GUEST COMMENT What’s keeping retail bosses awake at night?

The way we shop has changed radically over the past few years. The rise of mobile shopping and a new generation of digitally savvy consumers is now the norm, with shoppers demanding the very best deals and brand experiences from retailers whenever, wherever and however they choose to shop.

Coupled with this, consumers are growing increasingly shrewd at conducting their homework before buying. This trend has been coined ‘showrooming’ where they examine and explore merchandise in store without purchasing it, but then shop around online to find the item at the best price. Or conversely they scout around online for the best possible offers at home before actually going in store to buy them.

A recent global survey of 30,554 people in 16 countries conducted by IBM Institute for Business Value revealed that the physical store does still rule for purchases but is losing favour fast. This can be seen in the fact the percentage of respondents making their last purchase in a store declined from 85% in 2012 to 72% in 2013, while online was the complete opposite: the proportion of shoppers doubled to 27% making a purchase online in 2013, versus just 14% in 2012.

So, perhaps unsurprisingly, the big challenge for retailers and the key issue keeping retail bosses awake at night is how to re-connect with these customers doing their pre-buying research online to drive and secure an actual sale in store. It’s about connecting and engaging with consumers via the digital world and physical world, as the two are merging and inter-linked.

While this creates issues for retailers, it also provides them with great opportunity and a powerful way of gaining an additional level of insight into people’s buying behaviours. And it works both ways, as consumers in return should get a better service and experience by retailers interpreting and understanding their preferred buying behaviours and adapting to these needs.

Therefore retailers need to really think about and review their marketing strategies to ensure they invest in technology that truly enhances the shopping experience. If they don’t, in a famously competitive sector and ongoing tough market conditions, they risk not being able to serve the next generation.

This group are happy to interact with retailers by sharing information about their buying habits via apps and websites for personal gain, to scoop up the best discounts and bargains in store. Both retailers and shoppers benefit when loyalty programme offers are pushed out to consumers as they walk around shops, rather than in a follow-up communication, as they often are now. What will really differentiate retailers are more dynamic and real-time marketing, using apps on phones and gamified systems to enhance the customer shopping experience.

The possible answer, as we see it, lies in location-based engagement. Connecting directly with the consumer, wherever they may be, with personalised, time-relevant communications. Ground-breaking new technology allows retailers and brands to do this – we have called it Presence Zones. Presence Zones is based on wifi, while other beacon technology can use the various signals emitted or requested by consumers via smartphones. Using this latest technology, retailers can engage with customers in a more personal and tailored way to transform the in-store customer experience and make it more enticing. Presence Zones is based around using intelligent, location-based technology to engage shoppers in real-time and offer them targeted offers, deals and promotions that will really appeal to that person as they move around a store.

To explain how it works for example, if a retailer knows a customer has been scouring the internet for a certain product recently – a pair of black boots say – but has got distracted and failed to complete the sale online for whatever reason, they can offer them a deal there and then in the shop. Maybe they would offer a percentage off or buy-one-get-another-half-price – to seal the deal. This technology is being trialled in the US and Europe currently and if successful could be in many stores we shop in by the end of the year.

Therefore, as in the example above, Presence Zones technology works by allowing retailers to gain deeper insights into customer behaviour and preferences from those consumers happy to share their data in order to be able to deliver timely and contextually relevant offers. This is made possible by a unique combination of IBM’s mobile, cloud and analytics technologies that deepen the brand connection, foster customer loyalty and deliver an integrated digital and physical shopping experience.

Presence Zones also allow retailers to quickly optimise their resources and promotions in-store. For example for those customers opting in and happy to share their data, Presence Zones technology can track patterns of those shoppers in store – so if part of store is busy, in a department store for example the homeware section – managers from the store can divert more staff to that area to assist customers. Retailers can also adjust floor layouts to drive more foot traffic to popular store displays around seasonal offers and items. Store managers can also use this data to control and improve profit margins by offering appropriate discounts, which is more effective than previous blanket promotions.

Whether a department store, supermarket, or women’s high street fashion store – all retail businesses need to understand their customers better if they want to provide a more personalised and compelling shopping experience. So using technology like Presence Zones could potentially help retailers in so many ways – none so more than connecting the digital and physical worlds in which they shop.

Jason Nestor is retail industry executive for IBM’s UK and Ireland retail business