Customer-Centric Technologies in Demand
By Tom Ryan
A new report from U.K.-based Ovum finds that while retailers
will still be looking at technologies to further cut costs in what’s expected
to be another challenging year, a major focus will be on finding new ways to
build relationships with customers.
“Retailers are suffering because the general public is being
more cautious with its money,” Mike Davies, retail vice-president at IT services
supplier Wipro, told Computer Weekly. “Anything retailers can do to
get closer to customers and influence their spending patterns and behaviors
has to be beneficial.”
The Ovum report, 2010 Trends to Watch: Retail Technology,
said that especially with store staffs expected to be kept a minimum, mobile
handsets and automated management processes should be utilized to improve the
efficiency of retail staffs.
“Software which helps to manage the workforce and talent
so that experienced, trained or knowledgeable members of staff are available
when the customer needs assistance should be areas for technological investment,” said
the report.
Social networking and mobile shopping technologies are also
expected to get some attention.
“Countries like Thailand are really embracing mobile shopping,” said
Doug Hargrove, chief marketing officer at retail IT specialist Torex. “Even
in the UK, all the pieces of the jigsaw are there, so I wouldn’t be surprised
if mobile technology is adopted within the next 12 months.”
Meanwhile, interviews of some of the nation’s leading C-level
executives by the National Retail Federation BIG Show Expo producers likewise
indicated that the industry is focusing on technology solutions
geared toward the consumers.
The interviews – many of which will be available at The Innovation
Station on the EXPO Hall floor at the convention – identified six key challenges
for the retail industry:
- Delivering the bottom line
- Connecting with your customer
- Cross channel integration
- Creating customer experience
- Building customer loyalty
- Maximizing mobile retailing
Pinny Gniwsisch, founder and EVP at ice.com, the online jeweler,
said retailers should make sure that when they’re cutting costs, “they’re not
cutting the wrong things.” He emphasized the benefits of investing in innovation.
“If you think about site evaluation, the little changes –
putting this button here, adding this shipping cost earlier in the process
and all these little tweaks that you can find out with Google analytics …
if you look at those numbers and stay innovative, you’re going to make it through
the downturn,” said Mr. Gniwsisch.
Delaney Bellinger, chief information officer, Yum! Brands,
said her company focuses on proven technologies.
“It’s a low-margin and very lean industry so we can’t just
put wiz-bang stuff out there that kind of gooks good,” said Ms. Bellinger. “It’s
got to have a return on investment.”
Discussion Questions: What customer-centric
technologies do you think will provide the best payback for ROI over the
near-term and longer? What technologies are you most interested in at retail?
Here’s a low-cost, non-technological solution: improve customer service. At the end of the day, all the technology in the world will not compensate for lowest service, weak return polices, or sub-par quality products.
IT has allowed retailers to reduce costs dramatically by enabling consolidations and mergers and providing incredible leverage to the management function. This has, ironically, also caused a fundamental challenge to the business. With the consolidations enabled by IT, retail merchants have gotten farther and farther from the customer, spending most of their time poring over reports and/or staring at screens. This had led to a “one big store” mentality and nation-wide homogenization of product assortments, which in turn has driven retailers to compete on price, also known as a “footrace to the bottom.”
The next big step for IT will be to enable 4-wall retailers to:
– Support and manage multiple assortments and product lifecycles based on geographic, demographic, and ethnic variations by market;
– Establish improved brand loyalty through two-way communications with their customer base through Social Media;
– Continue to shorten the delivery cycle time from identification of trend to store-level delivery.
With these technologies, retailers could potentially get off the price promotion needle and return to a level of profitability not seen in 20+ years.
In their newest book, “Retail Connections,” published by PROSPER PUBLISHING, Don Schultz, Ph.D., and Martin Block, Ph.D., both of Northwestern University, point out that “Retailers and customers together create retail communities.” That thinking applies to technology, merchandising, pricing, service, etc.
The authors point out: Retailers cannot create identifiable retail communities alone, and equally, consumers don’t create them either. It is the two of them, together, that create the value for each other. That is what keeps the marketplace humming. When these retail communities are created, huge marketing opportunities come along with them. Both the buyer and seller want to succeed. Therefore, it is the combination of the two that creates marketplace success…there must be shared value or reciprocity in the marketplace for there to be marketplace equilibrium. Today, these retail communities can be identified through participant behaviors. That’s why listening to and hearing consumers is so critical to retailer success in the years ahead.
The retail winners in a consumer-centric “new world” will be organizations that make their shoppers a part of their technology, as well as their merchandise and marketing decision making.
Certainly, technology is a key component that can help improve retailers operations and connect with loyal customers. Solutions that optimize a retailer’s loyalty data and target promotions to specific shoppers will be top of the list.
Another opportunity for retailers is additional training for employees. If your employees are well trained to assist customers, including information about products, it will make a difference and build connections and loyal customers. Technology will always struggle to replace a friendly face in-store, eager to help you to find what you are looking for.
Having just returned from the NRF show, I can tell you that many vendors are saying they have it, but do they really? Every year I see vendors claim all these functions in their software. They use all the right words like optimize this and that, followed by accurate forecast. In reality there is no accurate forecasting in consumer products. Just like we are only starting to learn the how and why of social networking, the same can be said for customer focus across multiple channels.
I think we are still early in the game to be talking about ROI. We are still experimenting and will be for a few years. When we understand, then the question becomes what do we have to do to be competitive? Has the bar been raised or is there a business which will support an ROI?
When the topic is retail technology, we always begin commenting about improving personal customer service before turning attention to electronic gadgets. In at least one case, I must demur. The two largest supermarkets near my house and the Lowe’s down the street introduced self-checkout lanes last year. In all three stores the lanes remained virtually unused for several months. Today, one usually has to stand in line to use them. In other words, shoppers are choosing faster service over the personal touch in regular checkout lanes. I’d say that was customer-centric.
“…technology solutions geared toward the consumers.” I find this curious because most technology introduced into retail quickly becomes focused on retail efficiency. The customer must be really IT savvy to understand it or expected to quickly learn it to catch up to the retailer.
I think that the smartest technology solutions do not look IT driven but rather human driven. The Nordstrom legendary service is recognized and the customer freely interacts because there is a real person attached, not some multi-function tablet or touch screen. When technology solutions begin not to look like big brother, then they will truly be valuable and relied upon by the shopper, as well as the retailer.
While there is no shortage of challenges for retailers, I’ll suggest that there of these are really one and the same and all lead to the third point below:
1) Connecting with customers
2) Improving the customer experience
3) Building customer loyalty
For far too long, retailers have defined customer loyalty as something that is programmatic, often tied to a form of payment like a store-brand credit or charge card, and ultimately a gamed version of discounting.
The retailers that are taking and creating a sustainable advantage recognize that connecting to customers takes relevancy and that is only done through customer insights. Ditto the customer experience, which should not only reinforce the relevancy (e.g., of among other things, the retail brand) but also use and yield data and operational efficiencies.
Cross channel integration, especially from a media standpoint, is important but there has been way too much emphasis on 2009 as “the year of social media” and now 2010 as “the year of mobile.” Come on…these things are not new and as important as they are, they are subsets of meaningfully connecting with customers and the corresponding experience delivered.
The key to innovation, both with new technologies and old, is to start and end with the customer.
There is natural starting point when you need to build a relationship, that’s listening. Using customer experience feedback tools to constantly ask the tough questions, what more can we do? Why do you go to our competitors? What would make you change your behavior? Using the customer as the compass, you can change the unproductive course that your company, and employees may be following out of habit.
Connecting with the customer is without doubt the theme of 2010–looking at all channels as possible routes a customer may follow on a single journey. A consistent customer experience may require more not less staff; let’s not write that off as an outcome, let’s instead provide the insight that allows an organization to make informed investments in the experience.