Article
Putting the 'custom' back in customer
A commentary on how to save brick-and-mortar retail with tailored in-store experiences.
May 28, 2013
By Ajay Chowdhury
Today, rumbles are being heard about the death of brick-and-mortar retail.
Marc Andreessen, co-founder of Netscape and Silicon Valley investor, said a month ago, "Retail guys are going to go out of business and ecommerce will become the place everyone buys. You are not going to have a choice."
And this is apparently being borne out on the high street.
Large brand name chains that have closed include Borders, HMV, Jessops, Circuit City, Virgin Megastores, B. Dalton, Woolworths U.K. and the list gets longer every month. For those retailers who are surviving, they face the threat of showrooming, increasing rent, reducing store sizes, lack of qualified staff, customers wanting to order online and pick up in-store and so on.
When we speak to retail CMOs, the top two concerns on their mind are: "How can we be more like Amazon?" and "Should I get a mobile app?" But are these the right questions?
Amazon is a unique company that is truly visionary and has reached an amazing scale with very forgiving capital markets. (It was loss making on $61bn of revenues last year and is capitalised at $125bn. Contrast this with Target that made a profit of $1bn on $22bn of revenues and is capitalised at a third of Amazon...).
Similarly getting a mobile app is also not necessarily the answer. There are 775,000 apps in the iPhone App store and 80 percent of them get less than 100 downloads. Of the ones that do get downloaded the majority get used less than five times a year. Not quite a recipe for success.
So what should retailers be thinking about? Well, the threat from e-commerce and mobile is real. Although forecasts do say that in five years over 90 percent of shopping will still be in brick-and-mortar retailers, there is a huge variation in this number. A majority of music and book sales is now online. Electronics and white goods are moving the same way. Fashion remains largely a high street activity but e-commerce is certainly beginning to eat into this as well.
Grocery, food and drug are still largely done in person but a small minority is moving online. So what should retailers be doing to ensure they maintain their brands and hold onto their customers?
We believe that retailers should be looking at three core principles to succeed over the next decade:
Provide a superb in-store experience
Just as cinemas reinvented themselves over the last decade to provide a great experience, retailers need to do the same over the next decade. Walk into Victoria's Secret on Herald Square in Manhattan and you will see a true brand experience. Media and technology are cleverly used to move the customer through the store and get them to make a purchase.
We believe the in-store experience is about mapping the customer's journey base on their frame of mind and then providing the right media and incentives to make shopping a pleasurable experience and getting them to buy more. The experience starts outside the store with the show windows using dynamic video projection, holograms and the like to entice people into the store.
Once they are in the store, the use of touchscreens for wayfinding, linking to customer's online accounts and making recommendations can be powerful. As they move through the store the use of video walls, digital signage, music, virtual mannequins and so on get them to a decision point where they want to buy and buy more. Other technologies like Delay Mirrors in the dressing room (a screen with a camera showing a live reflection of the customer, yet delayed by a few seconds to see themselves in an outfit from all angles) provide an experience that cannot be had anywhere else.
Finally, linking these screens to the customer's smartphone allows them to get recommendations, find out more information or link to loyalty cards providing a truly holistic experience. This is what makes them come back and recommend it to their friends.
Join up your online, social, mobile and in-store media experiences
Most retailers have e-commerce sites, a Facebook or Twitter presence, mobile sites and some media in-store. But these are all in silos and not linked up. Imagine the immense value of recognizing an online customer as they enter the high street store.
You can offer tailored promotions as they enter your store and give specific recommendations based on their shopping habits. We believe you can do this by using one technology platform for your in-store media to manage your experiences effectively. This platform then links to your external systems such as your e-commerce site, Facebook, loyalty card systems, smartphones, EPOS systems etc. to provide one view of the customer.
Use the data generated by your customers to provide real insights
Finally, big data — this is a real buzzword these days. Retailers have a huge amount of data on their customers but only a tiny fraction of this data leads to insights. Working with companies like Dunn Humby, DS-IQ and Path Intelligence allows retailers to take the data they collect and create real actionable insights which then feed back into the in-store strategy to create a virtuous circle.
The world is changing and as the consumer has the power retailers also need to change.
Ajay Chowdhury is thechairman of ComQi, a company specializing in
multichannel message management in the digital signage and out-of-home industries.
Read more about multichannel retailing.
