Wednesday, October 31, 2007

Will retailers look to the Internet for clues to success?

According to a new report released by Datamonitor Plc (and as reported by the Wise Marketer), "retailers around the world are hoping to win back lost market share by making their customers' shopping experiences a little more meaningful - and even theatrical - with emphasis placed on the sensuous elements of an in-store shopping trip." Of course this should come as no great surprise to those working in retail design and marketing, however the report's summary identifies a few key trends that, at least upon my initial cursory analysis, don't quite fit with what my customers and colleagues have been telling me recently.

The summary leads off with the notion that, "the next step in the battle to retain customers is to streamline the
buying experience, bringing it more in line with Internet shopping in
terms of ease and speed of transaction." While most retailers -- especially big ones -- do constantly try to optimize checkout lanes, reduce overall transaction time, and generally improve the part of the experience where the customer has to pay for stuff, in all other parts of the store retailers have been focusing on ways to make bricks-and-mortar less like the Internet, not more. The report notes that as tracking devices become more reliable at identifying a shopper's race, gender and age, retailers will be able to beam targeted ads and messages to nearby digital signs in hopes of catching their attention. So ok, maybe stores will start experimenting with Internet-style banner ads. However, where experience really counts, there's still no topping the bricks-and-mortar store.

Looking for a new guitar? Want to try on a pair of shoes? Is the Corinthian leather really that much nicer than the brushed vinyl? There Internet still lags far behind the real-world experience when it comes to examining/analyzing anything that can't be captured accurately in a photo or two. Lots of really innovative work going on inside the store these days tries to highlight the advantages of traditional commerce, and increasingly, hybrid commerce.

Of course, where the Internet excels is in instances where the customer can benefit from a very large amount of information, the ability to compare multiple products at once (for both price and features), and see reviews from (presumably) like-minded shoppers. And in my experience this is where retailers have been putting more effort lately. In an effort to combat Amazon, Borders has had kiosks in-store for a while, and Barnes and Noble is starting to follow suit. Best Buy and Circuit City have had product info/comparison kiosks for a few years, and recently I've even seen department and home furnishing stores get into the act.

While the Datamonitor study cites POS, RFID and proximity sensors, the key driver (which they also mention) is most likely to be mobile, or perhaps more accurately, a combination of local in-store kiosks, Bluetooth/WiFi beaconing, and mobile Internet, all delivered to a shopper's own handset and in-store digital signs. By letting shoppers access the same kind of information that they'd be able to get over the Internet, retailers can help level the playing field with e-commerce while still pushing native advantages like allowing shoppers to interact with products before buying them.

Giving shoppers the option to get information on their mobile devices forces retailers to give up some control (since the mobile devices come in all shapes and sizes, have differing capabilities, and of course can access content outside of the retailer's control). However, offering the service in the first place means that retailers can still control some of the content and marketing (as opposed to none), can provide for deeper interaction (by using digital signs as big display screens, or letting users snap a picture of an item's bar code to look up information on it, for example), and can help build customer loyalty in a highly value-added, purely opt-in fashion.

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1 comment:

Unknown said...

I couldn't agree more. There is absolutely a new norm for operating in the world. Technology will help facilitate communications, or commerce, but it is the balance and interaction between these different cultures and perspectives that wasn't possible before, and retailers must now adapt. It will take some time, and probably cause some tension, before the established giants in retail will change their behavior to accomodate more of what customers want, but when it happens a major shift will have been achieved.

I wrote about some of this in my book, Media Rules! (which comes out in December - from Wiley). It touches on how organizations need to change the way in which they operate and are structured. That includes how you hire and train people, how you communicate, what you create, share, and distribute - whether it is a product or a service. Success now, and in the future, will be fueled by 'little m' media, the information, experiences, and stuff that we interact with every day, and what interests us most, what represents why people shop and what we all buy.

Check it out - Media Rules! - and let me know what you think.