In our previous article, we reviewed some of the digital tools used by retailers to drive store footfall and customer engagement with their products and brands.
In the second of this 2-part series, we will now look at examples of digital technologies that can be used in store to drive conversion levels and sales.
Due to the digital evolution, the bricks-and-mortar retailing space is changing with many analysts predicting that we will see more changes in the next 5 years than we have seen in the past 20.
Historically driven by a need to stop stores simply becoming showrooms, retailers now have access to an abundance of digitally interactive solutions they can use in pursuing their overall business objectives, from driving customer engagement and loyalty through to conversion and sales.
In the first of a 2-part article, we will look at some of the technologies and tools which can be used by retailers to drive footfall and customer engagement levels in the store itself.
Zara recently opened a new store in Soho, their first one to feature the “smart” dressing room using RFID technology. Inside the fitting room, customers can see on a touch screen the product information of the items they brought in, all tagged with RFID, as well as available sizes and colors.
Zara smart dressing room enables shoppers to request other colors and sizes without leaving the fitting room.
RFID is an exciting technology with numerous possible retail applications. Yet, it is often used to showcase digital innovation or generate buzz. Zara’s initiative on the other hand appears more customer-centric than technology-driven: it enhances the customer path, rather than changing or disrupting it, and simply makes it easier and more convenient.
Over the past 20 years we have seen a stampede of traditional retailers adding an online channel, with almost all now offering some form of Click & Collect as part of their service proposition.
Pure players though appeared to be already ahead of the game with speed to market, technological advancements, endless aisles and lower cost base modeling as the dominant factor for them to remain solely online.
Luxury brands have been reluctant to adopt digital commerce
For years, prestige goods companies have looked down on online sales channels, which they have perceived as inappropriate for an industry which is all about high-quality and exclusivity.
“We think for luxury it’s not right. It’s good in countries that don’t have the shop nearby.”
Many preferred keeping luxury in the rarefied world of high-end boutiques and department store glossy storefronts. They have mostly been using the online channel to showcase the brand, through institutional websites with limited product content and information.
Whilst many retailers have hesitated to adopt e-commerce for fear of store sales cannibalization, the reluctance of premium brands seems to have been mainly driven by a somewhat conservative view of the luxury shopping experience. This view has been largely supported by the stereotype of e-commerce as a discount channel on which it is difficult to perceive and experience the product quality.
Whilst retailers have an increasing choice of new technology (augmented reality, beacon, NFC…) and touchpoints (responsive website, wishlist, Tweeter “Buy Now” button…) to boost their multichannel value proposition, they should not forget the foundation of their success lies in the strength and presentation of their product catalog.
Yes, in the new omnichannel retail climate, all merchants should be marketing and technology driven, with most strategic decisions being fuelled by (big) data, consumer behavior and market trends. However, without a strong Online Product Catalog, reaching out to the (connected) consumers and convincing them of the value of your offering will become more and more difficult.
Consumer adoption of digital commerce, a great opportunity for the store
In today’s new retail landscape, synergies between offline and online channels of a merchant are ubiquitous.
John Lewis customer multichannel behaviour and revenue snapshot. Source: The John Lewis Retail Report 2014.
Click & Collect (pick-up in the shop of an order placed online) is now a must-have service for any brick & mortar’s e-commerce given its rapid adoption by shoppers and uplift effect on basket value. According to Forrester, a third of customers collecting orders in store make an additional impulse purchase.
Another evidence of the value of the store in digital commerce is Amazon’s recent announcement to launch its first physical outlet in New York City, a revolution for the global e-tailer.
The lack of credible digital commerce offering in the UAE remains an ever true fact with only 15% of its population shopping online. Given the country has an Internet penetration of 80% and one of the world’s highest smartphone penetration (78%), the paradox is striking.
Any analyst of mature online markets would regard this as nothing but pure heresy, since the more connected consumers a brand has, the more additional revenue it can draw from them. The reality is somewhat more complex and the relatively weak development of e-commerce in the UAE has reasons beyond lack of trust and payment security concerns, as often raised by vendors in their pitches.
UAE connected consumers are increasingly relying on web and mobile services to communicate and facilitate aspects of their day-to-day life. The development of e-services and mobile apps in the region, heavily pushed by the government, is increasingly generalizing electronic payments. Online payment has actually been a common practice in the Emirates for traveling purposes for some time. UAE consumers are now ready for more relevant and actionable online content and services, which local retailers are yet to provide them.
By adopting multichannel strategies, malls can offer rewarding shopping experiences to the connected consumers. Digital technologies and customer oriented marketing provide mall operators with new means to increase footfall and become more relevant to their retailers.
Loyalty programs: creating returning mall traffic
A loyalty approach enables a mall to develop a valuable customer database and share marketing operation efforts among its brands. Mall operators such as Unibail worldwide and So Ouest or Qwartz in Paris created simple but very effective loyalty programs. Their objective is to bring more loyal traffic to their retail clients and mutualize digital efforts on the web and mobile.
In Europe, these loyalty programs mostly base their marketing promise on services and benefits such as free parking, private sales as well as coupons and discounts.
The objective is to create distinctive services and offers that make customers feel valued and incentivized to frequently engage with the mall and its brands. Even premium malls, such as Le Bon Marché, are introducing loyalty programs to enable personalized communication with their customers.
Loyalty programs are structured social marketing efforts that reward, and therefore encourage, loyal visiting and buying behaviour. This targeted and incentivized behaviour should be beneficial to both customers and companies.
In terms of loyalty, understanding pre-purchase moments is more important than the purchase itself: customers want to be recognized and perceive their interactions with a brand are valued more than just for the purchase they make.