May 9, 2008
Shoppers Ready for Brave, New Retail Future
Consumers from around the globe are ready for social networking shopping websites, interactive dressing rooms, smart carts, biometric payments and a whole host of other uses for technology to improve the retail experience, according to a new study, New Future in Store, by TNS.
In the study, TNS asked primary shoppers for households in the U.S., Canada, China, France, Germany, Japan, Spain and the U.K., to rate 12 innovations at retail. Those respondents believed would become widespread included, in order: social networking shopping sites, collaborative product development, group buying, mobile phone advertising, interactive dressing rooms, shopping by mobile phone, smart carts, biometric payment systems, 3D body scanning, networked shopping, interactive dressing room mirrors and holographic sales assistance.
The perceived value of the innovations varied greatly by the country of the person being asked the question. For example, 60 percent of individuals surveyed expect biometric finger payments to be widespread by 2015 and with 25 percent rating it as their favorite innovation among all the choices. In the U.S. only 19 percent gave it their top vote.
One innovation that American consumers were high on was smart shopping carts. Twenty-eight percent gave it their highest ranking versus 19 percent of all consumers who participated in the research.
Mary Brett Whitfield, TNS senior vice president and director of the Retail Forward Intelligence System, said in a released statement: “There’s no doubt that we’re in a time of transition in retailing – and for consumers, the look and feel of a shopping experience has the potential to change dramatically. In our increasingly hurried culture, shopping innovations, which free up time are likely to rank highly, as shown in this first study of shoppers’ perceptions of evolving retail technologies. But despite the desire to save money and time, most shoppers aren’t going to be prepared to swap good traditional service for technology as evidenced by the small share of shoppers (42 percent) ranking holographic sales assistants as their favorite innovation.”
Siemon Scammell-Katz, Managing Director of shopping consultancy TNS Magasin, expects that the introduction of various technologies “will drive more change in the way consumers shop in the next 10 years than it has in the last 20 years. We know that shoppers are frequently overwhelmed by too much choice and need to shop in minimal time, and these innovations will provide welcome reassurance and help.”
Discussion Questions: Do you believe that technology will more directly affect how consumers shop over the next decade than it has over the past 20 years? What technologies do you think will most profoundly affect American consumer shopping behavior between now and 2015?
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Quickest-adopted technologies: anything that saves labor. Slowest-adopted technologies: anything that might raise sales. Justifiably, retail executives are skeptical of pie-in-the-sky technology promises of great sales increases to come. It’s much easier to prove how much is saved by cutting payroll.
Certainly, technology is having a major impact on the way people shop. Just look at Amazon and see what they have done to retailing. People can purchase multiple of categories of products online, and have the product delivered to their home or office. And we are not just talking about groceries. Electronics, Groceries, and now they are the second largest shoe retailer online.
Retailers are thinking about smart shopping carts? They best be a bit more innovative if they are going to compete with the true innovators.
In a ’65 paper, Intel co-founder Gordon Moore predicted that computer processing power would double every two years. It’s called Moore’s Law, and he was right. So naturally, technology will continue to outpace any other shopping influence in the U.S.
However (you knew there’d be one), this is not necessarily the case globally. If “how consumers shop”–as presented in this thesis–is a global question, then we need to reverse Moore’s Law a decade or so and then squirt a shot of nitrous oxide (a drag racer’s tool for quicker acceleration) into the global retail engine. The vast majority of the world’s population has either no or extremely limited (i.e., government controlled) internet access. They have few debit/credit cards, let alone bar codes or RFID. But, all that stuff and more will come to them in an accelerated rush. Were you surprised when you learned how much of our stuff comes from China? That came in a rush. Were you surprised when you learned that oil prices escalated because of sharply increased global demand? That came in a rush. Were you surprised when Paris Hilton was officially designated a Goober Dingbat? Well, no.
The Summer Olympics in China will sharply accelerate shopping technology in the most populous country in the world and in neighboring countries (like India and Russia). So, for the global use of shopping technology, I predict a brief lull of about two years and then an accelerated rate that will exceed by an order of magnitude the rate increase of technology-driven shopping here at home.
As a CPG professional, I understand the benefits to merchants for utilizing innovations like biometric payment systems. However, as a consumer, I’m still not sold. What exactly will these new products do for consumers? How do they add value for the consumer?
One element emphasized in the brief is the time-saving benefit of biometric scanning. This may indeed speed some processes, but will it still be effective when I’m the 500th person on any given day to place my thumb on a filthy scan pad while being serviced by a clerk who cares little about her job? Consider that credit cards have been around for 30 years and are now sold to us as time savers, but cash remains far quicker for most transactions. No worrying about missed swipes or down machines and clerk ineptitude is far reduced when point of sale transactions boil down to basic arithmetic.
I would expect that consumer, perhaps those in the United States in particular, would respond more favorably to innovations that add value to the shopping experiences, as opposed to those geared mainly to time saving. Lane Bryant, for example, has plans to implement a 3D body scanner that will match the consumer’s body type with specifically fitted pairs of jeans. This allows the merchant to guarantee their consumers receive a product that will fit well, which will in turn increase consumer brand loyalty. Plus, it will save time in the shopping experience as consumers will (presumably) spend less time trying on various clothes and will allow the merchant to collect very interesting data on the body morphology of their consumer, data that may well help the company design new products. That’s a technological innovation that’s a win all the way around.
It is very hard in survey research to ask consumers to rank what they have not yet experienced, because simply put, they don’t know what they don’t know. Regardless of the stats, however, I am all for the dialog with consumers, especially as new technologies start to become available and exposure and experience with them rises.
The real question is, will marketers take anything off the table that technology can enable if consumers don’t like it? I can tell you that my three college kids will drift from Facebook as more marketers use it to aim at them, and they are intent on maintaining full control of what they let in. When marketers get too aggressive, the backlash can be cruel, so we as an industry must keep our “listening ears” on at all times, and stay responsive to technology to enable the shopper, not the marketer.
The relatively low percentages of positive responses (many under 50%) reflect the fact that few people can envision the future at all. Using one’s imagination, then deciding how valuable that figment may be, is a challenge for most consumers. The ‘closest in’ innovations, such as social shopping and smart carts (already in circulation in some places) are easiest to imagine for US consumers. I am not surprised that these are rising to the top.
Additionally, how these innovations are executed in the future, matters a lot. Ultimately, the needs of the consumer must be served, regardless of fancy-schmancy technology. Benefits will always include: time-saving, money-saving, easy-access expertise or valued opinion, relevant array, and delight in experience. Technology must still deliver these benefits, among others, to be successful.
Technology will continue to have a major impact on how consumers shop. To have maximum impact, the technology should satisfy basic consumer needs: time saving, ease of use, improve self esteem and security. This should be coupled with excellent customer service, because when consumers have a question or problem, they want it addressed quickly and correctly. I look forward to seeing how technology will change, grow and affect the shopping experience.
Technology is impacting consumers from two directions…what they buy and how they buy it.
The mix of virtual vs. physical goods purchased is changing as more consumers see the internet, video games, movies, and music as alternatives to spending money on physical goods. Rather than watch TV, buy sporting equipment, or go to a theater for movies or entertainment, consumers are able to stay home and do all these things from the comfort of their living room.
Consumers are also able to stay at home to do their shopping. The biggest impact of this is the effect of brands and pricing. If all I have to do is search for the cheapest price of Brand X and get the same quality from wherever I order, price becomes the primary consideration. This makes the case for private label even more compelling, as online retailers need brand recognition to differentiate themselves.
But probably the most difficult thing with all this speculation is “knowing how to get there.” As of the end of 2007, 45% of households still did not have broadband internet access. Besides the connection, people have to change their way of thinking. Old habits die hard, but the impact of high fuel costs and shrinking consumer discretionary income will likely speed changes that can be accomplished by a “stay at home” alternative.
This year (2008) may prove most revealing as salaries have failed to keep pace with rising energy costs. Consumers will have to change what they buy or how they buy it. (Or take on more debt.) The real long term challenge in all this is “who are we going to sell to?” As the second largest employer in the United States, the Retail Industry is responsible for funding a lot of its own business. As emphasis shifts away from the store network, there will be fewer employees at store level and fewer customers able to visit the stores.
One glaring fallacy in all this has leapt out at me. The people surveyed may or may not be shopping in the far distant future whereas the younger people who will be shopping were not included. And they are the ones far more familiar with, and amenable to, technology. The face of shopping will change along with the faces of those doing the shopping.
I’d like to disagree with George’s description/interpretation of the results of this study. None of the options appeals to more than 41% of the respondents and top box likelihood of use does not exceed 26%. While shopping social network sites is expected by 79% of the shoppers (number one in the list), nobody (8%) expects to make use of it. This suggests that while changes may be widespread, they are not consumer-need driven. With that in mind, I’d say the introduction of internet shopping is a much bigger development than what we expect to see in the future.
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Quickest-adopted technologies: anything that saves labor. Slowest-adopted technologies: anything that might raise sales. Justifiably, retail executives are skeptical of pie-in-the-sky technology promises of great sales increases to come. It’s much easier to prove how much is saved by cutting payroll.
Certainly, technology is having a major impact on the way people shop. Just look at Amazon and see what they have done to retailing. People can purchase multiple of categories of products online, and have the product delivered to their home or office. And we are not just talking about groceries. Electronics, Groceries, and now they are the second largest shoe retailer online.
Retailers are thinking about smart shopping carts? They best be a bit more innovative if they are going to compete with the true innovators.
In a ’65 paper, Intel co-founder Gordon Moore predicted that computer processing power would double every two years. It’s called Moore’s Law, and he was right. So naturally, technology will continue to outpace any other shopping influence in the U.S.
However (you knew there’d be one), this is not necessarily the case globally. If “how consumers shop”–as presented in this thesis–is a global question, then we need to reverse Moore’s Law a decade or so and then squirt a shot of nitrous oxide (a drag racer’s tool for quicker acceleration) into the global retail engine. The vast majority of the world’s population has either no or extremely limited (i.e., government controlled) internet access. They have few debit/credit cards, let alone bar codes or RFID. But, all that stuff and more will come to them in an accelerated rush. Were you surprised when you learned how much of our stuff comes from China? That came in a rush. Were you surprised when you learned that oil prices escalated because of sharply increased global demand? That came in a rush. Were you surprised when Paris Hilton was officially designated a Goober Dingbat? Well, no.
The Summer Olympics in China will sharply accelerate shopping technology in the most populous country in the world and in neighboring countries (like India and Russia). So, for the global use of shopping technology, I predict a brief lull of about two years and then an accelerated rate that will exceed by an order of magnitude the rate increase of technology-driven shopping here at home.
As a CPG professional, I understand the benefits to merchants for utilizing innovations like biometric payment systems. However, as a consumer, I’m still not sold. What exactly will these new products do for consumers? How do they add value for the consumer?
One element emphasized in the brief is the time-saving benefit of biometric scanning. This may indeed speed some processes, but will it still be effective when I’m the 500th person on any given day to place my thumb on a filthy scan pad while being serviced by a clerk who cares little about her job? Consider that credit cards have been around for 30 years and are now sold to us as time savers, but cash remains far quicker for most transactions. No worrying about missed swipes or down machines and clerk ineptitude is far reduced when point of sale transactions boil down to basic arithmetic.
I would expect that consumer, perhaps those in the United States in particular, would respond more favorably to innovations that add value to the shopping experiences, as opposed to those geared mainly to time saving. Lane Bryant, for example, has plans to implement a 3D body scanner that will match the consumer’s body type with specifically fitted pairs of jeans. This allows the merchant to guarantee their consumers receive a product that will fit well, which will in turn increase consumer brand loyalty. Plus, it will save time in the shopping experience as consumers will (presumably) spend less time trying on various clothes and will allow the merchant to collect very interesting data on the body morphology of their consumer, data that may well help the company design new products. That’s a technological innovation that’s a win all the way around.
It is very hard in survey research to ask consumers to rank what they have not yet experienced, because simply put, they don’t know what they don’t know. Regardless of the stats, however, I am all for the dialog with consumers, especially as new technologies start to become available and exposure and experience with them rises.
The real question is, will marketers take anything off the table that technology can enable if consumers don’t like it? I can tell you that my three college kids will drift from Facebook as more marketers use it to aim at them, and they are intent on maintaining full control of what they let in. When marketers get too aggressive, the backlash can be cruel, so we as an industry must keep our “listening ears” on at all times, and stay responsive to technology to enable the shopper, not the marketer.
The relatively low percentages of positive responses (many under 50%) reflect the fact that few people can envision the future at all. Using one’s imagination, then deciding how valuable that figment may be, is a challenge for most consumers. The ‘closest in’ innovations, such as social shopping and smart carts (already in circulation in some places) are easiest to imagine for US consumers. I am not surprised that these are rising to the top.
Additionally, how these innovations are executed in the future, matters a lot. Ultimately, the needs of the consumer must be served, regardless of fancy-schmancy technology. Benefits will always include: time-saving, money-saving, easy-access expertise or valued opinion, relevant array, and delight in experience. Technology must still deliver these benefits, among others, to be successful.
Technology will continue to have a major impact on how consumers shop. To have maximum impact, the technology should satisfy basic consumer needs: time saving, ease of use, improve self esteem and security. This should be coupled with excellent customer service, because when consumers have a question or problem, they want it addressed quickly and correctly. I look forward to seeing how technology will change, grow and affect the shopping experience.
Technology is impacting consumers from two directions…what they buy and how they buy it.
The mix of virtual vs. physical goods purchased is changing as more consumers see the internet, video games, movies, and music as alternatives to spending money on physical goods. Rather than watch TV, buy sporting equipment, or go to a theater for movies or entertainment, consumers are able to stay home and do all these things from the comfort of their living room.
Consumers are also able to stay at home to do their shopping. The biggest impact of this is the effect of brands and pricing. If all I have to do is search for the cheapest price of Brand X and get the same quality from wherever I order, price becomes the primary consideration. This makes the case for private label even more compelling, as online retailers need brand recognition to differentiate themselves.
But probably the most difficult thing with all this speculation is “knowing how to get there.” As of the end of 2007, 45% of households still did not have broadband internet access. Besides the connection, people have to change their way of thinking. Old habits die hard, but the impact of high fuel costs and shrinking consumer discretionary income will likely speed changes that can be accomplished by a “stay at home” alternative.
This year (2008) may prove most revealing as salaries have failed to keep pace with rising energy costs. Consumers will have to change what they buy or how they buy it. (Or take on more debt.) The real long term challenge in all this is “who are we going to sell to?” As the second largest employer in the United States, the Retail Industry is responsible for funding a lot of its own business. As emphasis shifts away from the store network, there will be fewer employees at store level and fewer customers able to visit the stores.
One glaring fallacy in all this has leapt out at me. The people surveyed may or may not be shopping in the far distant future whereas the younger people who will be shopping were not included. And they are the ones far more familiar with, and amenable to, technology. The face of shopping will change along with the faces of those doing the shopping.
I’d like to disagree with George’s description/interpretation of the results of this study. None of the options appeals to more than 41% of the respondents and top box likelihood of use does not exceed 26%. While shopping social network sites is expected by 79% of the shoppers (number one in the list), nobody (8%) expects to make use of it. This suggests that while changes may be widespread, they are not consumer-need driven. With that in mind, I’d say the introduction of internet shopping is a much bigger development than what we expect to see in the future.