CPGmatters: Adding Virtual Connections Could Increase Sales at Shelf
Through a special arrangement, presented here for discussion
is a summary of a current article from the monthly e-zine, CPGmatters.
According
to a survey from Cisco, retailers must respond to technology-savvy consumers
by combining web-like and in-store shopping experiences to create "mashops" in
order to drive growth and build brand awareness. Mashops get their name because
they "mash up" the virtual and physical worlds to create a new way
to shop.
Creating "mashop" experiences will lead retailers to introduce
technologies such as interactive digital displays, video assistants, social
networking technologies and Wi-Fi networks that enable shoppers to remain connected
with trusted people and information while they are in the store.
Two distinct
groups of technology-savvy shoppers have emerged from the study: calculating
shoppers and extreme shoppers. Calculating shoppers (56 percent of the general
population) use the web to inform their buying decisions. Extreme shoppers
(11 percent of the general population, with high representation from Generation
Y) use the web and smartphones to find the lowest possible price. And while
extreme shoppers receive the most attention, the larger group of calculating
shoppers has the greatest impact on retailers’ revenues and
margins, according to Cisco.
Among calculating shoppers:Â
- Most prefer to research products online rather than speak with store staff.
- One in three use retailers’ Facebook pages and coupon-sharing sites.
- One in four use web-based group buying sites such as Groupon.
- More than half (54 percent) wanted to try a mashop-type service in the
store. Most of these (73 percent) preferred access to mashop-type services
using a touch screen at the shelf edge.
- More than half (54 percent) wanted product and price comparisons, and peer
reviews on touch screens in the store.
- More than four of ten (44 percent) wanted a virtual video adviser with
web content on a large screen or tablet service in the store.
Most important for retailers, calculating shoppers expect to increase their
value-seeking behavior over the next two years, further accelerating margin pressures.
Discussion Questions
Discussion Questions: How do you envision the “mashops” of the future evolving? What features of the virtual world will retail be most pressed to add to brick & mortar retail in the near term? How would you rate the threat to margins as more web tools are found in the store?
The race to the bottom. Any retailer realizes concentrating on the coupon clippers is not a profitable strategy. Why has this become the “smart” thinking?
This is a very interesting survey. It basically says the shopper wants the iPad or similar device to replace the sales associate, and that the mobile screen is too small/hard to manage for all the info needed/desired at the shelf.
I think it’s too early to predict the effect on margin. Ready access to the right information about product quality and performance via testimonials and succinct education could drive margins up, if executed well. I see this as a bigger opportunity in consumer electronics and other hard goods, even furniture than I do for the standard grocery or mass retail store. The more considered the purchase, the more opportunity to use time with technology to sell the shopper up.
What I don’t like is the default mindset to use every wired device to deliver an “offer” or coupon. We can guarantee margins will be hurt if that is all we have to offer as marketers.
I see this article as an indictment of the poor state of customer service in many retailers. Rather than rely on sales associates to provide knowledgeable information about products, consumers turn to the web where knowledge is plentiful and product comparisons are easy. Most retailers, in a continuing effort to cut costs, will cede knowledge to the web and rely on employees to find merchandise and handle check out.
In this world, it will be incumbent (and cost effective) to have Internet screens and access available throughout the store, so consumers can check features and make informed shopping decisions.
I wonder how many additional sales could be generated from the stock on hand if retailers had knowledgeable salespeople who really cared about their customers.
Here’s further proof that in-store is where it’s at. While the “mashop” terminology is a bit cute for my tastes, Cisco has done a pretty good job of documenting the self-evident truth–mobile and personal media are augmenting and displacing traditional service practices within the physical retail environment.
Are others besides me a bit troubled when device-savvy shoppers say they prefer to interact with anonymous, external microsites rather than with store associates when searching for accurate product information? What does this say about the mismatch between customer service expectations and retailers’ abilities to deliver on the promise?
Cisco embeds a fairly compelling argument within this report that retailers should provide hot-spot access within their stores as a service to shoppers. It could do more to address strategies and methods that would let retailers interact positively with their shoppers using personal media within the store.
I suppose, in this instance, Wi-Fi installations must precede the delivery of new best practices. But retailers had better think fast about their new service propositions: If shoppers are already using smart phones to compare deals on the fly, we may be standing on the threshold of the commoditization of everything.
From the descriptions, I guess I am a calculating shopper. I like to do my research online and at least know what features I “must have” in a product before I go to the store. But the more I learn about hyped up product reviews and companies literally paying for them, the less confident I have become about using them to choose between manufacturers.
Websites like Mechanical Turk from Amazon and others are brokering small tasks for workers on the Internet to either obtain information or post it. The person who performs the task might get fifty cents or a dollar and they can post that great review on hundreds of seller sites. Some sites may require a sign-in and confirmation that the product was purchased, but many don’t. If it is a non-retailer site, there may be no way to verify the reviewer ever used the product.
This is where the Brick and Mortar retailer can still influence the purchase decision. An informed sales person can make the difference. Even if a product has had great online reviews, the sales person can explain the features of the one they have in stock and often persuade the customer to try it. Even if they have the one the customer is looking for, by transferring their attention to another product they may be able to remove price as a determinant. In any case, an ill informed sales person will be at a loss and the customer is not going to change their mind if the salesperson is not convincing.
Maybe there is an opportunity here. I can’t imagine how it would work, but a source of product reviews that is guaranteed to be legitimate. A site that does something to verify the reviewer has actually tried the product and has a legitimate opinion. No fake Facebook write ups, no overloading of Consumer Reports, no fake Twitter announcements, just honest reviews from people who have used the products. Imagine.
This isn’t a threat to margin. This is an increase in margin and return on investment. Fully interactive stores will need less people, less inventory and less space, and will be a magnet for those coming shopping generations. They will increase their inventory turns by two or three times. They will be indifferent if they make a sale out of a store or online out of their warehouse.
I’ve told the story several times about one of my MBA students who claimed brick and mortar stores were necessary. He used the example of recently buying a new laptop. He went to several stores to look at different models to get a real touch and feel. But then one of the other students asked him which did he buy. The “shopping” student said, I went home and bought the one I liked on the internet.
Zappos has proved that even in apparel, brick and mortar stores are not necessary. Unfortunately, retailers are wishing to make shoppers shop like they used to. It will not happen. The coming generations do not have the time and most of all the interest to approach shopping as entertainment. Nor do they have the need!!!
Over the past year or so, we’ve seen more studies indicating that shoppers indeed want more information as they move through the purchase cycle. In our industry (health, wellness, supplements), the products are often new categories to shoppers and they want access to credible, reliable information that is actionable – buying new supplements can be an overwhelming process.
Now, we’re hearing that choosing cuts of meat, deciding between two cereal brands, and knowing how to select the most nutritious vegetables can be confusing as well. Those are skills that younger generations might not have been handed from their mothers or grandmothers.
There’s been many attempts to make this process easier for the shopper, from NuVal to ANDI scores and Guilding Stars–and more to come from the industry. These tools are wonderful to support a product decision in the store, but are we simply giving shoppers the fish rather than teaching them how to put a worm on the hook?
I believe that technology can play an important role in giving shoppers the tools to make a decision that helps them long term–education, information, incentives, and resources. But not at the expense of human interactions. While many shoppers say they’d rather get information from technology than a store personnel, it’s through the conversations and engagement that retailers can deliver value above and beyond the technology.
We need to be careful in making generalizations about the findings of a few shoppers/consumers. Certainly younger shoppers are typically, however not always, more comfortable with personal technology to research buying decisions. We do continually see increasing adoption of these technologies by older people, additionally.
A retailer understanding, at literally any one moment in time what a shopper wants or needs, is at the heart of driving the optimum shopping experience. These and other technologies are now being utilized by retailers and “CPGers” alike around the globe. Retailers need to collaborate with shoppers in more facets of the shoppers’ lives. Before, during and after the shopping trip, retailers have nearly endless opportunities to engage with the shoppers.
Will there always need to be a balance between live employees in the brick and mortar stores and the virtual “employee”? I believe so, yes. The more useful information that gets into the hands of the shopper, the better. Creating awareness of new items, promotions, etc, is always a good thing and this will typically increase sales at the shelf.
The trick is to find the point of diminishing returns between extracting costs (labor, inventory, etc.) and driving incremental sales. The good news is that there is technology being used for that now, too. Check it out!
The mashop findings here shouldn’t come as a surprise. It seems this is the natural evolution of how consumers shop. For me, the key question for brands is which mashops will prove most successful at engaging and retaining customers.
Consumers have long exhibited a desire to try and buy the latest, greatest tech. But not all new tech will be adopted by consumers for use on a regular basis – in this case, for use whenever they shop. For example, consumers are currently experimenting with a myriad of apps for handheld devices created by retailers, manufacturers and others. Not all will survive, just as not all mashops will survive. In the grocery category, for instance, consumers are likely to gravitate toward mashops that not only bring convenience, simplicity and thrift to the experience, but also those that can be replicated across the various nameplates the shopper frequents.
Two aspects in particular jump out at me. First, the confluence of poor in-store customer service combined with “hyped up product reviews and companies literally paying for them,” really leaves the customer in a pickle. (Is everything going the way of the BBB?). Until the advent of true customer review sites (or analytical tools that can do the sifting and estimate unbiased customer satisfaction), the retailer could make use of the information they already own to give the customer objective product information, posting product information, warranty and sales stats ala Amazon (product sales ranking, customers who bought this also bought that, sales trends, etc), but also return and exchange stats. Nothing says dissatisfaction like a return, but the exchange information is gold. Retailers could reduce returns significantly by mining this exchange data and presenting it in a digestible manner.
The second is the idea posted by Cisco, “Mashops might encourage shoppers to upgrade their purchases and increase their shopping cart size when factors other than price influence their buying decisions.” Giving information about add on products (fashion coordinates, compliments, etc.) truly could increase basket size, and possible margin. However, some information can be a double-edged sword. Posting repair information might either encourage or discourage consumers from buying the profitable extended warranties.
Overall, I think the companies that can present believable, valuable information in a easy to digest format will grab and keep those calculating customers, as well as many others. The investment in the technology to do this will payoff by increasing customer confidence and loyalty, and customer loyalty is the golden ring of retail.
For apparel multi-channel retailers, sizing is the biggest issue for customers. New body scanning technology with sizing, 3D modeling, and recommendation engines are going to change the customer experience dramatically. The best is Styku.com – currently part of the Microsoft Kinect accelerator. Check it out.