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12 approaches that work - The Strategy and Innovation Report 2015

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Retailers that develop new technologies and adopt new retail approaches stay ahead of the competition and set the pace. Here are 12 ideas that have been successful in the marketplace

1. Create concepts that work and keep developing them

The popularity of click and collect has grown quickly in recent years, and today most retailers see demand for this solution rising fast among customers.

The retailer credited with coming up with the concept, Argos , is still developing it today. The ability to order online and collect in-store now underpins an Argos hub-and-spoke logistics model that brings 20,000 items within same-day reach of shoppers, and also now powers same-day Fast Track deliveries. Customers can order from wherever they are, using a computer, smartphone or tablet, to pick up wherever is most convenient. The retailer’s own stores are located both in traditional locations and in new places such as Cannon Street Tube station.

Argos has also developed partnerships with online marketplace eBay and with Sainsbury’s  to leverage the power of click and collect. eBay shoppers, for example, can pick up their purchases in Argos stores, while Sainsbury’s customers can drop into an Argos store-within-a-store inside growing numbers of branches of Sainsbury’s supermarkets. These are highly innovative approaches that seem to be gaining the retailer a real advantage. Argos says that while around half of its total sales now start online, 90% of customers will visit one of its 755 stores to pick up their goods.

2.  Move fast to adopt winning technology

The mobile payment arena is full of alternative methods vying for consumer interest, but until recently no clear winner had emerged in the market. UK retailers, including Ocado , were fast to offer customers the chance to use Apple Pay to make fingerprint-authenticated payments via a smartphone or iPad when the method launched in the UK this summer. Within hours of Apple’s announcement of the launch, made in early June, Ocado said it would adopt the new technology. The online grocer’s retail boss, Lawrence Hene, said at the time that the one-touch checkout would simply make it easier for its customers to buy via a small screen – rather than entering their card details in full.

“Our customers love the convenience of checking out their grocery shop in just a few taps using our Ocado ‘On the Go’ iPad and iPhone apps, and Apple Pay will allow us to offer an even more convenient, secure and private way to shop,” said Hene. “We’re excited to be once again pioneering new technology and we’re expecting our customers to welcome Apple Pay with open arms.”

3. Bridge the gap between store and online

A growing number of online retailers are finding that, by opening stores or showrooms, they meet a consumer appetite to touch and feel products before they buy.

Traders from Made.com to Simply Be [ went several steps further. It developed technology in-house to power personalised home pages. Visitors to the very.co.uk  website see a homepage reflecting their interests, as determined by complex algorithms that predict customer behaviour to show relevant products and offers on the home page. The retailer generates promotion affinity scores that rank offers by relevance to each customer. Altogether, says the company, it can serve more than 1.2m versions of the website and it expects to offer 3.5m different versions by the end of 2015.

When the technology launched, Shop Direct chief executive Alex Baldock said: “We know that relevance wins in retail and right now customers are drowning in a sea of irrelevant choices. We’re making it easier for them to shop by tailoring our websites for them. This is the digital equivalent of Selfridges laying our their Oxford Street store for each shopper.”

5. Enable shoppers to use new devices

If Apple’s Watch proves even half as successful as the company’s previous devices, from the iPhone to the iPad, strong consumer demand could make an app designed for the smart-timepiece a must-have accessory for retailers. On the other hand, Google Glass has as yet failed to realise its expected potential as a must-use shopping device.

Smart retailers assess new devices quickly, and launch apps that both make business sense and give the customer something that’s truly useful. Marks & Spencer, for example, adapted its in-house-developed Cook with M&S app for the Apple Watch, using the device’s strongest points.

The Cook with M&S Apple Watch app features a shopping list feature, where shoppers can tick off grocery items as they buy them, and timing notifications that keep them alerted to the next recipe step.

At the time of its launch, Peter Wright, product developer for M&S Digital Labs, said: “When we first developed Cook With M&S we were aiming to provide not only recipe inspiration but a tool that offers practical help in the kitchen. In the Digital Labs team we always ask how tech can improve the customer experience, and specifically for the app, how can digital enhance the cooking process?”

6. Test, test, test – and measure

Retailers with in-house labs are using them to test new retail solutions at a smaller scale before they are put into operation. Argos’ lab is above its Victoria Street store, enabling it to check how shoppers receive the latest ideas in a test store before rolling them out more widely.

Sarah Baillie, head of multichannel development at House of Fraser , emphasised the importance of testing new innovations when she spoke at the Internet retailing Conference in 2015. She said it’s important for retailers contending with multichannel complexity first to use customer insight to see how behaviour is changing – and then to implement relevant solutions with an agile, fail-quickly approach. By trialling on a small scale, developers can both learn and share knowledge across the business. Testing shows what’s worked and what hasn’t. “With so many tests,” she says, “you’d look at it and think you know what the outcome will be – but this isn’t true. There have been things we thought were really successful, but didn’t move the needle as much as we thought.”

By continuing to measure results even once a new approach is implemented, traders will know when customers’ behaviour is changing, and when tweaks are required to make a service relevant once more.

7. Push the possibilities of technology

Ecommerce is built on retail technology: joined-up cross-channel trading just isn’t possible without it. But by thinking how other areas of science and technology, beyond the direct retail sphere, might support the business, smart retailers are tapping into expertise in areas from artificial intelligence to psychology and beyond.

Ocado is harnessing the power of robotics by designing a warehouse assistant to meet its backroom needs. The online grocer has invested in research through the SecondHands project to develop a behind-the-scenes humanoid helper capable of learning from and assisting its human colleagues. James Parnum, business director at Manning Gottlieb OMD, says this is a good example of how retailers are starting to humanise the technology. “The thought of technology as an enabler of emotion sounds like an oxymoron, as it is often accused of being cold, detached and lacking warmth,” he says. “Yet, products, communications and experiences that ignite the system one, or right side, of the brain have widely been proven to build healthier brands and drive stronger business growth. Unsurprisingly, we are starting to see examples of businesses testing the waters with ‘humanising technology’, especially in the retail sector.”

8. Find new ways to connect with audiences

Successful retailers are finding new ways to talk to and engage with customers, wherever these customers are. For many retailers, this now means venturing well beyond the company website, and finding relevant places to talk to the target audience. Thus, Lidl has partnered with parenting forum Mumsnet to promote its goods through such mechanisms as a lunchbox generator.

Burberry , which deservedly prides itself on its digital innovation, recently collaborated with Snapchat to preview its spring season 2016 collection the night before the official London Fashion Week catwalk show in September. It has also become the first brand to have a dedicated channel on Apple Music, a vantage point from which it can provide a soundtrack to its customers’ lives, as well as engaging around something that has emotional rather than financial currency.

“There are so many extraordinary British artists, and it is a privilege to have the opportunity to work with them and showcase their incredible talent,” said Christopher Bailey, chief creative and chief executive officer at Burberry, when the partnership was announced. “Music has always been intrinsic to what we do and I am excited about our partnership with Apple on this amazing platform, which will enable us to take what we do now with Burberry Acoustic and share it with an even bigger audience.”

9. Try concepts that work in other industries

Travel retailers were among the first to redevelop stores to include digital – and now these companies are among the first to introduce gaming technologies to stores. Travel businesses are different from many retailers in that they’re selling an idea, rather than a thing. The traditional business in this space relied on pictures and anecdotes to inspire holidaymakers, but today new-format digital stores from retailers such as Tui Travel-owned Thomson are inspiring shoppers confronted with a world of choice to make decisions through interactive maps, social media feeds and recommendations, with face-to-face advice from expert staff too.

Thomas Cook has gone still further, introducing gaming device the Oculus Rift to selected stores in three of its key markets. Would-be holidaymakers can ‘test drive’ a hotel, helicopter ride or other activity through this immersive experience.

When the experience was first trialled, Joanna Wild, managing director of the Thomas Cook retail network, said that, “using developing technologies, demonstrates our ambition to leverage digital advancements to further improve the customer experience – in this instance to enhance what our customers experience in retail today, and in the years to come.”

10. Rethink ideas around customer loyalty

Loyalty schemes that shoppers can use to collect and redeem points – and discounts – across sales channels help retailers towards that all-important single view of the customer. But those providing such schemes have to give shoppers a real reason to use the schemes, whether that’s a generous number of points, or deals that are directly relevant. Recent stand-out offerings that meet this standard include the personalised discounts offered through the myWaitrose scheme, which sees shoppers nominate the 10 items they would like to have a regular 20% discount on, whether they buy them online or offline. In the first three months of the scheme, some 700,000 shoppers signed up to pick their own offers.

More recently, M&S launched its Sparks members club following consultation with shoppers. Use of gamification means that shoppers must collect sparks in order to ‘unlock’ new discounts. Being a member is no longer enough for VIP previews of the sale, for example. That now requires 5,000 sparks, earned not only by spending with the brand, but also by engaging with it: a product review earns 25 sparks, for example.

“As a member you are more than a customer,” said Patrick Bousquet-Chavanne, executive director at M&S, launching the club, “and you’ll get the most from M&S, with tailor-made offers, priority access and invites to exclusive events. It’s a two-way relationship: members tell us what they enjoy, select their own tailored offers and are rewarded for sharing their views.”

11. Know what’s to be achieved

By being clear about the purpose of a new innovation, traders can be sure that it is something that fits the context of the wider business, rather than a project that seems attractive but fails to fit the brand.

When House of Fraser introduced augmented reality to its Home brochure, it had a clear strategy in mind. It knew that because its mobile site and app converted well, the feature, which enables shoppers to scan the page of the brochure in order to unlock digital content, had a high chance of success. But it was also important, says House of Fraser’s Sarah Baillie, speaking at IRC 2015, that it spoke to early adopters of technology. “We want to signal to customers that we’re a digital brand, and to drive downloads of the app,” she said, adding: “The numbers we needed for payback have happened already – this was a very successful trial.”

12. Match innovation to product

Consumers’ attitude to shopping online varies according to the price tag of the item they’re buying. When it comes to luxury cars, most customers are hesitant to buy without seeing for themselves. One seller of such motors, Amari Supercars, is deploying a new approach that it says can help to overcome that nervousness. It is using GoInStore wearable technology at its Preston showroom to give would-be buyers the chance to see a car for themselves – without making the trip. To date, Amari has sold at least three cars using one-way video and two-way audio feeds that come from a smartphone or wearable glasses.

Sheikh Amari, chief executive of Amari, says the technology gives his expert sales staff the opportunity to convey their knowledge about the cars they sell and to answer buyers’ questions. “Our customers, who include investors and collectors, are very busy people, based all around the world who typically know what they want but often have to rely solely on the pictures that are on the website. This new technology enables our customers to travel to our showroom in real-time and experience the cars remotely.”
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