Brick & mortar borrowed this from online retail and increased revenue by 5.1%

 

 

Brick and mortar has learned a thing or two from online retail, and last December shoppers took a meaningful notice.

By focusing on and improving their buying online and picking up in-store (BOPIS, also called “click and collect”) offerings, retailers experienced a never-before-seen surge in shoppers using the service.

Retailers saw the strongest holiday sales growth in six years, with revenue increasing 5.1% to more than $850 billion this year, according to Mastercard Spending Pulse.

Online shopping also saw large gains of 19.1% compared to 2017. And established brands were a significant part of that good news: Walmart, Kohl's and Macy's reported healthy sales and saw stock gains.

 

Giving shoppers anytime access to goods pays off

By offering true 24/7 access to goods, retailers were able to provide what customers wanted at a time that was convenient for them to shop.

For those who wanted to do some thoughtful shopping but were short on time during regular business hours, being able to browse selections from the comfort of a sofa or bed, pay and pick them up when convenient added some much-appreciated stress relief during what can be a very busy season.

“By combining the right inventory with the right mix of online versus in-store, many retailers were able to give consumers what they wanted via the right shopping channels,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Inc., in a release.

And Frank Layo, managing director at Kurt Salmon, part of Accenture Strategy, told CNBC in an interview that the top five "click and collect" or BOPIS retailers were Bed Bath & Beyond, Best Buy, Kohl's, Target and the Home Depot.

BOPIS was up 47% this holiday season compared with last year, according to analyst reports.

For example, Target reported that it expected order pickup volume would triple this holiday season compared with last year's.

 

Incremental sales increase from wider product offerings

During the past few seasons, brick-and-mortar retailers have worried about being bested by their e-commerce competitors and for good reason.

Online stores are conveniently open around the clock, offer a level of personalization and can provide an inventory with variety that couldn't be accommodated with the footprint of any department store.

Click and collect changes the game, however.

Many stores now let shoppers view inventory in stock, allowing them to place an order that is ready for pick up within a couple of hours.

But they also feature the ability to shop from a wider variety and have that item shipped to the store for pickup. The shopper saves on delivery charges, can see the product before accepting it and is able to take advantage of a wider selection than is offered on the retail floor.

And the stores benefit from incremental sales at pickup too. For example, Kohl's reports an average attachment rate of 20% to 25% for additional in-store purchases.

Retailers this past holiday season seem to have taken the adage, "Nothing ever changes if nothing ever changes" to heart.

 

Is it really discovery shopping if Amazon found it for you?

Effects of data-driven curation on discovery experiences

 

 

Remember when a trip to the store could yield a new discovery -- an unplanned purchase but one that delighted the customer?

Ecommerce handles specific shopping needs seamlessly and efficiently: Search for “motorized pedal exerciser” and buy it in less than three minutes.

But so-called "discovery" shopping — such as figuring out what to get your hard-to-shop-for great aunt for her 90th birthday — is much easier to do through brick and mortar browsing.

 

Selling discovery experiences

The world of in-store commerce offers shoppers an experience, an interaction with others that can't be replicated online.

In the best-case scenario, the experience is enjoyable and memorable, one that a shopper wants to repeat with that retailer and emulate at others.

No matter how good a recommendation engine or a chatbot is, the feeling a shopper gets from finding a perfect product can only come from shopping in a physical store.

That is, until an online retailer aggregates its collected data and presents it in a physical store as a curated collection to reach a specific audience.

If an online behemoth parlayed all the knowledge it has gleaned from the data it has gathered about its ecommerce shoppers, that retailer could be very well positioned against its competitors, online as well as brick and mortar.

 

Peer-based discoveries

Amazon has recently opened a handful of Amazon 4-Star physical locations, which are designed with discovery in mind. All the items are top-rated, and the selection will change frequently, depending on their customers' ratings.

The first, in the SoHo section of New York City, offers at-a-glance products that are "popular in SoHo," "frequently bought together" and "most wished for," among other categories.

Amazon can easily put these displays together due to the data it collects on its online shoppers. And that data collection continues to grow offline.

Amazon-exclusive products are also available, and Prime members get the Amazon price, while non-members pay MSRP. Signing up for Prime in the store not only provides customers lower pricing, but also adds to Amazon's information database.

Shoppers can see how many ratings a product has received and what the average rating is. Others have reviews displayed nearby.

The combination of a physical location and all that aggregated data is a fierce combination.

 

Personal discoveries

However, "discovery shopping" is more than simply sorting through trends and selecting from the most popular items.

If that were the case, small, specialized shops and boutiques would not be frequented, shunned for larger, on-trend department stores.

But the opposite is largely the case.

Discoverers aim to find the one-of-a-kind for a more personal gift or to satisfy their own personal taste. That's more likely to be found in a shop on Main Street than online, because it is not mass produced, so it therefore can't have hundreds of reviews.

 

In the end, Amazon's strategy for its physical stores, and any others like it, will mirror that of large department stores that have built a decent ecommerce channel.

Those stores, such as Macy's, Target and Kohl's, can also look at their data, slice it up regionally and offer only those products based on that data.

While not quite as personal as the local shop on the corner, there's a huge opportunity for larger companies to meet their customer needs more precisely.

 

How retailers are actually spending their customer service dollars

 

 

When companies describe themselves as having "excellent" customer service, the claim sounds user-centered but too often it's actually just a company-centered focus trying to position themselves as user-centered.

Those companies are generally concerned with efficiency and reducing costs first and foremost, and are just hoping to improve customer relations by osmosis, without actually doing the work to get there.

 

Questioning ROI on CX investments

Some retailers resist customer experience investments, believing they do not provide a significant return on investment.

However, Gartner reports that when it comes to making a purchase, 64% of people find customer experience more important than price.

Constantly trying to be the lowest-price provider of goods is futile: Competition is steep and low price is not an effective means of cultivating loyal customers, who are the foundation of success.

According to a Walker study, by 2020, customer experience will overtake price and product as the key brand differentiator.

Customers are loyal to a retailer because they believe they are getting a better experience, higher value and benefits than they would get from other brands.

In addition, a recent study from RetailNext found 57% of respondents said customer service is the only reason they go to a retail store.

Not selection, not price, but service.

Here are 4 pairs of categories in which retailers invest their customer service dollars. You decide which ones will actually create better customer experiences.

 

1: Self-service tools vs well-trained sales associates

Shoppers like that expect to find associates equipped with the information and training necessary to assist shoppers and close sales.

Too many retailers do not have that staff, so customers are frustrated and disappointed.

Today's shoppers want knowledgeable associates in the stores they frequent, as well as convenience. They also want to build a relationship with the retailer.

Retail management misreads customers’ disdain for associates as a desire for self-service.

But customers are happy to be served by well-trained, engaged salespeople. The frustration comes when the associate knows little about the product or has no enthusiasm.

Training goes a long way to fix that problem and helps build a sales team that is a contributing factor to customer loyalty.

 

2: Market saturation with new locations vs pop-up stores

While some brands focus investment toward market saturation via geographical expansion, others use pop-ups to build excitement about their brand.

Event-and experience-driven retail is becoming more popular, as department stores create pop-up locations or marketplaces in their stores and in hip shopping meccas.

Such temporary installations are smaller and more focused with their offerings and are replenished much more frequently, creating the impression of a “fresh” experience at every visit.

 

3: Promos to attract new shoppers vs rewarding repeat customers

Newvoicemedia.com reports that the top reason customers switch away from products and services is that they feel unappreciated.

Once customers have demonstrated their loyalty, it's important to reward them.

Too many retailers use incentives only to attract new customers. That, in effect, "ignores" loyal customers, leaving them frustrated and unappreciated.

 

4: Advertising costs vs experiences that drive WOM marketing

Nurturing existing customers and improving customer service can cost considerably less than launching advertising and marketing campaigns, but can have just as powerful an impact.

As Tony Hsieh, Founder and CEO of Zappos has said, “We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let the customers be our marketing.”

75% of Zappos' sales come from returning customers, and the company earns more than $2 billion in sales annually.

The Zappos's commitment to having happy customers and employees ends up being good for business.

 

Walking the customer service walk means more than just talking the talk.

Strong training, with an emphasis on earning customer loyalty, will result in a truly user-oriented business.

 

Attracting and retaining the elusive Millennial shopper

 

 

Loyal customers — the Holy Grail for retailers.

Repeat shoppers are a source of recurring revenue. Smart businesspeople know that success lies in cultivating loyalty, and that means more than creating programs that simply collect customer information.

Today's educated customers understand loyalty programs are often of more value to retailers than to customers.

Millennials in particular are sensitive to that value proposition, and retailers are starting to serve up programs targeted toward the specific desires of this demographic.

A quarter of millennials and 19% of Gen Xers like to shop with family and friends. It's a social activity that's enjoyed at a brick-and-mortar storefront.

But, while Gen Xers value the relationship with a store, Millennials value experience and don't have the same brand loyalty as the older generation.

It's easier to get a millennial to try a competing brand, so it's more difficult to retain millennials as customers.

Retailers have to work at providing customers perceived value consistently to earn their loyalty.

3 things Millennials look for:

 

1. Technological "wins"

 
How does a retailer make it easy for customers?

Millennials are dependent on their phones; 84% of them in a recent study said their mobile devices were the most important thing in their lives.

Retailers can use that knowledge to their benefit by, for example, offering mobile apps that are easy-to-use and relevant.

Many say that shopping is easier through an app than through a web site; by offering a digital experience that reduces purchasing friction and makes shopping easier, a brand can improve its relationship with millennials.

 

2. Shared value system

 

What matters to a brand, matters to Millennials.

For example, Patagonia has supported grassroots activists working to find solutions to the environmental crisis.

Shake Shack's ethos is "We stand for something good," which is reflected in its carefully sourced premium ingredients from like-minded purveyors as well as in its community support.

Customers feel good purchasing from companies that align with their world views.

 

3. Personalization

 
Yes, for customers, it's all about "me."

That doesn't mean obsequious associates greeting customers they don't personally know by their first name or creepily sending birthday cards to clients they've barely served.

Rather, it means positioning the company in a way that feels customized.

That includes having Instagram-worthy products, immediate customer service response and marketing that focuses on word-of-mouth.

Influencers — high-profile customers whose style is "gospel" — can be more powerful brand advocates than any type of advertising.

But it's not all about celebrity: For example, Carter's apparel encourages Millennial parents who want to share photos of their Carter's-clad babies to use its hashtag #lovecarters.

Retailers can have paying customers, or they can have loyal customers.

High quality products and experiences encourage loyalty in Millennials, who tend to be more easily swayed by special promotions and lower cost than previous generations.

However, loyalty can be earned: Retailers with compelling brand stories and experiences that regularly exceed expectations are positioning themselves to welcome the elusive repeat millennial customer.

6 Essential Elements of a Winning Independent Retail Strategy

 

 

Looking to improve inventory productivity and control?

Watch this final part of our 3-part Retailer Success webinar series to see principles and tactics that will help you manage inventory better and compete profitably.

Part 3: Six Essential Elements of a Winning Independent Retail Strategy

  • See how high-achieving independent retailers differentiate themselves to compete successfully in the changing world of Amazon retail
  • Learn the major factors you can implement immediately to differentiate your business in this 6-point plan from Management One

 

Mobile Apps: Building Unified Loyalty In-Store and Online

 

 

Loyal customers are repeat customers.

They are particularly valued because the cost of customer acquisition is high.

However, loyalty is not just about repeat business – otherwise, all repeat customers would be considered loyal, and they aren’t.

 

Repeat customers vs loyal customers

 

The difference is that loyal customers make a conscious choice to do business with a company even when a less expensive, more convenient or higher quality alternative is available somewhere else.

So why are customers loyal to a retailer when sometimes it seems illogical?

Because of that store’s superior customer service.

Creating an easy, frictionless shopping experience makes customers happy -- and that satisfaction can be parlayed into loyalty.

 

Converting online browsers into in-store customers

 

Only a few years back, brick and mortar stores were dying on the vine.

Customers were going online, finding the lowest price for items, checking them out in stores but buying them via e-commerce.

Soon, though, traditional retailers realized that those shoppers who were browsing but not buying could be turned into customers -- after all, they were in the store already.

Shoppers were saying they enjoyed the efficiency of e-commerce, but they also wanted to touch and feel certain items.

And other items benefited from having knowledgeable salespersons educate shoppers on features, uses, etc.

 

Building loyalty through mobile apps

 

Retailers are answering customers’ demands for more efficiency by adding mobile apps to their sales processes.

App Annie, an app market data and insights company, tracks usage and consumption for the average smartphone owner:

  • Average daily use: 2 hours and 15 minutes
  • Average number of apps installed: 60 to 90
  • Average number of apps used monthly: 30
  • Average number of apps launched daily: 9

With so many mobile phones in use, retailers are finding that the mobile app customers could be a key to increasing brand awareness, driving sales and increasing mindshare.

A survey of more than 500 mobile shoppers by research company Clutch, found that not only are consumers using e-commerce apps, but they’re also looking for features that go beyond browsing and buying: “Consumers want an easy, frictionless, and entertaining experience when using apps.”

Clutch noted that shoppers use e-commerce apps primarily for four reasons:

  1. To receive deals and offers (68%)
  2. For the flexibility to buy at any time (64%)
  3. To compare products and prices (62%)
  4. To save time at the store (54%)

 

The problem with mobile shopping apps

 

Too few retailers create apps with the consumer in mind.

What shoppers want to do with a retail app is what should drive app creation.

Retailers should develop a focused strategy when developing an app that targets the way shoppers use apps.

Many shoppers want apps that personalize the in-store experience, such as deal alerts, which are enabled when the customer is inside the physical store.

Also, Clutch reported that if an app syncs a business’ loyalty rewards, more than 80% of consumers would use the feature.

Mobile shopping apps are the future of unified retail.

Retailers should continue to increase their capabilities according to shoppers’ requests and usage patterns, and look to include discounts, rewards, personalization, and even augmented reality in the near future.

 

Has Walmart cracked the omnichannel challenge?

 

 

Offering customers the ability to seamlessly move from online shopping to brick and mortar and back to online is the crux of the omnichannel experience.

Shoppers can buy products 24/7, go to a physical store for an in-person inspection, and then make the purchase using either channel based on convenience.

Increasing numbers of retailers are incorporating omnichannel aspects into their business plans, including buy online, pickup in store (BOPIS), endless aisles and curbside pickup.

Creating efficient and profitable omnichannel strategies is a challenge for any business, yet their importance is well understood.

A recent study by Multichannel Merchant and Brightpearl found that 87% of retailers agree omnichannel is a critical business function, yet only 8% believe they are proficient at implementation.

That indicates a long road ahead: Retailers are clearly overcome with the technical challenges and customer expectations that are large parts of implementing an omnichannel presence.

 

What Walmart is doing

 

Recently, retail powerhouse Walmart has taken up the omnichannel challenge.

Walmart introduced its shoppers to a new e-commerce feature: 3D virtual shopping. Viewers can "walk through" an apartment outfitted with home goods sold by Walmart.

Certain items are designated as being available through the retailer, and by selecting an icon, the shopper can view a brief description and is offered an option to place it into a shopping cart.

The experience offers shoppers the benefit of seeing how items look in context: How an object will look in a home, rather than on a shelf in a store with dozens of similar items next to it.

Furniture stores have been using similar staging techniques forever. But Walmart, like other big-box retailers, has no space to devote to setting up faux living rooms, kitchens, bedrooms and bathrooms.

So using e-commerce site — where space is plentiful — is the perfect solution.

The apartment showcases roughly 70 different items, and it is easy to see how the virtual environment can be used an infinite number of ways.

Walmart plans to add "Buy the Room," which lets customers add groups of coordinated products to their shopping carts at one time.

Aimed initially at shoppers for dorm-room items, five curated collections will be offered.

Such unique online experiences can help create a seamless omnichannel experience for shoppers.

For example, a mom and daughter go shopping for the daughter's first apartment. They arrive at Walmart, but are overwhelmed by the selection and can't visualize how items will look in an apartment.

Pulling up walmart.com on a mobile phone offers a 3D apartment tour, helping put the items in a more familiar environment.

Some of the items can be purchased while they are in the store — and others may be only available online.

Both sales channels are used to provide the customers exactly the items they desire.

 

Customers want a better, integrated shopping experience

 

A recent Accenture study found that 32% of consumers said that the integrating the mobile, website and in-store shopping experience is the biggest improvement retailers need to make.

The old “customer-centric,” multichannel approach is being replaced by a more assertive, customer-driven approach.

It is not enough for companies to simply know each customer, but they must also respond dynamically to customers who are constantly re-evaluating what they want to buy and where they want to buy it.

 

 

 

Photo by Nicole Honeywill on Unsplash

Retailers going omnichannel pass on tech benefits to customers

 

 
In-store customers account for 50% of all eCommerce activity, research by Salesforce found, so closing the online-offline gap is critical for customer experience.

In response, retailers pursuing omnichannel with Retail Pro are turning their technology gains into customer-facing conveniences for unified commerce that puts shoppers first.

Here are three ways you can pass on the benefits of full data visibility in Retail Pro to your customers.

 

1: Show store inventory availability online

 
79% of shoppers research products online before buying in stores. Analysts are calling the trend ROPO – Research Online, Purchase Offline.

With so many shoppers choosing this blended approach to shopping, you can use your inventory data in Retail Pro to give customers online visibility into a product’s availability at their local store and secure the sale.

 

2: Make personalized recommendations

 
Though personalized recommendations generate only 7% of online visits, they result in 26% of online conversions – well worth the effort.

You can analyze customer history data in Retail Pro to personalize your marketing with recommendations based on items they recently or frequently purchased.

Effective recommendations are those that complement what the shopper already purchased from you, rather than simply other iterations of items the shopper has already browsed or bought.

 

3: Blend channels into one holistic shopping experience

 
For on the go consumers, the real shopping is done on your website.

They see your store as a fulfillment center where they will try on or pick up what’s needed on their way to do other things.

Integrated ecommerce and store POS can help you create a streamlined experience for these busy shoppers: shoppers can plan ahead and fill up their online shopping cart, and then access it at your store POS to complete the purchase and get the goods.

 

Omnichannel at Kanmo Group

 

Kanmo Group took this kind of holistic approach to managing data with Retail Pro Prism.

"To truly benefit from our omnichannel strategy, Kanmo Group has to look beyond simply engaging customers through offline and online means. When you look at the customer behavior in Southeast Asia, you will see that shoppers love to fill up their basket online – but they still prefer to complete the purchase in physical stores," commented Bhavin Patel, Omnichannel Director of Kanmo Group. "We want to give our customers flexibility to collect and check out the ‘basket' they created by communicating with a salesperson or through the real-time Retail Pro Prism POS system."

 

Customers can fill up their shopping cart online. If they are in the area, they might choose to visit a nearby Justice store and complete their purchase there.

 

Going Omnichannel with Retail Pro Prism

 
Retailers pursuing omnichannel are taking on the monumental task of integrating all their data sources into a 360 degree view of their business.

With full integrability in the Retail Pro platform, omnichannel is becoming attainable reality rather than simply rhetoric.

Accurate, real-time communications in Retail Pro help you keep your inventory and customer information up to date across the entire business, so you can make better decisions from holistic, integrated business insights.

Whether you’re leveraging Retail Pro for your brand stores, ecommerce, kiosks, outlets, franchises, store-in-store, or pop-ups, Retail Pro is one solution for all your retail and helps you unify commerce in a way that puts shoppers first.

 

To see what it will take to unify commerce with Retail Pro Prism in your business, contact your Retail Pro Business Partner or request a demo today.

How AI Can Help Retailers Fight Shrink

 

 

Retailers struggle with "shrink" — thefts from retailers that includes shoplifting and employee stealing — to the tune of $46.8 billion in 2017, according to the National Retail Federation.

Retailers lose an average of 1.33% of sales, on average annually to shrink.

However, artificial intelligence (AI) is now being integrated into technology solutions, which increases retail security and helps prevent theft.

 

Video Analytics

Video analytics is being transformed by AI.

Because AI does away with the need for pre-programmed algorithms, sensor technology can capture a large amount of metadata in real time.

As a result, AI allows video analytics to do much more than just alert users when a person or object has crossed a barrier; security cameras can specifically identify a person entering a store or department through facial recognition software, for example.

Retailers can even intercept known shoplifters by using cameras running analytics software.

The devices quickly and efficiently scan approaching vehicles and their license plates and then cross-reference that information with persons of interest to alert security teams.

By applying advanced video and data analytics to existing POS video and data streams, retailers can also curb loss by identifying the products that go without scanning at check out.

The electronic point-of-sale (POS) system can be connected to the surveillance system to track the entire POS activity and identify potential irregular operations.

Two other major causes of retail shrink result from "sweethearting" and self-checkout.

"Sweethearting"— when a cashier allows a customer to pass through the register lane without paying for a product — can include covering barcodes, stacking items one on top of the other, and skipping the scanner and directly bagging the merchandise.

AI fights sweethearting by applying advanced computer vision algorithms to the existing camera feeds, to see and analyze what is happening at the checkout and track each item.

It associates every item within a transaction to the transactional data feed from the POS system to flag anomalies.

Self-checkout fraud includes customers bypassing the scanner, tampering with price codes and leaving merchandise in the basket.

An intelligent computer vision system automatically reconciles what should be on the transaction receipt and the items being scanned in the video.

 

Internet of Things (IoT)

The IoT connects devices as varied as smartphones to wearable devices to products on the retail shelf.

As the use of IoT increases at a business with the expansion of sensors and devices — including from security-related devices — the volume of data being created will increase rapidly, which will require AI-enabled software and machine learning to analyze that information meaningfully.

For example, some businesses are implementing wearable devices for employees that can learn habits and create patterns based on usage.

An employee who strays from a regular routine sends a flag to security, which may then choose to investigate.

Despite Hollywood's eagerness to portray AI and machine learning as dominated by robots, in reality, machine learning is a part of everyday technology.

Its ability to synthesize data and help humans draw conclusions makes it a tool with a bright future in retail.

Refining the Retail Experience

The goal of experiential retail is to foster a sense of community in an entertaining setting.

Examples of the experiential retail trend are the increase in outdoor malls referred to as “lifestyle centers” and the emerging trend of mixed-use lifestyle centers.

Sadly, few retailers offer a truly memorable experience.

Apple does, with its merchandise displayed in a customer-friendly manner, basically inviting customers to come in and play.

What differentiates it from competitors is the full complement of staff ready and waiting to answer questions (and sell products).

For those seeking a slightly more special experience, customers can make an appointment for an exclusive one-on-one at the Genius Bar.

Apple customers expect -- and receive -- a hands-on tech experience that satisfies their needs, whether they stopped in to ask questions, buy some gadgets or get a feel for a particular set of products.

It wasn’t that long ago that industry experts were mumbling about the demise of Best Buy.

Many thought it would go the way of Circuit City, CompUSA and Crazy Eddie.

But, instead, the big box electronics retailer transformed itself during the last six years into a powerful competitor by confronting the challenges of showrooming and e-commerce.

First, Best Buy created an in-store shopping experience in which customers could watch movies on leading-edge TVs, play with the latest gaming consoles and listen to music on high-quality audio equipment.

The retailer gave customers a reason to visit the physical store.

Second, Best Buy’s size meant it can negotiate discounts with suppliers—and pass the savings on to customers.

Best Buy was, therefore, able to offer product pricing comparable to its online competitors.

Combining experience and pricing with instant gratification proved to be a winning solution.

Retailer Topgolf has taken experiential retail to new heights.

The retail chain is planning a three-level building in San Jose, Calif., with 3,000 sq. ft. of private event space and 120 hitting bays.

The company’s newest location offers golfers the opportunity to hit microchipped balls at colorful targets, challenge friends on the World Golf Tour app, follow shots on the range using Toptracer Ranger and view celebrities on the retailer’s original online content.

To be successful, experiential retail must be authentic: It must have a clear tie to the retailer.

In addition, a strong human element is also needed.

It’s not enough to have associates; frequently, shoppers will complain about intrusive employees.

More often than not, however, shoppers welcome friendly and knowledgeable staff -- after all, they chose to shop in a physical store rather than online.

What they really want is staff that adds value to the transaction.

Having an associate ready and eager to offer advice and to help them navigate their product choices enhances the overall experience.