RadioShack’s New Look and RFID Insights
By George Anderson
RadioShack Corp. is going for a whole new look and insights into how to operate all its stores with its StoreOne flagship concept.
According to The Associated Press, StoreOne is larger (four to five times) than the typical RadioShack location, rotunda-shaped and features “an interactive theater, games
and the latest in electronic tools and toys.”
The layout is more open than the typical RadioShack and it includes a Starbucks.
The company’s new chief executive, David Edmondson, said the StoreOne concept is too expensive to rollout everywhere but the company was considering opening other units in high
traffic locations.
An interesting feature of the flagship is the company’s use of smart cards with radio frequency identification chips (RFID) to track shoppers in the store. When customers enter,
they are handed a card that tracks where they go in the store, how long they stay and what, if anything, they purchase. Customers can decline to take the card if they choose.
“It’s all about customers interacting with technology and us learning what technologies customers are interested in,” said the RadioShack CEO.
Moderator’s Comment: What is your reaction to RadioShack’s StoreOne concept and the use of RFID chips to better understand how consumers shop the store?
How will the learning from StoreOne help RadioShack manage its other stores more effectively? –
George Anderson – Moderator
I think this is a more likely scenario for RFID in the store in the near term than item-level tagging at the shelf – the tagging of customers rather than products. But there are two things that need to be done to make it successful: one, there needs to be an incentive for the customer. Everything we’ve seen says that customers are willing to give up certain aspects of their privacy if something good is in it for them, and a discount or special offer would make sense in the RadioShack situation. But two, and more importantly, I hope RadioShack has a strong plan for how they are going to turn this data into action. So you are collecting information about how consumers behave in your stores? Doesn’t matter if you can’t do anything with it that will boost your sales or make you more efficient.
I agree that RadioShack’s customers will be more likely to participate as they are more into technology than an average consumer. Hopefully, they will be able to do a better job of interpreting the data than in Warren’s example. To have such rich data and not have the insight to be able to mine it would be a real shame. Matching the areas visited, time spent in each area and the actual purchases should be very revealing with such high impulse items.
Maybe I am on the wrong track here, but I simply don’t see RS as this type of a destination. When I have used RadioShack at all, it’s been for an obscure connector, cable, or component. Other than a couple of scanners that I own, I can’t think of anything else that I would purchase there. That’s even being somewhat of a radio nut.
On the trips that I have made there for a cable or connection item, I have been totally annoyed by the time its taken to go through the whole name, address and mothers maiden name sequence required to buy a $2.99 cable connector.
I just don’t consider RS as a browsing location or destination, let alone worth the investment in tracking my movements in the store having any value.
Quite honestly, I am surprised they have survived this far. They are the last place I would consider for a major technology purchase, however the first place for something small and obscure. I would think this might help improve their image, but beyond image, you need product. But I could be missing something on this one.
Well, I really must point out that Peter Fader (Wharton) and I are both BrainTrust panelists who participate reasonably regularly here at RetailWire. At least half of the Fortune 20 CPG companies are involved with PathTracker studies, and a significant share of the world retailer market as well. Our latest work is, of course, proprietary, but a fair amount has been published. I will be co-presenting at the IIR Shopper Insight conference on segmentation of shoppers based on their actual behavior in stores this July. For more information on the underlying tool, and insights, you might check: http://www.sorensen-associates.com/whatsnew.htm
I don’t believe that most consumers will let RS track their shopping patterns without giving them some sort of incentive. In the era of homeland security, we are already being tracked by all different sorts of government, health and financial institutions. If RS wants to track consumers’ shopping patterns – a study that should certainly be very beneficial to them – they should be willing to reward consumers for participation. Discounts, premiums, and coupons should easily provide sufficient incentive to make consumers willing participants – and yield a much higher participation rate.
I think it would be wise to offer, say, $1 off purchase coupons to incent people. Otherwise, it’s sure to upset that lunatic fringe that will feel their privacy is being invaded somehow. And those folk might be less inclined to shop RadioShack as a result. That said, it could teach them quite a bit about where things might be ideally explained, and why shoppers might spend a lot of time in a certain area without buying, etc.
Along with many other technophiles, I will be very interested to see how this turns out. There have been precious few real case studies on the commercial potential of RFID at the customer level. Come to think of it, there have only been a few case studies on the commercial potential of RFID further up the supply chain.
The nature of RadioShack’s customer base is that they are interested in electronics and technology. As such, they will be more willing than say shoppers at Nordstrom’s to participate in this type of program, and will understand that their privacy won’t be compromised. This second point is critical to the success of the effort – shoppers have to feel they will receive something by carrying around the card and will not incur any problems.
This effort could help propel RadioShack into the forefront of retailing technology if properly executed, and if the issue of privacy is properly addressed. Conversely, if there is real customer pushback, not the expected protests by CASPIAN and like-minded (and equally questionable) groups, look for RadioShack to close the book on the effort very quickly.
I certainly do hope that RadioShack has the ability to mine this data as the results could be very interesting and revealing, depending on what type of participation rate they are able to obtain.
However, I also agree with the comments on the destination — before the advent of the electronics superstore, this was where I always went for the latest and greatest technology. However, that was about 20 years ago. Now, as another contributor stated, it is kind of the cable and connector store — doesn’t even enter my mind when considering technology or electronic purchases.
To Warren’s comment about the professors tracking shopping carts – the PathTracker program he is mentioning was the underlying system behind a pretty large part of Unilever’s latest consumer research. Trust me, they got some industry guidance there!