Amber Stokes talks to Microsoft and its partners to find out which innovative technology solutions can help prevent the demise of bricks-and-mortar strores.
More and more stores are closing on high streets today. The Centre for Retail Research has estimated that total store numbers in the UK alone will fall by 22 per cent by 2018. Much of the threat comes from soaring online and mobile sales, as digitally savvy customers revel in the omni-channel experience. This trend is not unique to the UK. According to eMarketer, online sales in the US grew by 13.9 per cent in 2012, while the number of people buying online in China will nearly double between 2012 and 2016. So because of this, the future of bricks-and-mortar stores remains uncertain. Do we still need them? In ten years time, will they even exist?
“There will always be a place out there for bricks-and-mortar stores, but retailers need to make the experience more exciting and meaningful for customers in store,” says Marty Ramos, Microsoft’s director for worldwide Retail and Hospitality. “Mobile in particular has changed the role that stores play. Customers are going into stores today with a computer in their pocket – their smartphones provide them with instant, anytime access to information and deals, so they want the same, enriched experience when they go into the store.”
Indeed, much of the appeal of online shopping for consumers is having better access to stock and being offered competitive prices. And this is why the trend of showrooming has grown in recent years. “Showrooming is a rapidly growing trend where consumers visit a store to look at merchandise and then purchase the product from an online competitor, usually for a cheaper price,” explains Servebase CEO, Ritz Steytler. “Retailers need to embrace this new shopping behaviour, often just to stay afloat. Consumer journeys are no longer linear. It used to be that a retailer would be able to tell if a customer was online or not in-store – with the rise of smartphones, this is no longer the case. Customers may be in-store, comparing prices of products, reading reviews over social networks, checking product details and buying from a competitor’s website, while using store wi-fi.”
Steytler believes that bricks-and-mortar stores will continue to remain important, but warns that retailers need a strategy that promotes an optimal mix of customer touchpoints, taking all these different kinds of customer shopping journeys into account in order to improve the customer experience.
Back in 2011, Forester reported in Welcome to the Era of Agile Commerce that: “customers no longer interact with companies from a ‘channel’ perspective; instead, they interact through touchpoints.” And Steytler says this is exactly how Servebase operates. “These touchpoints range from stores and websites to apps, social media and SMS messages,” he says. “Showrooming has become prevalent because consumers want to be able to engage and transact on any device. So retailers need to focus on having an offering enriched engagement with customers.” Servebase is helping retailers to do this through its flexible multi-channel payments solution. ANYPay allows retailers to manage any payment device across any application, from a centralised intelligent hub via the cloud, meaning customers can pay in whichever way they prefer.
But just providing services on any device isn’t enough. Improving the customer experience ultimately starts with the store associates, and to ensure they give the best service possible, retailers need to give them the right tools. Lenovo’s Sharon Love, director of Global Integrator Offerings, says that mobility and touch have created a fundamental shift in thinking in retail today, and through the use of mobile POS, the retailer can demonstrate the value of the face-to-face experience and deflect showrooming. “Rather than making the customer go to the point of service, the service can now go to the customer,” she says. “Retailers should design the store experience around what the customer wants, enabling them to bring what’s online into the store in a way that really highlights the value of having real people ready to help. With a shared interactive space – tablet or larger touch screens – customers and associates can work together in a way that isn’t possible online. The in-store experience quickly becomes easier, more personal and more compelling.”
Lenovo’s Windows 8-optimised, dockable tablet, the ThinkPad Tablet 2, is ideal for retailers in this space because it is light and sleek, yet still rugged enough for regular use on the shop floor. Furthermore, Windows 8 delivers many benefits to retailers today. “Windows 8 means retailers can choose the device that is right for each unique situation, rather than being locked into proprietary architectures. They can also enable their applications for touch, without cutting off users from easy access to conventional applications,” says Love.
“Mobility has changed consumers’ behaviour,” says Enzo Capobianco, EMEA development manager at Honeywell. “If they struggle to find a store associate that can provide them with product and price information (such as availability or a promotion), then they will simply go elsewhere or online and the retailer will lose a sale.”
Capobianco claims that historically, a store associate would have to go into the back office to check for product information. Honeywell offers a platform that allows store associates to have access to information at their fingertips, on the shop floor.
Using Honeywell’s newly developed Dolphin Black device, store associates can have access to all the information they need on the shop floor. “The Dolphin Black is rugged and sylish – ideal for associates that need to provide assisted sales service to customers on the go in a professional environment,” says Capobianco. “They can access all the typical tools they have access to in the back office, but they can also use it as a phone to communicate with other staff and stores. Its integrated imager means they can also scan linear and mobile barcodes on the shelf or a smartphone for instant access to information.”
Mike Adams, who leads the Retail Industry Practice at Dell, says that while retailers understand the importance of using innovative technology in stores today, one of the biggest challenges they face is deciding what they should implement. “Customers are now in control of the shopping process and can dictate how and when they engage with retailers,” he says. “Store technology needs to be as flexible and agile as possible to enable these improvements. Retailers need to be able to experiment and find the right solutions for their business.” Dell’s wireless store solution provides a comprehensive mobile ecosystem that can equip retailers with secure customer wireless access, associate mobile devices to enrich the customer experience, as well as make store operations more efficient. “Retailers that do this will be well positioned to compete in this new retail environment,” says Adams.
“Physical retail is about having the product right in front of you and being able to try it out before you buy it,” says Microsoft’s Ramos. “That’s why it is so critical for a store to have the right stock and for store associates to be able to access accurate inventory information. There are some really innovative solutions in use now that are transforming the way retailers can provide what the customer wants.”
Getting personal is also an important part of improving the customer experience in store, it seems. “Through facial recognition technology, retailers can deliver this personalised experience to customers to ensure they are getting what they want,” says Allen Ganz, senior account development manager at NEC. “Facial recognition technology itself isn’t new and has been used for many years in security, but retailers are now starting to see the benefits in their stores. Today almost all devices have a camera so consumers’ perceptions of using photographs have changed over the last few years.”
Ganz explains that NEC facial recognition technology is helping retailers engage with customers and deliver personal experiences. Taking the example of a coffee shop, if a customer can see a queue of people leading up to the door, they might simply walk away and go elsewhere. If a customer opts in to the facial recognition solution, however, they can walk to a kiosk and it will know what they want based on their previous purchase history and even suggest other products they might be interested in.
Universal Studios Japan is currently using NEC’s technology for access control to the park. As one of the largest and most famous theme parks in Japan and with annual visitors exceeding eight million, easy access for customers is essential in ensuring they enjoy their visit. Using NEC’s facial recognition technology, it now takes approximately one second to check a face, and the system recognises previous visitors every time they return. With this access control system, the guests’ waiting time at the entrance is dramatically shortened and Universal Studios Japan has cut operating costs by 30 per cent. “We’re giving retailers the ability to capture customers who would have previously walked out of the door. Now they can up-sell based on purchase history and increase return on investment,” says Ganz. “This can be applied to almost any retailer who has a highly valued customer and a certain experience they want to present to them. We’re selling a unique customer experience that is enabled by our facial recognition technology.”
“One way to truly improve the customer experience in store is by analysing the data,” says Microsoft's Ramos. “Information, like how much time a customer spends in the store, what products they bought, which products they wanted to buy but couldn’t get hold of, and so forth – all of this can be really useful to a retailer in ensuring they offer the best products and service in store.” Dassault Systèmes’ My Store solution aims to deliver a unique and memorable consumer experience across all channels through analytics, 3D merchandising and store layout management. “People don’t just shop for things they need – they do it for pleasure too,” says Susan Olivier, vice president of Consumer Goods and Retail Industry Solutions at Dassault Systèmes. “Through our solution, we aim to make this experience more enjoyable for customers again. We look at how retailers can get them in the store in the first place and how to make it more interesting and enjoyable when they’re there, but also how they can better support their staff.”
Olivier explains that retailers need to work out how to use their time, space and staff more productively – which can sometimes mean differently – in order to pull customers into the store. “Using My Store, we start by looking at a retailer’s analytics in terms of sales and trends and combine that with social data to tap into the top tier consumers and allow them to have a voice,” says Olivier. “The most interesting part of My Store is the 3D merchandising part. Today, retailers might set up a model of their store in the back office somewhere and take photos and send them to other stores for consistency. If they’re lucky, these arrive with instructions before the actual stock arrives. We’re ahead of this process.”
By visually merchandising the store using Dassault Systèmes’ 3D technology, retailers can get an accurate understanding of where their stock should sit to better fit the customers’ preferences. Retailers might have ten different models for different stores to ensure each one is meeting the right standards according to the different data they extracted at the beginning of the project. They can drop fixtures into place with the product, sales collateral and POS to know what it will look like, so that the store associates can virtually walk the shop floor to understand what it should look like and why. They will ultimately spend less time on the shop floor moving products around and spend more time with the customers.
“Without a doubt, there will always be physical stores as consumers will always want to touch products and enjoy the social aspects of shopping,” adds Ramos. “But retailers must focus on enriching the shopping experience, which includes embracing the customer’s phone as their personal shopping portal. Retail is transitioning today and by using technology from Microsoft and our partners, we can help retailers excel throughout these changes.”