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There’s a stat that every retailer should sit up and take notice of. It’s this: half (49.5%) of total U.S. retail sales today are impacted by the web in some way.

What this means is that although online sales represent roughly 10% of all retail, a large majority of your customers interact with your brand online as part of their unique customer journey.

This raises a particular question about in-store tech. Are we about to see a convergence of point of sale (POS) systems and ecommerce platforms?

That’s essentially the nub of this article. Will retailers start to see no difference between online and off-, in terms of data, logistics, shipping and ultimately customer experience? Do some consumers, or even retailers, already think this way?

I’ve been looking at the results of a survey of 200 retail business and technology executives in the US and Europe, conducted by The University of Arizona in association with the National Retail Federation and Demandware.

To add some perspective, here are some of the findings in the context of five fallacies of bricks and mortar retail. Five arguments for a changing customer who is driving many retailers to consider a single platform.

Fallacy one – offline is more valuable than online

Myriad touch-points set the scene. Here’s that stat again. 49.5% of total U.S. retail sales today are impacted by the web.

The web is also more of a nebulous place than ever. In Q3 2013, online consumers spent 44% of their time on retail sites via smartphones and another 15% via tablets, according to comScore.

So, customers are better connected, using more mobile devices, whether out and about or in ‘lean back’ mode, and interacting with brands in different places (in store, on social, over the phone, on websites, through advertising etc.). Research has shown that multichannel customers are worth up to four times that of single channel shoppers. This paints a picture of online as a powerful enhancer of retail sales in their totality.

In a 2013 study again by University of Arizona, the ‘digital diva’ was coined to sum up this type of connected customer in apparel (see the second chart below for definition), engaged with fashion and technology.

These hyper-connected consumers comprise 22% of fashion shoppers, yet represent 69% of purchasing power, a combination of their direct spend (29%) and influenced spend (40%).

This loosely fits with the Pareto principle of a small percentage of customers delivering a large percentage of sales. I’ve written about this previously, the triangulation of data (best products, best customers, most profit).

data triangulation

Fallacy two – connected customers don’t cherish physical stores

Your most valuable customers are your most connected, but they still love the store.

The aforementioned divas visit an average of 3.4 destinations to shop, primarily shopping at physical retail stores (70%) and retailer websites (51%).

It’s clear that even the most connected customers value the tactile nature of the in-store experience (perhaps particularly these customers, as they are more engaged with the brand).

These connected consumers expect fluid and highly relevant interactions, where their context with the brand is never lost. If we posit that no single channel defines the total experience, retailers will benefit from connected data sources and integrated technology in-store and online.

what defines a connected customer - more shopping destinations, more info sources, more social networks

Fallacy three: stack it high

In-store retail is changing. More and more brands are selling direct to consumer both online and by opening branded stores. The pursuit of enhanced customer experience and enhanced store assistant productivity is notable in the examples of Apple and Nespresso, but many more, too. 

In these stores, there is less stock on the shop floor as the space is used for assisted selling and product showcase. Digital capability is used for both showcasing products, ordering and taking payment.

Clientelling and assisted selling becomes possible when stores are designed in this way and customer data is joined up across channels, and crucially, accessible to store assistants.

nespresso store

This level of interaction allows customers to be transformed from simply high value individuals to brand champions. The U.S. and European retailers surveyed rated guided selling (63% in US) and clientelling (50% in Europe) as some of the most important digital functionalities to increase loyalty and conversion in brick-and-mortar locations.

Accordingly, 80% of retailers surveyed in the NRF study expect to maintain or increase store technology investments over the next three years.

what do retailers want from in-store tech?

Fallacy four: one store knows what’s going on in the next

Retailers rated inventory search (73% in the U.S. and 49% in Europe) as another important in-store functionality.

I visited Uni Qlo on London’s Oxford Street to enquire about HeatTech socks for a friend. There weren’t any in stock and the store assistant said I could try the Regent Street store. There was no offer to check the stock levels remotely, or even to call the other store (which inevitably, when I walked over there, was out of stock, too).

socks

This may have been poor service (or perhaps acknowledgement that something in limited supply is often hard to find in store), but the fact is that with many of these requests, the ability to seamlessly assess stock levels is absent.

Legacy systems in this case are often systems originally implemented to solve specific problems for specific channels. This can lead to the following:

  • Redundant data that increases total cost of ownership and operational inefficiencies.
  • Inaccurate customer information that manifests itself in order, payment, and service miscues.
  • Siloed systems that stifle retailers’ ability to respond to market dynamics.
  • Stifling innovation e.g. creating a platform on which to add further customer interaction in-store (e.g. via mobile).

Over the past 15 years, ecommerce architecture that was designed for online shopping has surpassed store POS applications. As a result, traditional POS and call centre tech is increasingly being supplanted by ecommerce to establish a single consumer transaction platform.

According to the NRF survey, nearly 40% of retailers are considering a single consumer platform to manage interactions and transactions across channels.

are you considering a single retail platform?

Fallacy five – IT in store is the domain of operations

Retail leaders surveyed globally cited the following top priorities (in order of importance) that IT must enable in retail:

  • Improved efficiency (automated processes and simplified operations across channels).
  • Attracting and retaining new customers (data and intelligence to provide relevant and personalized interactions).
  • Reduced enterprise costs (simplifies environment to remove redundancy and sustain margin).
  • Increased enterprise growth (supports new brand, channel, and geographic expansion allowing financial scale).

It’s clear from point two that supporting consumer strategies is a very important criterion for IT in retail.

Almost half of the US (48%) and EU (47%) survey respondents stated that information technology must enable retailers to attract and retain new customers.

It’s clear to me that part of retaining customers is providing the same customer experience across store and web. Look what happened when I couldn’t return Doc Martens in-store.

Attracting customers to more touchpoints, whether it’s attracting in-store visitors to browse online, or vice versa, is another consumer strategy for increasing the value and loyalty of a particular customer. Having a single commerce platform may better enable this cross channel messaging.

This survey shows retailers regard store fulfillment (60% in the U.S. and 50% in Europe) as an important digital functionality in stores.

Conclusion

Advantages of a single commerce platform providing synchronized data, and real-time intelligence in-store include:

  • A single view of customer data (preferences, order history etc).
  • Consistent product data across touchpoints.
  • Accurate inventory (enables pick up in, or ship from, store).
  • Order visibility.
  • Optimization of promotions across channels.

Retailers are obviously cogniscent of these end goals, with the survey showing twice as many retailers globally plan to leverage e-commerce (38%) over traditional POS (19%) for their next-generation store software.

Furthermore, only 23% of retailers in the US and 13% of retailers in Europe are considering traditional POS.

what types of software are you considering for POS

Click to view Digitizing the Store, the results of a survey of 200 retail business and technology executives in the US and Europe, conducted by The University of Arizona in association with the National Retail Federation and Demandware.
Ben Davis

Published 17 March, 2014 by Ben Davis @ Econsultancy

Ben Davis is a senior writer at Econsultancy. He lives in Manchester, England. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

836 more posts from this author

Comments (5)

David Sealey

David Sealey, Head of Digital Consulting at CACIEnterprise

Thanks for the post.

From my research last year on a similar topic, many of the in-store technologies that retailers are rolling out are a response to competitor activity or perceived customer demand.

It's my belief that the retailers who will truly succeed are those that use technology to reach new customers not simply serve existing customers in different ways. Getting this to happen will require visionary, risk taking CEOs.

Cheers...Dave

over 2 years ago

Pete Austin

Pete Austin, CINO at Fresh Relevance

It's much more interesting to turn the headline statistic around:

Half (50.5%) of total U.S. retail sales today are still not impacted by the web in any way.

I find that totally amazing in 2014. Given that so many sales are at big companies like Walmart, Target or Costco, which have a significant Internet presence, this figure must reflect a very "long tail" of smaller businesses that still don't find this whole Internet thing to be of value.

over 2 years ago

Ben Davis

Ben Davis, Senior Writer at EconsultancyStaff

@Dave

Online I think there are still a lot of brands that don't convert well, whether it's in the awareness stage (they aren't buying media effectively, or in line with their stock or particular niche) or later on, on the website itself (effectively promoting products and converting to basket and checkout).

But the bigger opportunity could possibly be in-store. If a fashion brand, for example, gets a reputation for knowledgeable assisted selling, efficient fulfilment and in-store returns. Well, the customer quickly cottons on to branding and CX 'in the round'.

An interesting case study would be my girlfriend's cleanser. She used to use Liz Earle, but has gone on to choose Kiehl's and now Aesop. The difference between these stores is that Liz Earle only has one branded store in London (the rest are in department stores). Aesop and Kiehl's have invested in plenty of London stores and there's no doubt these are the main drivers of new customers in London. In turn, customers like my girlfriend will go on to order online, which will forge a greater loyalty with her local store.

In some areas of retail, pushing in-store data back into your CRM will evolve further. iBeacons, free WiFi, loyalty apps, in-store pickup, buying online from in-store tech; these are the thin end of the wedge when it comes to collecting data about customers and then marketing to them in other channels.

I will stop rambling now.

@Pete

:-) I admire your digital centricity. But I thought of Walmart as the opposite, one of the few brands that millions of people likely don't have online interaction with (though granted, millions do, too).

If one was to compare percentage of shoppers having interacted with a brand online, from say Topman and Sports Direct, clearly the more considered purchase (Topman) would have a more connected customer.

On top of that though, you have to layer all bought and earned media, so it's quite hard to attribute, I guess, other than by surveying consumers.

over 2 years ago

Pete Austin

Pete Austin, CINO at Fresh Relevance

@Ben: Seems to me that you only have to go to Walmart's website once, to check their opening hours, and that counts as all your retail purchases from them being are impacted by the web in some way. I bet a lot of people do this! :-)

over 2 years ago

Ben Davis

Ben Davis, Senior Writer at EconsultancyStaff

@Pete

Lots just assume 7-11? No, I agree with you. Maybe it's classed as FMCG?

I think the stat is still impressive compared with the 9% sales online often stated.

over 2 years ago

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