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[16 comments]

Shoppers going uber-digital

January 22, 2014

The fourth annual research study of digital shopping behavior by Cisco Consulting Services, released at NRF's Big Show, focused on digital mass market shoppers who represent 80 percent of the population and "Uber-Digitals" who represent 18 percent of the population (up from 11 percent last year). The study zeroed in on shopper attitudes on personalization, device and channel usage and attitudes towards in-store digital concepts.

Some of the insights:

  • A fast-growing percentage of shoppers often use smartphones and tablets when in physical stores and access other digital devices along the shopping journey. As Jon Stine, the North American lead for CCS puts it, "Today's mobile phone is a remote control for shopping. The growing trend of consumers using mobile phones when shopping in the store is a wake-up call...."
  • Shoppers are leery of sharing personal information with retailers, who need to build higher levels of trust in order to gain the potential benefits of customer data—even 25 percent of Uber-Digitals did not want retailers using any personal information. Yet, many shoppers will provide more personal data, if incentives are offered, the most popular of which is savings on their next purchase.
  • While shoppers want personalized offers, they prefer to receive them via e-mail at home, rather than getting offers while in stores.
  • Online reviews are more valued than advice from friends and family, and especially store associates.
  • Shopper expectations continue to increase, with better values the most important, followed by price visibility, wider product range, and information access.

Cisco also tested some in-store concepts, including:

  • A smartphone app that combines a customer's relevant offers, coupons, and loyalty points and offers them the net best price for a product—this was most popular.
  • Second most popular was a "mobile concierge" app that greets customers as they enter the store and provides information and offers.
  • Shoppers had interest in a digital gamification solution that offers them special promotions for a limited time, vie their digital devices, as well as another solution that rewards them for collecting tokens or QR codes in stores.
  • Other concepts tested include remote consultation with an expert; endless aisles; a solution builder that suggests projects, builds shopping lists and offers recipes; and social shopping, which integrates popular social sites.

Recommended actions include demonstrating to shoppers that a retailer will be careful with the collection and use of their data and use it in a way that benefits them; paying closer attention to Uber-Digitals; and building network infrastructure that can meet shopper expectations.

FINANCIALS:     [NASDAQ:CSCO] [ ]

Discussion Questions:

What do you take from the rapid increase in Uber-Digital consumers? What can brick and mortar stores do to encourage heavy digital shoppers to spend more time and money?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which is most important for brick and mortar retailers?

Comments:

This study may provide some validation, but the in-store concepts described herein are years old and have been done somewhere by somebody already. The only way to "encourage heavy digital shoppers to spend more time and money" is to provide deep and true engagement in their needs and interests. Endless aisle, as an example, does not do that at all. In fact, it puts the burden upon the shopper to find what they need rather than the merchant having the skill to curate a ready product mix that suits its clientele's needs.

The stores/brands that will lead in engaging digital consumers and get the most benefit from them are the stores/brands that put some muscle behind the word "innovation" and engage their customers in ways that are entertaining and add value. Doing as the competition does will have a very short benefit window.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

Trust is always the name of the game in retail. The ongoing security breach at Target and others will be the story of 2014, and how that affects the willingness of shoppers to opt-in and even shop in their stores once compromised. And no amount of digital couponing will overcome that.

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Bob Phibbs, President/CEO, The Retail Doctor

The information in this article did not showcase differences between the "uber-digitals" and the rest of the digital users. Without that information, recommendations for encouraging them to shop more is not possible.

Digital devices provide a variety of opportunities for consumers to gather information and for companies to communicate with consumers. This report reinforces the idea that consumers use different devices for different purposes at different times. Companies then have the responsibility of determining which consumers use which devices for what purpose. Only then can they identify relevant strategies.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Retailers with a brick and mortar component first need to face reality and not try and out-smart digitally empowered shoppers. All too often, retailers have used digital technologies as Trojan horses to hide old analog marketing ploys. It doesn't work! Retailers need to embrace the new reality and provide shoppers with real, relevant and personal value.

I worked with one retailer who made it clear that they did not want to make it easy for shoppers to compare prices while they were in their stores! Guess what! You can't! And if you try, your shoppers will hold it against you. I believe a key strategy is that retailers need to not only embrace but activate the art of storytelling and the science of seamlessly managing and delivering those stories across all available shopper touch points.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

What I take from it is that man is a tool-using animal, and our tools are increasingly digital.

Retailers need to wake up to the fact that -- for an increasing number of shoppers -- digital shopping is easier, more convenient and less stressful than shopping in an actual store. Of course, some of this depends on what you are shopping for. Much easier to buy a computer online than it is to buy a tomato -- so far.

If I were a brick and mortar retailer, I'd think about what digital shopping does better -- connectivity, speed, price, peer review, suggested selling -- and what it doesn't do -- provide emotional connection, talk somebody through a purchase decision (ala Best Buy), etc. I'd then facilitate the former and promote the latter.

That said, in the end, it's a losing battle if you still think the war is about stealing sales back. The whole retail model has to change if today's crop of physical retailers hope to survive the next 20 to 40 years.

Seem radical? Talk to operators of those DVD, music and book stores -- if you can find one.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

The focus for mobile at Brick & Mortar should be KIS, and a real value add. Three ideas:

1) Loyalty cards should be mobile. LOC Card is an interesting solution that is looking to create one universal card with a mobile app. Customers love it.

2) Combine the in-store and mobile experience. For example a grocery store could offer card-loaded savings with unique and interesting recipes tied to occasion or theme. For example: Sporting event, healthy, dinner party, appetizer, vegetarian. Consumer picks the number of servings and the list is created. Then offer a card-loaded savings if the consumer purchases x number of items in the recipe list.

3) Partner with solutions that provide store and brand feedback so consumers can earn cash in your store while they shop. In return you and your brand partners can learn a great deal about the consumer, store conditions and brand and store execution.

Mobile is a huge opportunity for brick and mortar. They just need to embrace it and KIS.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

The rapid rise in "Uber-Digital" consumers means this is the new reality in retail. It won't go away.

Brick and mortar stores can't take a blanket approach to increasing their share of the heavy digital shopper. You can't re-invent the store experience without a deep understanding of your shoppers. By now, reality is that majority of shopping has a (growing) digital component. So, we have to make sense of that and a good starting point is having a 360 view of the shopper and to tie that to localized assortments and pricing as well as personalized and contextually aware offers.

Digital reality and enabling technologies give retailers the tools needed to create and deliver, not a one-size-fit-all strategy - but to do so selectively based on the uniqueness of each shopper.

The kicker in all this will be the industry's long-term response to consumer privacy and perennial data security concerns. Uncertainty and opaque policies and actions are the enemies of growth and innovation.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

Clarifications: 1. CCS didn't test the 8 in-store concepts because they were new - they were testing to see how these two groups reacted to them. Details can be found using the links below the story. 2. To see the differences in how mass digitals and Uber-Digitals think and act, use the links as well.

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Al McClain, CEO, Founder, RetailWire.com

There isn't much new news in the study, perhaps just some confirmation of what was already thought. Penetration of mobile traffic is among the highest in the U.K., as compared to the U.S., Australia or other major, mature markets. I see an even faster rise in adoption in growth markets that are "skipping" the PC stage and going straight to mobile-enabled shoppers.

Retail and CPG brands need to be agile to effectively capture opportunity in any market around the globe. Physical stores must rethink store staff investments as personalization and responsiveness in-store is becoming a true differentiator. While we have always tried to extract expense in store labor, I feel that the right placement of real, LIVE humans in the stores can really augment mobile shoppers' propensity to purchase.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

I think the rapid increase is due to the nature of early adopter dynamics. Imagine the group of ultra-hip, using the latest tools and their fast-following wannabes. Imagine those serendipitous moments where the aspiring Uber asks: "What is that app?" The point: there will always be a slice of people that will follow that path and there's your xx%.

That adoption process will go on until the magic happens, which leads to your question: what can brick and mortar stores do to encourage shoppers to spend more time and money? They (retailers and vendors) need to spend more time and money.

If I had a budget and a mandate to explore the digital experience, I would wire a prototype store with beacons, develop a mobile application that made my smart phone into a sidebar that was smart to the category and when I visited a section, the phone would offer up all this relevant content to help augment the moments at the shelf. I would create a store level, shopper-aware storyboard. Yes, that's it.

Oh, how much time and money would that require? Oh I don't know; $10-20 million and a staff of 30-50. I'd go for $50 million to recruit "A" players, heck, let's call it $100 million to be safe. Of course we would need to open an office in say, Palo Alto, Mountain View and SF, so the commute for the iOS and Android folks would be lifestyle compatible.

Oh, my budget is $500k...hmmm, what if we offered shoppers a coupon for 10% off when they entered the store? I can do that on the cheap -- or why don't we just let the shoppers figure it out on their own?

That was fun...good morning!

Vahe Katros, Consultant, Plan B

First off, I am not getting the definition of the Uber digital. Also, up from 11% to 18% does not constitute rapid increase to me.

Aside from that, since 80% of the population appears to be digital mass shoppers, I think we can accept this as the norm. They are not a unique class of consumer that needs to be encouraged to spend more money and time. These ARE the consumers.

Now, how is retail going to use digital to keep these consumers engaged, improve their path to purchase, and earn their trust? That is the question every retailer needs to ask about their brand and the answers will differ depending on the brand story.

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

It suddenly seems simple to me. If they're awake, they're shopping. In-store, at home, at work, at play.

This is not just about Ubers, and it's no longer about a few defined moments of truth. Social, mobile, local and search enable a 24/7 consumption experience that is continuous, always on, dynamic, connected, shared, individual, subconscious and explicit.

Retailers need to plant their sensors in the physical and virtual realms and adopt practices that address shopper expectations.

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James Tenser, Principal, VSN Strategies

It's not surprising to me that shoppers do not want to receive personalized offers while in the store, but want them sent via email at home. Peppering shoppers with such offers during what may be a quick shopping trip could be annoying and thus detract from the shopping experience.

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John Karolefski, Editor in Chief, CPGmatters.com

The rapid increase in uber-digital consumers means that brick-and-mortar retailers must adapt or perish. To adapt, they must integrate "bricks" with "clicks" creating an integrated experience that does not hinder but in fact encourages digital interactions in-store.

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Mark Price, Managing Partner, M Squared Group, Inc.

So McKinsey suggests 85% of sales will be from Brick & Mortar through 2025. Therefore the question becomes, "How do you encourage heavy digital shoppers to spend more money in YOUR store?" Answer is improved MOBILE experience, since mobile devices are used when people are...mobile (as in a store)!

Tom Lipscomb, Retail Solutions, Software AG

The rapid increase in the Uber-Digital consumer does not seem all that surprising given the diffusion rate of mobile devices, and the fact that we are all (device manufacturers, application developers, enterprises, consumers) still in a state of relative infancy in learning how to use them, and what they are capable of.

Similarly, the possibilities for what brick and mortar stores can do to encourage heavy digital shoppers to spend more are practically endless. At the end of the day, we are talking about people, and it is a question of understanding what are their needs and wants, and then finding a way to serve them. The first step, however, is for the retailer to assess for themselves the extent to which they want to focus on the digital shopper versus other kinds of shoppers.

If they do want to attract the digital shopper specifically, then it would seem that implementing or enhancing omnichannel capabilities, and making the store more digital-friendly would be logical places to start. For example, when Starbucks implemented Wi-Fi in all of their locations years ago (which was considered very innovative at the time), it led to increased visits from individuals who wanted to be digitally connected. Similarly, retailers could attract the Uber-Digitals by offering free Wi-Fi, facilitating access to price comparisons, product reviews, bundling possibilities and, as trust is earned, eventually personalized offers that drive the individual into the store in the first place.

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Alexander Rink, CEO, 360pi

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