If I had a dime for every time I heard the question “Isn’t eCommerce taking over retail?”, it wouldn’t make me wealthy, but I’d certainly have a few hundred dollars more than I do now. Nonetheless, it’s a question that is unfortunately misguided and has permeated our zeitgeist. The truth is that yes, eCommerce is growing - but physical retail is far from doomed. Let me take the two parts of that last sentence and address them each separately.
First, the fact that eCommerce is growing. Forrester just released the latest five-year online retail forecast and to no one’s surprise, the numbers are big. We’re projecting $294B in eCommerce sales across 30 retail categories in 2014, expected to grow to $414B by 2018. The web keeps doing what it has always done well: it provides huge assortments of products, at comparable, often lower, prices than physical stores, with 24/7 access and often free shipping. For many categories like media products or electronics, we’ve already observed a heavy shift to the web channel away from physical stores. Add to that the ubiquity of mobile devices and that drives even more shopping in more instances and places. In fact, we’re projecting that $87B of that $294B will happen on phones and tablets in 2014, and that doesn’t even include another $28B in additional mobile transactions on sites and apps like Uber and Domino’s Pizza that aren’t even in that aforementioned mobile commerce number.
But all this growth certainly doesn’t mean that stores are dying. Here’s why:
Since joining Molton Brown, shortly after its purchase by the Kao Corporation, Amy has modernised the brand and business operations, particularly in the areas of eCommerce, eCRM, and other digital marketing programmes. She has also successfully leveraged resources across the Kao organisation to help accelerate Molton Brown’s growth outside of the UK home market, and more recently has been working with the other Kao brands to better leverage digital assets and talent within the Kao organisation in EMEA and the Americas.
In the run-up to the Forum, I caught up with Amy and asked her these questions to uncover some of her messages for the marketing leaders attending our London event. Do join us on May 13-14 to hear Amy's full story!
Europeans spend €5 in-store for every €1 spent online after researching products via digital touchpoints. Digital activities influence a significant proportion of physical store sales. Yet, many eBusiness professionals tend to evaluate their digital efforts in terms of online sales generated and struggle to measure the value of a website and digital activities in terms of the overall influence on the shopper journey.
The key for eBusiness professionals is to recognize the influence that digital has on purchase decisions across the customer lifecycle and keep consumers within their own ecosystem, no matter where the final transaction takes place (in the physical store, on their website or via their mobile app).
But how can you quantify the influence of your digital presence on physical store sales?
For several years we have published the cross channel retail sales forecasts in the US and for the first time Forrester has developed a European version focused on seven European markets: UK, France, Germany, Netherlands, Italy, Spain and Sweden. The forecast projects the growth of cross channel sales - sales that are influenced by the digital touchpoints but where the purchase is completed in a physical store.
A few key takeaways from a European perspective include:
The Infrastructure and Operations (I&O) role is changing significantly: I&O pros are increasingly helping to drive business strategies with the technologies they choose and implement. Business leaders tell Forrester that technology is too important to leave to technology managers alone; they are pushing their I&O colleagues to explore the business value associated with the technologies they choose, implement, and manage. I&O pros, in turn, tell us that their jobs are changing. As one I&O pro put it, “I’ve been an infrastructure manager for 15 years, but only in the past 3 have I been asked to construct a business plan and be part of the business planning team.”
Figure: Burberry's Technology-Powered Flagship Store In London
For I&O pros in retail and related verticals like hospitality (or for anyone involved in creating in-person experiences), we’ve just released a report to help aid this transition. Along with my co-author Michele Pelino, we’ve just released the report “Infrastructure Will Drive The Retail Store Experiences Of The Future.” The report asserts that I&O pros have an important role to play in helping their companies engage shoppers in experiences that will drive loyalty and spending.
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.
IBM recently kicked off its big data market planning for 2014 and released a white paper that discusses how analytics create new business value for end user organizations. The major differences compared with last year’s event:
Organizational change. IBM has assigned a new big data practice leader for China, similar to what it’s done for other new technologies including mobile, social, and cloud. IBM can integrate resources from infrastructure (IBM STG), software (IBM SWG), and services (IBM GBS/GTS) teams, although the team members do not report directly to them.
A new analytics platform powered by Watson technology. The Watson Foundation platform has three new functions. It can be deployed on SoftLayer; it extends IBM’s big data analysis capabilities to social, mobile, and cloud; and it offers enterprises the power and ease of use of Watson analysis.
Measurable benefits from customer insights analysis. Chinese organizations have started to buy into the value of analytics and would like to invest in technology tools to optimize customer insights. AmorePacific, a Hong Kong-based skin care and cosmetics company, is using IBM’s SPSS predictive analytics solution to craft tailored messages to its customers and has improved its response rate by more than 30%. It primarily analyzes point-of-sale data, demographic information from its loyalty program, and market data such as property values in the neighborhoods where customers live.
The prospect of remote collection lockers and click & collect points replacing London Underground ticket offices sparked a round of strikes last week, creating havoc for commuters. The second round of planned strikes was only narrowly averted this week.
Transport for London’s (TFL) proposal to close 240 underground ticket offices and replace them with automatic ticket machines will result in a proportion of job losses for station staff but present an opportunity for TFL and UK retailers alike, by:
Responding to the popularity of click and collect in the UK. Forrester’s Consumer Technographics® Retail Survey data shows that UK shoppers are responding to retailers’ omnichannel fulfillment capabilities, readily adopting click & collect services. UK grocery stores Asda, Waitrose and Tesco are not waiting for the closure of ticket offices. They are already setting up trials for click & collect services at selected stations across the London Underground network. The click and collect service will allow shoppers to order their food online before a cut-off point during the day, for collection at their local station on their way home in the evening.
In my post at this time last year I wrote of the changes we could expect in 2013 around the shift toward digital business. And indeed we did see a significant move toward digital business in 2013 - a transition that’s still very much just beginning.
But 2014 will be different. 2014 is when digital reality begins to sink in for CEOs around the world. And if your CEO doesn't figure out digital business this year, I predict 2015 will be a very challenging year for your organization, no matter what business you are in.
The Retail Conundrum
A recent Wall Street Journal article highlights the challenge of retailers very well. Store footfall is declining as consumers' lives become more digital. We are seeing a steady shift toward shopping online and shopping less often. So how can today’s retailers survive? The simple answer is that many will not. Retail will undergo a seismic shift in the next 10 years. And since retail is a major employer, it's a shift that will impact us all.
Time drives behavior. Digital tools extend the workplace into our private lives, allowing greater productivity while also creating fewer opportunities for large chunks of time to “go shopping.” We are increasingly using digital technologies to optimize how we fill our days for work and pleasure:
• Digital scheduling tools like Google Calendar help us plan our work and play time.
Roughly half of companies on the path to customer experience maturity say that they’re in the repair phase today — and that’s probably a conservative estimate. But there are companies at more advanced stages of CX maturity, including a few in the most advanced phase, differentiate. That’s where firms reframe business challenges in the context of unmet customer needs, connect innovation ideas to their customer experience ecosystem, and infuse innovations with the brand.
We had two speakers at our event who represented companies in the differentiate phase: Dean Marshall, director of Lego brand retail store operations Europe, and Declan Collier, CEO, London City Airport. What is it that their organizations do that’s so different?
Lego stores goes beyond even the typical design best practices used by companies in less advanced (but still pretty advanced!) phases of CX maturity, practices like ethnographic research and co-creation. How? By combining the two.
Infrastructure professionals are now all too familiar with the dynamics of bring-your-own (BYO) technology and devices: Their workers walk into the office with consumer technology all the time. This post is one in a continuing series on how consumer retail stores act as de facto extensions of the IT department in today's BYO world.
The rumors have abounded for more than six months: unconfirmed whispers that Google will open up its own major chain of consumer retail stores. The company has dipped its toes into the retail waters with Chromebook-focused kiosks in the U.S. and the U.K. over the past few years, with installations inside larger retailers like Best Buy, Dixons, and Currys.
A Google Kiosk in the U.K.: Not Yet Reaching Revolutionary Heights
Yet while kiosks – particularly those staffed by Google employees – offer some value in promoting Google’s products and services, the company has a much greater opportunity for late 2013 into 2014. Kiosks aren't going to foment a retail revolution. To quote the popular Star Wars geek meme, "these aren't the droids you're looking for."
No, it's time for Google to think big – to go gangbusters. To do something nobody has done as well previously. Why is this imperative?