Bringing digital into stores won’t work

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.

Right before the Labor Day weekend, I caught an article on the Ad Age website, a motherhood and flying cars piece about how digital will magically transform the store experience and, even better, how digital agencies will be the leaders in making this transformation happen.

Pie in the sky statements about tectonic changes in stores don’t help the industry. And it’s not agencies that are going to affect these changes, but retailers. They are the people who understand stores and customers (and hopefully technology), and with that knowledge figure out how to keep the store relevant.

Yet all these efforts to put tech into stores continue to fail for a few simple reasons.

First, stores aren’t designed for technology.

In the Ad Age article, the author mentions his own company’s work at a store in Edmonton Mall, where the retailer implemented "interactive experiences across 470 digital screens." Great. How much did that cost? How much work needed to be done in basic cabling to power those screens? How much bandwidth had to be added? Now multiply that across a hundred or a thousand stores. It’s not that the tech itself is so expensive — that seems to get cheaper every day. It’s the provisioning and the zoning and the permits and the jackhammering that make that store multiplier number so scary.

Retail tech

Photo: Honeywell

Further, technology changes too fast for stores to keep up. Those beautiful large format touch screens in the Edmonton Mall that look so high tech today will be obsoleted by 4k or 3D or holograms, for all I know — and all in the next three years.

Finally, store employees are in-store tech’s weakest link. Upon rollout, the whiz-bang hardware turns out to be not ergonomically designed for employee use, doesn’t fit quite right into the customer buying process, or the response time is slow. Employee feedback isn’t heard. Trained employees leave.

To make in-store technology successful, stores need to solve specific problems and fill in gaps in the in-store part of the customer journey.

For instance, why not hand associates tablets to have them be on par with mobile-wielding shoppers? What if store associates had more information, such as when the next shipment arrives, if the reviews have been trending up or down over the last couple of weeks, or the top three products that customers buy along with that item.

Technology in stores has often felt like a "throw it against the wall and see what sticks" exercise, which has led to the bad reputation that in-store technology now has. But we surely know enough about how to define needs and requirements to do better by stores than we have so far.

BrainTrust

"There are two questions here. First, do most traditional stores have the infrastructure necessary to "do digital" right? And second, should digital be done at all?"

Ryan Mathews

Founder, CEO, Black Monk Consulting


"Essentially, too many companies are looking to use technology, which is only a tool, as a replacement for their weaknesses in other areas. More retailers need to work on managing their OOS, keeping customer satisfaction high, and better managing their in-store experience."

Kai Clarke

CEO, President- American Retail Consultants


"Content is the value — not the technology. The technology only enables the best and simplest way to tell the brand story through rich media. This same rule is true for both shopper and sales associate."

Adrian Weidmann

Managing Director, StoreStream Metrics, LLC


Discussion Questions

Do you agree that retailers tend to have a “throw it against the wall and see what sticks” mentality when it comes to digital technology in stores? Where do you see the greatest need and opportunity for digital technology to be used within the store to improve the customer experience and, ultimately, drive sales?

Poll

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Paula Rosenblum
Paula Rosenblum
8 years ago

The most important thing is to empower employees with technology. That allows retailers to ensure their employees know at least as much as the shoppers they are serving.

It’s hard for me to agree that retailers “throw tech against the wall” because I see retailers being pretty hesitant to do a lot of mass implementations. It is most definitely true that retailers threw self-service tech against the wall, to no real useful end.

Al McClain
Al McClain
8 years ago

While I agree with Nikki for the most part, I think retailers need to test some of these “flying car” opportunities to stay current and not get too far behind the curve of what might be possible. Customers do like cool and new stuff, so the industry really has to keep experimenting and testing. Just dedicate a portion of the budget to in-store tech trials and see what works. In the meantime, I think it’s pretty well proven that equipping associates with tablets to assist customers, and providing better visibility into supply chain and product availability are huge winners.

Chris Petersen, PhD
Chris Petersen, PhD
8 years ago

Ah … digital is already in all stores. The consumers are bringing it to the stores every day in their smartphones.

Nikki Baird raises a lot great points about the challenges of installing digital merchandising and signage in retail. Costs for hardware, installation and maintenance top the list of challenges for most stores, and some advanced technology like 3-D holograms is simply unrealistic at this point in time.

If “digital” means wireless and non-print, the most ubiquitous digital technology in stores today are mobile devices connected by Wi-Fi or even cellular. Smart retailers like Apple and NFM have equipped every associate with a mobile device to demo products, check inventory and even ring up sales right in the aisle.

Today’s omnichannel consumers are demanding more than products on a shelf. They know there is rich content and demos online. If they can’t get that digitally from the store, the simple answer is that they “showroom” on their own smartphone or tablet to get the information they want.

Bob Phibbs
Bob Phibbs
8 years ago

I’ve been at several Nordstroms where digital screens were shoehorned into the men’s departments. Cables dropped from the ceiling, merchandise a sorry sideshow huddled around, table space compromised as generic content plays. It makes the merchandise the afterthought, the digital displays are the true stars.

Yet employees are no more engaged or engaging than before the screens. The devil is always in the details. When you look at what all of this adds to the shopping experience — or takes away, and as Nikki notes the costs, you have to wonder if some are reaching for anything to differentiate rather than the right thing.

Gene Detroyer
Gene Detroyer
8 years ago

I don’t think most retailers have the foggiest idea of how to implement it in the stores. They start in the wrong place.

They say, “We have a store, how do we fit technology in?”

They should be saying, “Technology is a powerful tool and will help our company be successful in the future. How do we change the store to meet the technology?”

Ryan Mathews
Ryan Mathews
8 years ago

There are two questions here. First, do most traditional stores have the infrastructure necessary to “do digital” right? And second, should digital be done at all?

The answer to the first one is no, but the answer to the second one is a resounding yes, and that presents a real problem going forward.

Of course most retailers mishandle in-store technology. They have since the early days of scratchy radio broadcasts and muzak, but that doesn’t mean that we can ignore technology.

Whether you subscribe in whole or part to the notion of the “Internet of Things” the fact is the world is increasingly more and more digitally connected. This connectivity and its byproducts — fingertip access to all information, the ability to print on demand in two or three dimensions, social networking, etc., is simply the new normal of how we live our lives and — like it or not — how we will shop.

It isn’t about plunking big screen televisions all over the place. Stores aren’t sports bars after all. But it is about integrating all the technologies customers employ in the normal course of their day into the retail experience.

Does this mean that stores will be constantly adjusting and retooling? Yup, it does. But the alternative is to fall out of step with your customer space and, in the end, that’s more expensive than any remodel.

Mohamed Amer
Mohamed Amer
8 years ago

Thank you Nikki for providing a provocative nudge on the state of digital in the store. To summarize your key points: stores aren’t designed for digital, technology changes too fast for stores to keep up, and store employees are in-store tech’s weakest link.

If we take the position that digital will not influence the future of retailing, then we don’t even need to get into this discussion — the status quo reigns. However, if we believe that digital is a growing force in the retail experience, then Nikki raises serious concerns on the longevity of retail as we know it: today’s retail stores cannot be a viable part of the future. If you fully buy into the argument, then the path to “progress” (as in using technology and people to re-design and improve the shopping experience and in turn increase sales and protect margins) is limited to a “back to basics” approach sans technology (since stores can’t absorb and keep up).

The retail landscape is such a varied landscape along the digital and technology adoption curve. It’s true that to date the store has been a graveyard to many technology initiatives that are more reflective of an alignment gap between the business and IT and a lack of an overall business strategy to guide investments than of inherent technology shortcomings, even if they do exist. In business, the future belongs to those that can move with the changing demands of their customers. And in times of fast-paced change, a wait-and-see attitude is an eventual path to irrelevance.

The key is to do pilot-sized experiments. To explore and test new models and understand the opportunities and the limitations. Very few organizations can do a complete 180 turn to their strategy, organization and systems. Best to take small steps that help prepare and transform for a different future. The dilemma has always been how to change in the face of existing limitations and paradigms without freezing in fear or throwing the baby out with the bathwater. The future is digital.

Tim Smith
Tim Smith
8 years ago

I agree digital is already in stores on phones and tablets. The biggest barrier for me is the variety of in-store apps/programs, more logons and passwords, different navigation and terminology. Do I shop here often (grocery store) or not so much (department or specialty stores) to even bother? Do I want to leave my digital footprint with them? Most times no.

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.
8 years ago

Implementing technology in a smart way is a huge challenge requiring the balancing of strategic decision making and tactical testing. On the one hand, back-store technology has to be integrated in a manner that can work seamlessly across all platforms and channels and parts of the supply chain. On the other hand, technology must work to facilitate the consumer’s path to purchase.

With so many new forms of technology, small scale testing needs to be a continuous activity. Choosing the specific applications that match front-end and back-end processes should be based upon which tests integrate information, work for consumers and help fulfill the store’s mission. This means the best opportunity for technology will be different for each retailer.

At the same time, it is important to keep abreast of what new choices are working well for the competition because customer expectations continue to rise with each new application that provides assistance in the path to purchase.

Lee Peterson
Lee Peterson
8 years ago

Some, like Macy’s, are “throw it against the wall’ for sure, but most retailers have done nothing, waiting for someone else to make some kind of silver bullet breakthrough in terms of digital retail integration.

The best stores today, in my opinion, have great customer service provided by people, not technology, even though those people may use technology. Great apps and other digital tools used on the customer’s mobile device combined with an excellent sales force makes way more sense to me than anything else I’ve seen or heard of. Old school with new school, but not on the sales floor.

Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.
8 years ago

First, the article appears to be about mall stores, not supermarkets and other FMCG/CPG milieus. The difference is that with 2.3 trips per week to the FMCG/CPG group of stores, behavior of the shopper is far more habituated. And lower margins create a lot less opportunity for third party suppliers.

For example, typical purchase time in a supermarket is something like 20 seconds, and plenty of purchases happen in less than 10 seconds. Stirring into the pot stores which are visited less often than once a week isn’t very helpful.

Back in the day when Walmart was harvesting lots of cash from suppliers in support of Walmart TV, we found that many shoppers weren’t even aware of these big screens well above their heads. Probably billions of dollars have been siphoned down these holes. And the money didn’t come from the retailers.

And I don’t think “retailers” have near the tendency to “throw it against the wall” as it might seem. This practice comes from tech companies with close to zero understanding of either shoppers OR the retailers. “Retailers” are not spending money on this stuff — mostly — but tech companies who see large imaginary potential.

Having said all this, I think there is great potential for technology at retail, but it may be less snazzy than imagined.

Shep Hyken
Shep Hyken
8 years ago

For now, digital is new. Basics are there, but more advanced concepts haven’t experienced the “tipping point” where consumers like it, expect it or even want it. As more digital tech is brought into the brick-and-mortar stores, there will have to be a balance between high-tech and high-touch (the human connection).

Michael Twitty
Michael Twitty
8 years ago

Technology often shines when it is used to provide a solution to a consumer problem or, in terms of retail, when it overcomes a barrier along the path to purchase. In other words, shoppers will embrace practical solutions which facilitate THEIR objectives. Rather than seeking ways to implement new technologies, manufacturers and retailers may wish to rely on insight to identify the most important shopper opportunities and to suggest practical solutions that address such shopper barriers.

Jan Kniffen
Jan Kniffen
8 years ago

Having stocked my first shelf in 1964, attended the grand opening of Walmart store number 26 in 1968 and having attended the opening of the first Walmart SuperCenter in 1988, witnessed the advent of indeck scanners, laser wand scanners, participated in changing Lord & Taylor from cash drawers to POS systems, watched the shortening of the supply chain for a retailer from 54 weeks to 13 weeks through technology, observed the advent of RFID, and watched Macy’s and Nordstrom successfully implement omnichannel retailing, I just howled when I read that “bringing digital to stores will not work.”

Yes, there has always been a lot of “throwing it against the wall,” but just think how much tech has stuck!

Frank Beurskens
Frank Beurskens
8 years ago

Digital technology is an asset, a tool, a process, a platform; it supports strategy and services. The greatest need and opportunity for digital requires rethinking retail. Dominant brands are “commodities”—a curious paradox—and commodities do not require physical stores to engage shoppers; the engagement is already done by the brand. Browse and select is easier online.

But the perishable perimeter is not a commodity. It is a unique engaging sensory experience, that technology in-store can support with in depth and visual product information including local source stories, nutritional and preparation/handling information, and coupons for stimulating new product demand.

In-store, at least in grocery, however, is often a digital desert due to many retailers still thinking retail is about buying right. In the “old days,” retailers chose to pilot everything and anything a vendor was willing to throw in, for free. Those days are gone. Those that have been in the in-store technology business for the past decade and survived know sustainable technology has to provide real value to the shopper and the retailer. We’ve seen record growth this past year with in-store technology specifically because shoppers expect it, use it, and benefit by it. Retailers that focus on differentiation through service, selection, and solutions seem to gravitate to digital. “Commodity” based, buy-side minded, bricks and mortar retailers may not need technology. They also may not need stores.

Gordon Arnold
Gordon Arnold
8 years ago

The value of technology is in the retailer’s ability to address consumer needs and wants for inventory information and transaction access. Placing materials in a brick & mortar facility requires that all employees are able to assist consumers in becoming successful users. It would follow that technology not used by the consumer for what it is intended for is difficult to explore, use and navigate or seemingly irrelevant. Blaming the technology is as preposterous as it sounds at face value.

The first need is for the retailer to create a single data file structure and only allow for new technology implementation that is tested and proven compatible. The next step is to consider the practicality of the technology against consumer needs and its ability to withstand the anticipated abuse found in service areas and store aisles. Most important would be to select test sights randomly and mandate that the store itself be placed in charge of the install with no special attention or assistance. Plug and play easy to use technology with value information where it needs to be for the consumer is the name of the game. And this is a game retailers must learn to win now simply because consumers expect it.

Peter J. Charness
Peter J. Charness
8 years ago

Retailers, those amazingly prolific spenders on IT and infrastructure throwing stuff at the wall? Not likely. Retailers are very careful spenders on technology particularly where a deployment has to go across hundreds or thousands of locations.

Digital is already in-store, the customer walks in with more computing power in their pockets than some retailers provided their analysts not that many years ago. The caution is against throwing shiny objects against the wall, as opposed to deploying technology that solves real problems or enhances the customer experience.

Empowering associates to be up to speed with answering and guiding customers about product, sure. Making the shopping experience more convenient—sure. Supporting customer research in a form factor that isn’t a 5″ screen, where product information needs that a bigger format, sure. Suggestion selling that helps a customer accessorize a purchase (like formal wear for example, or furniture design) these all make sense in that they enhance the customer experience, or support the store associate in helping customers.

Other stuff that may not have worked? How about Mobile POS in a small sized store, with few if any employees working the floor, where the only time the mobile POS made it off the cash wrap was when the counter was being dusted…Didn’t stick, did it?

Kai Clarke
Kai Clarke
8 years ago

Sometimes the haphazard retail approach to digital technology reflects the imminent “doom” that will occur, should this technology be implemented but not followed up on. Essentially, too many companies are looking to use technology, which is only a tool, as a replacement for their weaknesses in other areas. More retailers need to work on managing their OOS, keeping customer satisfaction high, and better managing their in-store experience. A simple thing like having enough checkstand employees available at all times will ensure that customers don’t have to wait in line for extended periods of time (a simple yet ignored thing in almost every store-from Costco to Starbucks).

Ralph Jacobson
Ralph Jacobson
8 years ago

I tend to always agree with Nikki, however there is at least one international retailer with a very valuable brand following (to say the least) that has capitalized upon in-store technology leveraged by the staff. That electronics retailer need not be an anomaly in the industry. Yes, even grocery stores can leverage in-store tech more effectively than most do today. It has everything to do with defining what the expected outcomes of the tech implementation should be. From there, look to the industry globally to see best practices. Then evaluate the marketplace for the technology. Finally, in-store staff enablement and follow-on coaching cannot be underestimated in terms of being a critical success factor.

Adrian Weidmann
Adrian Weidmann
8 years ago

Retailers tend to experiment with in-store digital technology that they believe solves a problem that THEY have. Retailers need to implement in-store digital technologies that address shopper expectations. Giving a sales associate access to the same information the shopper already has is counter productive. The sales associate should have valued insights that go beyond what the shopper has, or there is NO perceived or real value. In fact, it becomes a distraction, a waste of time and an insult to the shopper.

Content is the value—not the technology. The technology only enables the best and simplest way to tell the brand story through rich media. This same rule is true for both shopper and sales associate.

Steve Kohler
Steve Kohler
8 years ago

There has indeed been some “throw it against the wall” mentality, and many of these projects are missing the obvious.

If “digital technology in stores” is digital changing rooms, big screens, etc, then NO, these will not be adopted on a wide scale. They are too complex and cannot be cost justified. Ultimately, customers want to interact with the product and a human sales associate, the core of retailing since the beginning.

But there is one aspect of shopper behavior that has changed. And it is technology based. In this respect, the answer is YES, digital technology will be used within the store to improve the customer experience and, ultimately, drive sales.

My view is that digital technology is already pervasive in bricks and mortar retail, and its the biggest retail (of any type) potential opportunity since the e-retailing B2C era began circa 2000.

In-store shoppers are already digital and are shopping digitally. They do it with their mobiles and brand/social web sites.

Right now, most retailers (almost all) are *not* leveraging this obvious and ubiquitous shopper behavior into a merchandising/service/sales advantage. Technologically simple things can be done that are powerful, such as aggregate and present content and online services in a meaningful/contextual way to shoppers through their mobiles. In-store support of these technologies are as simple as POS signage (digital or old school).

Retailers don’t need special dedicated apps and most don’t need beacons, just Wi-Fi. Or their customers can go 3G/4G like they already do when navigating to the shopping mall.

There are some independent retailers and brands doing this with great results already. (This means measurable sales increases and happy shoppers.)

In the case of larger retailers, they may be challenged by the siloing between in-store merchandising/ops and technology management. When these retailers see digital efforts succeeding at their local independent stores they will probably start asking how they can do it too.

Matt Talbot
Matt Talbot
8 years ago

While this “throw it against the wall” mentality may be true for some retailers and retail brands, I have seen something very different as the CEO of a software company that helps companies improve retail execution.

Retailers and retail brands come to us with the specific problem of not having insight into what is happening in-store. They seek out our mobile technology to gain real-time insights, empower their employees, improve retail execution and ultimately drive sales.

These smart retailers and brands have a distinct need and they hunt for digital technology like mobile data collection to improve their business. In my experience, these retail companies are embracing mobile technology to solve a very precise business need which is the antithesis of the “throw it against the wall” mentality.

Simon Liss
Simon Liss
8 years ago

Firstly, thank you Nikki for a balanced and realistic take on in-store technology, the industry definitely suffers from hype and unrealistic expectations from what, in many cases, is early stage technology. From a UK perspective, high-street retail in general has been forced to react to eCommerce, and in their rush to integrate physical stores with digital tools and channels we have seen many expensive failures.

Beacons, retailer apps and in-store screens have for the most part not delivered—victims of poor strategies, flakey/too early technology and a gimmick driven approach. I am yet to see a UK grocery chain, bank, restaurant or bar who has measurably improved bricks-and-mortar customer experience through technology. I’m not saying they won’t, or can’t, but there has been a tendency to latch on the latest tech buzz without thinking about its role in the customer journey or store environment, let alone its scalability or ROI. This is changing, but these are still real barriers. Clients, agencies and the digital press are all guilty of jumping before thinking and hyping up immature technologies.

Oh, and I work in retail technology, so it’s not that I’m down on the whole thing, I just think there is scope for so much more in terms of technology’s potential to improve retail experience and efficiency for multi-channel brands. Mobile is not going to be the only answer, because shopping in the real-world shouldn’t be heads-down experience. I see a gradual movement away from screens to sensors and behind the scenes data driven intelligence that can personalise the shopping experience and empower staff. All this without the need for people to be glued to screens (big or small). The next few years in this space are going to be very interesting!

vic gallese
vic gallese
8 years ago

Yes! The approach to date for most retailers is a boil-the-ocean model.

What has to take place is a strategic, simple, focused application model that part time associates can use to look for colors, sizes, order, ship, etc. What I have seen to date is access that is impractical to use.

Think: crawl, walk, run!