The omnichannel world is here and, says Paul Skeldon, this means companies have to think about the place of the bricks-and-mortar shop within a retail experience where the real world and the digital realm merge at the edges.
You could be forgiven in recent months for thinking of the high street shop, the bricks-and-mortar retail outlet and even the shopping mall as being poised to go the way of the woolly mammoth. However, in an increasingly cross-channel retail climate, it would be hasty to write off the big beasts.
The important thing to realise here is that, even in the age of the internet and mobile, the shop is a key part of the overall experience that shoppers increasingly expect. Forget the highprofile store and chain closures of late. These have largely been down to a failure to adapt physical retail outlets so that they fit with the overall cross-channel needs of today’s consumers. “The internet isn’t killing the high street, it’s simply altering customers’ expectations,” says Guy Mucklow, CEO, Postcode Anywhere . “The failure of these wellknown brands is solely down to failing to adapt to changing consumer preferences. The perception is often that consumers are turning their backs on the high street when in fact the modern consumer wants to shop in a variety of different ways, without giving up on any one method. Getting it right, however, is definitely an art and not a precise science.”
But some retailers are applying the processes of precise science to the problem. Marks & Spencer has opened its own digital lab to help it develop and exploit technology to create a leading omnichannel offering. As part of the move, the retailer has appointed Kyle McGinn – who previously worked at Reevoo and is credited with aiding the design of the BBC iPlayer – as its new head of digital to lead the innovation function within the digital team.
The opening of the lab comes after M&S pledged in its third-quarter results published in January that becoming a multichannel retailer was key to its business development, following a 10.8 per cent rise in multichannel sales last year – fuelled by a staggering 90 per cent boom in mobile retailing.
“Over the last 18 months, we’ve really embraced digital experimentation from being the first retailer to join Samsung’s smart TV platform to the inclusion of Aurasma technology in our app,” explains Laura Wade-Gery , executive director of ecommerce & multichannel – and McGinn’s new boss – at M&S. “By strengthening our in-house expertise, with a dedicated digital lab we can move with even greater pace and deliver first-to-market technology and experiences for our customers.”
The move marks a cultural shift within retail that is starting to put digital technology at the heart of what companies do, including in stores. But while this new approach is starting to take hold rapidly – HMV has really given people the willies: from £1 billion company to zilch in a decade – the idea is not so much to make everything digital, rather for retailers to look at how to use digital technology to deliver the best experience for customers on whatever channel these customers use.
In store, this clearly covers everything from store layout and design, point of sale, shop floor information and even the ambience of the place, as much as it means bringing the ‘endless shelf’ of the internet to bear in store.
“We are entering a world of true omnichannel: the virtual and physical worlds are converging,” says Jonathan Glanz, director of omnichannel retail sales, Certona . “The web, mobile and instore must truly be a consistent brand experience at all touchpoints along the path to purchase. The advantages of the web include bringing the full assortment to the table, and in a world of just-intime and direct-order fulfilment that vast sea of choice is growing every day. The key to in-store digital experience must be to bring that endless aisle into the store but to curate that unlimited selection to the individual in a way that is contextual. In other words, the right personal product recommendations, at the right time in the right place.”
Glanz gives an example: “If you try on a great sweater in green and you are wondering if it comes in more colours, you should be able to look down at your mobile device and be shown – without searching or finding an associate – that it comes in black. You need it in a small? You see that this is not available in the store, but with a click of a button you make the purchase at the same cost and it is shipped overnight for free. As you make this purchase you are offered a personalised recommendation for the perfect shirt that goes with that sweater. You look up and see that shirt, try it on and buy it in the store.”
Many in the vendor community agree with Glanz, that personalisation is the real key to developing omnichannel services and, in the battle to reinvigorate the high street, mobile technology is being seen as the route to doing this.
“Customers these days have a whole raft of data about what they like, what they do, their social media posts and interactions and shopping habits,” says James Lovell, lead solutions consultant for the European retail team at IBM . “Retailers need to gather and use this information to design how each part of their omnichannel strategy needs to work – and this dictates the technologies you need to make it work.”
Lovell’s view is that ecommerce systems are now better described as interaction platforms, and they are driven and refined by data about what consumers do. But getting this data in store has always been challenging.
“Most retailers have the ability to capture digital data, but they struggle in capturing physical store data,” he says.
But mobile again holds the key. “Mobile used to be talked of as the glue that would hold multichannel retail together. Now I think it is the foundation on which it has to be built,” says Allan Davies, CMO, Symphony. Davies – and many others in the industry – believe that mobile holds the key to developing personalised experience across all channels because it has the ability to create a two-way relationship with the consumer, through which their tastes can be discerned and acted upon.
And this is the real challenge that retailers face: bringing together their ecommerce and m-commerce strategies with their store design and staff training under the auspices of user experience and that nebulous idea of brand values.
“The challenge is very much psychological as much as technical,” says Dan Cohen at TradeDoubler. “Retailers have to look all channels in a much more holistic way and adapt the experience to the location and device the consumer is using.”
This involves understanding how consumers shop with you – which is where data gathering and data analytics are key – but also then how you actually run your business, believes Cohen.
“EPOS starts to play a critical role,” he says. “It has to be able to attribute who bought what through which channel so that you can keep optimising what you do. And then stock control becomes crucial as you need to stock what works in store in preference to what you are seeing happening online. This is what the move from multichannel to omnichannel really boils down to.”
The design of store is also becoming a key element in this shift to omnichannel. Apple is (rightly) held up as the shining beacon here right now, but other retailers are starting to get things right here too.
Apple’s stores – which it has recently, at the third attempt, managed to patent the layout and design of, right down to the cantilevered shelves and the rows of tables in the middle – are becoming something of a benchmark for how the future of the retail environment will look. The use of the company’s own technology, and the ease with which customers can find, order, pay and leave is exemplary, and finely tuned to the whole Apple experience.
Disney has also revamped its shops, shifting the ambience from a merchandising model to a ‘destination experience’ model.
Aero Postal in the US is pioneering iPad kiosks in its stores to engage younger customers with the view to getting them engaged and learning all about them – and then hopefully converting them to bring their own devices into the store further down the line.
“The iPads are designed to let young customers build cool outfits, watch style videos for ideas, shop the look and – most importantly of all – email what they want to mom. They can also send it home and buy it online,” says Carin Van Vuuren, CMO, Usablenet. “But the really interesting thing is that allows the young shoppers to vote on songs they like and ask for them to be played, which means they hang about in the store waiting to hear them.”
Kiosks – or something more akin to a hybrid between kiosks and iPads – are starting to hit the market again, fuelled by this shift towards in-store online activity. One iota has introduced SmartPod which is designed to help, through cloud computing, retailers get a toe in the digital in-store waters.
SmartPod allows consumers to use a kiosk if they don’t have, or don’t want to use, their own devices, while the powerful cloud-based software that sits behind it also lets retailers offer the right experience to those that are on mobile or tablet.
SmartPod is a completely managed service comprising hardware, applications, secure chip-and-PIN-based payments and a developer framework. The full launch of SmartPod follows the launch of SmartPod kiosk in September 2012 for fashion retailer, Footasylum.
David Hague, CTO of One iota explains: “SmartPod gives retailers the ability to drive new sales across their extended range and provides a simple solution to covert sales for out-of-stock items. We continue to invest significant resources to ensuring that SmartPod becomes the leading in-store technology offering in the UK.”
In August 2012, Tesco famously launched its virtual grocery store in Gatwick Airport to capitalise on its success in Korea with virtual stores. This offers a glimpse of how shops may not even be in shops any more, but where consumers are doing something else.
“The virtual store blends clicks and bricks, bringing together our love of browsing with the convenience of online,” explained Tesco’s internet retailing director, Ken Towle, at the launch. Which came hot on the heels of a range of pop-up digital shops from Tesco – selling clothes on a wall in Covent Garden – to Ocado in the City of London and Birmingham.
Could this be the future of retailing? Do we really actually need physical shops at all, when we can use a big screen or even just pictures of goods on the wall of the subway, as has been trialled in Tokyo? Could it be that HMV, Blockbuster and Jessops are just the first to fall in the digital revolution?
Postcode Anywhere’s Mucklow believes that there will always be a place for shops and that these high-profile high street closures are down to companies not understanding how consumers are changing.
“It would be unfair to suggest that Blockbuster didn’t attempt to tackle the online market – its DVD rental service was launched online only just last year,” he says. “However, as with HMV, the company simply waited far too long to jump on the online bandwagon in an already crowded marketplace.
Consequently both sites were publicly flogged for poor customer service and website usability.”
And while there is no doubt that technology is the key driver for change in the retail market – from self-service checkouts in a local supermarket, through to being able to ‘try on’ jewellery using an augmented-reality mobile application, there’s a caveat here. “None of this matters without a well-placed and user-friendly ecommerce site to provide a strong basis for retail success: online should work in harmony with the high street store – not hinder it,” warns Mucklow.
Speaking from Experience
CONSUMERS EXPECT CHOICE
“Retailers can no longer afford to rely solely on shoppers buying from their physical store. A successful offering is likely to see retailers expanding and strengthening their traditional offering into a multichannel approach, incorporating both mobile and social commerce in order to provide new avenues to convert sales, while also benefiting from the competitive pricing of services such as click and collect. It’s not a case of either/or when it comes to physical stores and ecommerce.”
Guy Mucklow, Postcode Anywhere
BREAK DOWN SILOS
“If you haven’t approached this from an omnichannel perspective then you are going to have problems. Do you have webservers in place that allow you to let different interfaces communicate with each other? It is no good still thinking in silos. The web, mobile, CRM and POS all now have to interact and work together.”
Carin Van Vuuren, CMO at Usablenet
KEEP TAKING THE TABLETS
“Tablet traffic is growing rapidly, but from a low base, but be prepared: this time next year everyone will be bringing smartphone, tablets and phablets like the Galaxy Note into stores and they will want to use them. You have been warned.”
Dan Cohen, TradeDoubler