BrainTrust Query: The Great Digital Disconnect

Nov 14, 2012

Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.

Digital content and especially digital coupons have been a disappointment to many retailers in their immediate impact to the business. While shoppers are increasingly pre-shopping online, loading coupons and building shopping lists prior to their journey into the world of bricks and mortar, their activities still remain on the periphery of most retailers’ mainstream focus. This is particularly true in the grocery channel.

Some of the barriers I see preventing digital content from truly joining the shopper experience include:

Lack of Technology Integration In-store: Shoppers aren’t able to actually use their mobile device in-store to aid in the experience. Mobile payment capabilities, while catching on, are still not ubiquitous to the point of becoming mainstream for the shopper or the retailer.

Competing Value Propositions: While digital content is considered slick and most retailers believe it is the communication media of the future, paper coupons, weekly circulars, and other traditional promotions still drive the vast majority of sales and the quick return on investment that brands and retailers must have to run their business.

Dearth of Digital Content: This is the biggest void. Clearly many retailers and manufacturers are dipping their toes in the water, but digital offers and information continue to be under-nourished, which is especially damning if the brand and retailer want to design this content so that it is meaningful to the shopper. Hundreds of digital offers covering some of the highest household penetration categories need to populate the offer bank, not just the few dozen that is the norm today — mostly contain high margin, low penetration categories.

Digital content has been wrongly positioned (in my humble opinion) as a series of standalone events and content that often has no connection to the mainstream value proposition of the retailer.

An opportunity exists to gain acceptance and reach a degree of critical mass with digital content if two things happen. First, the digital content is directly linked or layered to existing value elements of the retailer. Digital deals can be positioned as bonus savings on end cap items in the store, front-page items in the circular, or even targeted offers that are in direct mail or email communications.

Second, evidence of these digital offerings must be visible inside the store — signs with QR codes to connect with content; references to how to load digital content to the shopper’s account while they shop in the store.

When these conditions are met, shoppers will embrace the offers and engage with digital content programs at a much higher level. Consequently, brands will be more likely to spend their trade or shopper marketing dollars with the retailer who can deliver a more holistic digital approach. Then the fun begins.

What barriers do you see hampering the use of digital coupons and content as part of the shopping experience in the grocery channel? What steps should grocers take to drive the use of digital content?

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19 Comments on "BrainTrust Query: The Great Digital Disconnect"

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Joel Rubinson

I think technology integration is the big thing. At some point, shoppers will expect to find technology in-store that encourages paperless shopping. When that happens, a switch will flip in the shopper’s head about their expectations of shopper experience and promotion availability. Right now, that is not the expectation.

Dr. Stephen Needel

While I agree with Mark on many of the needs, perhaps the biggest barrier (imho) is that the smartphone is not an integral part of grocery shopping. I’ve done this a number of times with people here in Atlanta — take 30 minutes and watch for how many people are using their smartphones while grocery shopping in Kroger or Publix — not a lot.

And the second part of the question assumes that driving the use of digital content is a good thing — I don’t know that that’s true. So I’m not sure grocers should, at this point in time, be taking any steps to drive the use of digital content.

Ken Lonyai

Mark hits upon some of the key issues in his article, which I would sum up as lack of commitment by retailers. While they give plenty of lip service and go through the motions of integrating digital, it seems like they are not willing to give it the same priority as traditional methods. In doing so, they are fulfilling their own prophecy of the digital stepchild because they treat digital like a stepchild.

Grocers or any retailers need to be all-in if they expect to gain anything from digital. They need to create the in-store tools that enhance mobile applications and consumer research efforts or digital will remain a disappointment for both merchant and customer.

Gene Hoffman
Gene Hoffman
4 years 11 months ago

The barriers I see that hamper the use of digital content as part of the shopping experience are the ever-increasing wealth of digital content and the compression of consumers’ TIME today. It’s true that time brings all things to pass, but that implies only after they have cleared all existing hurdles.

Consumers are bombarded today with more of everything. To wit: You can’t easily shove 10 pounds of multiple marketing activity into the consumer’s 5-pound sack.

If you are a food retailer, become knowledgeable and selective before chasing every new rainbow in the skies — or marketplace.

Max Goldberg

Time and ease of use hinder the adoption of digital coupons, loyalty programs and payment instruments. It takes too much time for consumers to gather the coupons. And when they do, there is too little information in-store on how to use them. Finally, the process is not seamless because all of the technologies do not work together.

Consumers don’t want to invest the time in these technologies until they can realize significant savings in time and money. This includes electronic couponing and loyalty programs, as well as QR codes (who is going to take the time, while trying to get through an excursion to the grocery store, to scan and read QR codes?).

If retailers want new technologies to be used by consumers, they need to make the consumer experience more friendly, easier and quicker.

Frank Riso

I do think the problem is getting the data or accepted offer from the new digital device used by the shopper into the legacy POS systems. Once that is a real capability, we will see the use of mobile devices by the consumer and the retailer go main stream. Hopefully with NRF just around the corner we should see a new technology to make that link possible.

Kenneth Leung

Technology integration and signage is the key for execution in store. Digital coupons can’t be easily delivered to the checkout right now (scanning QR Codes on a regular scanner means handing the cashier the mobile device) and unlike pieces of paper that can be held, it is easy to forget the digital content on your device while you are shopping. Grocers who want to use digital coupon need to work through the human process or redeeming the coupon, tying to a card program perhaps, so that it is easier for consumers to digest the content to drive traffic into the store.

Warren Thayer

I think Heckman is spot on. And, IMHO, this is a slow evolution, not a revolution. Pioneers will eventually get the gold, but right now they will also get lots of arrows. I see, as I write this, that half the people taking the instant poll think digital coupons will be at least equal to paper coupons within two to three years. Absurd. What ARE they smoking?

Doug Garnett

One thing digital advocates forget is the tremendous communication impact of a physical coupon. Whether pinned to a board or kept in a coupon clippers stash, they are easy to browse and remind the consumer of the opportunity, the product, and the stores.

Retailers should look for those opportunities where digital coupons make sense, but continue to leverage physical coupons for the much higher communication value they carry.

gordon arnold
Nothing in the world puts pressure on the IT industry like point of sale (POS) systems. The highest priority is and will remain ease of use, followed very closely by business continuity, system security, and of course, speed. Electronic coupons are the number one nightmare for both cashier and self checkout retail stations. The current supply of IT coupons must be printed in order to be used expeditiously by the present day majority of consumers at these POS stations. This puts the consumer in charge at the expense of the retailer because most consumers are not that IT handy and/or persistent causing many customer abandoned attempts to gather and print them. Please note that the same code used to measure abandoned e-commerce carts can be and is used to measure the number of unsuccessfully printed or gathered coupons. To eliminate these obstacles we need to generate a bigger and more friendly code and run it faster. The time to build the next generation enterprise system and bring it to user level is three to four years with another one to two for new user interface devices and practice. For these reasons I am comfortable with a 4-5 year time line.
Shep Hyken

The biggest barrier at this point is the customer. They either don’t have the technology to use digital coupons, don’t know how to use it, or don’t even know it exists. For example, I just started using the Passbook app on my iPhone. Until last week I had no idea it existed. Now I print coupons, boarding passes, and can’t wait to see what else I can use it for.

Customers have to be told it exists, then educated on how to use it. By the way, if there is no benefit to the customer, they won’t use it. The benefit could be discount coupons, convenience, and more.

Ed Dennis
Ed Dennis
4 years 11 months ago

The biggest problem is that retailers have been sold a bill of goods that “digital” is the future of the world and the fact of the matter is that is only “a” tool, not “the” tool! The fact is delivery of mobile digital is a form of theft in that the mobile user has to pay for the data AND many mobile users get a little miffed when anyone tries to SPAM their phone, iPad, etc. with unsolicited advertisement even if it includes a “deal.” I think digital coupons are a rip off. If a discount is in order then put a sign in the window, but getting cute with discounts and offers via any means is counterproductive — you alienate everyone who is not offered the discount and word will get around. If you want my business then post a price and item number and if you deserve my business, you might get it.

Lee Kent

Integration! What I mean by this is being able to, at your leisure, and when you stumble upon it, load/accumulate digital coupons, etc. into your digital wallet. When you go to the checkout and open your digital wallet, whichever coupons, etc. that are applicable will be applied. It is all about convenience, savings, and ease of process!

Tony Orlando

My problem with digital coupons is the incredible amount of fraudulent coupons being created by a whole new type of cyber criminal. Every week from OGA and NGA I get a gigantic laundry list of fraudulent coupons, and I simply do not accept online coupons anymore. It has cost my business in losses, which is unacceptable. Until the online gurus can figure out a way to certify the coupons for the retailer, I am not playing the game.

Call me old fashioned, but the circulars in Sunday’s paper are still working well in my area, with many major coupons available, and I will be patient until the legitimate digital coupons far outweigh the criminal coupons…which may take awhile.

Ralph Jacobson

Although a majority of shoppers leverage the Web for product comparison and research purposes, a small minority use it for couponing. This has simply not gone mainstream yet.

As retailers and CPG manufacturers collaborate better and better, I believe this will become more seamless for the consumer.

Herb Sorensen
Agreed on all points. Again, I compare the smart phone in the store, to your finder in the car, your GPS unit. You simply do not use it except on occasions when you are going where you usually don’t go (duh!) You go to the store all the time, and buy the same 150-200 items over and over — occasionally slipping in something else. The smart phone will not become an integral part of the shopping trip until it does something throughout the trip that every shopper is likely to find worthwhile. I think that will be mobile self-checkout, and the “reward” that drives it will be the elimination of checkout at the end. Just put the bags in your cart at the beginning of the trip, fill ’em as you go, scanning and paying, too, and then go straight to your car, do not pass (the checkout) “STOP.” Now, there’s a reward that will alter human behavior — and open the door for the smartphone to become your personal shopping assistant. Until this happens, the smartphone will be a toy that absorbs more investment dollars than it produces in profits. But the learning may be of value, particularly to… Read more »
Ross Ely
The slow adoption of digital coupons can be attributed to causes at the brand, retailer and consumer level. For CPG brands, it’s more difficult to run a national campaign with digital coupons compared to paper FSIs. Paper coupon processes are cheap, easy and effective. Budgets for digital programs compete with traditional paper coupon budgets, for which the ROI is well understood and predictable. Retailers also have a major role in the success of digital coupon programs. We find that retailers who promote digital programs through all their shopper communication channels see greater adoption. Contests, holiday themes, sweepstakes and giveaways have proven effective in driving traffic for digital programs. Finally, consumers must adopt new practices for viewing, selecting, organizing and redeeming digital coupons. The registration process and linkage to loyalty cards adds complexity, as does the challenge of remembering which coupons you downloaded once you are in the store. Furthermore, smartphone integration is still in its very early stages. The coupon industry has made progress in establishing a working model for the distribution, redemption and settlement of digital coupons, and millions of digital paperless coupons are processed every month. The industry still must address the challenges above, however, before digital coupons… Read more »
Tom Redd

Increasing use of mobile couponing in grocery stores will take some time, but once the conditions are right it’ll take off faster than anyone expects. Those conditions include what Mark Heckman mentions plus the ease of collecting and presenting these digital coupons (for both customer and retailer), ability to discern real from fraudulent digital coupons, system upgrades at the POS and integration with the backend, and encouraging customer use of digital signage/content in the physical store in a non-proprietary way.

Jerry Gelsomino

Is there a simple, universal system which all retailers can consistently link into? It may needs to be driven by the array of POS manufacturers to have one program, everywhere.


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