Top five tools retailers need to survive

When Patricia Lorenz finds a bargain in Largo, Fla. - like her Gloria Vanderbilt jeans priced at 80 cents at a Bealls outlet this summer - the first place she heads after the check-out counter is to her computer to e-mail friends about her big find.

 

But in the retail reality of 2008, Bealls had better find a more direct way to reach Lorenz's pals, and it needs to be glitzier, more personalized and faster if the store wants to sell more jeans.

 

That type of change is just one of many retailers need to consider.

 

Three macro events are taking place under the surface that influence the store experience.

The first is the availability of information. Consumers used to go to a store to see what it had. Now they arrive with that information and expect the bricks and mortar to take it from there.

 

Secondly, shoppers themselves are different. Thanks to the Internet and smart phones, consumers see facts as a web, hyperlinked and immediately executable. They don't want a structured lesson - they want to control what a retailer tells them and when.

 

Finally, in a slower economy, retailers have to realign their value proposition to stay alive. Quality products and service? Of course. Now it takes in-store activities to build a better relationship with shoppers.

 

After speaking with major players in the industry, five top tools emerged that retailers need to stay in the game.

 

 

Americans have conquered the self-service check-out. Now they demand the next stage: information kiosks. Virgin MegaStores moved into the U.S. market from day one with listening stations around the perimeter of its stores, each containing an analog CD player with one to four "discs of the day." Today, Virgin's 10 U.S. locations feature digital-listening stations where a customer can sample anything in the company's CD, DVD or video-game inventory.

"It allows you to get under the shrink wrap and determine whether or not you want to purchase," said Virgin's vice president of information technology and CIO, Robert Fort.

 

The kiosks also provide additional information about the artist or product to help nudge that sale. It's so popular, the company has approximately 100 stations in its Times Square store alone.

Since upgrading to the digital system, 70 percent of Virgin shoppers sample products, compared to just 30 percent who headed for the analog stations in the past. "Undeniably, people are sampling more, and we feel that has contributed to an increase in sales," Fort said.

At the very least, the store still exists in a niche dominated by iTunes.

 

Still, Fort credits the interest spike to Virgin's marketers knowing their audience. For instance, typical CD and DVD buyers are browsers who wander the aisles looking for inspiration. They're ripe for suggestion, so a kiosk offering a preview and product information is an effective tool.

 

 

When NCR Corporation surveyed U.S. and Canadian consumers via BuzzBack Market Research, 86 percent said they're more likely to do business with a company that offers the ability to interact using self-service, an 11-percent increase from only a year earlier.

 

So, savvy stores have multiple streams of information flowing. And, according to Bob Richardson, president and CEO of Associates Interactive, smart phones are coming on so strongly, they will replace scanners as the self-service technology of choice.

 

Count StoreXperience in Berkeley, Calif., among the pioneers that have pilots in the consumer electronics, cosmetics and foodservice channels.

StoreXperience takes advantage of smart-phone technology to reach consumers.

 

Consumers with 3G phones (iPhone, Nokia N76, TMobile Dash) - already 20 percent of the population, Richardson claims - can scan bar codes to pull up product information and coupons through their data plans. "That's a new opportunity - a new channel the retailer needs to understand and master," said Herve Pluche, StoreXperience's president.

 

The consumer is always in control and doesn't appreciate a retailer pushing products. And the retailer can use incoming data to drill into customer buying patterns.

 

"This is absolutely huge, because today the consumer lives in a dual world. He either chooses to get the Internet experience with a wealth of information but without the satisfaction of touching the product, or he goes to a store and is on his own to decide what those sophisticated specs mean on the side of the package," Pluche said. "There is no reason why he can't have both."

 

 

Linda Carlson in Seattle, Wash., uses Eddie Bauer's customer-service number for almost every item she buys from the clothing chain. On the other side of the country, Mary Naylor in Alexandria, Va., is confident her company, VIPDesk, can take credit for those sales. And her home-based call center is not only delivering those results for Eddie Bauer - it's duplicating the upscale experience for jewelers, electronics stores, candle shops, home décor specialists, office-supply stores and cellular-phone outlets.

 

"The person who answers the phone at midnight or responds to an e-mail is just as important in the experience chain as the person who says hello when you walk through the door," Naylor said. The secret: Working from home to solve customer questions succeeds because stores can hire a more educated representative. These representatives also can be a smart business decision for retailers - their retention rate is 85 percent.

 

"They are equipped to be more intuitive and deliver a higher caliber of interaction with retail customers," Naylor said. Gone are the canned scripts and recited expressions of care. "You can hear the confidence when you're talking to someone who was a travel agent and then worked for Ritz Carlton in a previous career. It translates into better customer service."

 

 

Borders hit a home run in 2008 with its weekly mobile alerts. Bloggers like Char James-Tanny, president of JTF Associates technical writing services in Lynn, Mass., praise its text-message

 

Text messaging is the new marketing darling; receivers open 96 percent of text messages compared with less than 30 percent of their e-mails, according to Ed Higdon, executive vice president of business intelligence and consumer insights at Integrative Logic in Lawrenceville, Ga. But it won't remain king of the hill unless retailers start using customer data to stay relevant - it simply will become more noise to tune out.

 

One-on-one messaging follows the new four P's of marketing: personalization, predictive modeling, participation and peer-to-peer reviews. Of the four, personalization is what captures customers and builds brand loyalty, Higdon tells his clients.

 

For instance, Integrative Logic's program will home in on a text-messaging participant who buys a blue suit and compare that with other shopping habits for a Tuesday. If the data shows this combination also translates well for red tie sales, the retailer might send down a communication suggesting the neckwear. Sound familiar? It's the same approach iTunes uses to sell more songs.

 

 

In-store entertainment doesn't have to be fancy - as long as it brings people into the store for an activity, persuades them to stand longer in the aisles or enables them to get to know products and sales associates better, it qualifies as entertainment in Richardson's book.

 

That means when Carlson ducks into Magnolia Hardware to let her dog snarf some of the popcorn the store gives out as a treat, those owners are on the right track.

 

Of course, competition being alive and well in America, larger retailers need a touch of amusement-park excitement for their events.

 

Thus, Wal-Mart sponsors national in-store contests for shoppers, and grocery stores like Fred Meyer hire Ric Hansen of Radio Parties to jazz up a back-to-college night.

 

Along with the other essential tools, in-store entertainment needs to be a paradigm-changer.

 

"We're looking at a permanent change in what a retailer does for its customers," Richardson said.