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Chris H. Petersen explains why assorting the hottest products is not enough to win today's consumers.
It's been several years since I've attended CES (Consumer Electronics Show). At every CES show, there is always a lot of hype about the latest and greatest tech gadgets. There are countless displays for new tech in cars, smart homes, as well as the more traditional PC and TV products.
But, what is most striking about CES 2017 from just five years ago is not the advances in technology, but the fundamental change in target customers. They now have the ability to shop any time and everywhere to procure the latest "shiny new tech" online. The reality for the sales success of the tech products on display at CES will be far less about the technology inside, and much more about how to engage consumers in the experience of using new technology in their lifestyle.
Why this is important: With the rapid growth of ecommerce, neither products nor technology are unique differentiators. Retailers are rapidly transforming beyond selling gadgets to creating a differentiated experience. Will vendors also adapt?
1. The customer is now the POS – "The Store"
The most fundamental foundation of omnichannel is that consumers are now in charge. They determine where they research, how they shop and where they purchase. They literally can shop on their phone to compare prices on almost any item, any time and everywhere. Even more importantly, customers now determine:
Gone are the days when retailers could differentiate by merely adding the latest tech devices to their assortments. If a consumer can't find the latest gadget in a store, they most certainly can find it online. Even businesses are increasingly turning to Amazon and Alibaba. Merely "having" the latest tech products is simply not enough. Customers are now looking for who can provide the best experience, assistance in buying what's right for them, and support after they purchase the latest technology and try to live with it on a daily basis.
2. Purchase is a journey across both time and place
Stores are not going away anytime soon. Especially for tech retail stores, where consumers want hands on experience with products and how they work. But in an omnichannel world, stores are not the only, or first, shopping destination. In considered purchases, especially technology, the consumer path to purchase takes place across both time and place.
More than 80 percent of customers start their journey online. In the case of new technology, the journey often starts with either tech reviews, consumer reviews, especially on Amazon. Consider the impact of the following statistic on the success of products in retail: 90 percent of Amazon shoppers will not purchase a product with less than three-star rating.
Consumers will have as much, or more information about the new products as the retailers selling them. The key to success for both retailers and vendors in selling the technology of CES will be all about connecting with today's omnichannel consumer, early and often, across multiple touch points in the consumer journey. Even more important than the "touch" is the ability to add value and service at each step of the journey.
3. Both retailers and vendors must solve for engagement with experience
Retailers are rapidly adapting to the consumer purchase journey. Consumers want more than a just a product photo and specs online. They want "rich content" that shows the product being used and how it fits their lifestyle. When consumers visit stores on their journey, they expect more than seeing technology displayed on shelves. They are looking for hands on experience and assistance in buying what is right for them.
The growing need to engage consumers is NOT just a retailer role and responsibility!
Creating engaging consumer experience is a tremendous opportunity and joint responsibility for vendors. They can ill afford to just provide "air cover" in media advertising. Success in launching new tech products will come from partnering with retailers to provide the critical information at that "moment of truth" when and where customers choose to engage … whether it be online, chat, social media or with staff assisting in the store aisle. The critical success factor for vendors is communicating the why, how and fun in their technology.
4. Building it does not mean that they will come … or buy it
The latest tech products have direct appeal to the "early adopters." The "techies" are the most likely to find and purchase the latest products online. While selling the early adopters is easier, they are a minority of the population. The key to profitable success is creating engagement and experiences that will lead mainstream consumers to explore and adopt the technology.
A great case in point is the growing category of "smart home" products. This year CES 2017 is literally filled with hundreds of IoT products that can be connected in the consumer's home but CES is not for consumers, and few attend. Consumers need opportunities to explore why and how they would use such products in their own home. That part of the consumer journey process typically begins online. Vendors have a major opportunity and responsibility to work with retailers to "bring the technology to life" in the eyes of the consumer.
5. Solving the Long-tail vs curation conundrum requires strategic partners
In an omnichannel world, it is relatively cheap to add new products online, which has far less physical inventory. Literally, online can be used a "virtual shelf" to showcase the latest and greatest technology with minimum risk. It also represents a real time testing lab of what will appeal to customers. Distributors can also play a major strategic role of enabling online assortment expansion through drop shipments direct to consumers, minimizing inventory.
Retailers offer "hundreds" of smart home products … Amazon "tens of thousands"
Today's conundrum is that retailers are still restricting online assortments to be more in line with stores. In an omnichannel world, where consumers go online first to discover, an expanded online showcase represents a tremendous vendor/retailer partnership to expand consumer awareness, exploration and engagement. If retailers don't solve for online, Amazon stands ready to fill any void with millions of choices (and ratings) available for consumers.
Results Count … the road to profitability is still under construction
I was honored to have the opportunity to speak at the CONTEXT CEO Breakfast at this CES. As part of speaking about "Omnichannel is the New Normal," I had the opportunity to share feedback from the CONTEXT Omnichannel Retailer Survey 2016. This survey focused on feedback from the c-suite of Europe's top technology retailers.
Over 90 percent of retailers responded that they were well prepared or actively engaged in omnichannel transformation in order to adapt to the changing behaviors of consumers. Clearly, retailers are also seeing omnichannel as their new normal. But, saying you are omnichannel and becoming "omnipresent" are two different things. Omnichannel is not cheap. It requires significant investments in technology, systems, logistics and people.
One of the most interesting findings of the survey was the response to the question: "Are you achieving ROI on your omnichannel investments?"
Clearly, the retail challenge is not just becoming omnichannel, but how to be profitable doing it. There is no single solution. But, one thing is now very clear. While there is a lot of conversation about omnichannel, results count. One of the most critical success factors will be the ability to measure results, especially ROI.
Chris H. Petersen, PhD, CEO of Integrated Marketing Solutions is a strategic consultant who specializes in retail, leadership, marketing, and measurement. He has built a legacy through working with Fortune 500 companies to achieve measurable results in improving their performance and partnerships. Chris is the founder of IMS Retail University, a series of strategic workshops focusing on the critical elements of competing profitably in the increasingly complex retail marketplace.