David Inggs, Chief Technology Officer, VMob
The spread of digital technologies and connected devices is changing the way businesses operate across all sectors. No doubt. However, there is no industry for which the digital transformation has been as lopsided as in retail. Traditional bricks and mortar retail and online retail seem to be driven on two completely separate tracks, so much so that they often end up driven out of completely separate teams!
The growth hungry, technology enabled online retail sector has aggressively leapt forward employing user tracking, predictive analytics and retargeting methods to continuously evolve the customer experience and optimize marketing material right down to every touch point.
Meanwhile the traditional retail store has in many cases gone backwards in this respect. In order to keep pace with the lower overheads of online stores, retailers have ended up reducing staff head counts, increasing product to floor space ratio and in general cutting the quality of in-store service.
While some might say this just signals the changing times we live in, retailers know there’s a bigger issue that needs solving. Any retail marketer worth their salt knows that experience sells. Even brands with a strong online presence still spend millions on in-store environments for one reason: they know that in-store traffic converts.
The Mobile Shift
Enter mobile – with the explosion of smartphones we’ve seen a reversal in the trend towards online shopping. In-store retail is now gaining some of the strengths that online has had for years: a mobile app or website gives a brand a digital touch point with the in-store customer. More and more customers are turning to their mobile as the trusted shop assistance of choice. This offers a digital connection to the customer while they’re in-store, one which can be tracked and measured, much the same as a viewer on an online store.
This has seen many retailers adopting apps to serve the needs of an ever increasing base of mobile in-store shoppers. According to a study by flurry analytics, the use of shopping apps alone grew 174% year on year in 2014.
Retailers have also been striving for new and innovative ways of engaging customers with their apps and encouraging them to use the apps while in-store. This has brought about a wave of new services for retail mobile apps from mobile loyalty cards and vouchers to augmented reality games and product demonstrations.
The Missed Opportunity
As retailers swarm to mobile platforms to get visibility into the browsing behaviour of their shoppers, there’s one piece of data that many seem to be missing. And it’s perhaps the most important – the transaction.
Data from shoppers browsing your mobile app or mobile website can give insight into most viewed products. By including in-store redeemable offers, you can even get insight into which of your promoted products people buy the most of. A mobile loyalty card will even give you visibility into how often an individual shopper buys something. Unfortunately, it’s here that many retailers stop.
By taking the digital evolution of the in-store environment a little further, retailers can create a fully connected “internet of things” (IoT) which gives them full visibility into the popularity of different products and the performance of different campaigns because without that final piece of the puzzle, you’re not quite looking at the full picture.
Connecting with consumer on a Mobile App and IoT devices provides new opportunities to link specific market efforts to changes in consumer’s behaviour and what specific purchasing took place because of this in the bricks and mortar stores.
Once a retailer gets transaction data and mobile behaviour data in one place they know what products a customer looked at, when they came into the store and what promotions they showed interest in. And most importantly, they now also know what the customer purchased - not just from offers scanned within the app, but also any other products purchased at the same time.
This in itself isn’t completely revolutionary – some analysis of POS data will give you an idea of what products were purchased with a particular promotional item. However, it’s the ability to also layer that data over individual customer data like demographics and behavioural data that gives us a full picture of what led to the sale. And of course because all the data is collected in real-time and in one place, it can be fed into machine learning systems and other platforms to continuously evolve the customer experience.
So why aren’t More Retailers doing it?
There are two main blockers to retailers implementing a fully closed loop approach to marketing at the moment: First of all, there’s the overhead of integration – POS systems aren’t always easy to integrate with, especially the older systems and many larger chains have multiple versions of POS terminals across their chains. Secondly, there’s an inability to actually use the data – there’s no point in collecting it if you can’t actually make use of it.
To overcome some of the difficulty in integration, it’s important to look at where you store your data – a temptation for many retailers is to use their POS or CRM system as the preferred point of storage. However, as these are often the bulkiest systems to change, that can create problems. Instead, look to the newest system – often the backend of your mobile app. By pulling data out of legacy systems and into your mobile app you not only ease the headaches of integration significantly, but you also remove the risk of giving marketing access to potentially sensitive areas of those systems, giving the IS team the control to expose on the necessary data into the marketing ecosystem.
It’s also important to evaluate any new systems you’re pumping data into to ensure that they are developed to modern open standards. Make sure they can easily have data exposed or push data out to external systems and dashboards. As technologies like machine learning evolve, you need the freedom to be able to plug new systems in to use or add to your data set.
It’s definitely not without its challenges, but if retailers get it right the pay-off is well worth the time and effort. In-store sales will finally have all the measurability and advantages of an online store (with the added benefit of a smiling face at the counter).