Feature Story

Re-Inventing the Mall: How Retailers are Bringing Digital Technologies In-Store

by Kristi Essick

A look at the concepts many retailers are using to bridge the gap between in-store and online shopping.

Online shopping has become the norm for many U.S. consumers, with 70% of online users regularly purchasing goods online. But while e-commerce sales continue to grow – they'll reach $362B in the U.S. in 2016, up from $224B this year – they still account for only about 5% of total retail sales.

It turns out, a lot of people still like shopping in stores. Many consumers still like to see and touch products in real life, enjoy "browsing" in shops, or want to talk to a sales person before making major purchases. But after more than a decade of web commerce, consumers have also become more demanding, price-conscious, and technically savvy. They want to shop in stores, but at the same time benefit from the advantages of shopping online: transparent price comparison, immediate access to product information and reviews, interactive apps and product customization, and all the other advances they've grown accustomed to online.

"Retailers have to up their game; research shows that as people increasingly shop across channels, they're expecting more from retailers," read a recent article in AdWeek.

Enter the "digital store" – a new concept that many retailers are embracing to bridge the divide between offline and online. At a time when most bookstores are shuttered or struggling to survive, Barnes & Noble has made a huge push to bring digital technologies in store, putting large digital kiosks in store entryways where customers can download books directly to their Nook e-readers. Oakley installed in-store kiosks in many of its stores to let customers customize sunglasses and goggles using a nifty interactive app, then click a button to have the glasses delivered to their home or to the store.

But perhaps the big box stores are investing the most in in-store digital technologies. Wal-Mart has experimented with digital in-store signage, scannable barcodes that provide product reviews, information, and offers to smartphone users, ship-to-store and product availability lookup options on its website, mobile shopping apps and games, and much more. The company has created popular shopping apps for iPhone, iPad, Android, and other mobile platforms. These efforts to bring digital technologies in-store landed Walmart on the AdAge Digital A List earlier this year.

This holiday season, Target has rolled out in-store quick response, or QR codes, for many top-selling toys. The codes will allow shoppers to scan the codes with their mobile devices to purchase the product and arrange for free shipping, even if it's sold-out in store. Target also envisions the service as a help to parents shopping with kids; shoppers can buy toys as presents without having to hide them in the cart.

On a recent Sunday afternoon at the Colma, California Target outside of San Francisco, one woman named Yvette was scanning the QR code for a popular LEGO set.

"I have my phone with me and thought I'd scan this to find out if they offer a discount or special offer," she said. When she found out it only allowed you to buy the product and have it shipped home, she wasn't that enthused. "I can just buy it right now, so why would I want to wait?" she said, adding that it could be useful if the product had been out of stock.

The Target mobile app will allow shoppers to scan toy QR codes, purchase the product and arrange for free shipping.

Some in-store technologies are more fun than functional. A recent Forrester Research report titled The Digitization of the In-Store Experience cited a Lego store in Chicago that launched an interactive shop window that used a Microsoft Kinect motion-sensing camera to turn kids into interactive Lego mini-figures. These personalized mini-figures then got to interact with a virtual dragon and go on other video adventures.

Whether stores choose to adapt to the digital age or not, consumers already are. Some 56% of shoppers use their smartphones to check prices while in store, 53% take photos, 46% look up coupons, and 35% receive discounts while in-store, according to eMarketer. Consumers want stores to offer more seamless online-to-offline features. Some 80% of consumers said they want in-store sales clerks to be knowledgeable about online offers, but only 32% of people say stores do this today. Meanwhile, 72% of consumers want to go online to look up product availability in their local stores, but only 44% of people find stores offer this service regularly, says eMarketer.

Clearly, there is a disconnect between what consumers want and what stores deliver when it comes to multi-channel shopping. This holiday season will be a test case to see which in-store digital technologies will yield the highest returns in terms of sales and customer loyalty. Best Buy recently announced it would match online offers from some competitors, including Amazon.com, in store. Just a few years ago, such a move would have seemed impossible. But retailers no longer have the luxury of going about "business as usual". Today's digital-savvy customers want to shop in stores, but they don't want to go back to the dark ages.

"When it comes time for a shopper to actually buy, the brick-and-mortar store continues to be the leading channel through which they are likely to make that purchase," said Corrine Munchbach, an analyst at Forrester Research, in her recent report The Role of Digital in the Path to Purchase. "Shopper marketers must think of their digital properties as a mechanism by which to drive consumers to the store and improve the in-store experience."


The contents or opinions in this feature are independent and do not necessarily represent the views of Cisco. They are offered in an effort to encourage continuing conversations on a broad range of innovative technology subjects. We welcome your comments and engagement.

We welcome the re-use, republication, and distribution of "The Network" content. Please credit us with the following information: Used with the permission of http://thenetwork.cisco.com/.