Entire store chains are declaring bankruptcy and liquidating; department stores are transitioning to specialty stores; the leadership carousel at the top of organizational charts is spinning faster than ever; and online retailing titans are … opening brick-and-mortar stores?
There may never have been such a tumultuous time in the retail industry, one both rich in opportunity and rife in peril — and both simultaneous.
So, I ask you, as a retailer, how are you sleeping at night?
New Retail Reality
Retail is not “evolving.” The pace and scope of change makes it so much more than an evolution, and the term “revolution” has morphed into a rather tired, trite cliché. Label it as you wish, but retail’s new reality includes:
- A disruptive convergence of channels,
- A newly empowered consumer who is clearly in charge, and,
- A deep understanding that what worked in years past won’t work going forward.
So what’s a smart retailer to do? Retailers have to find the optimal mix of online, mobile and in-store channels. And that doesn’t mean “omnichannel,” because as last year’s past holiday season so profoundly illustrated, consumers simply refer to the exercise of consuming as “shopping.” So retailers have to approach the shopping journey as a singular, branded experience, and a big part –- maybe the part that affords the greatest opportunity to deliver a value-added, differentiated shopping experience –- is the in-store shopping experience.
Music to Your Ears
In his keynote address at the NRF’s The BIG Show this past January, Levi’s Brand President James Curleigh likened retail to the music industry. The music industry is a journey that begins with a song and travels through different listening and viewing mediums, various purchase and streaming channels and, ultimately, a live performance at a concert. Just as the music fan’s most memorable, satisfying and fulfilling part of that journey is the live performance of a favorite song, a shopper’s most memorable, satisfying and fulfilling part her shopping journey is found in the physical store. So do your customers find they can’t get your music out of their heads, just as they hear their favorite songs on replay all the time in their minds?
How are you nurturing your shoppers into becoming “fans?”
To deliver upon the promise of stores, retailers have to produce a unique experience, not available elsewhere, and must do so in an authentic, genuine and often creative manner. But before that, a retailer must first understand its shoppers, and to be successful, it must do so better than its competitors.
Going Back to Go Forward
Here’s another question for you. As a consumer, would you trade today’s online shopping experience for the one you enjoyed just 15 years ago?
Of course you wouldn’t.
Online retailers have continuously evolved their shopping experience over the years, developing a better understanding of who their shoppers are and how they conduct their shopping journeys. The result is a dramatically different online experience, and one that continues to get easier to use and enjoy.
Over that same 15-year time period, physical retail has innovated in starts and stops, but, on the whole, is still facing the same challenges as before. Only today, the ultra-competitive, global retail environment –- spurred on by the exponential growth of e-commerce — has compounded the effects of those pain points.
It’s time for physical retail to catch up to its online brethren. It’s time for bricks to learn from clicks. The foundation for that insight comes in the form of advanced retail analytics, a term that may make many legacy executives anxious. We do live in a generational digital divide.
Start with Shoppers
The retail analytics journey begins with in- and around-store activity, and shopper traffic represents one key measurement of opportunity. Technology has moved well beyond simple beam counters, and now allows accurate and efficient calculations of many benchmarks, including store traffic and capture rates (the percentage of passersby that actually enter into the store).
However, traditional traffic counts only report how many shoppers enter a store. In the online world, that would be akin to measuring the number of visitors to a home page, and that’s not nearly enough data to better understand shoppers and their behavior, or to begin to design a more memorable experience.
Technology advancements now empower “Traffic 2.0,” and the use of a technology infrastructure with multiple applications beyond traffic measurement, delivering immediate returns by replacing legacy, single-point solutions.
Traffic 2.0 now tells a retailer the duration of each shopper’s store visit, whether she’s a repeat customer or not, and the frequency of her visits, if she is. Additionally, it measures the path a shopper takes through the store – where she visits, what fixtures she engages with, and what she buys. It begins to the tell the “why behind the buy.”
But that’s not all. Even with a robust sales conversion of 33%, the data only tell the story of a third of a store’s shoppers. Traffic 2.0 can also provide the same data for those shoppers who don’t convert, the other 67%. And for the first time ever, it can provide quantitative data on some of the reasons explaining the “why behind the no buy.”
Advanced analytics provide invaluable insights into shoppers’ full paths through a store, and immediately allow retailers to answer its most pressing questions, including (but hardly limited to):
- What’s more effective, folded garments or hung?
- Do counters and tables work better than shelves, and if so, what’s the best height?
- Are staffing schedules properly aligned with peak hours in store traffic?
- When should shoppers be greeted by sales associates, and for how long?
- What are the effects of queues at fitting rooms and POS on sales abandonment?
- Do shoppers make it to, and engage with, the fixtures containing higher margin merchandise?
Retail has traditionally been an industry that values and trusts experience and “gut feel,” and the artful application of subjective analysis is very important, particularly with fashion and creative design. But even the most fundamental components of advanced retail analytics add a complementary, objective and quantitative layer to decision-making. The combination of the art and science of retail sets the stage for competitive advantage.
The Key to Unlocking Personalization
Knowing your shopper and her in-store behavior and level of engagement is just a foundational layer in delivering a differentiated experience. Online retailers know the most meaningful experiences lie in personalization.
Technology is the gateway to personalization, at least on any level of scale. With a majority of shoppers utilizing mobile devices during their in-store shopping journeys, providing guest Wi-Fi is the entry-level ante into this new game. It’s one of the platforms –- along with beacons and others –- that enable the delivery of rich value-added content and services, including suggested accessories, how-to tutorials, share-with-friends, promotions and more.
Effective personalization is a tricky proposition, as it can be fairly easy to be “creepy” and turn off shoppers. Yet at the same time, Millennials and other younger shopper generations are technology-savvy and will accept opt-in to reveal personal information, but only if there is an appropriate value received in turn. Discovering that value proposition and delivering upon it will determine a retailer’s level of success.
A Future Bright with Innovation
Measuring and observing in-store activity can be done through a variety of data sensors, including cameras, mobile device detection, Wi-Fi, Bluetooth Low Energy and more. In fact, it’s important to note that data acquisition technologies –- the sensor layer of the technology stack –- are constantly being innovated, and it’s critical for stores to deploy analytics platforms that are not inexorably tied to an eventually obsolete sensing/data collection technology.
With each innovation and new data stream, analytical insights are formulated, arming retailers with the actionable information needed to better understand, attract, serve and retain shoppers – essential to becoming one of the few “retailers of choice.”
The New Brick-and-Mortar
The call to action for physical retailers is simple. If leadership is not already piloting and experimenting with advanced retail analytics, it’s already behind. Shoppers control the new retail reality, and an organization simply cannot survive if its competitors understand shoppers and their behaviors better than it does.
So, I ask you again, as a retail leader, how will you sleep tonight?
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