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Making New Connections

Time for It to Take a Lead

Time for It to Take a Lead

From in-store screens to facial recognition software, digital technology is allowing retailers to fine-tune the shopping experience and influence behaviour, reports Barnaby Page

Whether a store is built of bricks or clicks, a shopper’s physical, mental and emotional journey is only just beginning when they walk through the door. Merchandising exists to direct that journey, and if new technologies are making consumer attitudes and shopping behaviour more complex, they are also giving the in-store merchandiser a new arsenal of tools to shape both.

And while the online retailer has the clickstream to analyse, the high street shop has its own rich source of data, long casually observed but now much more accurately measurable: the physical presence of consumers. Technology such as facial recognition or the monitoring of mobile phones’ ‘pings’ to the nearest base stations can track consumers at the individual level as well as – in the case of facial recognition – amassing generic information on how gender, (approximate) age and even racial group correlate with interest in particular products or promotions and with subsequent shopping behaviour.

But the consumer data that can be exploited is not purely passive and observational in-store anymore than it is online. Although privacy concerns dictate that facial recognition and phone tracking without explicit consent don’t identify individual consumers as people but simply scrutinise them as series of data points, direct contact – and perhaps the beginning of a continuing digital relationship – can be achieved with shoppers and their mobile devices through, for example, QR codes, near-field communication (NFC), augmented reality, or prompts to interact with the retailer through the internet while actually on the premises.


Indeed, while e-tailing was originally seen as a replacement for, or at best a complement to, the bricks-and-mortar outlet, increasingly it is being recognised that ‘the web in-store’ is a powerful means of connecting with shoppers, whether via the hardware employed is a mobile phone in the customer’s pocket or a fixed kiosk supplied by the retailer.

For example, it enables access to the so-called ‘endless aisle’ – allowing the retailer to use online channels to sell items that are not stocked in the store. Carefully managed, this can make the most of both the physical and virtual channels, balancing inventory with demand while maximising customer choice, and opening up the opportunity to virtually stock SKUs that are never physically held by the retailer but shipped directly from manufacturers or distributors.

Of course, e-commerce can achieve this on its own, too – but when the endless aisle is also available in-store, it can be used to upsell or cross-sell from items physically in stock, allowing those items and associated promotions to dram attention to other products as well. For example, a customer browsing washing machines might not find exactly that model that appeals to them, but merchandising material in the real aisle can point to similar products in the virtual, endless aisle.

And connecting the retail floor with the customer via digital devices can go much further than merely permitting access to extra products. Because the device is personal to the consumer, recommendations and advice can be delivered based not only on past shopping behaviour or general characteristics of their demographic group – as is the case with store cards, for example – but driven in real time by current behaviour, whether that is the scanning of a code in-store , interaction with a kiosk, or social media activity. In short, content that pertains to the intentions of the moment and to the store where the consumer is browsing, making the combined virtual and physical shopping experience more relevant than either on its own.

Harnessing data for in-store digital merchandising – whether through personal devices or public-facing media such as digital signage – is not only about acting on clues from individual behaviour, though. It can also draw upon environmental and social factors; examples could include a restaurant’s digital menu board promoting soup when the outside temperature drops below a given point, or a sporting goods retailer highlighting relevant brands according to the current standing of individual athletes or teams associated with them. Integration with EPOS and inventory systems has further potential for fine-tuning the message to the business’s requirements as well as the consumer’s.

Digital technologies can assist in improving the shopping experience as well as overt selling, too. For example, in a fashion retailer, screens can be used quickly to show how a certain combination of stock items would look as a complete outfit. Services entirely unconnected to the store’s own offer can also help to entice customers, as with the free wi-fi concept that has caught the interest of all the UK’s big-four supermarkets, or Spar’s promotion of Payzone bill-payment facilities on its digital signage network.

Human mediation need not be absent from the digitally enhanced shop, either. Many stores, for instance, the new Mothercare outlet in Edmonton, north London, are equipping staff with tablets or other devices (in this case, Apple iPads) so that they can assist customers in finding the digital information that will benefit them.


At the other extreme, digital media can make the shop work for the retailer even when it’s shut, or create new opportunities for entirely stock-free stores that are barely more than virtual.

Into the first category fall in-window screens that take advantage of prominent retail positions to entice consumers to engage digitally, whether that is by allowing touchscreen interaction or directing them to an ecommerce service on their own devices. The second category includes not only unattended kiosks (which can either vend directly, or again provide access to ecommerce) but also the increasingly common virtual stores such as the one operated by Tesco last summer at the North Terminal of Gatwick Airport with a very specific USP for departing travellers: allowing them to order groceries for delivery as soon as they returned from their trips.

It followed the debut of Tesco’s first virtual store in a South Korean subway, but whereas the Korean project relied on interaction via mobile phones, that at Gatwick also used fixed screens mounted on four refrigerator-style units. Consumers could scroll through these to browse products, then scan barcodes with their smartphones to add items to their basket.

Downloading of a free app giving access to many more products than the 80 or so on the interactive screens, and registration with, were required. Meanwhile, House of Fraser has shown how this model is extensible beyond supermarkets, with its format for stock-free stores in Aberdeen and Liverpool.

There is interest, too, in creating virtual stores that consist only of a window with no shop floor behind. City Dressing, a UK firm specialising in pop-up shops and virtual windows, epitomises this approach with its Virtual Retaility, intended to give retailers a low-investment presence on high streets by taking over the windows of empty sites with interactive installations. It can also provide a way to test new markets.


With technologies like these, retailers have come a long way from the ‘in-store TV’ model of digital signage that prevailed in thinking about digital merchandising in the bricks-and-mortar shop a decade ago. But there is still mileage in subtler successors of that model, combined with more personalised and interactive media.

For example, one of the most digitally active of all retailers, Media-Saturn, employs a huge network of TV-like screens in some 900 stores across 16 countries, carrying ads, educational content, branding and information on services such as delivery, alongside a variety of kiosk-based installations offering value ranging from music and movie previews, to ink cartridge product information, to mobile phone model recommendations. And more modest digital signage installations are also becoming more ambitious, in particular with the increasing adoption of video-walls combining multiple screens into a single large display – especially popular among fashion retailers. Futuresource Consulting has predicted that video-wall installations in 2012 will total an astonishing 380,000, up 60 per cent on 2011’s shipments, with retailers among the major new adopters. For example, Lacoste in the USA turned to video walls in an effort to immerse its customers in branding, installing them at three stores including its Fifth Avenue and Broadway outlets in New York. They show content tracing the history of the 80-year old brand, updated from Lacoste’s corporate headquarters. As Lacoste senior project manager Peter Wiegand explained, the retailer “wanted to convey our brand and communicate with customers in a very modern way. In order to do this we needed a solution that wouldn’t compromise on the quality of playback or be a barrier for Lacoste corporate to update the content.”

An installation like this, emphasising branding without attempting to immediately influence individual activity, seems conceptually far removed from one that delivers coupons to a customer’s mobile phone via NFC, or hypes hot drinks when a chill sets in, or sends a consumer to the retailer’s Website. But all exploit the ability of digital media to add a new dimension to the physical store which is quicker and easier to modify than conventional non-digital merchandising materials, enabling the retailer to respond to the company’s own changing imperatives and consumers’ shifting interests alike.

Speaking from Experience


image004“Our business in Korea is teaching us a lot about how customers and technology are transforming shopping. It gives us a unique window into the future and the chance to try out exciting new concepts. The virtual store blends clicks and bricks, bringing together our love of browsing with the convenience of online shopping.”

Ken Towle, internet retailing director, Tesco


image006“Where Virtual Reality separates itself from other virtual windows is that our windows incorporate other senses such as sound, smell, and touch, offering the experience of choosing goods in an actual shop. This enhances the shopping experience that online experience by itself can’t match. Bringing two or more senses together is a proven way to increase customer spend. Consumers who pass in front of one of our virtual retail shops will not only be able to feel and hear the brand, product or service being featured, but will also be able to purchase the products there and then by scanning QR codes with their smartphones.”

Jeremy Rucker, director, City Dressing


image008“The holy grail in retail is to increase purchase conversion rates by gaining a better understanding of the way shoppers actually shop a store. What is the path of their shopping journey? Where do they dwell in the store? What merchandising techniques are most successful in moving shoppers to traverse more of the store?”

Stuart Armstrong, president, Americas , ComQi


Considering in-store digital signage? Scala, one of the oldest and bestestablished software vendors in the sector, offers the following tips for getting it right:

1. Start with goals and metrics. Begin with a pilot installation, which is essential for learning, and be sure to have metrics in place to determine project success. Goals and metrics can be based on a mix of business (such as improving brand awareness and boosting sales of targeted products) and operations (such as system uptime).

2. Employ a cross-functional team. Marketing, communications, IT and visual merchandising all need to be part of your team.

3. Develop a content strategy. Retailers need to continually have fresh, bold content that commands attention of consumers. Digital signage should be part of an omnichannel strategy that addresses content across in-store, mobile, print and web channels to provide a consistent brand promise. Also link content with advanced analytics capabilities to generate meaningful messages that address exactly what shoppers are looking for in the store.

4. Determine customer engagement level. Will they just see your digital signage? Touch it? Use other technology – like mobile devices – to engage with it? And don’t forget to add some future-proofing for how digital displays may evolve in a year or two. For example, you may want to start simple to build experience and add touchscreens or multi-screen displays down the road, so plan in that flexibility from the start.

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