save our stores -ebook

7/30/2019 Save Our Stores -eBook

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1INNOVATE NOW. connectedstore.com.au

SaveOur Stores;

how creative technical innovationcan save traditional retailers

A multitude of technologies stand ready to transform stores.But which ones are w for you? In this two part ebook,

Mark Schroeder provides an overview of theopportunity and the tech tools available.

The lack o creativity and dierentiation

in the Australian retail market has become

apparent. Australias reputation as a

testing ground or new products hasnt

translated into retail experimentation.

International retailers and digital

entrepreneurs have identifed this market

is wide open or.

Interbrands general manager

Andy Wright

Theres been a problem with writing thiseBook: customer-acing in-store digitaltechnologies have been moving aster than mydrating process! I I cant write ast enough tokeep up, how do traditional retailers, with theirhands already ull o the daily challenges, ndtime to sit though the endless options, assessthem properly, procure them, pilot them andnally implement them?

It comes down to survival. You do what youmust to survive, and traditional retail has surelyreached the stage where it knows it mustevolve and rapidly.

I wont regurgitate the numbers about themove to ecommerce because they move evenaster than technology and we all know thatpeople have responded by the billions to theimmediacy and value oered by ecommerceincluding through the second wind providedby mobile - and the trend continues togather pace. Chances are your customersare carrying better interactive technologyin their pockets and handbags than you

have in your stores; its as i youre suddenlycompeting with all the worlds shops that canbe accessed by your customers rom the palmo their hand at a ew keystrokes. The bricks-and-mortar casualties are well documented.

Consumers have become aware that theystand at the centre o a powerully complexshopping universe which they have increasingcontrol over. Oer relevance, instant pricecomparison, group buying deals, ephemeraldiscounts, recommendation engines eortlessrewards, consumer reviews and multiplepurchasing options are all commonplace.

How do bricks-and-mortar retailers (lets calledthem BAM retailers) respond to this perectstorm o consumer-empowering technology?

Foremost they need to embraceinnovation, recognise thattechnology provides additionalways to orge customerrelationships and make a sale.Busy over the past decadeocussing on supply chaineciencies while relying on pricediscounting to stimulate custom,many missed the undamentalshits taking place in consumer

behaviour. Innovation, creativityand insight seemed to havebeen discarded and thenorgotten over the past twentyyears by Australian BAM retailers who seemedspellbound by Harvey Normans success asthe standout retailer o their generation. Insteadthey were led down a dangerous path, madesot by a time o booming consumerism whichallowed lowest common denominator retailto work. They must now relearn the creativeblind spots that allowed to nd themselves soshort o answers, because simply opening anecommerce site isnt going to provide the silver

bullet. Just ask David Jones.

eBOOK April 2013

PART 1: WHERE WERE AT AND WHERE WEVE BEEN

ConnectedStore


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Save Our Stores; how creative technical innovation can save traditional retailsers

INNOVATE NOW. connectedstore.com.au

Now that the novelty and initial shock oecommerce is over, its time or retailers tostop blinking in the headlights and take theght back to the new kid in town, build on andinvest in their inherent advantages in satisyinghuman drivers o consumption, and identiyways in which technology can allow themto satisy those drivers better than pureplayonline retailers can.

The options are stark: take calculated risksnow or hand over the baton.

Same as it ever was, but dierent.

Consumerism has slowed and people dont eelthe same need to shop, however when they dothey have more choices - technology is providingthe means to shop anywhere, anytime, 24/7.

I you want them to bother to go to a BAMstore, youd better provide a good reason.

Too ew retailers successully get to grip withthe stores role as anything much more than abunch o shelves, a roo and a sales counter.Finally its time to heed Paco Underhills almostdecade-old call or experiential retail.

What people want rom their trip to the

shops hasnt changed much: seduction,un, instant gratication, discovery, service,sensory inspiration touch, sound and smell convenience, social interaction, local-ness. Thiscontrasts markedly with online which can onlyoer a solitary, cerebral version o shopping.

A poll by Harris Interactive recently underscoredthe limitation o online shopping. O the 2,258active online adults surveyed, 54% reportedreduced ace-to-ace contact with riendsand 31% said they elt lonelier. Somethingimportant is lost through the experience ocommunicating and shopping online and this

provides opportunities or the role o stores associal enablers. In his infuential book The GreatGood Place, sociologist Ray Oldenburg wrotehow social environments other than home andthe workplace provide important anchorso community lie. The general store and pubtraditionally provide space or customers tohang out with or without making any (oradditional) purchases. Recently, the caindustry has taken advantage o this need togreat eect by providing space that Oldenbergsays is determined most o all by its regularclientele and is marked by a playul mood,

which contrasts with peoples more seriousinvolvement in other spheres. Many retailersreplaced that playulness with grim eciency or in some case (are you listening HarveyNorman?), just grimness.

O course, some important drivers are betterserved by ecommerce inormation, value(or now), convenience and comparisonor example. Whilst BAM retailers must

provide to these requirements as best theycan by mimicking the techniques o theironline counterparts (and well discuss thetechnologies to allow them to do so later),theres no point building their oer around them.

In other words, BAM retailers must secure theirplace in the shoppers new world by building ontheir inherent strengths and exploiting onlinesweaknesses whilst at the same time integratingits best tricks into the store experience. Anexample is location-based social media egFacebook Places and Foursquare whichleverage the communal aspects o shopping.

It is this hybridised approach thats known asmulti-channel or omni-channel retailing, thecatch-all jargonsims that simply mean usingdigital tools to seamlessly bridge the gapbetween the online and ofine worlds, creatinguser experiences that are interactive, sociallyintegrated, personally tailored and ingrainedinto our everyday activities. Omnichannelprovides multiple was to capture the transactionincluding:

Search mobile/online, try/buy instore

Search/try instore, buy online

Buy online and collect instore (click and

collect eg Coles) Buy instore and have it delivered (eg

Sportsgirl) Search/try instore, buy in the store via the

website using touchscreens Respond/buy anywhere via mobile (eg scan

tag instore or QR code on a billboard) andhave it delivered.

Experiential technologies enhance in-storeshopping with engaging, personalisedenvironments, interactive interaces, customer-

specic responses, augmented reality andsocial media integration to ultimately create abespoke and compelling experience or eachindividual consumer to ensure every visitor is asale and every sale is an upsell.

I you think about what made a good store

in 1980, in 1990, and what makes a good

store todaythey are all dierent. And

while theyre driven by a certain biological

constant, there are a series o other actors

that are in a continual state o evolution.

Paco Underhill, author of Why We Shop


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Retail therapy is alive and well according toPaco Underhill. Online-only stores sometimes

become real-lie stores or pop-up shopsbecause, as Vicki Cantrell o shop.org saysthe consumer wants the total experience.

Depending on the category, the sensoryaspects o retailing can be as important ormore so than the operational and unctionalcomponents. Underhill observed that mostretail environments continue to be designedand operated by men or women. BAMretailers who embrace the emotionaldimension o the shopping experience canregain the high ground by using without

getting lost in technology.

Technology combining operational

and marketing benefts demand new

management approaches

One things or sure in retail, millions still gounspent due to abandoned purchases drivenby out-o-stocks, limited sta assistance,long check-out processes and ineectivein-store marketing. Ready to help BAMretailers meet the ecommerce challenge

is an array o technologies at varyingdegrees o maturity and uptake. Some oeroperational improvements (aster checkout,smaller stores), some enhance marketingeectiveness (competitive response speed,geo-specic oers), and most combine both.

BAMs need to work through the options,identiy those most pertinent to their oeringand heres where it gets really complex, gureout how to combine them to enhance ratherthan conuse the shoppers experience. Thisis going to take a willingness to energeticallyinnovate, invest and experiment i urthercarnage is to be avoided.

Sigicantly, retailers need to cut acrossinternal silos in order to deploy thesetechnologies. IT, Operations and marketingdepartments need to converge, just as thetechnologies have done. Historical budgetand responsibility allocation models haveprevented large retailers coming to gripswith omni-channel retailing; entrenchedmanagement territories and practices needto be challenged.

The Inormation Buy-Way; integrating

technology into the path to purchase

Conventional wisdom said that 70% opurchase decisions are made in-store but,driven by instantly accessible real time shoppinginormation, an ever-growing share o decisionsis being made online beore the store is evenentered.

Now, consumers simply use a range o dierenttools and inputs whilst moving through the pathto purchase, and many o these provide potentialtouchpoints or the retailer. According to GooglesZero Moments O Truth (ZMOT) analysis,consumers on average research 10.4 pieces ocontent beore making a purchase (note, this hasincreased 2-old rom 5.27 in 2010).

technology has turned the corner

and smart retailers and brands are

using it to put a human ace back

on the shopping experience.

Piers Fawkes, Founder PSFK


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The key to identiying these touchpoints andapplying the appropriate technology is tounderstand the shoppers journey now that thetradition unnel model has evolved to a muchmore complex but empowered model.

Shopper Marketing as a range o connecteddisciplines targets shoppers at multipletouchpoints using data-driven insightsrom search to purchase to deliver the rightmessage to the right person at the right timeall along the shoppers Inormation Buy Way.Messaging throughout the journey need tobe consistently delivered right through tothe store using conventional and digital

techniques.

Doing so will help minimise the threat oshowrooming, the name given whenshoppers research and/or try on productsinstore tying up sales assistant time - andthen seek out cheaper prices online, perhapsusing a comparison shopping app on theirmobile right in your store! Keep this inperspective; Shop-ability ound the numbero Showroomers is signicantly less than thenumber o shoppers who research online andthen buy in bricks and mortar stores.

The issue in the US has seen chainsincreasingly giving sta tools to responseto the threat - pricing/deal fexibility, layby,extended terms, home delivery, loyaltyrewards etc - whereas Australian retailershave mostly just complained about it. It goeswithout saying the stores job is to convertthat enquiry which urther highlights theimportance o taking your digital brand rightthrough to store delivery.

View TVor print

ad

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AWARENESS CONSIDERATION SELECTION LOYALTYPURCHASE

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VISITWEBSITE

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ACTIVATING AT THE THE MULTICHANNEL STORE

The shit in consumer decision

making means that marketers

need to adjust their spending

and view the change not as a

loss o power over consumers

but as an opportunity to be in the

right place at the right time

McKinsey Quarterly


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Retailers need to experiment with

combined technology solutions with due care

The increasing use o technology to enhancestore environments will soon give customers areason to visit one brands outlet over another,based on what excites, engages and motivatesthem. Marketers who can use it eectively willbe able to better connect the online with theofine so that customer engagement wonthave to end when a retailers doors close.

Retailers need to move ahead with both cautionand commitment to the uture. Experimentation

will be the only way to nd the optimal tbetween online, mobile and store basedtechnologies but they key will be to integratearound the needs o the customer. In Germany,a grocery store devoted to exploring thesetypes o innovations the Real Future Store has been in operation since 2008 and isconsidered a success but it also shows that notasking customers to change their tried-and-true habits needs to be done with care. Forexample, customers enjoyed the recipe kiosksand were enchanted by the ocean soundsthat complemented the seaood department,but were less enthused about an option toidentiy themselves at the register using just angerprint.

Nick Marfeet, chie technical ocer at BlocksGlobal, a sotware company specialising inomni-channel retailing and customer experiencesolutions, points out that most retailershave built their dierent digital channels inisolation, and reactively rather than proactively.Fragmentation between the channels iscausing riction in customers experiences,he says.

Working through the range o options andtesting the right combinations might soundtricky but lets not orget that this has beendone by that most conservative o industries banking. We take the on-line banking and ATMchannels or granted but their co-existencealongside physical branches has really been a

journey into the unknown or the industry. Whileno single banking channel has proved capableo replacing the other, together and properlybalanced they represent an eective solutionthat ts the diversity o customer needs andpreerences.

Overcoming the organisationalbarriers

Even though the potential applications andimpacts o digital shopper media tools might

be clear, the biggest challenges in even gettingto test stage are usually to do with internalresourcing rather than designing a suitableplatorm. Most businesses spend 80% o their ITbudget maintaining existing systems.

How many retailers have an innovation budget,let alone a suitably qualied and empoweredmanager to drive cross departmental innovation?

A major issue is project ownership; whilst thesetechnologies serve marketing (and sometimestraining) objectives, they involve the kind otechnologies that are generally designed,procured, managed and even unded out o theIT department. Oten the two unctions work at

cross purposes or even in opposition! Then thereare the physical aspects o installing hardware,which normally involves Operations. A top-downcommitment to co-ordinated planning andexecution along with the allocation o sucientpersonnel and unding is absolutely crucial inorder to spend a lot o time eort and moneyon a poorly designed experiment thats destinedto ail rom the outset.

Adapt or die.

This time its real

So, although signicant hurdles andcomplexities are involved, the imperative toinnovate is there. I it aint broke, dontx it doesnt work in todaysshopper marketingworld. As Jon Bird,CEO o retail ad agencyIdeaworks wrote recentlyOnline is devastatinglyeective as a transaction medium. Its a ast,ecient way to browse, compare andpurchase. But it cant compete with

physical retail when it comes to deliveringan experience. Retailers will need toinvest more in creating experience centres,which should be always high-touch, otenhigh-tech and designed to get talked about,like the Apple Stores all over the world.Customers may want it, eciencies may demandit but technology alone will not save retailers -in act it will be the demise o some. But to trulybecome customer-centric and thereore relevanttomorrow, the smart use o tech tools will be thekey. Retailers who dont master the applicationo technology to create emotional connectionsto their oering, enhance their operational

eectiveness, and to make their physical storesrelevant to their customer base are inviting theircompetitors through the ront door.

CROSSDISCIPLINEPROJECTTEAM

STORE

OPERATIONS

TRAINING

MARKETING

BUYIN

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FITOUT


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Until this point I have deliberately avoidedmentioning Apple stores, but its unavoidable.

Few retailers would be unaware o therewriting o just about every rulebook achievedby Apple - Apple stores make more moneyper square oot than any other U.S. retailer,almost doubling second place Tianys andgenerating $51m in each store on averageeach year. Getting a job at an Apple store inthe US is statistically harder than getting intoHarvard!

Are Apple multi-channel retailers? Yes. Aretheir stores digitally engaging? Yes. Do theyuse technology to demonstrate product as

well as to speed transactions? Yes. Do theyprovide an engaging, human and sensualshopping experience? You bet. And theseguys werent even retailers.

Traditional BAM retailers need to discoverthe will, develop the creative and technicalcapabilities, carve out budget and establishproject management silos required to becomemulti-channel retailers in a hurry. As WayneGretzky once said, A good hockey playerplays where the puck is. A great hockeyplayer plays where the puck is going to be.

In the case o retail, its VERY clear where thepuck is heading and how ast its moving.

1. Digital merchandising coming o age

signage and interactive

Shoppers aficted with ADD (AnalogDecit Disorder) see static signage andmerchandising displays as nothing morethan wallpaper, but technology can nowtransorm these into dynamic, always current,responsive, inormative and interactivedisplays.

When I attended New Yorks National RetailFederation conerence back in 2005, digitalsignage was the hot topic. Although now wellestablished internationally, digital displays are

just starting to make an impact in Australiawhere Frost & Sullivan expected the localindustry to grow at 12% pa, and be worth$58 million in 2013. Digital merchandisingtechnology is not new or particularlychallenging; media players are solid-statedependable and display screens are light,thin, energy-ecient and aordable, even athigh denition. To date, most digital signage

has been passive, but this is quickly changingas interactive screens and tablets becomecheap and reliable. This is seeing twochannels o digital merchandising emerge:

PART 2: FOUR TECHOLOGIES RETAILERS SHOULD

BE LOOKING AT IF NOT ALREADY USING

Technology has become too

embedded in the abric o business

and too critical or competitive

perormance to be let to the IT

unction above.

McKinsey Quarterly:

Elevating technology on the

boardroom agenda


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large broadcast displays are being integratedinto the store design itsel, mounted in

walls, buttresses and aisle-ends as well asbecoming walls themselves - video walls.

These are being supplemented by smallerscreens and tablets or a more personalinteraction at shel level, in tables or evenworn by sta! The best sotware can managemultiple screen ormats and channels ocontent on the same platorm.

British ashion brand Burberry launched arange by streaming live catwalk shows intostores worldwide, displayed on video walls.Customers could purchase items rom the

shows using tablets located around thestore. Voice and sensory-activated interactivescreens can display promotions until theyregister a nearby shopper and then promptthem to explore inormation about theproducts around them.

Reaching out and grabbing attention withengaging content and arresting oers still hasits oundations in rm logic; in the Journalo Consumer Research, Nielsen reports thatonly 26% o shopping list items are branded,24% o grocery purchases are unplannedand 75% o shoppers still expect to make

unplanned purchases. Impactul selling inthe store is no less important today and asNielsen has widely reported, digital signage isan aective way to achieve it. In act Nielsenhas published studies across a number onetworks (largely in the US) notably WalMartswhere ad recall topped 32% and approvalwas 64%. In terms o sales lit on promotedproduct, Walmarts creative director AndyJohnson reported 7% lit in Electronics, 13%in ood and 28% in health and beauty, andresponse to oers saw a 7% l it on a matureitem boost, 6% on price reductions, 9% onlaunch and 18% on seasonal push.

Quick Service Restaurants have reported 5%lits rising up to 20% in ood courts. ErnestoSmith, Burger Kings senior director o U.S.merchandising claims an ROI payback atBurger King stores o 9 to 12 months. Withdigital, rom the get-go its just a much betterimage o the product and [theres] much moreappetite appeal.

Because o its high visibility, digital signagemakes or an eective centrepiece around whicha range o technical tools can be oriented screen content not only providing atmosphereand selling messages, but also directingcustomers to the other technologies on oer.Ralph Lauren used interactive digital windowdisplays which enabled customers to buy

clothes by scanning their phone over the display,tuning the store into a 24-hour proposition.

Then there are the operational benets: content(perhaps including pricing) tailored to eachstore location, instant updates and response tocompetitor oers, the elimination o paper PoS(along with its reight costs, carbon ootprint anddisplay compliance issues) and no more labourcosts and OHS risks associated with hangingposters. Digital shel-edge pricing can be updatedin an unlimited number o locations at the click oa button, eliminating labour-intensive processes.

Interactive touching infnite possibilities

Touchscreens seemed so exotic so recently whenthey were only ound in clunky kiosks, and thencame the iPad. And now you can buy one withthe latest Android operating system or under$300 and tablets are expected to outsell bothdesktops and laptops in the immediate uture.This opens up a world o interactive possibilitiesor store operators.

I was involved in providing touch hardware or amanchester brands store-within-a-store rollouts

where instead o shelves ull o bedlinen whichconstantly needed tidying ater every customerinteraction, touchscreensallowed them to browse roma bigger range o productsand view their shortlistedpreerences in a room setting.To achieve the same withoutdigital would have taken asuperstore.

Touchscreens open upa whole range o other

interactions; shoppers canemail product details tothemselves, join mailing lists, share inormationand transact on screens paced into the store.

Adidas digital merchandising;more colourways, less space

Digital shelf edge

screens for

promotion

and pricing


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Additionally, interactive screens have animportant hidden benet they track everytouch, silently building data proles about

customer interaction and providing realtimeeedback reports just like Adwords.suchdata is retail gold.

Instant expertise everywhere

Thanks to online pre-shopping research,theres a good chance a customer knowsmore about a product than your store people- a Motorola ound that 55% o store stathought so. Tablets loaded with the rightinteractive inormation and videos can beused to guide customers through complexinormation, providing product comparison

and demonstrations that would be impracticalotherwise. Reliance on sta knowledge isreduced and the selling process is bettermanaged. Accessing instant knowledgemeans that sales sta can de deployed acrossdepartments. Additionally, i the product is notin stock, the tablet can be used to place andorder and even receive payment on the spot,reducing the chance o a lost sale. Nearly25% o surveyed shoppers said they wouldbe very likely to take advantage o a salesassociate using a handheld payment terminalto complete their purchase, compared to only

9% who would be very likely to use their ownmobile phone to scan their items and processpayment without assistance. When shoppersreceived guidance rom a sta-member armedwith a tablet, 43% reported an improvedshopping experience.

What will the new digital store look like?

Digital merchandising has the potential toprooundly alter the ormat and the unction othe store. I product ranges can be browsed

on a screen, i augmented reality meanscustomers can try on a range o colourswithout changing the garment then why holdall that stock, and why rent all that space? Iselling displays are activated when a customertouches a product, i customers can learneverything there is to know about a product bynavigating a digital display, i they can sel scanand checkout and i ecommerce-level ullmenteciencies mean the purchase can be homedelivered the next or even the same daywhyhave all those sta?

Given that a Cisco study ound that 71% o

shoppers want to access digital content in-store, and retailer touchscreens and shoppermobile devices are the preerred options,integrating these technologies is not likely tomake a retailer unpopular.

Borsheims jewellery; staff trigger displays that match

what a customer is looking at.

Monetising retail screen networks icing on the cake?

Digital signage networks are yet to be ully accepted as a commercial medium

eg unded by the sale o advertising airtime to suppliers, although it is happening

slowly. For retailers the idea is attractive brands pay to reach their shoppers

close to decision-time. Its a great way to monitise the retailers store trafc; in the

US a hit TV show may draw 20 million viewers. Walmart, in contrast, aggregates

150 million customers every week. However, generally brands have beenslow to take up the medium or a range o reasons, amongst them: practical

challenges o dierent ad ormat requirements on dierent screen networks;

lack o understanding and acceptance by media buyers; and reticence to alter

the terms o trade already in place between the retailer and its brands. This is

changing and big FMCG businesses including Procter & Gamble now allocate

signifcant budget to in-store media in the US and networks like Walmarts earn

signifcant revenues rom suppliers advertising on its screens.

At the niche end there are also successes. Lord & Taylor the oldest upscale

department store chain in the US, has been successul in selling airtime to its

brands including Chanel and Dolce & Gabbana. Said Daniel Ponti who runs the

program, We rent screens (airtime) monthly or weekly, and they have more than

doubled their net worth in less than six months.


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2. Mobile all the worlds stores rightin your handand nearly as many

applications

Mobiles are anticipated to infuence 1 inevery 5 retail sales by 2016. Smartphonepenetration in Australia is nearing 60%.Mobiles are big news or in-store interactivewith retail apps, comparative shopping sites,price-nding sites, geolocation marketing,barcode scanning all here to stay. Our girlsare on the phones 24/7 and we should be,too. Said ashion chain Sportsgirl groupsstrategic brand manager, Prue Thomas.

Shoppers are using their smartphones tomake in-store experiences even better andsmart retailers are helping them in all sortso ways. Mobile usage trends indicate thattodays consumers are more likely to usesmartphones, tablets, and mobile shoppingapps to enhance all acets o the shoppingexperience online and o by gatheringinormation about products, conducting pricecomparisons, social shopping with riends,and more. They provide instant access tothe shopper, and a medium or the retailer to

deliver tailored promotional messages directly.Some use apps to drive in-store trac usingreal world redemption mechanics.

Mobiles represent considerable challengesas well as opportunities or traditionalretailers. Shopping apps usually incorporateM-Commerce; shopping directly rom mobiledevices is growing rapidly although it still lagsway behind ecommerce, despite increasingmobile trac. To put mobile usage intoperspective just 20 percent o the average

American users time on a smartphone ortablet is spent on the mobile Web. Instead,

gaming apps predominate, ollowed byFacebook, according to Flurry Analytics. Just8% is spent on Utility including shopping.

In the US, the trend o using mobiles in thestore is well established and signicant.Nielsen ound 63% o mobile shoppers havecompared prices with their smartphone whileshopping in-store or on their home computer.Owning a tablet also makes it more likely youlluse it or product research beore makinga purchase (68%), and or reading onlinereviews (53%).

Barcode scanning

Mobile barcode scanning apps have seeing

Just whilst our Australian retailers who have

been pretty abysmal in e-commerce - are

starting to invest gazillions o dollars into this

stu guess what? The internet or the web aint

really that relevant anymore. Because i you

walk out on the street the world is

re-platorming again on to smartphones.

Peter Williams, Deloitte Digital

this 60 year old technology is making its wayback into the limelight; according to ScanLie,mobile barcode scanning was up 700% in 2010.QR codes are a specialized version o a barcode intended to be scanned by the camera ona mobile phone, providing a ast and easy wayto transer inormation. The phone uses a readerapplication to recognize the QR code and convertit to a small amount o data (i.e. the payload),most commonly a URL pointing to a mobile webpage containing a link to a shopping app, detailedinormation about the product, its provenance,applications, variants, complimentary products

and product reviews.


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Barcode scanning apps are also being usedto retrieve discounts or coupons and entercontests. For example, Nine West ran acampaign that allowed customers to scan 2-Dbar codes appearing on in-store signage andproduct packaging. I the customer texts theimage to a designated phone number, theyare entered into a contest to win apparel andother prizes

It goes without saying that QR codes caneasily be added to digital signage content,making this one o the simplest orms oplatorm convergence available.

Apps and mortar retailing

Apps are big with The Wall Street Journalrecently estimating annual revenue o $25billion and on average 7.9 apps are launched

every day. Shopper apps have gone rombeing retails the next big thing to beingho-hum in a matter o a year or two, somedoing little more than good Mcommerce sites.

They come in various guises and accordingto mobile analytic leader Flurry Analytics,usage is evenly spread around the dierentapproaches:

Flurrys study explored the usage o shoppingapps among more than 1,800 consumers onboth iOS and Android over a year ending inDecember 2012. Its heartening to note thatretailers saw the greatest increase in timespent, rom 15% in 2011 to 27% in 2012 andwhile overall app usage grew by 274%, retailerapps exploded by 525%. As Flurry commentsThis suggests that retailers are beginning to

Creative integration o a QR code

better respond to the tectonic shit created bythe collision o online- meeting ofine-shoppingthrough mobile apps.

According to a recent IBM report, more than18% o shoppers used a smartphone or tabletto access a retailers website on Cyber Mondayin 2012, an increase o 70% over 2011. Mobilemade up 13% o total web-based purchases.

Theres an increasingly standardised approachto many retailers apps: o course the store isat the core (store locator/contact, products,details, prices, wishlist, cart, checkout), andthen come the bells and whistles: sharing,scanning tools, rcoupons, reviews and so on

. Some allow layby, loyalty points check, andorder progress updates. Walmart is testing aeature called Scan & Go that would you scancan items as you shop, so you can go quicklythrough sel-checkout.

Time Spent in Shopping Apps per Category

Growth inTime Spent per Shopping App Category


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Woolworths was amongst the rst majorAustralian retailers to launch an app which

included the ability to scan a productsbarcode, add it to their shopping list, and thenorder and pay or their groceries, which arehome delivered. Since then it has had morethan 1.644 million downloads, according tothe groups corporate aairs manager ClareBuchanan. Predictably Coles was not arbehind, adding recipes, shopping list tools,and integrating QR codes into promotionalmaterial.

Its probably true to say that meaningullyintegrating the in-store experience with

mobile - surely a pre-requisite o true multi-channelling - is rarely achieved, the bestexample perhaps being rewards-orientedShopkick, discussed later. Shopping listapps avoured by supermarkets take anotherapproach there are dozens which allowyou to draw up and share lists, tick them o,create avourites and set regular remindersetc. Mostly they are designed to enhance thestore-based shopping experience.

As well as acilitating mcommerce shopping,there are many apps that help users compareprices you simply scan a barcode (or even

a book or DVD cover) and it delivers the bestonline and local price it can nd. Some linkto reviews and retailer oers, listing nearbystores and allowing listing and sharing.Google has entered the sector with GoogleShopper and in Australia comparison leadersinclude GetPrice and Australian Shopping.Lassoo lets users search current retailcatalogues. Discount department store chainBig Ws mobile app allows users to scan aproduct in any competitors store and get thecomparable price at Big W.

Most local comparison apps lack the same

level o coverage as US sites and thereoreuseulness (unless you want to ordermerchandise online rom the US) but its saeto assume theyll get there. This will be a keybattleront or traditional retailers who willhave to work ever harder to compete. Big Wsapproach is illuminating We are so condentthat you wont nd any stocked item or lessanywhere else that we want our customersto check or themselves with the BIG W Appprice scanner, Director Julie Coates has said.

Geolocation - place-based tools

One o the most powerul assets a traditionalretailer has is stores on the ground.Geolocation technology leverages this

asset, providing new tools to drive trac.Imagine passing by your avourite retailer.

a geotargeted alert is sent to your phone withnews that a hot new collection just arrived.

That prompts you to stop in the store andwhen you arrive, your personal shopperis waiting with your sizes and colours.

Thats the scenario described by eBaysVeronica Katz and its now being useddaily by retailers.

A small gps, bluetooth, audio orwi unit installed in the store cancommunicate with smartphonesin the immediate area which is

called a geo-ence, sending alerts (pushmessages) when users walk near or enter thestore. The idea is to deliver deals tailored tothe potential customers location and possiblypurchase history/tastes. When shoppersdownload an app, theyll choose betweenreceiving push messages or not. Consumerscan opt-in to receiving text messages in avariety o waysat the store, online, via text-message, mobile websites or on Facebook.

Proximity makes mobile messaging locallymeasurable ie store by store and it can evenprovide trac data by tracking the number

and movement patterns o individualhandsets more on that below.

The range is small so it is ideal ormalls, department stores, retail outletsand locations with pass-by-oot trac. Thesmarter apps run in the background on yourphone, meaning you dont need to open itat the right times or it to work it and it wontwear down your phone battery by constantlyrunning GPS.

The latest version o Walmarts shoppingapp includes an in-store mode, a

key eature aimed at keeping Walmartshoppers buying rom Walmart, even whenwhat they want isnt in the store and a rivaloutlet is just a ew taps away in the palmo their hands. Two weeks ater Walmartlaunched in-store mode with its app,roughly 60% o its shoppers opted to useit. Moreover, about 12% o the sales thatcome through the app are coming romcustomers who are inside a store andusing in-store mode.

In 2010 retailers American Eagle Outttersand REI participated in a pilot program by

geolocation app provider ShopAlerts thatproduced astonishingly high results: 65% oshoppers that received a text message endedup purchasing a product. 60% o participantsound the messages to be innovative, 79%


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said it increased their likelihood to visit astore and 73% would denitely or probably

use the service in the uture (as reported onTechcrunch).

News Ltds Australian consumer reviewwebsite TrueLocal app alerts shopperswhen they are near a location that they areinterested in or when the brand is oeringsales and specials.

Check-in apps

Some geolocation services let users check

in when they stop at a store, bar, restaurant,park, event place or supermarket. Some allowusers to connect with riends and alert themo their location.

Checkin apps use geo-specics to allowretailers to reward people or visiting theirstores. The rewards are the usual benets osocial media: Fun, Fame or Fortune.

Foursquare hit it big when it pioneered thegamication o loyalty by creating rewardsand notoriety or regular customers oparticipating businesses it claims to have

more than 10 million users with over threemillion check-ins taking place every day. ThenFacebook came out with a check-in system otheir own, as did Google and others includingPepsi! As the novelty seems to be over,Foursquare is moving its ocus to a suppliero place data, leveraging its place databaseo over 50 mil lion points. Nonethless itsrumoured to be in trouble.

Enter Shopkick with 4 million users in the USso ar and ranked the ourth top shoppingapp by Nielsen in June 2012. Ultrasonictransmitters installed in a shop identiy users

ie it does not require the user to activelycheck in but the ShopKick app, running in thebackground o their smartphone, providesrewards just or being there and alerts themto special deals. Shopkick is one o themost used shopping apps, with the averagecustomer spending three hours per monthwith the app.

Still new entrants introduce new models Shopular drew 250,000 downloads in threeweeks ollowing launch last year, and wasinstantly the top shopping app on the Androidplatorm. It integrates coupons in a new way.

Although geo-location and hyperlocalmarketing are important trends, shoppers

should not expect all o their avourite brandsto suddenly send alerts as they walk throughtown, even in the US. According to ForresterResearch the perect model is still elusive andlocation-based ads represent a tiny percentageo mobile marketing expenditure. Its stillnascent, but it has a lot o potential, Julie

Ask mobile analyst at Forrester said. Beingcontextual and personal is the holy grail omobile, and location is one o those aspects.But the mechanics o how this is going to workand how eective its going to be get a bitmurky.

One last thing on apps beore you rush o to

commission yours, remember you have to getpeople to download it! It may not be enoughsimply to create a unctional, compelling,useul app; Adobe research ound that brandlikability is a key actor in driving downloads,with some 60% o consumers claiming theyonly download apps rom their avourite stores.

E-commerce and brick-and-mortar will continue to

meld together, and user location will be central to it.

Commerce is commerce, and your location is the same

whether youre online or ofine. Location will be key to

determining i a consumer will be directed to buy rom

your e-commerce site or your local brick-and-mortar

store. There may be more cross-branding between real-

world stores based on location.

Rob Friedman, Digital Element


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bundle on Samsungs Galaxy S phone, IPhonedoesnt have NFC, though Samsung, Androidand HTC devices do. Some experts saycontactless payments wont take o here until

the iPhone one o Australias most popularphones ships with NFC capabilities.

The inancy o the sector can be gauged by theact that Coles is trialling a Coles MasterCardMobile Wallet in conjunction with GE Capital

Australia, Vodaone, MasterCard and Gemalto. among a sample group o just 60shoppers.

Westpac research showed one in veAustralians want more banking applications ontheir smartphones and the banks have beenbusy with payment app development however

issues remain to be solved. CommonwealthBanks Kaching app - because the iPhonehas no NFC - required customers to buy aspecial case the allows the app to work, andeven then only on PayPass PoS terminals.However, Commbank also oers Bump whichallows people to pay each other by bumpingphones and mid last year announced awhole ecosystem called Pi which uses itsown contactless, wireless PoS terminal,quaintly called Albert which allows shoppersto make credit/debit card payments viaswipe, NFC, and PIN transaction. Combining

the unctionality o etpos terminals with theeatures o smartphones, it pitches the bankdirectly against EFTPOS. Merchant apps will bedeveloped on the Pi sotware developmentramework and hosted in a CommBank appstore and youll have to be a Commonwealthcustomer to use it.

Guess that counts out Harvey Norman!

3. New payment platorms

Perhaps less sexy at present than some othe other technologies discussed here, NearField Communications (NFC) oers orderingand payment technologies which allowcustomers to sel-order and checkout. In

Australia, contactless credit card paymentsare becoming common (mostly MastercardsPayPass), speeding the checkout process,but the technology has the ability torevolutionise point-o-sale systems wellbeyond this point. Products like Google Walletlet consumers store their bank, loyalty andother cards on their mobile phone which theycan use at NFC checkouts to pay, transerunds and accrue loyalty rewards; based onprior ordering history add-on sales may besuggested and relevant promotional oersdelivered. As Jon Bird o Ideaworks put it now my 16 year-old daughter can accept acredit card as payment or babysitting duties

There are some very impressive NFC relatedpayment ecosystems emerging in the USeg Square whose tiny Card Reader plugsinto the headphone jack o an iPhone, iPad,or Android device and allows or credit card

payments through Square apps. Squarecharges a rate o 2.75% per swipe. Squarestechnology had been adopted by over twomillion individuals and businesses in the US.

In Australia the complexity o designingan entirely new payment ecosystem hasseen slow progress. In the mix are banks,the EFTPOS organisation, the credit cardcompanies VISA and Mastercard, regulatorssuch as APRA and IT companies Appleand Google. Etpos chie executive BruceManseld says it is working on new paymentplatorms or the Australian market, including

a mobile widget that will be designed as aunding source within a third partys wallet.

Hardware platorms are still patchy and ewconsumers have access to NFC: Visa plans to

Square

Commbanks

Albert terminal

and Kaching app


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4. The utureoops, its here

Augmented reality

Last year Google teased us with Project Glass,those uturistic glasses that overlay the userseld o vision with digital images. Known as

Augmented Reality (AR), this technology playswith the digital superimposed on the realworld. Complicated at the back end and stillin its early stages, its retail applications arebecoming evident as is its potential impact:the value o the global Augmented Realitymarket was approximately $40 million in 2011and Juniper Research is estimating the marketwill hit about $15 billion by 2015.

One o the most obvious retail applicationsis the virtual changing room which has beenused to allow people to virtually try on glasses,

jewellery and ashion. Shoppers stand in ronto a camera-equipped touchscreen in the store(or indeed their computer at home!) and selectmerchandise images that are superimposedintelligently on their image. Body-mappingtechnology is being used in US departmentstores like Bloomingdales - 3D scanningmachines identiy your proportions and spitout a list o items that will t and where to get

them. Its not a perect world but you get asense o how something ts and looks, saysThe Iconics IT head Eben Miller.

Other examples o AR being used in retailinclude a Japanese app that allowedcustomers to virtually catch butterfies thatappear only in certain retail premises. Whenthey do, they collect and use them to earncoupons.

Lego, meanwhile, has introduced augmentedreality displays to its own-brand stores, whichenable customers to hold a product box up

to a screen to activate an animation that revealswhat the model looks like when built. Legodirector Bernd Larsen Linde says that customerswho engage with them are spending between20-40% more than customers who dont. Ikearecently announced the launch o an augmentedreality catalogues or 2013 which allow yoursmartphone to see inside the urniture on thepages. Closer to home, Coopers applied ARto an FMCG instant win promotional conceptby branding cases o Coopers Clear with ARcodes. By scanning the code with their phone,buyers were able to view prizes in 3D. Theapp was downloaded in excess o 2,000 timesand Coopers received over 7,000 entries rom

it. CommBank uses AR in their property appwhich has achieved over 100,000 downloadsencouraged by AR print advertisements whichtrigger 3D animations o a virtual town toillustrated the eatures o the app including useaugmented reality to search or properties at theusers current location to get a real world view o aprospective home.

A ascinating use o AR is virtual stores which ocourse compared to bricks and mortar storescost almost nothing to create. Airwalk shoescreated what it called Invisible PopUp Stores which saw shoppers

being able to access product ina virtual store geo-enced aroundspecic locations: http://www.youtube.com/watch?v=4erNe_NpdyE

In South Korea, Tescos HomePluschain there has been testing icommuters will shop virtually onthe way home rom work via QRcodes in a subway station, wherescanned items are then delivered to commutershomes. Virtual stores have shown their potentialto the extent that Chinese company Yihaodianreported it has secured government approvalto open 1,000 augmented reality supermarkets.How long beore we see a virtual mall?

As well as potentially changing the very natureo stores, AR also poses more dangers ortraditional stores in the next couple o years,customers will be able to try on clothes andproducts at home smelling, hearing and eelingthe abric as i it were real. AR provider HolitionsLynne Murray calls AR clothing the holy grail oaugmented retail experiences. We are pursuingactive ways in which the other senses can be

integrated into augmented spaces, whetherthat be touch or sound, Murray says, werelooking at how to include haptic interaces to ourexperiences to allow us to communicate multiplesensory experiences.

A virtual store


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Customer recognition and MovementTracking

Big brother is here to serve you! Intel

partnered recently with Procter & Gamble

to integrate acial recognition into digital

signage placed at the end o store aisles.

When a customer is within 10 eet o

one o these signs, it reacts by gathering

metrics such as the persons gender and

age, then trigger messages with relevant.

A startup called Facedeals uses Facebook

photos to recognise individuals: shoppers

access the Facedeals app through their

Facebook account, then acial recognition

cameras installed at the store recognizetheir ace and check them in at the

location. This data is then used to identiy

the shopper and deliver customised oers

based on their Like history.

Since only about 20-30% o shoppers

actually buy rom a store, Indoor Position

System (IPS) have been developed to

allow retailers to track the rest o the trafc

to see how they behave. Generally small

inexpensive sensor nodes are installed in

the store simply by connecting power and

internet. IPSs, some o which integrate

geolocation push technologies, monitorcustomer movements using a couple o

dierent approaches:

WiFi location: IPS allows pinpoint tracking

o any Wi-Fi-enabled device, such as a

smartphone or tablet, within a building. The

sensors capture the unique identifcation

number o each device (similar to a

computers IP address) and track its

movement throughout the stores.

Bluetooth: Very precise location can be

achieved in a specifc area, such as inside

a retail store, using beacons that sendout signals via Bluetooth. The beacons,

smaller than a cellphone, are placed

every ew meters and can communicate

with any mobile device equipped with

Bluetooth 4.0, the newest version o the

standard. Bluetooth is also an excellent

way to deliver content and once customers

have opted in, they are recognised and

welcomed on subsequent visits - the

technology knows to deliver them a new

oer that theyve never received beore no

matter how recently they visited the store.

It should be noted that IPSs are attractingadverse attention rom privacy advocates.

It is important to collect this mobile

commerce data, without overstepping

boundaries that would lead consumers to

eel that their trust has been abused.

I all this sounds experimental and o

no concern to todays pragmatically

ocused retailer, think again. Much o this

technology has been around or a ew

years now and smart retailers have been

working hard or to get their solutions right,

knowing that retailers will soon become as

much defned by solution as by physical

presence.

TAKING PRACTICAL STEPS

TOWARDS INNOVATION

How on earth can a busy retailer deal with all

this new technology that not only moves at

breathtaking speed, it also cuts right across

dierent department disciplines?

The short answer is hasten slowly. The

wrong way is to start calling in vendors to

make presentations to see whats out there;

youll simply get conused, wasting a lot

o your time and theirs. And please dont

add to the enormous pile o badly planned,

poorly executed, inadequately assessed,

underunded and unloved pilots that wesee every year theres no better way to

In Australia you have the number one market o

individuals who can absorb technology in the world.

The number one app downloaders per capita are right

here, number one users o video online - right here and

number one users o online banking are here. But we just

do not see that happening in the retail space.

Peter Williams, Deloitte Digital


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turn your organisation o the whole idea o

applying new technologies.

The right way is to take a careully managed,

strategic approach. I you dont have a multi-

disciplinary team with broad knowledge o

the various technologies, experience with a

range o vendors and time o their hands,

its advisable to bring in external expertise to

help you get to the right starting line.

Over several years, several pilots and many

non-starts.

Connected Store has developed a staged

planning methodology which works through

structured process, each stage with defnedobjectives and outcomes. Bridging the

marketing, retail and technology dimensions,

the process is designed to provide all the

inormation necessary to engage with

vendors in a meaningul way that minimise

risks and maximises organisational and

strategic alignment necessary to ensure the

successul implementation o new initiatives.

For more information contact

[email protected]

0417 371 071

Connectedstore.com.au

About Mark Schroeder

Mark has spent 30 years in communications and

marketing, including 11 years at the head o one

o Australias biggest specialist retail advertising

agencies where he worked with several top

national retail chains. For 6 years he hasspecialised in customer-acing technologies as

CEO o Playcom, working with clients including

Grand Hyatt, Chemist Warehouse, Movenpick/

Nestle, Specialty Fashion Group, Merivale, Jones

The Grocer and many others, deploying a wide

range o technologies across hundreds o sites.

He also runs Swordfsh Marketing and

Advertising and blogs about marketing-related

ethics and sustainability at marketingheart.

wordpress.com

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