Category Archives: State of the Industry
This week, I noticed something scary happening (and yes, Halloween is already over). Retail stores have exploded with wrapping paper, bows and garlands. Radio ads proclaim “Outdoor light sale, get a jump on your decorating!” And two days ago, one of my social media acquaintances proudly boasted that their Christmas presents were bought, wrapped and already placed underneath the decorated Christmas tree.
It was November 4th.
For those that are bothered by this, it’s easy enough to ignore the premature festivity. But there is one aspect that is harder to tune out, and you can bet it will be starting soon, if it hasn’t already.
The Christmas music.
Some love it. Some hate it. Marketing wisdom tells us that it puts shoppers in the “right frame of mind”, and encourages them to buy more. It’s hard to argue with this business strategy and its bottom-line results (see last year’s post Deck the Malls for an overview).
For this reason, I’ve been waiting for someone to take Christmas music to the next level. Now that the holiday season officially runs from November to January, the next logical step is to write a new carol that reflects our modern reality. The “61 days of Christmas” seems like an appropriate title. By my calculations, it would take several days of continuous play to reach the end, and it could be placed on an endless loop in retail stores. And think of the possibilities for product advertising! “On the 49th day of Christmas my true love gave to me, a Windows 8 Surface Tablet!” It could be changed up every year to reflect the hottest products.
Then, to my relief, I came across a news article that dissuaded my fears of a 24/7-carol-o-thon. This week, Shoppers Drug Mart found itself in hot water after pumping out the Christmas tunes on November 1st. Customers complained that the pharmacy giant had overstepped the unwritten rule of “No Christmas before Remembrance Day” and the soundtrack was yanked “until further notice”. I skimmed through the 100+ comments on the article and the consensus was overwhelming: “No Christmas before December 1st please”.
Will retailers hear the message? Or will it be lost in the chorus of “fa la la la la-s” and register “cha-chings”?
Do you think the Christmas hype starts too early? Or should retailers use every sales tool at their disposal?
“If we wanted to figure out if a customer is pregnant, even if she didn’t want us to know, can you do that?”
This was the question posted to Target statistician Andrew Pole, as recounted in the New York Times article “How companies learn your secrets”. New parents have always been a boon for “one-stop” retailers like Target, as this life-change offers a small opportunity to alter engrained buying habits. “Coming in for diapers? Might as well pick up some supper too.” The competition for new parents’ attention is so fierce that Target wanted to get a jump on their competition and begin their marketing efforts before baby was even born.
And Pole delivered. He analyzed women’s purchase history and identified 25 products (pre-natal vitamins, maternity wear, etc.) that when considered together, generated a “pregnancy prediction score”. This allowed him to estimate who was a mommy-to-be, and approximately when she was due. Target then created custom “mommy-themed” flyers and coupons, disguised as regular flyers, and sent them specifically to these women, who were unaware of their data-gleaned origins.
And Target is not the only retailer doing this. As the article explains, “Almost every major retailer, from grocery chains to investment banks to the U.S. Postal Service, has a “predictive analytics” department devoted to understanding not just consumers’ shopping habits but also their personal habits, so as to more efficiently market to them.”
Does this story give you pause? Or does the prospect of a tailored-deal excite you? Either way, just wait. Those predictive analytics departments are about to get a whole lot more in-your-face thanks to mobile wallets.
The internet has been awash with talk of mobile wallets. (For the uninitiated, Jen’s post ‘The Next Step’ provides a great introduction). People are quick to talk about their convenience, the “coolness” of the technology, their lighter pockets. But less often do they mention the real reason for their existence; marketing.
A few weeks ago, I read an article that explained how RBC is poised to be the first Canadian bank to offer mobile wallets, possibly as a soon as October. Interestingly, this article also spoke at great length of the marketing advantages of the technology.
Retailers will now be able to collect purchase-data more easily than ever before, tailoring promotions to specific consumers. Combine this with your smartphone’s location-aware technology and retailers can now text you their latest flyer when you are near their store. Or alert you of their lunch special.
There are obvious advantages for both merchants and consumers alike, and it might be nice to walk into your favourite store and be provided with a list of on-sale items, or a coupon. We won’t know how this latest evolution of analytics will play out, but one thing’s for sure – we’ll all be watching. Oh, and so will they.
Do you think predictive analytics improve the retailer/customer dynamic? Or, are they an invasion of privacy?
In the next few years, augmented reality (AR) is poised to take over retail. For the uninitiated, AR uses computer-generated sensory input to alter your perception of the world in real-time. Already we are seeing its potential being harnessed in all areas of retail, including in-store, online, and through advertising.
In-store Customer Experience
Retailers have introduced AR in-store in an attempt to improve the customer experience.
Starbucks Holiday Cups
In 2011, Starbucks introduced their entertainment-focused “Holiday Cups” campaign. After downloading an app, customers could use their smart phone to make their coffee cups come alive.
AR’s in-store usefulness goes beyond entertainment. Intel has developed an AR digital display, which has interesting implications for retailers. Installed at the store entrance, the 7ft transparent display shows customers a digital floorplan and recommends products after assessing their gender. Product location is superimposed on the screen, and products can be placed on hold and brought to the cash register for payment. The aim of the technology is to help customers shop more quickly and easily.
Traditionally, the problem with online shopping has been that you can’t truly get a sense of a product from a 2 dimensional image. With AR, customers are now able to hold products in their hand, and try them on virtually.
Tesco online shopping
Tesco has already made AR a large part of their online-shopping experience. Customers select a product online, and then print a copy of the AR marker. Holding the marker to their webcam, it is transformed into a 3d model of the product. As the customer turns the marker, the 3d image rotates on screen as well. In the video below, a customer views a TV, and is able to see the ports on the back of the unit as she turns the AR marker.
Holition’s AR is as luxurious as the products it promotes. Designed for high-end products, their AR experience allows customers to virtually “try on” jewelry and watches. Holition is also working on expanding their AR so that customers can smell, hear, and feel products.
Bodymetrics Virtual dressing room
Unsurprisingly, 50% of garments bought online are returned. But what if you knew how those jeans would fit before you place your order? Bodymetrics’ Virtual dressing room uses your in-home motion capture device (such as the X-Box Kinect) to assess your body shape and virtually project clothes onto your digital frame. If you like what you see, your purchase can be completed right through your console.
AR is also finding its place in advertising.
GoldRun has already launched several successful AR advertising campaigns. One of their most interesting campaigns was when they created a virtual shoe store for Airwalk. AR markers were secretly hidden in public places in Washington, New York, and Los Angeles. Customers used their smartphones to locate the markers, and were able to view limited edition versions of Airwalk classic shoes. They could then place an order from their phone for the shoe that they found.
Every weekday, I compile the best retail and technology news from Twitter into our “we get retail” Daily paper.li newspaper. Through my monitoring, I’ve noticed several technology trends that are poised to shape the retail industry like never before. I have compiled a list of my top five emerging retail technologies:
Tablet PCs are increasingly being used in retail environments to speed up sales. Couple this with mobile payments, and several interesting possibilities arise. Sales staff can help you find a product and ring it in, right on the sales floor, with no need to line up at the cash register. Product you need not in stock? Staff can check inventory levels right then and there, and tell you when the next shipment will arrive. I can see this technology becoming an invaluable customer service tool.
Most of us are already familiar with QR codes: “scan here to go to our website” or “scan here for our coupon of the day”. While QR codes are excellent promotional tools, businesses are also recognizing their benefits after the sale. For example, whirlpool includes QR codes on their dryers that link to animated instructions on the proper installation of vent material. QR codes can be used to provide usage instructions, replacement part numbers, contact information, etc. This customer friendly solution provides yet another way of promoting product entanglement, as well as maintaining brand integrity.
Apple’s passbook is an intriguing offering; it allows customers to electronically collect, store and organize store cards, gift cards, and coupons. Passbook uses the iPhone’s geo-location capability to identify when you’re in a particular store, and load the appropriate card. For example, it will load your Movie gift card when you enter the theatre, presenting it on-screen to be scanned. Aside from its obvious convenience, this technology makes it easy to carry your store loyalty cards (how many times have you signed up for something, but left the card at home?) It’s an interesting product for consumers and retailers alike.
Radio Frequency Identification is another new trend hitting the retail world, and widespread adoption is expected in the next 3-5 years. Inventory is tagged, and can be tracked at any point from warehouse to the storefront. Because locations are tracked in real time, RFID offers retailers unparalleled supply chain accuracy. The completeness of incoming shipments can be quickly assessed, rather than relying on random inspections. Other benefits include prevention of vendor fraud, administrative errors, and employee theft.
Nokia City Lens
Nokia’s City Lens (currently in beta) uses your smartphone camera and augmented reality technology to recognize your location and superimpose relevant information right on your screen. Wave your phone, and City Lens will identify nearby landmarks, restaurants, and shops near you. Imagine – customers wave their phone at your store front, and you are able to see your hours of operation, special sales, reviews, etc. It will provide unparalleled visibility to potential customers. When this takes hold, this could be a boon to retailers, or a bane for those unprepared.
Will these technologies impact the retail industry? What other technologies will be of use to consumers and retailers alike?
Picture this. You’re in your favourite restaurant with a group of friends, eagerly awaiting your meal. Everyone else at your table receives their meal, except for you. It eventually arrives 15 minutes later, but it’s loaded with the ingredient you specifically asked to be excluded. When you finally manage to flag down your server, it goes back to the kitchen, but its replacement doesn’t arrive for another 15 minutes. Then to top it off, your drink is spilled in your lap.
At this point, what would you do?
Did texting the manager cross your mind?
A new service called Talk to the Manager allows restaurant-goers to anonymously complain to the restaurant owner via text. “Every cellphone is a comment card”, their website boasts. The rationale behind the service is that management has direct (and confidential) access to complaints, rather than scouring nasty public reviews on sites like Yelp or Urbanspoon.
When I first heard about this service, my initial reaction was that it seemed a little ridiculous. What happened to speaking to people directly? We are increasingly placing more and more layers of technology between customers and businesses in the name of efficiency and improvement.
That being said, a few years ago, could you imagine “tweeting” your complaints to a company? There is no question that Twitter has become the new frontline of customer service. In fact, I would not be surprised if social media eclipses the traditional call centre as the preferred method of contact.
Are services like “Talk to the Manager” just the latest evolution of customer service? And, would more people offer feedback in an anonymous fashion? Perhaps managers would finally hear from the non-confrontational customers who might otherwise have kept quiet. Of course this type of service would be more suitable to some industries than others. (How’s my driving? Text 555-4435)
As a retailer, would you appreciate a service like this?
Do receive feedback from customers? Are text-feedback systems just the latest evolution of customer service?
The restaurant world is filled with various idioms. I’m sure everyone has heard them; phrases like “Can I tempt you with our hot peanut fudge quadruple scoop sundae?” delivered by the server in a rushed, robotic manner. As diners, we can almost anticipate them we hear them so often. But that may be about to change.
Last week, I read an article in The Globe and Mail newspaper that examined the latest service trend in the restaurant industry. Restaurants, the ultimate service business, are recognizing that they need to move beyond scripts to stay competitive. With so many restaurants to choose from, quality of service can be a distinguishing factor. As an Applebee’s executive so eloquently put it, “Food is easy to copy, a building is easy to copy, but it’s not easy to copy our people”.
So what are they doing instead? Teaching human observation skills. Or, in other words, asking servers to pay attention to their clientele. Some examples? “Customers who arrive early and well-dressed are likely on the way to the theatre and need fast service” and “chatty tables are more likely to respond to suggestive food and beverage selling”, among others. Similar insights could be applied to the retail industry as a whole.
As a consumer, I can attest that what I find to be “good service” is never scripted. It’s real human interaction that is timely, and relevant. It’s when I feel the salesperson is speaking to me, and not saying something because they were told to in an attempt to upsell. If scripts are not the answer, is teaching observation skills the new magic bullet?
Personally, I think that good servers already do this intuitively. And I think that’s why part of me remains skeptical about this new trend. I am fully behind the idea of investing in one’s employees, but I wonder, is good service something that can be taught at all? Sure, you can teach someone the mechanics of painting, but can you teach them to produce art? It may be a case of “you’ve got it or you don’t”. Many businesses believe they can hire any warm body and train them. What’s the result? Poor performance. High turnover. The feeling that anyone can work retail, and the resulting undervaluing of retail employees.
I propose retail businesses adopt a new approach: hire the right people – the ones with a talent for service – and invest to keep them there. The right people will do an amazing job, and if you treat them well, and pay them well, they will stay. Some level of training is always required, but starting from the right place is a smarter return on investment. So start by hiring the right people. You’d be well served.
Is truly “good service” something that can be taught? How do you invest in your employees?
When I was attending university, I took a marketing class in which the professor was convinced that brand recognition was the only requirement of a successful business. Sure, you needed capital to get started, and you would need a good sense of the product that you were selling, and sales skills and some knowledge of your market were a bonus. But he truly believed that the only thing a company needed to do to ensure their long-term success was to make their name synonymous with their product. He pointed out examples like Kleenex, Aspirin, Band-Aid and Jeep. He made sure that we all walked out of that course with the belief that our businesses would succeed so long as our brand names were part of the public lexicon. Make your product known and you will stay in business forever.
It’s well known that Kodak has had a lot of problems in the last ten years, and the majority of those troubles are being blamed on the growth in the digital camera market. And yet for a brief period of time in 2005, Kodak was actually ranked first in the U.S. in digital cameras sales. But here we are, seven years later, with a different company in the first place slot and Kodak struggling frantically to keep afloat.
But this is Kodak! They invented the Brownie camera, which was the first camera available to amateur photographers at the start of the last century. They were the first company to produce and sell color 35mm film. Would we be able to go the movies or even watch DVDs if Kodak hadn’t been there in the early 1900s to help develop the film stock that was originally used to shoot motion pictures? Who amongst us has not had a “Kodak moment”? And here’s a little piece of irony for you: the man credited with inventing the digital camera, Steve Sasson, worked as an engineer for Kodak at the time that he developed the equipment. Kodak engineers also invented the megapixel sensor, which is a key component to making your digital pictures look so great. That’s right – the company that is currently being brought down because of increased competition in the digital photography market can actually lay claim to being part of the invention of the digital photography market.
So how does this happen to a company that has dominated the landscape for over 100 years and can lay claim to being one of the most recognizable brands in the world? It’s actually quite simple. It’s because they were dominant and had brand-recognition. Sure, they tried to expand a little and open their doors to different products and ideas. But in the mid-1990s, Kodak executives were sceptical that this whole “digital” thing would even become a thing. They were confident in their brand, and while they were willing to branch out a little into new areas they firmly believed that staying the course of their original marketing and production paths was what would keep them at the top of the heap. When others within the organization tried to say differently, they were shut down in favour of management’s plans. To say that management failed to take into account the speed with which the consumer market changes is an understatement.
Now, of course, the management at Eastman Kodak is singing a different song. And with new people and new voices being heard within the organization, there is hope that Kodak will be able to reorganize while under bankruptcy protection and come out even stronger on the other side. But this path is going to be long and painful, and what makes it worse is that it could have been avoided if the company had spent more time ensuring that their brand stayed at the top of the market rather than just assuming that it would because they were a Brand.
If I could take this information and go back ten and a few years to my university professor, I would tell him the following:
- The key to brand recognition is making sure that your brand continues to be seen by the consumer. People have short memories. If your brand disappears from the market, consumers won’t stop buying that product in protest. They’ll move on.
- Price can trump brand, but only in those cases where the brand doesn’t have legitimate strength and clear competitive advantage. If you’re going to rely on product quality as your value proposition, then you need to be sure the quality of your product allows for it.
- All the brand recognition and all the excellent product development in the world will not help your company if management fails to plan ahead and think about the future. Listen to the market, listen to your employees, and remember that what goes up must come down and nowhere does that analogy ring more true than in a capitalist marketplace.
Do you think your customers are buying your goods/services because of the product itself or the brand behind it? Which do you tend to promote more when you’re making a sale?
Were you one of the unlucky ones whose newest thing-a-ma-bob didn’t work as advertised? Maybe it was hurtled a little too vigorously down the chimney, or maybe the assembly line elf was asleep at the switch. Regardless, I’m sure it was frustrating as you agonized in the customer service line waiting to return that defective product.
If that did happen to you, my sympathies. But, as it turns out, there might not have been anything wrong with it after all.
Before the break, I read an interesting article on the ‘Retail Info System News’ website: “Consumer Electronics Returns Costs $16.7B Called Unsustainable”. You can find the original article here: http://goo.gl/Nd3Ub
This article discusses a study by Accenture which examined the high cost of returning consumer electronics. This includes receiving, diagnosing, repairing, re-packaging, shipping, then eventually re-selling. They found it amounts to $16.7 billion dollars a year.
That’s right. $16.7 billion.
Is this just a cost of doing business? Some would say so. But here’s the kicker. 68% of ‘defective’ product returns, when investigated, are deemed to have ‘No Trouble Found’. Only 5% of returned products are truly defective.
So what does this mean for the retail industry? It seems that a majority of returns are related to poor customer education. Here’s a great opportunity. Imagine implementing an in-store program that helps customers understand, setup, use and optimize the products they purchase. What a great way to improve the customer experience and turn customers into repeat, happy customers.
And, more importantly, save money.
According to Accenture “Reducing the number of NTF customer returns by just one percent would translate to roughly a 4% cut in return/repair costs. For a typical manufacturer, that represents approximately $21 million in annual savings; for a large retailer, about $16 million.”
Now that’s a kind of return we can all appreciate.
How do product returns affect your business? Do you have any programs in place to curb the amount of unnecessary returns?
I saw the first signs on November 1st. I was at the grocery store, hunting for discounted Halloween candy when I saw the glitter. And then sparkles. And a tube of shiny coloured paper. Disbelief took hold. There was no way….was it possible…..were the Christmas products on the shelves already?! I still had a jack o’lantern on my front porch. I hadn’t even bought my Remembrance Day poppy yet. How was I supposed to get into the holiday spirit?
There used to be a very clear start to the holiday shopping rush. The day after American Thanksgiving meant the unofficial countdown to Christmas was on. When the stores opened on Black Friday there would be fancy decorations everywhere the eye could see, and the holiday muzak would start playing through the mall on a 24/7 loop. Parking lots and stores would get crowded and chaotic, and the line-up to visit Santa would wind around fake reindeer and big red SALE signs. But the last few years have seen a definite shift in the retail market in regards to when the season starts. More and more, store owners are trying to speed up the clock and get their customers looking to the end of the year. Forget Black Friday – several big-name American retailers started their seasonal sales in July!
There is sound logic behind the push towards a longer shopping season. Consumers have less money to spend, and retailers are fighting each other for every last penny. Impulse shopping is at an all-time low, and more consumers are focused on budgeting and necessity spending than ever before. Retailers need to work hard to make shoppers open their wallets. Malls and big-box retailers are being hit especially hard in recent years, with increases in local and online shopping affecting the amount of people who walk through the mall to work through their Christmas list. Spreading the Christmas shopping season over several months will allow shoppers to spread their spending out, thus spending more cash in the process. Stores are then able to spread their costs out over a greater period of time, which allows for more steady revenue over an extended period. It’s just good business sense.