How retailers are using technology to bring shoppers back in store.November 10, 2014
It’s no surprise retailers are pulling out the stops to get shoppers into stores. E-commerce has been eating into brick-and-mortar sales for years, and the pace is only accelerating. Online sales will account for $291 billion, or 8% of all US retail sales, by the end of this year, and that number will rise to $370 billion, or 10% of all retail sales, by 2017, says Forrester Research. Real-world retailers are poised to capture some of those billions on their websites, but they are increasingly losing out sales to “pure play” ecommerce companies that can offer lower prices or unique product selections.
With websites and mobile apps making it so easy to buy from the comfort of your couch, shoppers are drastically reducing visits to stores.
“Consumer tastes are changing. Instead of wandering through stores and making impulse purchases, shoppers use their mobile phones and computers to research prices and cherry-pick promotions, sticking to their shopping lists rather than splurging on uneeded items,” said a recent article in the Wall Street Journal. Such words strike fear into the heart of big-box retailers and Main Street stores, whose revenues depend on customers purchasing items they didn’t even know they needed. Retailers as diverse as Target, Walgreens, Best Buy, and Macy’s have seen steep drops in in-store sales.
“Retail guys are going to go out of business and ecommerce will become the place everyone buys,” unequivocally said venture capitalist Marc Andreessen, whose firm Andreessen Horowitz has invested in many ecommerce companies.
Not all real-world retailers are quaking in their boots just yet. Instead, they’re deploying cutting-edge interactive technologies in their stores to entice more people to come in and browse.
For the smartest retailers “websites and mobile apps are not just e-commerce ordering vehicles, they are front doors to the stores,” said Darrell Rigby, a partner at management consulting firm Bain & Co. “Stores are not just showrooms, they are digitally-enabled inspiration sites, testing labs, purchase points, instantaneous pickup places, help desks, shipping centers, and return locations.”
What are some of the coolest in-store technologies retailers are using to turn their stores into “digitally-enabled inspiration sites”? Retailers certainly can’t be faulted for lack of creativity. There are smart mirrors controlled through body gestures that let shoppers see themselves in different outfits and share these images with friends via a mobile app. There are shop windows that critique your current outfit and suggest new looks, interactive kiosks that let you try on virtual watches on a video screen, and robots that deliver your items to you in the fitting room.
Many stores have had success with opt-in geo-fencing apps that provide shoppers with immediate mobile coupons based on which aisles they visit and past purchase data. Shopkick, which counts dozens of real-world retailers as customers, rewards shoppers with discounts and offers “just for walking in the door” of stores. Over 6 million consumers have downloaded the app so far.
Some of the in-store retail technologies being tested feel a bit more sinister than fun, such as facial scanning technology that can determine a shopper’s gender, age, and mood to determine their “propensity to buy”, or digital signs that recognize you based on personal information stored on your smartphone.
Many of in-store technologies are only in the testing phase. But with the ubiquity of mobile devices, embedded Internet of Everything” (IoE) sensors, and the ability to collect, crunch, and analyze petabytes of shopper, CRM, purchase, and trend data, several of these “far-out” technologies will soon be commonplace. Cisco’s own research shows that retailers will use IoE technologies to generate $1.6 trillion via untapped revenue and savings over the next decade.
However, whether tech-driven experiences will bring shoppers back into stores in droves remains to be seen.
“Glaring success stories with in-store digital initiatives today are few and far between,” said Forrester Research analyst Adam Silverman in an October 2014 report titled The Emerging Technologies of the Digital Store. “While these digital enhancements hold the promise of meaningful improvement in customer experience, operations, and revenue growth, retailers are still looking for iron-clad success stories, backed by clear evidence of uplifts in incremental revenue.”’
Silverman says interactive technologies that make in-store shopping easier or cheaper – such as touch screens that interact with barcodes to give more information on products, or geo-fencing apps that deliver opt-in mobile coupons – are the most promising. Interactive mirrors and facial scanning will become mainstream, but not for several years, while robots and 3D printing won’t appear in stores anytime soon.
“Only technologies that improve the customer value proposition by breaking down existing friction points or increasing consistency online, offline, and via mobile will stand a chance of surviving the evolution of the retail store,” Silverman said.
Whether stores become ghost towns before eventually shutting down, or whether we’ll see resurgence in bricks-and-mortar retail as shoppers flock back to malls to “experience” cool in-store technologies, is still up in the air. But retailers with high real estate overhead aren’t about to give up without a fight. They’re using IoE, big data, and mobile technologies to turn their stores into assets instead of albatrosses.
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