NRF: Are Retailers Ready for the (Overly) Informed Consumer?

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Jan 11, 2011
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Commentary by Bill Bittner, president, BWH Consulting

I started out my first day at the annual NRF Convention intending to see the Association for Retail Technical Standards (ARTS) Annual Update. Because of the train schedule, I ended up getting in earlier so I saw a good portion of a prior presentation on "The Future Electronically-Enabled Supply Chain." What I heard at both presentations made me wonder if retailers are really ready for the impact of an informed consumer.

In the Supply Chain session, Peter Longo, president of logistics and operations for Macy’s, talked about their efforts in RFID. They have been using item-level RFID in their Manhattan Bloomingdale’s store for awhile. They raised their inventory accuracy from 75 percent to 97 percent. The reactions of both customers and employees were the same. Customers were happier because they could find what they wanted and employees were happy because they didn’t have to disappoint them. Many of the customers had used the online catalog before deciding to visit the store. These customers, who were looking forward to a cheerful in-store experience, were let down by an out of stock condition that prevented their purchase. RFID had minimized these occurrences.

My next session was with ARTS. One of the major projects ARTS worked on this year was version 2 of their mobile computing standard. They emphasized the broad impact of mobile on the consumer, marketing, and store operations. The goal of the ARTS standard is to establish common interfaces that can be used by various vendors to integrate features into mobile devices.

We have all heard the stories of consumers using their mobile phone to allow them to shop price at other locations as they consider products right at the shelf. We have also heard about them using the internet for product information. Consumers are also using the internet and their mobile devices to decide whether to make a store visit. Imagine the disappointment when they see the color they want online only to find it out of stock in the store. Worse yet is hearing the store employee say "it doesn’t come in that color."

Discussion Questions: With some of the larger, more sophisticated chains gearing up, will other retailers be left unprepared to handle the "overly-informed consumer"? Can most chains give their store associates tools to keep up with consumers? Can we at least arm them with the same mobile devices the shoppers are carrying?

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19 Comments on "NRF: Are Retailers Ready for the (Overly) Informed Consumer?"


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Dick Seesel
Guest
10 years 3 months ago

The advance of mobile technology is a reality, and retailers need to manage their business accordingly. In particular, it makes the argument for competitive pricing and in-stock performance even more compelling than before. There is nothing acceptable about “walking” a consumer who came into your store expecting to find an item in stock–whether through the promise of a circular or a website–and this standard shouldn’t change no matter what the tech landscape looks like.

Retailers do have an opportunity to be smarter about using new tools like kiosks (where customers can order out-of-stock items from a website), in order to avoid disappointing the consumer.

David Biernbaum
Guest
10 years 3 months ago

Eventually retailers and consumers will arrive at a point in technology where both are looking at the same level of availability of data and information from maybe even the same sources. In my estimation, we’re within five years of this reality.

Max Goldberg
Guest
10 years 3 months ago

Retailers need to use all of the technology at their disposal to help satisfy customers. Those that succeed will receive positive word of mouth, which will further drive sales.

Retailers will rarely be ahead of consumers in the race for information. It’s too simple for consumers to download the latest app or visit another website. But by returning to the basics of a positive shopping experience (having items in stock, consistent pricing across platforms and excellent customer service), retailers can build good will with consumers and drive profits.

Bill Emerson
Guest
Bill Emerson
10 years 3 months ago

Being in-stock on advertised merchandise has always been a big challenge for retailers, particularly large multi-store operations. The growth of websites as 24/7 marketing entities has only exacerbated this challenge.

Mobile apps that provide instant data on lowest price are a whole new game. This basically commoditizes the national brands and acts to increase the velocity of the “footrace to the bottom” which is the strategy of competing strictly on price. Look for a continued growth in Private Label and vertical retailers. J. Crew and Zara don’t worry about these low price apps, do they?

Put differently, technology is driving a fundamental change in strategic positioning for retailers. It’s a lot more than trying to respond quickly to the latest new app. Retailers need to do everything they can to get ahead of this parade. We all know what the guy at the back of the parade does. He’s the one with the shovel and the waste can.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
10 years 3 months ago

Customers will never be informed, as this topic suggests, let alone “overly-informed.” What was the last significant customer-centric retail innovation? Was it the use of credit–and then debit–cards? Was it online shopping? Both long ago. Lay-away has returned from mothballs. Supermarket shoppers still make 70% of their purchase decisions at the shelf. Retail moves quickly when manufacturer fashions are involved, but slowly otherwise. Semi-complete use of barcodes required over three decades. Today’s smartphone shopping apps are, so far, technophiles’ versions of Star Trek communicators. All show. The number of active smartphone shoppers parallels the Trekkies’ percentage of the total population. Ours is neither a broadly nor deeply informed consumer society–even considering trendy electronics.

In these spaces we have recently discussed the role of retailers in both leading shoppers (sustainability) and keeping up with shoppers. Reminds me of my ’48 Chebby–going too fast or too slow but never just right. Goldilocks found her “just right” solution, but retailers never will. It’s the nature of the biz.

Lee Peterson
Guest
10 years 3 months ago

Clearly, consumers are in a different league than store associates when it comes to mobile retail…for now. Many retailers however, like Best Buy, are changing that. (See BBY’s stores in Vegas, for example.)

But here’s my thing: don’t over-think the tech! Don’t lose sight of the fundamentals! Customers are still customers. They still want the best product and great service so, just because they’re staring at their hands doesn’t mean retailers should for ONE SECOND lose sight of the most basic retail principles that have stood the test of time since the shops opened on the Ponte Vecchio! Help them, they still need you!

Herb Sorensen
Guest
10 years 3 months ago
This may seem far out, but it is not hard to imagine stores where customers know MORE about the store than do retailers. They may certainly know more about the store from a customer perspective than does the retailer. This will particularly be true in terms of comparison with competitive experiences. Most of the focus on the convergence of online, mobile and bricks-and-mortar at this point focuses on one-way transmission from the retailer to the shopper, less on the shopper to the retailer. However, very little attention is given to the shopper’s capability to collect and analyze data across stores. Of course scanning items across stores allows price comparisons, as does available data base searching. But here I am thinking more of the shopper’s ability to photograph displays, etc. I don’t think that shoppers are going to come up with data collection and analysis apps on their own, but some enterprising developers probably will. After all, Yelp and such are already collecting and analyzing data, without retailer participation. Eventually, the collection will not be simple… Read more »
Anne Bieler
Guest
Anne Bieler
10 years 3 months ago

Retailers are exploring and some are struggling with the technology for their store associates. The cost of not developing and implementing a strategy that works toward retailer objectives is very high. Shoppers expect fast solutions to out-of-stocks, access to technical information, and informed associates who can help shoppers. Even loyal shoppers change store destination when the store experience is distinctively better at a competitors–who are using technology tools to make things happen with a consumer centric focus.

Mark Burr
Guest
10 years 3 months ago
Seems to Scanner that the best education on informed shopping can be learned by studying the new processes of car shopping. In this market, likely more than any other, consumers are more educated now than ever–especially with respect to price and availability. It’s also the best connectivity between net/app/phone usage and visiting ‘bricks and mortar’. Or, in some cases nearly no face to face contact whatsoever. It’s a good place to learn. Both of my latest purchases were done nearly 90-95% via the internet. In both cases, the marketplace was national or at least over a large region. One purchase purely by happenstance was local and the other was over 200 miles away. It’s clearly a marketplace where 10-15 years ago a selection was limited to what was ‘on the lot’ at your local dealers. Today, it’s what’s available nearly anywhere. Nevertheless, the lack of integration in systems, the lack of vision to reality and desire by many retailers will leave this potential in a slow pace of advancement. Currently, even updating inventories and availability… Read more »
Christopher P. Ramey
Guest
10 years 3 months ago

First point: don’t call this a war. Retailers exist to serve customers. Second point: learn to adapt. I have a pretty good hunch the internet isn’t going away.

Price isn’t always the primary driver. Opportunities remain for retailers who are customer centric.

Gene Detroyer
Guest
10 years 3 months ago

There is no such thing as an overly informed consumer. The consumer will gravitate to whatever information they need, however they get it. Those who provide the information will give them the most comfort in their decision making. The retailers that don’t will be left behind.

Consumer-oriented information tools are growing geometrically. The only problem is that there are so many that they have to be digested by the user, but that will change.

In the end, purchasing decisions will not be made in stores, they will be made by the consumer interacting with their computer or smart phone. This of course leads us to the obvious conclusion (note Scanner’s comment about ordering autos)…why go to the store at all?

That conclusion brings me to the comment in today’s discussion, “Imagine the disappointment when they see the color they want online only to find it out of stock in the store.” Hey, if you found the color online, why not just order it there?

Craig Sundstrom
Guest
10 years 3 months ago

I’m not sure where Herb shops, but I’ve ALREADY been to plenty of stores where the customers know more than the people who work there…sadly. Anyway, it seems that we have two emerging trends working against each other here: stores using technology to maintain optimal (read: minimal) stock levels, and customers knowing–or thinking they know, really–what’s on the shelf. What do you do when your iWhatever shows exactly one item in stock? Maybe it’s true, maybe it’s not, and maybe it will be sold as you walk in the front door.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
10 years 3 months ago

Here’s a great example of retail stores where the customers typically know more about the product than the salespeople: Car dealerships.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 3 months ago

I have a couple of thoughts. These integrated technologies are going to force on many retailers a level of operational discipline and execution that they’ve not been accustomed to. This is especially true in apparel retailing. In a sense, Macy’s could afford 75% inventory accuracy at store level if the customer was strictly shopping in the stores. If one item was out of stock in her size, there would always be another style she could choose. That’s not good enough in this new world of cross-channel delivery. The customer expects more.

The customer also expects sales associates to know at least as much as they do about they products they are shopping for. This is a real challenge for retailers because all too often their customers are far more motivated consumers of product information that their sales associates tend to be. As time goes along, this is likely to become a more acute problem for those many retailers who have done little more than hire order takers.

Jerry Gelsomino
Guest
10 years 3 months ago

It is going to be a challenge. So much information and so little time to keep abreast of the latest. One aspect seldom overlooked, “How do I know the information I am getting through digital sources is the truth? Who is behind this and do they have a vested interest?” i.e., Wikileaks.

Retailers must know the facts about their product and its performance capabilities. That is, the information they must know better or at least as real time as the shopper. It might also be helpful to know the untruthful rumors spread, in order to be ready to honestly defend themselves.

Ed Rosenbaum
Guest
10 years 3 months ago

Retailers will not be at the same informative level as consumers until they are willing to invest heavily in training. They will not do that without some commitment from employees they will not leave within a certain time period. Employees have no reason to do that. It will be a never ending cycle until retailers commit.

Ed Dennis
Guest
Ed Dennis
10 years 3 months ago

The real challenge is going to be how to attract and keep employees that have the ability to serve the informed customer. In the past this has been accomplished by segregating retail by price and service (Nordstroms vs Big Lots). It has also been divided by urban vs rural.

Success will require management to really work on recruiting and training. Unfortunately, retail management and work have not historically existed in the same time zone. I am afraid that retail is evolving into Walmart and Radio Shack. One is affordable but loaded with out-of-stocks and the other is ultra high priced with semi-competent help.

Dave Wendland
Guest
10 years 3 months ago

My suggestion is quite simple–don’t plan retail for “today’s” shopper, position the experience (in-store, online, mobile, etc.) for the shopper of tomorrow. That, after all, is where the future dollar resides.

You admittedly cannot drive forward if all you do is look in the rear view mirror.

Tony Orlando
Guest
10 years 3 months ago
Very interesting…. How many of the consultants on this forum have real retail experience, both as a front-end worker or a manager? Just wondering, because the overlying theme is that we better have wiz kids, and super high technology at our disposal, or we will not survive in the near future. I still believe that overkill with technology is not good either. Yes…I do try to keep up with e-mail services, and state-of-the-art checkout scanning, and new credit card applications. But as a single store operator, it is impossible to implement some of the things you read about, simply because it is too expensive. However, the customer–young or old–can be won over with today’s technology, and a nice dose of old fashioned service. Maybe I’m an old codger, but the future doesn’t scare me as much as the government regulations do. The meat nutrition labeling will cost everyone more, and my concerns lie in the implementation of all these things which really do not add any value to the bottom line. I’m not ranting (OK,… Read more »
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