Why Beacons Are the Next Big Thing

There’s a war being fought in retail between the brick-and-mortar store fronts, and the e-commerce players. Physical stores have had to beat back e-commerce competitors, which often offer lower prices for products, due in large part to low overhead costs. Slowly but surely, e-commerce is nibbling away at the retail pie: The fourth quarter 2014 e-commerce estimate from the census bureau increased 14.6% from the fourth quarter of 2013, while total retail sales increased 3.7% in the same period. E-commerce sales in the fourth quarter of 2014 accounted for 6.7% of total sales. But brick and mortars are fighting back with beacon technology.

Business Insider recently reported it expects beacons to directly influence more than $4 billion worth of U.S. retail sales this year at top retailers, or 1% of the total). That number could climb tenfold by 2016. In particular, beacons — which alert shoppers to deals, specials and discounts on in-store merchandise, while the customer is in close proximity to the item — are the next evolutionary phase in store operations and can become integral parts of loyalty programs. Repeat shoppers are rewarded with personalized offers, generated via the beacon technology.

Beacons push out messages to shoppers, rather than gather data. Once shoppers “opt-in” to the location-based marketing program, their smartphones can detect the beacons. The smartphone relays a “VIP in store” message back to the beacon, which directs the information to a store associate’s mobile retail management device, and the store associate then personally greets the loyal patron.

Beacons could beat back much of the competition from e-commerce merchants because, despite online shopping’s growing popularity, approximately 90% of what people buy still comes out of brick-and-mortar locations, according to Adweek. In addition to burnishing loyalty programs, beacon technology, with its broadcast capability, can successfully entice passersby to come in. That is a clear and distinct advantage over e-commerce retailers, which must rely on search engines and word of mouth primarily.

Beacons can broadcast a “consider stopping in” message, which a shopper receives on his or her smartphone. That can drive new customers, who may not otherwise come into a store. An even more directed effort can be obtained through hyper-local marketing, which provides very specific messages to very specific customers.

Despite the growth in e-commerce, brick and mortars are stepping up the offensive by employing beacon technologies to communicate to shoppers the deals they just shouldn’t be passing by.

Bricks and Mobile Makes Retailers More Efficient

Payments take time: time away from selling — if you’re the retailer  — and from shopping, if you’re the customer. Either way, it’s a point of friction. The easier and faster that process goes, the happier retailers — and their customers — will be.

According to figures from eMarketer, the global retail market will see continuous growth during the coming years, and in 2018, worldwide retail sales will increase 5.5% to reach $28.300 trillion. And, according to the Keynote Executive Presentation at eTail West this month, Americans see an average of 29,000 marketing messages daily. That means competition is stiff for sales dollars. So, retailers that implement smooth payment processes and streamlined shopping experiences will receive a competitive advantage.

During the keynote: “Defining The New Retail Experience – Stores And Mobile” session at eTail West, Jamil Ghani, vice

Consumers using mobile to engage with retailers.

Consumers using mobile to engage with retailers.

president of enterprise strategy said that integrating mobile into stores results in bigger sales. Target recently redesigned its mobile app to create an efficient shopping experience, as well as to entice consumers to buy more products and steer the retailer toward its goal of becoming a bricks-and-mobile store.

The so-called bricks-and-mobile philosophy is a retail strategy that combines mobile and in-store offerings to drive sales, increase awareness of items that are on sale or otherwise “special” and let harried consumers get more done by providing features such as in-app shopping lists.

Another way to blur the lines between channels is to use digital signage to feature shopper-generated online content within the physical store. Shoppers engage with reviews and opinions and often become more certain of their impending purchase as a result. And, Rob Manning, content marketing manager at a digital marketing software provider, told CIO.com that stores can further “promote content sharing within stores by displaying [brand-related] hashtags on signage and on monitors and kiosks and encouraging customers to share content right then and there using the hashtags to enter to win a prize, receive an automatic discount code, and/or have their content featured on the website.

Experts agree that it is pointless to prevent customers from comparison shopping online while in store. So retailers should just go ahead and provide free Wifi. Shoppers finding alternatives online can be incentivized to stick around with a low price guarantee. And QR codes are still around; stores can put them to good use and have more control over the shopping experience by attaching them next to products with links to discover them easily on your site.

When customers finally reach checkout, retailers must provide the technology to facilitate mobile wallets. The technology will become critical, and a differentiator, in the near future.  Although Apple Pay has heightened interest in mobile payments recently, Google is the granddaddy, first introducing Google Wallet’s tap and pay feature in 2011. On Feb. 23, Google said it would partner with Softcard, a joint venture of Verizon Wireless, AT&T and T-Mobile. The Google Wallet app, including tap-and-pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by those carriers in the U.S. later this year.  The deal will expand Google’s reach, as well as provide more choices for consumers.

Is It Time To Update Your eCommerce Site?

The most successful retailers have updated ecommerce solutions — rather than vestiges from the turn of the 21st century.  A recent report from RSR Research notes that the highest-performing retailers have eCommerce sites that are positioned as being a vital part of the

Is your ecommerce website appealing?

Is your ecommerce website appealing?

customers total shopping experience. The laggards? Many times their ecommerce systems are in the way of their success.

According to the report:

It turns out that under-performers are far more likely to be hanging on to legacy homegrown eCommerce sites than their better-performing competitors. This is consistent with other studies that we have conducted; laggards are far more likely than Winners to operate old technology long past its “sell by” date. In the case of eCommerce, while it may have been true that retailers were forced to develop their own capabilities in 2000, in 2014 commercially available solutions (delivered as an outsourced service, “in the cloud”, or licensed for on-premise operation) offer far greater functionality and flexibility than yesterday’s custom sites could.

It’s important for retailers to get current with commerce technology because shoppers are leading the way. As shoppers rely increasingly on smartphones and tablets to research and ultimately purchase products, retailers that haven’t upgraded their mobile commerce systems will be left behind. The way customers are shopping differently than they did 15, 10 or even just five years ago: 44 percent of respondents told RSR that keeping up with evolving consumer shopping patterns was one of the top three business challenges.

That wasn’t the toughest hurdle, however, said those surveyed. Forty-six percent of respondents said getting customers to engage more with their brand online was their top challenge. Pushing content to consumers through email or texts may drive short-term results, but those techniques don’t necessarily promote repeat business or loyalty. To that end, many retailers are eyeing social media as a significant marketing tool. Fifty-seven percent of respondents said that social media will be a valid selling tool in 2015.

It’s critical for retailers to keep up with their customers’ technology use, just as they do with their tastes in merchandise. Implementing mobile payment systems, buy-online-pick-up-in-store and using geo-location to offer personalized shopping experiences are all ways in which the retailer of today will usher in the shopper of tomorrow.

Walmart Needs Tech Help. Now.

Customer satisfaction needs some urgent care at retailers nationwide, notes a survey of more than 8,700 people released today by the American Customer Satisfaction Index. And no company is in need of that more than Walmart.

The survey found that satisfaction is on the decline from last year. The drop was small, at 1.4%, but in an industry that claims to be fixated on enhancing the customer experience, that figure is disheartening. And Walmart didn’t just perform poorly, it received its worst customer satisfaction rating since 2007, securing the bottom spot on ACSI’s retail customer service ranking. In contrast, Nordstrom finished at the top of the list by a significant margin.

The problems customers have with Walmart as well as other retailers can be solved by the use of technology. These are not unique challenges. What’s holding back poor performers is the desire to invest in solutions. Let’s look at three customer complaints and ways they could improve with a technology makeover at the world’s largest retailer.

Complaint #1: Long Lines. Mobile POS can work wonders here. By equipping department associates with mobile POS, front end registers will have a lighter load. In addition, tablets can be used for linebusting, in which customers are redirected from a standard checkout and serviced via a m-POS. And, during the busiest store times, a clerk can collect a customer’s information while they stand in line for ultra-fast check-out when they reach the register. The mobile device connects to the database in real time, so the check-out process is already half-completed by the time the customer places the products on the counter.

Complaint #2: Shelves Are Consistently Understocked. By equipping the shelves with RFID antennas, EPC Gen 2

RFID tags can be used for a number of retail purposes.

RFID tags can be used for a number of retail purposes.

readers and tags, as well as an application that can run on tablets or smartphones, inventory can be accurately monitored. Managers can reorder hot selling products or lower the prices on slower movers.

Complaint #3: Unpleasant Associates. Technology that makes workers’ jobs easier is a sure way to increase job satisfaction. Training on mobile POS, for example, requires less training than traditional registers. Knowing when shelves need to be replenished rather than waiting until they are bare helps managers set the pace of the day. Ship to-store is a technology that intentionally drives customers into the brick and mortar establishment, but if the customer is greeted by a surly representative, ship-to-store will fail in its goal of enticing those customers to add to their baskets.

Mobile Is Crucial Part of Retail Strategy

Retailers afraid of mobile? No way — virtually all (93%) of retailers surveyed by Retail Systems Research said that mobile will help their employees meet customer service expectations. Long gone, apparently, are the bad old days when retailers feared showrooming by customers and distraction of associates. Today a vast majority (88%) of retailers say the purpose of their mobile strategy is to drive shoppers to the store.

Retail customer trends point to the growing popularity of mobile devices for shopping and payment transactions.

Retail customer trends point to the growing popularity of mobile devices for shopping and payment transactions.

“Consumers are in love with their mobile devices; the best thing any retailer can do right now is think creatively about how to leverage that relationship. And with stores in such need of reinvigoration, it has the potential to be a match made in heaven,” according to the study, entitled, “Mobile Retail Finds New Purpose.”

That means that retailers need to pay closer attention to what needs customers want mobile to satisfy. Right now, although the most popular mobile capability offered by 62% of retailers is “store locator,” it’s one that only customers 29% would find valuable. Other technology can easily provide that same function — a store can easily be found by using a smartphone’s map program, for instance. However, an app that helps shoppers search for and select merchandise is more highly valued by customers (59%), but implemented by only 49% of responding retailers.

Likewise, retailers need to assess how mobility can best serve their associates in their jobs. Although 47% of retailers noted that they have either piloted or implemented email, access to email is valued by only 25% of employees. Assisted selling, however, is valued by 53%, but implemented by only 27%. Also popular among employees (40%) was the ability to access corporate information about products and services; that mobile capability was offered by only 30% of retailers.

The survey also outlined the tremendous opportunities retailers could benefit from by adopting a mobile strategy. The top three advantages:

  1. Deeper customer engagement to build loyalty through mobile channels (65%)
  2. Deeper customer engagement to drive sales through personalized offers (62%)
  3. Deeper insights into shopper behavior through mobile site or app insights. (55%)

The survey defined a segment of respondents as “Winners,” and another as “Laggards,” and revealed a surprising trend:

“Laggards are even more bullish on getting deeper insights into shopper behavior through mobile site or app insights – a whopping 70% to Winners’ 51%. This is interesting, as it potentially points out a common tendency among those whose sales are hurting to overhype the saving power of a single technology. We call it ‘magic bullet syndrome,’ and it often leads laggards astray from what they really need to focus on.”

 

Retail CEOs Predict More Sales Growth Ahead

A recent study by PWC of CEOs found that while top execs in the retail market generally believe there are more threats to the growth of their companies today than there was three years ago, a majority also believe that there are more growth opportunities for their companies today than in 2012.

Among its findings, the survey found that 66 percent of those responding said they either agreed or agreed strongly that there was more room for increased sales today. Why might that be? Perhaps because of the potential various technologies have on retail. Mobile check out, beacons and data analytics are just a few implementations that can streamline and enhance the customer experience. And happy customers mean larger receipts.

When asked, “How important is/are mobile technologies for customer engagement for CEO’s

Location-based functions on mobile devices offer merchants opportunities to target their retail marketing campaigns and collect information about shoppers' habits.

Location-based functions on mobile devices offer merchants opportunities to target their retail marketing campaigns and collect information about shoppers’ habits.

organizations?” 81 percent of participants in the survey overall said it was either somewhat or very important; 89 percent of retail CEOs said the same. For a growing number of companies, mobile is becoming the primary sales channel, rather than simply a key channel. Statistics show the accelerated growth of mobile payments globally in the last quarter of 2014: 25 percent of global online transactions took place on a mobile device, 11 percent higher than in the third quarter of  2014 (23.3 percent), and 37 percent higher than the fourth quarter of 2013 (18.8 percent). A ‘mobile-first’ strategy is looking increasingly as though it is a viable solution for more businesses heading into 2015.

Data mining and analysis were also critical to CEOs. When asked, “How strategically important is/are data mining and analysis for CEO’s organizations?” 79 percent of all CEOs as well as retail CEOs in particular said they were either somewhat (26 percent) or very (54 percent) important. Beacons can be used to gather data that can direct retailers’ inventory selection as well as product placement. Such track and trace technology can even help retailers predict sales.

But all the customer-centric technology in the world will be for naught if retailers don’t step it up in the security department. With security breaches being reported seemingly every other day, it was surprising that retail CEOs were not more hardcore when rating the critical nature of cybersecurity. When asked “How strategically important is cybersecurity for CEO’s organizations, CEOs 78 percent of CEOs overall said it was somewhat (25) or very (53) important, while 68 percent of retail CEOs said it was somewhat (32) or very (36) important.

 

In-Store Purchasing Goes Mobile

If a brick-and-mortar or online store makes purchasing totally mobile — and offers personalized coupons — will shoppers will be more likely to purchase? A new Retail Consumer Sentiment Survey published by Merkle Inc. indicates that will indeed happen, particularly if the consumers are young.

Mobile coupons see increasing customer acceptance.

Mobile coupons see increasing customer acceptance.

A wide majority, 67%, of respondents under the age of 50 are interested in a totally mobile path to purchase. In addition, 46% under 50 would like personalized offers sent to their smartphones while shopping in-store. Those coupons should ideally also incorporate time and location.

Mobile offers are part and parcel of any modern loyalty program. But while  loyalty programs are supposed to retain customers and distract them from the competition, few — less than one-fifth — of consumers consider today’s loyalty programs to be a main differentiator. Many of those programs are price and transaction based, and the retail landscape is evolving. Just as important to many customers is a store’s personalized, omnichannel approach. According to the survey, retailers that master a personalized, omni-channel approach to loyalty generate results on the order of magnitude of 10 times the revenue of non-program customers.

A recent survey by Deloitte of 2000 customers found smartphones influence 19 percent of sales at physical stores. That’s up from just five percent in 2012. When PCs, tablets and smartphones are factored together, digital technologies influence 36 percent of in-store sales and that will likely increase to 50 percent by the close of 2015, according to Deloitte. In addition, 4 percent said they use a mobile device either before or during a shopping trip. For those customers using a digital device, the conversion rate was 40 percent higher at the store. Order size was 22 percent higher for digital-wielding in-store shoppers. The kicker? Eight in 10 would rather use their device or a kiosk versus talking to an actual human being in a store.

That doesn’t say much for in-store customer service. But it does point to a certain type of customer, at a certain type of store, that could be made to feel special through technology rather than the personal touch.

As Paul Schottmiller, Merkle senior vice president, strategy, retail and consumer goods noted: “Consumers’ expectations are high, and retailers have never had more options for using technology to deliver differentiated customer experiences.”

Local Gift Shop Continuously Evolves with Retail Pro Analytics, Gives Back to Community

In the historical town of Lexington, Mass., retailers walk a fine line between respecting tradition and embracing modern business practices.CY_WhiteSignLg Crafty Yankee, a fine gift shop located right where “the shot heard round the world”was launched, started using Retail Pro as its retail management solution in 2000, leveraging its robust functionality to transform what originally was a sleepy little business into a vibrant, charitable part of the community. Kathy Fields, owner of Crafty Yankee, has a rich background in retail. She had worked in senior positions at Dillard’s and Federated Department Stores before taking a (very) early retirement in her mid-forties. But her retirement didn’t go quite as planned. Kathy Fields bought Crafty Yankee from its founders in 1994, wanting to take on a business that would free up her time and allow her to give back to those less fortunate.

 

Embracing Modern Business Practices

Shortly after the acquisition, she recognized the need to put in a computer system. Initially, she opened a couple satellite stores and networked computers so she could be away from the store—perhaps enjoy a vacation—and still be in touch remotely. Business was growing but Fields eventually realized she needed to consolidate her business into one location and, to be successful, have a thorough understanding of which merchandise was selling and when it was bought. Knowing those sales trends would give her a concrete understanding of what was going on in her business so she could offer popular products and streamline inventory. CY-SpringStoreFront.Best (1024x683)

 

Using Analytics to Reshape the Store

Crafty Yankee found Retail Pro’s analytical capabilities exceptionally valuable in accomplishing this end. “By having good computer information, I can constantly reshape the store,”said Fields. “We must change with the customer: Patterns, age, tastes.” Retail Pro 9 gave Fields tools to analyze Crafty Yankee’s $1 million business by key segments. The store has been using Retail Pro 9 since 2012 and Fields credits the software with contributing to the store’s consistent, healthy growth despite a stagnant overall economy. Knowing what sells—and what doesn’t—is critical to every retailer and Crafty Yankee has adopted an analytical method with Retail Pro.   No guesswork here: “I like to analyze my business in lots of different segments. It’s important to me to start from the top. Let’s say we had a 20% increase last month. Where did that come from? Jewelry? Glass? Pottery? Once I see the trend in the data, I can break it down by vendor or resources. And I can compare that data to last year’s.”

 

A Technology Update that Made a Difference

None of that could have happened if Crafty Yankee had remained with its original retail management platform, CraftShop, which she started using in 1995. Much of the data was difficult to extract and it required quite a bit of manual work. “What I liked from the beginning with Retail Pro was that they saw what I had with the CraftShop system. It was pretty complicated,”said Fields.  Realizing she needed a more robust system, she started researching other software solutions, finally determining that Retail Pro was the best fit for her needs. “I have thousands of items and people would tell me, ‘You’re going to have to re-enter all that information.’And I said, ‘I don’t think so!’” CY-Interior Scarves

 

Targeted Growth that Enables Philanthropy

The Retail Pro platform, together with Fields’ business acumen, positioned her gift emporium for rapid, targeted growth. “I can learn about my business on any day of the week, as well as a specific date of business. I can compare Mother’s Day, Easter, wedding seasons.” I’m looking across the information in a lot of different ways: Top producers by vendor. Who is downtrending? Who is trending up? Our other system was just not as granular; jewelry for example, can be subcategorized. I can put more criteria in the system, which allows me to analyze each item,”Fields said. “We’ve been so successful because of the good computer information I can analyze. We are able to constantly reshape the store. If I hadn’t changed it, year after year, based on the information I get from the Retail Pro solution, the store would be out of business.” And what about the idea of giving back to the community? Crafty Yankee sells a number of items where most, if not all, of the purchasing price is donated to charity. Sometimes, retirement is overrated.

To learn more about Crafty Yankee, visit http://www.CraftyYankee.com.

To learn more about the Certified Retail Pro Business Partner supporting Crafty Yankee, JD Associates, visit http://www.jdapos.com/

The Key To Increasing In-Store Sales? Mobile

Digital retail growth is slowing, but the key to pumping it up likely exists in the palm of customers’ hands.

Sucharita Mulpuru-Kodali, vice president and principal analyst at Forrester

How are consumers using mobile to engage with retailers?

How are consumers using mobile to engage with retailers?

Research and a research partner for the NRF’s State of Retailing Online recently noted that digital retail continues to be strong but growth rates appear to be slowing slightly. She noted that in recent years, many retailers experienced high double-digit growth; now, fewer retailers report that level of fast growth.

It’s important to remember that slower growth doesn’t mean no growth at all. It just means the rate is no longer at breakneck pace. And as e-commerce continues to nab a bigger piece of the retail pie, it will become more difficult to rack up huge percentage increases, although the amount of revenue will rise handsomely.

Still, how to grow those sales? Retailers should look for expanding existing avenues that are succeeding. And that means investing in mobile commerce.

Mobile shopping retail sales in the US were $70 billion in 2014, and Goldman Sachs Group predicts growth to $173 billion by the end of 2018. Goldman’s research found that nearly half of all smartphone users have used their phones to locate store information, such as location and working hours. Clearly, consumers are comfortable with the devices, so it makes sense for retailers to capitalize on that comfort zone, by inventing customers to use their mobile devices while they’re in the store. Wipe away fears of “showrooming” — that’s a thing of the past. The future lies in letting customers access all the information they need to make a decision while still in the store. It’s all about location, location, location for brick and mortars.

The potential growth comes from retailers working with and appealing to mobile phone users. While Forrester Research Inc. says 42% of the world will own a smartphone by the end of this year, research firm IDC notes that just 16% of enterprises have a mobile strategy. Retailers should look at ways to become more aggressive in reaching out to mobile consumers, as conversion rates are typically only 1% on smartphones compared with 3% on desktops. Too often, shoppers can’t find what they want on a mobile site, it’s too difficult to checkout, or service is just too slow.

By embracing mobile shopping within the confines of the physical store, brick and mortars may actually extend their reach. Consumers spend in-store time on their phones, comparing product information. Smart retailers are pushing product information of their own to shoppers’ phones as well, increasing the shopper/retailer connection. And enhancing that connection is key to a revenue uptick in 2015.

Mobile Payments Start to Take Shape

Once upon a time, customers had very few options for mobile payments. Today, the technology is improving rapidly and options are growing. More than a quarter (27%) of consumers plan to use some form of mobile payment solution in the next year. Whether that type of payment will be through Apple Pay, Google Wallet or CurrentC — or through digital gift cards — remains to be seen. And a new player has arrived on the scene as well: Samsung’s LoopPay.

LoopPay is unique because it piggybacks on an older, pre-existing technology that virtually every retailer already has: the magnetic stripe. With LoopPay, a metallic coil generates a magnetic current that transmits to the magnetic strip card readers found in most modern payment terminals.In contrast, Apple Pay and Google Wallet are mobile payments services that depend on NFC hardware — the phone communicates wirelessly with the contactless payment terminal.

In adidition, digital gift cards are a large part of the overall mobile payment picture. eGift cards are emerging as part of retail’s payment and loyalty solutions. For example, Starbucks’ reloadable digital gift card acts as a brand’s own currency to add efficiency and reduce cost at the point of sale. But customers must be incented to participate is such programs, so they are rewarded with some of that savings in the form of loyalty points and discounts.

But those plastic cards may soon fade away, replaced by digital counterparts. eGift cards provide always-there access to the money stored on them. Research from eGifter found that 53% of consumers have reached for a plastic gift card only to realize it wasn’t on them when they were getting ready to pay for an item. That dynamic has contributed to more than $27 billion in gift cards going unused from 2007 through 2013, with another $1 billion

in spillage expected this year. While current gift card laws have reduced such spillage, mobile wallets are poised to further correct the problem. Digital gift cards are designed to work in tandem with digital wallets; however, when plastic cards are in the mix, 40 percent of consumers are willing to scan them into a digital wallet to be certain that they always have their cards when they need them.

As retailers implement mobile payment technology, consumers’ willingness to use a particular type or types of technology will determine which ones stores ultimately embrace.