Converging Physical And Digital Worlds

Magazine Article | February 17, 2016

By Anne Marie Stephen, CEO and Founder, KWOLIA

March 2016 Innovative Retail Technologies

As the lines between physical and digital retail continue to blur, savvy retailers are implementing ways to provide seamless, any-channel shopping experiences.

As consumers wield ever-increasing power and access to information — with the latest smartphones in their pockets or purses — during the shopping journey, retailers are faced with the challenging task of providing an experience that seamlessly merges bits with bricks and delivers what shoppers want, when they want it.

After a rocky start to some retailers’ foray into this brave new world (many initially kept their online stores completely separate from the brick-and-mortar channel, while other physical retailers blocked Wi-Fi signals and removed product codes from shelves to prevent showrooming, according to an SAP-sponsored report from The Economist Intelligence Unit [EIU]), in 2016 commerce companies are catching up to the idea of providing frictionless experiences because consumers expect a consistent brand experience wherever and however they choose to transact.

The Mobile Game-Changer
been the biggest game-changers in recent retail history, sometimes described as the “third storefront” after brick-and-mortar stores and desktop websites. But retailers are lagging in their mobile efforts. After the initial intense interest in designing native mobile retail apps to immerse customers in their brand (and generate push notifications to keep their brand top-of-mind on a user’s phone), retailers are shifting their resources to creating well-designed mobile websites. According to Internet Retailer, however, just 20 percent of the top 500 mobile retailers have a responsive website that automatically adjusts to the screen size of the device loading its page.

The good news for retailers is that consumers seem to enjoy shopping on their mobile phones. EIU’s global consumer survey found that 51 percent of respondents claim that mobile makes shopping more fun, and 47 percent say that using mobile devices to interact with retailers increases their brand loyalty to those stores.

Despite the strong uptake in mobile shopping behavior, it’s important to note how different demographics use their devices. What’s more, shopping on traditional desktop e-commerce sites is still going strong — for the moment. But with the baby boomer generation (ages 51 to 70) waning and mobile-native millennials (ages 18 to 35) on the rise, retailers that ignore the importance of smartphone shopping in favor of “business as usual” are awaiting a “mobile time bomb,” according to the EIU report. Not only will they miss out on sales placed in the mobile channel but they also may forego transactions in their brick-and-mortar stores that are enabled by mobile.

That’s because millennials are demonstrably more open to using their smartphones to aid their shopping experiences than older demographics, whether they’re at home or on the go. Just 13.4 percent of baby boomers report using their mobile devices to search for deals while out shopping, according to eMarketer, while more than 30 percent of millennials and Gen Xers (born between the early 1960s and early 1980s) report doing the same.

Indeed, there’s some evidence that mobile is working to help and not harm physical stores. Roughly 60 percent of mobile searches are related to the user’s physical location. This could indicate that consumers prefer online merchants with brick-and-mortar locations, NYU brand strategy and digital marketing professor Scott Galloway said in the EIU report.

What Can Tech Do For You?
The options for leading-edge technology in retail are proliferating seemingly by the day. Many efforts, such as Rebecca Minkoff ’s “store of the future,” have been widely hailed as what retail can and should be. The apparel and accessories brand’s flagship in SoHo is built on eBay technology and features digital mirrors that guide shoppers along the purchase journey, enable them to order a beverage, tap and select items they’d like to try on, and then have the items placed in the fitting room. For garments that don’t fit, shoppers can order up, a la Uber, an alternative size right from the digitally-enabled fitting room, and a store associate will bring the new product right to their room. The customer gets a seamless, tech-first experience and elevated customer service while Rebecca Minkoff gleans invaluable data and customer insights.

Hointer provides a digital experience at Macy’s, eliminating the need to carry high stock levels on the sales floor that require shoppers to carry several pieces of merchandise to the fitting room. Rather, a single piece per product is on the sales floor; shoppers use the Macy’s app to scan a product, then the appropriate size garment appears in the fitting room in under 30 seconds.

True Religion Apparel, maker of premium denim products, is leveraging the popularity of the Apple Watch to off er its customers an “endless aisle” experience. The company partnered with Formula 3 to design an Apple Watch app that integrates with Aptos Point of Sale and Enterprise Order Management, an important step toward capturing every possible sale. While True Religion carries myriad colors, washes, and cuts, it offers a localized assortment based on customer demands and wanted to be sure it wasn’t missing out on sales because a desired product wasn’t in stock in a particular location.

John Hazen, vice president, omni-channel commerce & digital innovation, True Religion, says, “We have greater confidence in our inventory and are able to appropriately credit sales for purchases that were placed in one store but fulfilled from inventory in another. Since rollout of Endless Aisle Apple Watch App, in-store customer engagement and conversion rates are higher, and the number of endless aisle transactions has increased significantly.”

Starbucks has developed its own digital and in-store purchase program. On its Q1 2016 earnings call, it reported that the Mobile Order and Pay program currently has about 6 million monthly transactions. This success has prompted Starbucks to add more markets in 2016. The program allows consumers to order ahead via mobile and then pick up their order upon arrival at their store.

Starbucks, Rebecca Minkoff , and True Religion demonstrate best practices in deploying new technology by identifying and prioritizing the customer objective: a seamless, frictionless experience across digital and in-store channels.

Experience Is Everything: Personalization, Contextual Messaging, And Interactivity
Retailers amass enormous amounts of data — but all of that information is meaningless if you can’t make sense of it and convert it into actionable insights. Efforts around personalization are ramping up this year, as retailers acknowledge the need to deliver messages tailored to specific customers and customer groups. However, while 56 percent of retailers would like to deliver cross-channel personalization, just 7 percent currently report having the tech and tools to recognize consumers across devices and channels each and every time, according to Bronto, the email marketing company. And just a third of brands have enough usable data coupled with the capabilities to convert that data into personalized touchpoints.

There is a disconnect between how retailers and consumers view personalization. Nearly a quarter (24 percent) of retailers don’t believe it’s worth the effort, although 88 percent of shoppers say that mobile, online, and in-store experiences that are more personalized and connected would increase their likelihood of shopping at that retailer again, and 87 percent say it would increase their brand loyalty.

To off er a personalized experience, retailers should start with rethinking their reactions to certain consumer behavior. For instance, nearly 75 percent of shoppers say they use online shopping carts to store items that they plan to revisit later, and 40 percent claim they review those products while in your store at a later time. In those cases, knee-jerk “abandoned cart” emails may serve little purpose — or even result in unnecessary discounting if your emails include a promotion. Bronto also encourages generating personalized promotion codes instead of generic ones to avoid promotion code abuse and reinforce the idea that the off er is exclusively for that one individual shopper.

Similarly, contextualized messages can help to reach consumers at the right moment in their purchase journey. In the fall of 2015, Elle magazine connected physical and digital experiences via its 30th anniversary September edition, driving over 500,000 shopper visits to 700 stores nationwide via location-based mobile technology. In-market shoppers received beacon triggered content from Elle style editors and special offers.

Retailers are showing an “intense interest” in beacons, though the main challenge at the moment is the technology cost and how to manage it, Doug Caywood, Microsoft’s worldwide consumer goods industry director, told attendees at the pre-NRF 2016 Retail Innovation and Shopper Symposium sponsored by Toshiba. And while many look to the technology, which uses Bluetooth to “listen” for signals from nearby Bluetooth-enabled mobile devices, as a way to push out messages to in-store shoppers, beacons can also be useful in alerting employees to the purchase history and preferences of a customer who has entered the store, said Opterus CEO Janet Hawkins.

Above all, interactive experiences, whether online or in-store, grab attention and engage shoppers. Bloomingdales partnered with Inwindow Interactive to create a fashion trivia game at its New York City flagship ahead of a fall fashion campaign. Located next to the 59th Street store’s main entrance, the interactive window featured sound, marquee lights, and digital award badges, inviting passersby to test their fashion knowledge.

At Modell’s Times Square flagship store, the retailer worked with Tensator to roll out an interactive virtual assistant via next-gen digital signage. The “Virtual Mitchell Modell” projected an image of the chain’s CEO that provided suggestions on gear for the Super Bowl, shared information on apparel, footwear, sporting goods, and licensed team products, and informed customers about the store’s loyalty program. The virtual assistant also invited shoppers to provide their email addresses upon checkout to get up-to-date information on sales and be invited to special events such as celebrity appearances.

As the lines in retail continue to blur, merchants will be compelled to meet their consumers where they are, whether browsing their smartphones in their stores, shopping at home on a tablet, or anywhere in between. Compelling, seamlessly executed experiences will distinguish the leaders from the laggards in omni-channel retail. It is important to recognize that technology is not the solution to driving sales and customer experience, it is the enabler to delivering them.

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