NRF Big Show: Show Me the Execution
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.
What am I going to be looking for at NRF’s Big Show next week? Two main things: the latest in tracking in-store customer behavior, and the evolution of next generation fulfillment.
Cracking the Code on In-Store Customer Behavior
I’m going to sound very contradictory here. I think that retailers urgently need to crack the code on in-store customer behavior. The capability has been around for a long time, whether through in-store video or at-the-door customer intercepts. But it’s all been very expensive, difficult to execute continuously and challenging to get actionable insights.
The latest technologies are changing the game, but here’s where things get contradictory.
Retailers may need to understand what customers do in stores as quickly as possible, if only to help struggling stores, but if they don’t take care, they will kill this nascent capability before it gets off the ground. That’s because a lot of those technologies that make cheap, quick, and continuous location analytics possible are also very intrusive and have little respect for consumers’ privacy. So while I’m interested in the development of what I see as a key capability, I’m also very interested to see how the industry is actively preparing to do so in way that is respectful of consumers.
Next Gen Fulfillment
Oh, am I excited about this one. Omni-channel’s impact on supply chain has been a long time coming. I feel like I have said on more than one occasion, "Okay guys, it’s coming — supply chain transformation is going to be here any minute." Well, I’m saying it again, but this time I really mean it. Supply chain can no longer be isolated from omni-channel impacts and the transformation that has already wracked marketing is going to be nothing compared to what it will mean for supply chain — particularly for supply chain execution.
In part, this is a little bit of sticking it to all those planning people. I believe firmly that it is impossible to plan perfectly and what will differentiate "Winning Retailers" in supply chain will be their ability to achieve both supply chain efficiency — which comes from planning well — and supply chain flexibility — which comes from execution. So I will be looking for the retailer and vendor stories that bring this transformation to life.
The end of the channel masters has been a long time coming, but nothing will drive that home more than the fulfillment innovations that cross traditional supply chain lines — and I firmly believe that the retailers who invest to make those capabilities a reality will be the ones that win in the next decade.
Discussion Questions
What technology solutions are you particularly hoping will “wow” you at the NRF’s Big Show? Do you suspect we’re close to major advances in in-store customer behavior or next gen fulfillment?
One area we seem to miss is the ability for store associates to communicate with each other. It is great to know what a customer is interested in and what products can be purchased online and picked up in the store. However, if we fail to provide the notifications to the store staff, it is all for nothing. So I think we also should be looking for solutions that connect the store staff with each other, with management and most certainly with the customers shopping both in and out of the store.
As a purveyor of in-store customer behavior analytics technology, I’m glad to hear it’s on the top of Nikki’s list. Her analysis that it’s tricky to get useful information cost effectively that doesn’t compromise customer privacy is dead on. It isn’t easy for sure and keeping cost down is a challenge.
Gaining insights into how the customer moves through the in-store sales funnel is critical for offline success. In the case of apparel retailers, capturing fitting room usage and service metrics and correlating that data to KPIs like conversion, ADS, and UPT gives management critical feedback on the execution of customer service behaviors by their associates.
The last mile for the offline retailer is gaining insights into the in-store sales funnel their customers experience and creating real-time behavioral responses to the data.
There will be some great technologies shown at NRF this year around consumer insights. The tools available today are able to help merchants take the “gut feel” out of the decision making process. The analytics capabilities of some of these solutions is incredible. The challenge remains with retail execution. All too often we look at utilization of implemented technologies and we find that they are severely underutilized.
The in-store analytics/customer behavior game has changed significantly with Apple’s support of beacons. The landscape in 3 ways:
Dealing appropriately with customer privacy is paramount. There will have to be opt-ins and a value exchange with the customer – studies show that both of these are in line with customer expectations and are likely to develop into positive interactions for both the shopper and the retailer.
(And yes, there will be hiccups along the way.)
I’ve spoken to several retailers recently who view “cracking the code” on in-store behavior as a priority in 2014 and beyond. Many of them have seen success with their eCommerce channel and are craving the similar levels of insight about customer behavior in their store channel. The challenges are to pick the technology partner that is the best fit for the retailer and its customer base and then to develop the capability to act on the information gathered in a way that will pay off the investment.
In-Store Customer Behavior and Fulfillment are very much a part of corporate profit degradation. It is my opinion that loss of sales, terminated customer relationships and litigant expenses that are arrived from these two causes are uncontrollable using present day technologies and procedures. Perhaps it is time for retailers to consider the option of hiring third party support for security and out-of-stock disasters that cause both whole order and client losses every day. These options may seem a little like surrendering, but that is simply not the case. Placing more manpower and inventory in both e-stores and brick & mortar stores can be justified as a means to limit lost sales while improving profits exponentially.
Even in Hong Kong we got daily updates on how incredible CES was this year. Two main points made over and over was how smart technology is growing allowing customers to shop MORE EFFICIENTLY from anywhere other than a store, and how small and powerful imbedded sensors are getting. This allows anyone to track anything – including behavior. Now what will retailers do as a follow-up?
As a consumer and shopper, at a personal level I am most interested in the technologies that are going to improve my in-store experience. Specifically, I would like to see how retailers can better customize offers to my specific interests, track me and my purchases across all channels, and offer the right price on the products I want. I am also interested in opportunities for retailers to build loyalty with me by not only providing me with a fair deal on the products I buy, but also demonstrating it such as by arming store associates with competitive price intelligence, or making it available on in-store tablets.
As for in-store customer behavior, I have demonstrations from companies that have been able to create significant lift for retailers. Provided the implementation and monitoring is done right, the ROI is positive and privacy is respected, there is every reason to expect the capability to become more prevalent going forward.