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:
There is no hotter topic in retail today than beacons. These small objects which transmit location information to smartphones based on Bluetooth Low Energy have transformed our retail imagination, conjuring up visions of continuous offers being showered onto customers as they walk the aisles of their favorite grocery store. The reality is more subdued. We are still very early in the development of location strategies that leverage beacons and the iBeacon protocol, and retailers need to solve for a variety of challenges such as customer privacy, beacon maintenance, connectivity, and campaign management.
Beacons require the right combination of hardware and software. BLE is required as beacons leverage the Bluetooth hardware found on most new smartphones. A mobile app is also required to interface with the beacons, transmitting the location information provided by the beacon to a server, and then receiving the appropriate content back from the server to display on the customer’s mobile device.
Beacons enable rich experiences beyond offers. We all enjoy saving money, and pushing offers to us via beacons will be a popular use case. However it is possible to offer a deeper level of engagement. Based on location, retailers can allow the ability to unlock dressing rooms, authenticate a mobile payment, or provide enhanced service such as preparing your favorite latte as you enter your local coffee shop.
Looking back at 2013, it’s easy to see all of the great innovation occurring within the digital store. Most retailers focused on omnichannel fulfillment, whether it was click-and-collect or ship-from-store. Some retailers like B&Q in the U.K. began to experiment with dynamic pricing in-store. If 2013 was about launching new services, 2014 will be about shedding light on the actual performance of these initiatives.
One example of new digital store technology is eBay’s digital storefronts. Last year in June, eBay made a splash by deploying a digital storefront for Kate Spade, allowing customers to browse and buy products from a giant digital screen strategically placed over a vacant physical storefront. This digital storefront replaces the static posters that mall operators use to cover up vacant stores. This past holiday season, eBay expanded the pilot and deployed a series of digital storefronts in a popular San Francisco mall. These new digital storefronts are a few blocks from the Forrester offices, and I capitalized on the close proximity to conduct some research on how the technology was being used and received. eBay launched three digital storefronts: a small format Rebecca Minkoff storefront, a small format TOMS storefront, and a large Sony storefront in front of an escalator exit.
In mid December, I spent two hours observing customer interactions with the digital storefronts (some might even call it lurking). After an informal assessment of almost 500 shoppers who passed by these digital storefronts, I came to the following conclusions:
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.
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.