How Digital Technologies Have Changed The Retail Store

Lily Varon

One of my first jobs was as a sales associate at a clothing store, after which mall shopping lost any of the leisurely appeal it once held. I still find myself folding clothes I didn't unfurl and fixing hanger hooks to all face the same direction. Chalk it up to knowing how the sausage is made, or perhaps a logical side effect of working in eCommerce research, but I do most of my shopping online these days.

The store shopping experience hasn’t changed much since my time as a sales associate. But that’s all about to change. We’re at the beginning of a retail transformation: The growing percentage of retail revenues driven by eCommerce and the influence of digital technologies on consumer behavior and expectations alike means that retailers are being forced to reevaluate the value proposition of the store. The result? A digitally enhanced retail store.

Today, a mix of technologies are coming together to marry the online and offline experiences to revolutionize in-store shopping and the role of the physical store. However, we’re still in early stages. Many of these initiatives remain in experimental phases, and glaring success stories are few and far between. Despite the rarity of iron-clad business cases for these initiatives, eBusiness professionals and their colleagues in store operations are forging ahead.

Together with eCommerce technology analyst Adam Silverman, I recently published a report laying out the current state of digital store initiatives and the promising opportunities a digital store overhaul represents for retail. Some of the ways retailers are transforming retail stores include:

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A New Generation of Clienteling

Adam Silverman

As we ramp up our coverage of the digital store, we recently researched the role of retail sales associates to understand their impact in the age of the customer. There’s no doubt that technology has dramatically impacted the way in which consumers discover, explore, buy, and engage with brands, products, and services. However, the impact of technology on sales associates is unclear, as is the degree to which the role of the sales associate needs to evolve to leverage these new capabilities.

In the new report A New Generation Of Clienteling, we tackle the role of sales associates and their use of technology in the digital store. In the report, we note a number of trends, including the following:

  • The role of the associate will change from an information provider to a facilitator of engagement. The sales associate is no longer the sole provider of information in stores: Customers can now find product information via their mobile device without the help of an associate. This scenario provides an opportunity for the sales associate to pivot and drive increased engagement with the customer.
  • Digitally connected sales associates are trusted. Less than a quarter of US online adult today state that sales associates are the best source for product information. However, when armed with mobile devices, the associate is seen as a trusted advisor. The breadth of information available to sales associates via mobile devices allows them to consider a broader array of information when making product recommendations to customers in the store. 
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A Bumpy Ride For Retailers At Shop.Org

Adam Silverman

Last week I was thrilled to attend and present at the annual Shop.org event in the great city of Chicago.  I attended many great presentations, talked at length with the vendor community, and broke bread with some of my old eComm friends.  One observation that was more apparent to me this year is the massive transformation happening in retail.  It feels more dynamic than it did at the peak of the dot com boom of the late 90’s. For me there were clear trends emerging:

  • There is a palpable divide between forward looking retailers and those stuck in second gear.   Going after incremental improvements such as checkout funnel analysis and improving page load speeds are still important functions, but these are now table stakes that most digital businesses employ. Forward looking retailers go beyond site optimization and look at advanced analytics, leverage social graph data to better understand their customers, and employ mobile strategies that add contextual relevance rather than simply emulate the website.
  • Omnichannel is the hottest topic, but it means different things to different people.  The reality is most retailers fail to understand the complexity around creating a seamless experience for customers, and often fall back on defining their omnichannel initiatives as simply creating a singular presentation across all touch points. For organizations to truly support the needs of the customer, they need to focus on aligning supply chain, fulfillment, customer service, and operations around the specific needs of the customer. For instance, enabling the store associate to engage digitally-savvy customers requires new training, new technologies that facilitate assisted selling,  and new compensation paradigms that reward the associate for driving sales in any touch point.
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The ROI of Agile Commerce

Martin Gill

Its been a labor of love, but its finally here. Yes, I’ve actually published The ROI Of Agile Commerce.

 

One of the most common themes we hear from firms looking to invest in pushing their digital agenda forwards is “show me the money.” It's not that eBusiness professionals don’t believe us when we say that investing in a customer-centric, flexible future vision is a good thing. In fact, most of the time they are absolutely on board and nod sagely, frowning while we describe this bright and shiny vision. They then scratch their heads and ask that trickiest of questions, “how?”

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Omnichannel Execution Missteps Can Cause More Harm Than Good

Adam Silverman

A few weeks ago I visited a new prototype store from a major U.S. retailer in order to learn more about their omnichannel strategy. Expecting a customer-centric experience that seamlessly connects the digital and physical stores, I was disappointed to see what appeared to be a misguided omnichannel deployment, with an experience that was actually inferior to one without enhanced technology. Here’s why:

  • New layout but broken technology.  Upon entering the store, I noticed a different layout with a lounge area on the right and an inoperable digital kiosk staring right at me. While the layout did appear to be more welcoming, the dark interactive display indicated a lack of commitment to execution
  • No in-store inventory or location-based awareness.  I found a smaller kiosk near the front of the store and searched for an item online.  I chose the 'pick up in store' feature, expecting the kiosk to recognize I'm already in the store and show what's in stock. Instead, this retailer decided to fulfill the order from their distribution center rather than direct me a few feet away to their colorful display showcasing the item. There was no in-store inventory information or any type of store mapping application within the kiosk.
  • Kiosks do not provide utility.  Another department also had a kiosk, but only provided the ability to find and buy the product online. Again I was expecting the retailer to recommend the appropriate product based upon my specific needs, and show me that the product I need is just a few aisles away.
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How to be a Digital Commando

Martin Gill

These poor, cold fellows stand few miles from my parent’s house in the Highlands of Scotland.

They commemorate the founding of the Royal Marine Commandos in 1942, and these windswept, bronze statues (almost as cold as the poor trainees were at the time) overlook the glens and lochs where the original commandos trained.

So what’s significant about the commandos in the context of eBusiness? Well, it isn’t that they were uber-cool special forces dudes. It isn’t even that they were pioneers of irregular warfare (i.e. innovators). The concept of Commandos pre-dated World War 2. In fact, in commanding the foundation of the commando units, Sir Winston Churchill took inspiration from his experiences in the Boer War and looked to the raiding tactics of the Boers for a model. So it's not even like us Brits invented the term.

What’s important about the commandos is that they were cross-functional. They were expert at collaborating across organizational boundaries. And in this they were pioneers.

Traditionally, the Army, Royal Navy and RAF were silos. Massive, traditional, centuries old silos who went further than just having incompatible processes and disjointed command structures. In many cases there was outright rivalry between service arms of the kind that would be intolerable in business. Troops fighting in bars. Intelligence actively hoarded by officers. Functional rivalry like nothing you have to deal with in eBusiness (hopefully).

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What's your in-store digital strategy?

Martin Gill

At the start of the year, I published a piece of research looking at the major trends we predicted would hit Europe this year. One of the themes I called out was building on Peter Sheldon’s excellent research around The Digitization Of The In-Store Environment; as I put it in European Online Retail: Five Trends To Watch In 2013:“The web and the store will cuddle up.”

We’ve seen significant investment from US retailers in this space. Lowes, Home Depot, Nordstrom, and others have all been spending heavily on developing the underlying infrastructures that they can then leverage to create in-store digital experiences. Store Wi-Fi, associate devices like tablets or smartphones, kiosk technology, and even more emerging technologies like ePaper signage and electronic shelf-edge labels are on some agendas. Even Amtrak is getting in on the act with its eTicketing initiative.

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Why you shouldn’t rush out and hire a CDO

Martin Gill

Chief Digital Officer (or CDO) is the latest in a long line of snazzy C-level titles to emerge over the last few years. At Forrester we’ve been watching this trend for a while now and have made a few comments, but I think it’s time to put a firm stake in the ground.

 
Don’t hire a Chief Digital Officer!
 
There. I said it.
 
Now, why might I say this when a number of high profile firms are in fact hiring CDOs? Well, to put things in perspective I want to look at a tale of three brands, all of which I’ve spoken about in the past:
        
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Luxury Retailers: Wake Up! The Internet is Here to Stay...

Martin Gill

The following picture might be a little harsh...

...but I’ve spoken to a number of eBusiness executives in luxury retail companies over the last 12 months or so, and by and large they share a similar frustration. For the most part, their senior management remain resolutely defiant in the face of the opportunity that digital brings.

Which is arrogantly short-sighted, when you consider that luxury shoppers are:

  • Young. Shoppers who buy luxury products online in the US are almost ten years younger on average than regular online shoppers. Globally, online luxury shoppers are more likely to be tech-savvy thirty-somethings rather than brandy-swilling boardroom bumblers.
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An NRF Retrospective

Peter Sheldon

As the annual retail pilgrimage to the Jacob Javits Center draws to a close, I started wondering if anything has changed since last year. As I met with Forrester’s retail clients during the show, it was clear that this is no longer just a brick-and-mortar show. The retailers I met with had all sent a delegation of cross-functional executives, including the CIO, COO, CMO, SVP of eCommerce, and head of store operations. These leaders are no longer working in organizational silos: they know that they need to find technology solutions that meet the needs of today’s digitally connected customer, not the needs of their legacy channel-centric business units. I was impressed at the way these retailers are embracing and executing on agile commerce.

On the expo floor, the same theme was abundantly clear. NRF has evolved to become a retail commerce show, not just a retail technology show. Joining the incumbent store systems and POS vendors were all the enterprise eCommerce solution providers, order management vendors, system integration firms, and digital agencies. Whereas last year was all about mobile, with hastily developed prototypes and lots of vaporware, this year the expo floor was a place more grounded in reality. Strategic relationships were abundant, with vendors realizing that customers are demanding integrated solution suites that go far beyond the scope of their own product portfolio. As I did my rounds of expo floor booth visits, executive briefings, and product demos, here’s what I found:

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