October 5, 2012

Digitally-enhanced retail destinations

photo: Marks & Spencer
Experimental hotbed: M&S are testing many new online ideas at their Cheshire Oaks branch
True to its aims, World Retail Congress 2012 (WRC) was an insightful experience.

Clearly, many UK and international retailers are experimenting with so-called “digitally-enhanced destinations”.

These leading players are integrating their online offer within their stores  in order to create an omni-channel experience for their customers.

Surely, this is the way forward for physical retailers?
 
At Marks & Spencer’s new Chester Oaks store near Chester, for instance, store customers can order from the company's entire catalogue at twelve “browse & order” terminals.

With perhaps more than a side glance at Apple, these terminals have been deliberately designed in an attractive high-tech way. “Customers engage more if the screen is fitted to store design,” says online director Laura Wade-Gery.

Multi-channel boosts sales

The London-based department store operator also offers free Wi-Fi in its outlets. This encourages customers to use a corporate app on their mobile devices with maps to help them around the store.

Clearly, this classic bricks & mortar retailer is not afraid of its own online operations. Wade-Gery: “Consumers who shop in many channels order more…Online also makes our store estate work much harder, creates footfall, and has a strong knock-on effect.”

Store staff are equipped with tablets connected to inventory systems which allow them to check availability and process orders.

This not only reduces queues at the tills and makes for smarter service. “It also gets staff members on board regarding our online services because the iPads really interest them,” says Ms Wade-Gery.

Other store features include mobile checkouts and numerous 70-inch digital display screens placed prominently around the shop floor.

The latter create innovative entertainment spaces with video clips showing the latest designs and explaining trends etc. They also provide information regarding items such as bedding, towels, duvets, pillows etc.

Meanwhile, virtual make-up counters have proved to be so popular that 10 per cent of the company’s beauty sales are now online. Augmented reality is also used in the changing rooms.

Soon in ten countries

Many of these store features will be rolled out in Marks & Spencer’s 700+ UK stores over the next few years, but not all of them, says Wade-Gery. Her pragmatic philosophy in a nutshell: “If it’s not going to work, fail fast, and move on.”

Currently, 12 per cent of Marks & Spencer’s general merchandise and one third of its dresses are sold via its e-commerce channel. The company already has 1.5 million Facebook followers and receives 500,000 comments a year. With this type of customer interaction, who needs market research?

Marks & Spencer is currently only one year into a three-year plan to boost its online capacity. The historic bricks & mortar company is investing £100m in in-store technology and a further £140m in a new web platform to be launched in 2014.

By the year-end, Marks & Spencer will be trading online in ten countries, says Wade-Gery. Currently the group operates transactional websites in the UK and France. The company declines to be more specific as to which of its 43 countries world-wide have been earmarked for development.

Digital luxury at Burberry's

Burberry’s newly-opened global flagship on London’s prestigious Regent Street is a haven of digital luxury.

The 4,000m² store sports 100 digital displays. These include the world’s largest in-store screen (7m x 7m) showing promotional content and Burberry runway shows. Staff are equipped with 160 iPads, and customers can surf their mobile devices on comfortable sofas as they would at home.

In the fitting rooms each garment has an RFID tag that triggers information content to appear on the cubicle mirror as the shopper enters. Augmented reality also puts customers straight onto the cat walk.

This is reminiscent of various US malls which use body scans to suggest which clothes ranges fit your body type.

German shoe retailer Goetz is also experimenting with 3D bar codes which show how shoes would look on customers. Nike even uses interactive touch screens to help customers design their own sports shoes.

While these developments in augmented reality might not make fitting rooms completely redundant (customers still like the tactility of clothing as part of the overall shopping experience), it is clear that outlets are increasingly becoming not stores for things but delivery points of service.

Tesco Korea's virtual store

In the food arena, Tesco’s first virtual stores in Seoul/South Korea caused a sensation last year. Commuters waiting for buses and trains can use their smartphones to scan the bar codes of product photos for home delivery the same evening.

Tesco has now gone on to install an interactive video poster site at Gatwick Airport near London so that holidaymakers can order food to be delivered to their home for the day they return.

In the UK, Tesco is testing “scan-as-you-shop” devices that allow customers to keep track of their spending as they walk around the store.

A number of other interesting developments were mentioned by speakers at this year’s World Retail Congress.

Smartphone apps, motorised tablets & NFC

These include the smartphone apps of French group Carrefour and Dutch retailer Albert Heijn. They both show store layouts and direct customers from shelf to shelf according to individual shopping lists.

American organics specialist Whole Foods goes one step further and is experimenting with tablets on motorised trolleys. These drive to items on the customer’s shopping list while warning about individual dietary concerns such as allergies.

Combine all this with near-field communication (NFC) technology and you have contactless payment and personalised messages sent to smart phones when customers cross store thresholds.

Don't overpromise

There are other pitfalls. Clearly, it is fatal to become so enamoured with one’s own technological prowess that you overpromise.

“There is too much hype on mobile,” warns Dave Cheesewright, President & CEO EMEA Region of Walmart International, “and with so many different channels there is a danger of not being consistent. Content alone allows you to win.“

Yilmaz Yilmaz, Chairman of Koton and BND, also points to the absolute necessity of integrated operations: “You can build customers with multi-channel, but you can also lose them, if you don’t do so consistently.”

This is echoed by Nordstrom CEO Blake W. Nordstrom: “Surprisingly, when building a multi-channel offer, the organisational part is harder than the technological part.”

It is certainly extremely hard to maintain an innovative edge in technology in a world where, to quote Hany Fam, President Strategic Alliances at MasterCard Europe, “There’s no such thing anymore as a fast follower.”

Hence Laura Wade-Gery’s advice to the trade: “Experiment because no one knows who will win.”

John Lewis rethinks capex

Charlie Mayfield, Chairman of John Lewis, closed the World Retail Congress, with some conclusions drawn from his experience of adding a successful online business to a major retail brand:

“The key impact of technology is the way it changes consumers’ behaviour and the way they shop. This, in turn, changes the way retailers make money. You have to rethink where you are going to invest, and certainly logistics have become much more important.”

“Retail management must ask itself: What capabilities are we building now to succeed in the future, and how are we going to deal with stock and integrate the supply chain?”

“Above all, one must integrate one’s online business in such a way that shop staff will not perceive it as a threat.”

But perhaps the very last word should go to Arcadia Group owner Sir Philip Green: “Whether physical or virtual, you won’t be successful if you don’t give people a reason to buy your product.”
 

Related article in German: By Mike Dawson in Lebensmittel Zeitung, no. 40, 05.10.2012


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