace the current before it is universally adopted. As I look around the technology battlefield I think the format of the future is already here; the mobile phone and the iPod (or some other general name for mobile personal entertainment unit). We will have to find a way in retail to allow, encourage interaction with, and support these technologies in bricks and mortar stores for the long-term survival of the future.
Someone said it before; the experience of shopping in a store is completely different than any other. It will not be the only way to shop, but it should offer its own, unique, and satisfactory experiences to the customer that no other method can imitate.
By the way, I think the transportation method of the future may already be here too; the roller blade or personal transportation system. I own a phone, but don’t own an iPod or Rollerblades–this is not a hidden endorsement!
Bricks and mortar shopping is a person to person interactive experience that should not be lessened by inconsistencies in employee product knowledge and training. The e-commerce shopping experience does not have the possibility for a warm person to person interaction but on the other hand, it can be a precise and consistent tool for product information and sales message delivery. The modern bricks and mortar shopper has expectations of a warm human interaction and access to detailed product/service information. Just providing access to an e-commerce web site in-store does not effectively accomplish a hybrid solution.
The retail shopping experience that merchandisers spend so much time, effort, and money developing requires an in-store merchandising tool that compliments the shopping experience and provides both guided or self-service interaction with product/service information. The expectation of a shopper when they enter a retail location is typically to buy something. The opportunity for the retailer through merchandising tools and sales associates is to nurture and facilitate that expectation and if possible up sell, cross sell, or motivate an impulse purchase. Properly developed and deployed interactive merchandising tools help make sales associates more consistent in sales message delivery, more knowledgeable on products/services and give shoppers access to this same information on a self serve basis. Sounds like a win win solution.
There are times when I read articles like this that I feel like the advice being given to stores is to try to replicate the online experience as much as possible, after internet marketers spent so much time and energy trying to replicate the store experience….
An in-store experience is, by definition, different than an online experience. This is neither a good nor a bad thing, it just is. The store experience, at it’s best, is defined by the human interactions that take place. That is the great advantage stores have, and that should be capitalized on, rather than trying to deal the human element out of the equation.
Do store customers really want web access in the stores? Those that use the Web either buy from the Web or do their research on the Web before going to the store. I think in-store consumers are more interested in the things that make the store different from the Web. Namely, hands-on access to products, knowledgeable associates, and informative digital signage.
Herb is the only commentator today who hit on the pivotal issue–mobile access is the huge wild card in this discussion. For the shopper carrying a smart phone with an unlimited data plan, a retailer’s wireless hub is redundant. Any few others will know that it’s there.
Yes we can use in-store WiFi to communicate with smart carts, self scanning guns and digital signs, but believe it or not, I see it as a technology that will be rapidly displaced by 4G phone networks and near-field communications (NFC).
Here’s my prediction: The era of big media hardware at retail will arrive and pass so fast that our accountants won’t finish depreciating the investment before it’s replaced by lighter, more flexible communications technologies.
None of the in-store web access initiatives (Sears, Target, Best Buy, et al) have gained significant traction or customer fan bases. A Best Buy Blue Shirt recently used his web access to inform me that the product I was considering was also available online. Okaaaay….
When I want to learn about a product, I’ll turn on my iPhone and peruse in the privacy of my own connectivity. Retailers have struggled to connect consumers’ worlds in-store; in the meantime, mobile capabilities have rendered many of these efforts irrelevant.
Should retailers re-invent their stores by including in-store web access? Yes, this is a perfectly good idea. There is one overriding concern…a substantial percentage of the nation’s retailers are currently working on ways to deal with a significant downturn in store traffic, sinking sales numbers and operating costs that grew too fast during the good times of the recent past. Many of the nation’s retailers are working on survival, not new initiatives.
Those retailers who focus their attention on creating and building stronger customer relationships through their stores, their existing web presence and through their catalogs will come out stronger when this recession is over.
Isn’t the answer simple? For most concepts, in today’s environment, putting online access in stores just doesn’t pay out. Over time, of course, technology will get cheaper and online presence more ubiquitous. It’s happening already with iPhones. In that world, I doubt the online access point is the important part–it’s probably more about providing apps that work to enhance the store experience (i.e., the customer will bring her own kiosk into the store!)
The piece by Mr. Fry is clearly biased while serving his position in tech sales. For example, most web sites do not offer 360-degree product views. In any case, is there a better view than the one a consumer gets by picking up a product in a store or trying it on?
Touching a garment that looks good but feels rough can kill a purchase and prevent an unnecessary return. Colors might not look complimentary if tried on in a store. A camera might not feel well-balanced or comfortable in the hand but look good in an online photo. A TV’s picture might not compare well to its neighbor in a store.
I use the Internet to research complex products, especially in terms of electronics. While I do visit retail websites, I base most of my buying decisions on the more knowledgeable research-oriented sites. This often requires considerable time, much more than I would like to devote within a store visit. Imagine waiting in a line just to access an in-store computer. How many must the retailer invest in to keep the lines manageable?
As to shopping declining as a source of entertainment for consumers, I know many people who see shopping as an activity to anchor some of their weekend, though I am certainly not one of them.
I just read Don Tapscott’s book, “Grown Up Digital”–I’d recommend it to anyone with millenial kids. Due to their deep immersion in all things digital, our kids are now thinking very differently than we do. Their expectations of relationships with people and organizations are very different that ours are.
As they are now entering their consuming/buying years, retailers are going to have to change their approaches to bringing digital capabilities to the in-store shopping experience. I don’t think anyone knows how the model of integrating web 2.0 and social networking into the store experience is going to look–we have to go through an evolution and learning process before we get there. But I think the key stumbling block today is the shortage of millenials in retail management positions to drive new internet-aware store formats.
Web access is already ubiquitous in the store, first and foremost with cell phones–something the older generation is less adept at using for web access.
This discussion seems more directed to the kiosk-type web access in stores, and the comments are certainly appropriate to that. But more interesting is the next level, mobile internet access through large screens like MediaCart or smaller hand-held screens like ModivMedia. Modiv is already deployed in scores of stores, and MediaCart is moving on to Gen II pilots (with competitors moving to initial pilots.)
However, the role of cell phones and PDAs as mobile “mice” that can access the global internet “cloud” is already apparent. This is a freight-train that will have the first mass impact on in-store usage of the internet, and retailers, per se, have not been and likely will not be the driving force behind this train. One major reason for this will be their lack of control of the message.
It’s gonna be interesting! 😉
Before retailers start worrying about how to integrate web access in their stores, they should be paying attention on how to integrate e-commerce into their sales mix. I will go one step further, they should make e-commerce the leading edge of their business vis-à-vis the shopper.
The internet has taught shoppers that they can easily get information about products without getting into a car, making stops at multiple stores and spending large chunks of time chasing products.
As long as brick and mortar retailers see e-commerce as competition they will continue to experience declines. This reminds me of a classic case study from business school some 40-years ago that is still applicable today. It was about railroads that saw themselves only as railroads and not in the freight transportation business. The big mistake of course was that had they seen themselves as transporters of freight, they would have embraced and integrated the nascent trucking business. Instead, they saw trucking a competition. Ultimately, they would lose because trucking gave the customer the ease and flexibility that the rails could not. That is much like e-commerce gives the shopper the ease and flexibility that brick and mortar does not.
As the article says, “Shopping is declining as a source of entertainment for consumers.” Entertainment? Could shopping possibly compete with the entertainment access that exists outside the store? Shoppers are not going to the store for entertainment. Shoppers are not going to the store for more self service. Shoppers are not going to he store to access the internet online, which they can do at home or even on their iPhone. The retailer must offer the shopper something they can not get online. The best place to start would be customer service. Let’s make that CUSTOMER SERVICE!
Measures. Don’t forget that store comps (and subsequently bonuses) are not based on web sales in most cases. I think the solution to that is to allocate web sales based on delivery zip code to each store. It simply comes down to if you don’t have incentives aligned for stores to support web access, then any initiative along those lines is going to fail. Broken machine? Try unplugged or shoved in a corner or covered up–and wouldn’t you, if it meant you were letting sales slip out the door to another channel?
The role of the store has changed in the Shopper’s universe of information. It is only one touch-point now. Bricks and mortar stores are so entrenched in old business models, and “what’s worked in the past,” to really understand the depth of the shift.
The roles of the store and sales person in the shopping process are evolving. Retailers who can get the roles right, win.
The reason is simple: computers break down. Without someone in the store capable of keeping computers running, in-store Internet access will be difficult at best. Consumers and their children don’t treat in-store computers as gently as the computers they have a home. If retailers have trouble maintaining and running their self-check out machines, how are they going to keep computers up and running?
Yes I agree with some previous posts that retailers should not be trying to replicate the online experience. This would be falling into the classic trap of chasing your opposition’s market position rather than strengthening your business’s own unique qualities. Providing uncontrolled web access in-store is the equivalent of using the local radio station for background music: it comes with the baggage of competitor’s advertisements!
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Retailers aren’t listening to the customers on e-commerce. They are so caught up in their demand issues that they don’t have the time or skill to do it. If you examine how most retailers are organized, it is all about store operations and supply chain. E-commerce efforts are consistently isolated. Very few retailers even have the capability to evaluate side-by-side the performance of consumer-direct channels vs, physical stores. When they can, they see clearly that e-commerce is a consistent predictor of wide-spread results.
When they talk to their shoppers, they see the powerful changes they are involved in. Traditional methods of reaching consumer–newspapers, radio, magazines, and TV–are rapidly giving way to social networks, on-line ads, podcasts, and YouTube.
At the very least, retailers should be offering shopper access to their own web site. It might help the store associates get on the same page.
I read a prediction recently that the next and newest generation of technology will replace the current before it is universally adopted. As I look around the technology battlefield I think the format of the future is already here; the mobile phone and the iPod (or some other general name for mobile personal entertainment unit). We will have to find a way in retail to allow, encourage interaction with, and support these technologies in bricks and mortar stores for the long-term survival of the future.
Someone said it before; the experience of shopping in a store is completely different than any other. It will not be the only way to shop, but it should offer its own, unique, and satisfactory experiences to the customer that no other method can imitate.
By the way, I think the transportation method of the future may already be here too; the roller blade or personal transportation system. I own a phone, but don’t own an iPod or Rollerblades–this is not a hidden endorsement!
Bricks and mortar shopping is a person to person interactive experience that should not be lessened by inconsistencies in employee product knowledge and training. The e-commerce shopping experience does not have the possibility for a warm person to person interaction but on the other hand, it can be a precise and consistent tool for product information and sales message delivery. The modern bricks and mortar shopper has expectations of a warm human interaction and access to detailed product/service information. Just providing access to an e-commerce web site in-store does not effectively accomplish a hybrid solution.
The retail shopping experience that merchandisers spend so much time, effort, and money developing requires an in-store merchandising tool that compliments the shopping experience and provides both guided or self-service interaction with product/service information. The expectation of a shopper when they enter a retail location is typically to buy something. The opportunity for the retailer through merchandising tools and sales associates is to nurture and facilitate that expectation and if possible up sell, cross sell, or motivate an impulse purchase. Properly developed and deployed interactive merchandising tools help make sales associates more consistent in sales message delivery, more knowledgeable on products/services and give shoppers access to this same information on a self serve basis. Sounds like a win win solution.
There are times when I read articles like this that I feel like the advice being given to stores is to try to replicate the online experience as much as possible, after internet marketers spent so much time and energy trying to replicate the store experience….
An in-store experience is, by definition, different than an online experience. This is neither a good nor a bad thing, it just is. The store experience, at it’s best, is defined by the human interactions that take place. That is the great advantage stores have, and that should be capitalized on, rather than trying to deal the human element out of the equation.
Do store customers really want web access in the stores? Those that use the Web either buy from the Web or do their research on the Web before going to the store. I think in-store consumers are more interested in the things that make the store different from the Web. Namely, hands-on access to products, knowledgeable associates, and informative digital signage.
Herb is the only commentator today who hit on the pivotal issue–mobile access is the huge wild card in this discussion. For the shopper carrying a smart phone with an unlimited data plan, a retailer’s wireless hub is redundant. Any few others will know that it’s there.
Yes we can use in-store WiFi to communicate with smart carts, self scanning guns and digital signs, but believe it or not, I see it as a technology that will be rapidly displaced by 4G phone networks and near-field communications (NFC).
Here’s my prediction: The era of big media hardware at retail will arrive and pass so fast that our accountants won’t finish depreciating the investment before it’s replaced by lighter, more flexible communications technologies.
None of the in-store web access initiatives (Sears, Target, Best Buy, et al) have gained significant traction or customer fan bases. A Best Buy Blue Shirt recently used his web access to inform me that the product I was considering was also available online. Okaaaay….
When I want to learn about a product, I’ll turn on my iPhone and peruse in the privacy of my own connectivity. Retailers have struggled to connect consumers’ worlds in-store; in the meantime, mobile capabilities have rendered many of these efforts irrelevant.
Should retailers re-invent their stores by including in-store web access? Yes, this is a perfectly good idea. There is one overriding concern…a substantial percentage of the nation’s retailers are currently working on ways to deal with a significant downturn in store traffic, sinking sales numbers and operating costs that grew too fast during the good times of the recent past. Many of the nation’s retailers are working on survival, not new initiatives.
Those retailers who focus their attention on creating and building stronger customer relationships through their stores, their existing web presence and through their catalogs will come out stronger when this recession is over.
Isn’t the answer simple? For most concepts, in today’s environment, putting online access in stores just doesn’t pay out. Over time, of course, technology will get cheaper and online presence more ubiquitous. It’s happening already with iPhones. In that world, I doubt the online access point is the important part–it’s probably more about providing apps that work to enhance the store experience (i.e., the customer will bring her own kiosk into the store!)
The piece by Mr. Fry is clearly biased while serving his position in tech sales. For example, most web sites do not offer 360-degree product views. In any case, is there a better view than the one a consumer gets by picking up a product in a store or trying it on?
Touching a garment that looks good but feels rough can kill a purchase and prevent an unnecessary return. Colors might not look complimentary if tried on in a store. A camera might not feel well-balanced or comfortable in the hand but look good in an online photo. A TV’s picture might not compare well to its neighbor in a store.
I use the Internet to research complex products, especially in terms of electronics. While I do visit retail websites, I base most of my buying decisions on the more knowledgeable research-oriented sites. This often requires considerable time, much more than I would like to devote within a store visit. Imagine waiting in a line just to access an in-store computer. How many must the retailer invest in to keep the lines manageable?
As to shopping declining as a source of entertainment for consumers, I know many people who see shopping as an activity to anchor some of their weekend, though I am certainly not one of them.
I just read Don Tapscott’s book, “Grown Up Digital”–I’d recommend it to anyone with millenial kids. Due to their deep immersion in all things digital, our kids are now thinking very differently than we do. Their expectations of relationships with people and organizations are very different that ours are.
As they are now entering their consuming/buying years, retailers are going to have to change their approaches to bringing digital capabilities to the in-store shopping experience. I don’t think anyone knows how the model of integrating web 2.0 and social networking into the store experience is going to look–we have to go through an evolution and learning process before we get there. But I think the key stumbling block today is the shortage of millenials in retail management positions to drive new internet-aware store formats.
Web access is already ubiquitous in the store, first and foremost with cell phones–something the older generation is less adept at using for web access.
This discussion seems more directed to the kiosk-type web access in stores, and the comments are certainly appropriate to that. But more interesting is the next level, mobile internet access through large screens like MediaCart or smaller hand-held screens like ModivMedia. Modiv is already deployed in scores of stores, and MediaCart is moving on to Gen II pilots (with competitors moving to initial pilots.)
However, the role of cell phones and PDAs as mobile “mice” that can access the global internet “cloud” is already apparent. This is a freight-train that will have the first mass impact on in-store usage of the internet, and retailers, per se, have not been and likely will not be the driving force behind this train. One major reason for this will be their lack of control of the message.
It’s gonna be interesting! 😉
Before retailers start worrying about how to integrate web access in their stores, they should be paying attention on how to integrate e-commerce into their sales mix. I will go one step further, they should make e-commerce the leading edge of their business vis-à-vis the shopper.
The internet has taught shoppers that they can easily get information about products without getting into a car, making stops at multiple stores and spending large chunks of time chasing products.
As long as brick and mortar retailers see e-commerce as competition they will continue to experience declines. This reminds me of a classic case study from business school some 40-years ago that is still applicable today. It was about railroads that saw themselves only as railroads and not in the freight transportation business. The big mistake of course was that had they seen themselves as transporters of freight, they would have embraced and integrated the nascent trucking business. Instead, they saw trucking a competition. Ultimately, they would lose because trucking gave the customer the ease and flexibility that the rails could not. That is much like e-commerce gives the shopper the ease and flexibility that brick and mortar does not.
As the article says, “Shopping is declining as a source of entertainment for consumers.” Entertainment? Could shopping possibly compete with the entertainment access that exists outside the store? Shoppers are not going to the store for entertainment. Shoppers are not going to the store for more self service. Shoppers are not going to he store to access the internet online, which they can do at home or even on their iPhone. The retailer must offer the shopper something they can not get online. The best place to start would be customer service. Let’s make that CUSTOMER SERVICE!
Measures. Don’t forget that store comps (and subsequently bonuses) are not based on web sales in most cases. I think the solution to that is to allocate web sales based on delivery zip code to each store. It simply comes down to if you don’t have incentives aligned for stores to support web access, then any initiative along those lines is going to fail. Broken machine? Try unplugged or shoved in a corner or covered up–and wouldn’t you, if it meant you were letting sales slip out the door to another channel?
The role of the store has changed in the Shopper’s universe of information. It is only one touch-point now. Bricks and mortar stores are so entrenched in old business models, and “what’s worked in the past,” to really understand the depth of the shift.
The roles of the store and sales person in the shopping process are evolving. Retailers who can get the roles right, win.
The reason is simple: computers break down. Without someone in the store capable of keeping computers running, in-store Internet access will be difficult at best. Consumers and their children don’t treat in-store computers as gently as the computers they have a home. If retailers have trouble maintaining and running their self-check out machines, how are they going to keep computers up and running?
Yes I agree with some previous posts that retailers should not be trying to replicate the online experience. This would be falling into the classic trap of chasing your opposition’s market position rather than strengthening your business’s own unique qualities. Providing uncontrolled web access in-store is the equivalent of using the local radio station for background music: it comes with the baggage of competitor’s advertisements!