We’ve all been told time again that the in-store shopping experience is undergoing seismic change. Technologies such as beacons, omnichannel fulfillment and in-store analytics have promised to change the definition of how a retail store engages with customers. And although iron-clad digital store success stories are few and far between, stores will continue to chase the digital store dream despite not knowing the precise endgame. A handful of market leaders are implementing digital store initiatives that will act as lighthouses to the rest of the industry, showing a glimpse of what's possible with the right strategy.
In 2016, Forrester believes that:
Digital operational improvements will emerge as the golden child of store digitization. Trying to engage shoppers with shiny new technologies makes for some pretty flashy headlines, but does little to boost the retailer’s bottom line. On the other hand, store operations-focused technologies have shown early, but real, results. Tools such as in-store analytics and associate task management are ushering in a new era of store efficiency, using real-time insights to help associates understand what needs to get done and when. The smartest retailers will start combining data from sources like online behavior, in-store analytics, supply chain, and labor planning to make operational decisions in real time.
At Forrester's Digital Business Forum in Chicago today, we announced the launch of our brand new Digital Store Playbook. This playbook provides a structured framework to guide eBusiness professionals through digital store transformation – from creating a digital transformation vision to developing a digital store business case.
As part of a much broader and highly digitally-influenced customer shopping journey, brick and mortar shopping is increasingly becoming a digitally enhanced experience. Retail stores that use digital technology to drive convenience, service and relevant personalized experiences for customers will succeed, while those who fail to make smart investments in technology that enhances the in-store experience risk losing market share to more customer-centric competitors. As such, it is imperative that retail eBusiness executives have the appropriate tools, knowledge, and cross-role alignment to operate a digital store platform that not only unlocks new sources of value for customers but also increases operational agility in service of customers. We crafted this playbook to address key elements of digital store success. The Digital Store Playbook will help you:
Discoverthe far-reaching impact of store digitization. Forrester’s Digital Store Playbook introduces the value of using digital technology to enhance the in-store experience for customers and associates alike. Along with outlining the benefits, we discuss the costs associated with digital store transformation.
As far as digital store initiatives go, iron-clad success stories are notoriously hard to come by. Mobile point-of-service (mPOS) is one of the few digital store technologies that has garnered the attention and investment dollars of retail executives—but the return on investment has been nonetheless elusive. Despite large-scale deployments by a number of leading players (including Nordstrom, Urban Outfitters, and Bloomingdales, among others), key questions such as “will this drive incremental revenue?” and “which use cases deliver the most customer and retailer value?” remain. Our newly published report “The Business Case For mPOS Is Associate Enablement” answers these questions and addresses common opportunities and challenges for eBusiness leaders rolling out an mPOS program. In the report, we find that:
Consumers expect digitally-enabled associates to facilitate in-store engagement. Retailers must change their thinking and start to view mPOS as more than just a “mobile cash register.” When shoppers see a store associate armed with a mobile device, they expect to receive contextualized assistance when and where they want it. In addition to ringing up sales in aisle, your associates should be prepared to use their devices to access enterprise inventory, provide product information, and give personalized product recommendations.
Omnichannel initiatives have dominated eBusiness priority lists for a few years now, and leading retailers have been doubling down their investments in omnichannel fulfillment technology. Most of the focus, however, has gone toward store fulfillment of online orders and click-and-collect functionality. Why did these capabilities rise to the top? Because of their clear financial impact on the business, as well as minimal impact on store and associate processes.
But considering that roughly nine out of ten retail sales still take place offline, a much larger opportunity exists when retailers leverage inventory while the customer is shopping within a store. By offering the ability to fulfill out-of-stock items from any location within the enterprise, endless aisle tools offer a scalable tactic for retailers to drive incremental revenue. Today's endless aisle programs allow retailers to:
Meet customer expectations. Consumers expect the conveniences of eCommerce—including virtually unlimited inventory and assortment—regardless of whether they’re shopping online or in the physical store. Forrester data shows that in the event that an item is out of stock, over half of US online adults would opt to have a store associate order the item for them if they could get it shipped for free. Offering endless aisle capabilities means never having to say you’re sorry to customers looking to buy your products.
The in-store shopping experience is increasingly being transformed into a digitally enhanced experience for both the customer and retailer. Technologies such as beacons, retail store analytics, and store fulfillment programs are rapidly changing the definition of how a retail store operates and engages with customers. While 68% of customers use a mobile device while in a store, retailers are just beginning to take an active role in that in-store digital experience.
Forrester believes that, in the future, retail stores that drive convenience, service, and relevant personalized experiences through the use of digital store technology will succeed. Why? Because today. customers show an affinity for digital store technology. In fact, 66% of luxury apparel customers are more likely to shop with a digitally-enabled associate. Those retailers who wait on the sidelines are at risk of maintaining the status quo and may only grow marginally.
As we enter the 2014 holiday season, retail news outlets are latching on to dramatic headlines highlighting the risk of showrooming - the act of checking prices on a mobile device in a store and then purchasing at another retailer. Yes it’s true; customers use their mobile phones to compare prices in-stores. However the behavior of shopping multiple stores to find the lowest price is nothing new. My grandmother often "showroomed" a bag of peanuts at the farmers market just to save a few cents. I suspect this behavior has been occurring as long as humans have been bartering goods.
While the behavior is not new, mobile phones have enabled customers to compare prices immediately across a vast set of digital retailers. As mobile phones afford customers greater choice in-aisle, showrooming has instilled fear in legacy retail organizations who quickly realized they no longer completely control the experience in their stores. At first, retailers responded with force by removing Wi-Fi, which in a world with rich cellular connectivity did little to curb showrooming behavior. Today retailers are reacting to showrooming by providing margin-eroding offers in-aisle. In the future, advanced retailers will begin to embrace showrooming, using the signals from price-checking on mobile phones (either by observing behavior or using retail store analytics) to offer greater convenience and rich experiences at the customer’s moment of need.
In the Age of the Customer, consumers are increasingly empowered. They decide where, when, and how they engage with organizations as they shop. European consumers are using multiple devices along their path to purchase and almost a quarter are buying online from outside their home market. This is a growth opportunity for retailers in larger eCommerce markets where online retail sales growth is slowing. These cross border buyers are a valuable target group and more likely to use mobile devices as they shop.
Yet researching and buying across multiple devices and touchpoints is not restricted to those that are happy to buy online from other countries. Across the board, consumers are using smartphones and tablets more frequently and across multiple contexts. Forrester’s updated mobile and tablet commerce forecast predicts that mobile and tablet commerce combined will account for 20% of online sales in 2014 increasing to 49% of online sales by 2018.
Mobile phones, smartphones in particular, bridge the gap between digital and physical shopping experiences. In 2015, European consumers’ increasingly multitouchpoint shopping behavior will heighten eBusiness professionals’ attention on the influence of digital across the customer journey and into stores.
Forrester believes that, for Europe, 2015 will be a year of experimentation. We predict that:
What lies ahead for the retail store? Yesterday, Forrester published a report that predicts the answers to key questions about the future of the retail store: Which digital technologies currently on the periphery of the store environment will make the leap to the sales floor? How will retailers know which technologies have potential and which will remain gimmicks?
In the report, we outline the utility and predicted chronology of several technologies, including:
Proximity technologies. Retailers will know when and where an associate is needed, by whom, and for what purpose.
Wearable technologies. Associates will access the relevant data to provide optimum customer service with minimum intrusion.
Facial scanning technologies. Retailers will know their in-store customers’ histories, preferences, intentions, and needs and will cater the store experience to them.
Smart countertops. Retailers will embrace consumers’ propensity to do product research while shopping in-store and enhance the utility and experience at the same time.
3D printing. Retailers will make the inventory they need on-site or once it’s been purchased.
For more on Forrester’s take on the usefulness of these and other technologies, and to see our predictions of when we’ll see them enter the retail store, see the report (client access required).
Which technologies do you think will realistically make it into retail stores of the future?
My dad came over today for a visit today. He’s an avid reader and consumes The New York Times from front to back. I guess you could say he’s part of my research team as he frequently cuts out articles for me related to digital business. This past weekend he brought over the front page of the business section, profiling the use of tablets in the quick serve restaurant category. Although many digital technologies in physical spaces have yet to transform shopping behavior, the restaurant industry has one of the stronger use-cases to employ digital, including:
Improving service by eliminating waiting in line. At Panera, customers go straight to their table and order via their smartphones. No more waiting in line to order, and standing around for your order to be ready.
Increasing average order size and margins with contextual meal recommendations. Chili’s employs tablets that drive up order size by providing meal recommendations that may have a higher price point, higher margin, or is highly rated. In their tests they indicate a 20% lift in dessert sales! Yum.
Expediting service and improving accuracy. Restaurant staff has a lot to gain by employing digital technology. They can reallocate cashiers to kitchen or service roles, and having customers order at the table improves order accuracy.
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: