Future-proofing Retail - sponsored by Flixmedia

FUTUREPROOFING RETAIL 02 | WELCOME 03 | AR AND MIXED REALITIES 05 | USER EXPERIENCE 07 | Q&A 10 | THE ONLINE-OFFLINE MIX

MAY 2018

FUTURE-PROOFING RETAIL

Welcome F

uture-proofing a retail business must involve going beyond shopper expectations, delivering rich, engaging content online and providing personalised, immersive experiences. Amazon’s already doing it – and reaping the rewards – and it’s time other retailers do the same. How? By surprising and delighting shoppers and augmenting the shopping experience to extend far beyond simply ‘buying stuff’.

We’ve identified a number of factors, which, rather than being passing trends, will be the essential tools that allow all retailers to meet these expectations and drive the revolution of the retail industry.

First, mixed reality (MR) technologies, an area where consumer and industry perspectives have shifted massively.

Augmented reality (AR) and MR are being embraced by an increasing number of retailers and will soon become a ‘need to have’ rather than a niche ‘nice to have.’

Second, user experience. We all shop differently in store, so why can’t this diversity of experience be replicated online? Good content drives sales, so delivering product

2

BY SCOTT LESTER, CEO, FLIXMEDIA

pages which adapt to suit individual preferences will elevate content to ‘great’ status. The result? More sales.

Finally, the backbone of retail: omni- channel. We shop on multiple devices at different times via different channels – all of which must be integrated to deliver a consistent, rich experience. For those that have it, bricks-and-mortar must be intelligently incorporated into the mix. That means swapping in-store stock space for experiential or service-based offerings, bringing the aesthetics of the digital world to shops via interactive tech or any other innovation that reimagines the purpose, concept and monetisation of bricks-and-mortar.

Digitalisation must touch every aspect of a retail business to deliver a shopping experience which is frictionless and, above all, fun.

We examine the opportunities and challenges presented by today’s retail landscape and advise how retailers can plan and implement to sell – and sell better – in the future.

www.flixmedia.eu

FLIXMEDIA

SEEING IS BELIEVING Augmented reality may not have had an obvious use case for brands and retailers at launch but the technology has evolved significantly over the years since it hit the market, which means there’s a very real value proposition to be had from mixed realities AUGMENTED REALITY (AR) was once something akin to digital witchcraft. With the smartphone acting as a magic wand that could conjure up digital items and insert them into the real world, companies were soon climbing over each other to get involved in order to enchant their customers.

Blippar, the AR specialist, was among the firstmovers to champion the AR movement in the UK

www.flixmedia.eu

in 2011. Compared to today, smartphones weren’t quite mainstream but the potential of apps was quickly recognised by developers and brands alike.

Quick off the mark that year, Cadbury tasked Blippar to turn its chocolate bar packaging into a trigger that would open a doorway to an AR-powered game when scanning it with the Blippar smartphone app.

Described as “childishly fun” by the brand, it may have been unclear then what the purpose of it was. But Tesco rapidly followed up the same year with an AR print campaign as part of its Big Price Drop scheme, granting access to store information and recipes, making it plain that AR would become an extension of retail.

Five years later and Pokemon Go was arguably the turning point that made AR mainstream. It’s fair to say it’d be unlikely the average consumer would throw the term AR around but you can be certain that most will have heard of Pokemon Go. The location-based mobile game from Niantic, the software company, had people taking to the streets en masse as they sought to catch all the pokemon scattered in their vicinity.

3

FUTURE-PROOFING RETAIL

According to a study from the International Data Corporation (IDC), the research firm, worldwide spending on AR and virtual reality (VR) is set to hit $17.8bn in 2018. This is up massively from what was estimated at $9.1bn in 2017 as consumer and business use cases grow.

“There is currently a huge appetite from companies that see tremendous potential in the technology, from product design to retail sales to employee training,” said Tom Mainelli, program vice president, devices and AR/VR at IDC. In the commercial arena, retail will be leading the charge as largest sector for 2018 spending on AR and VR. Moreover, retail and online retail showcasing are expected to be the largest use cases with $950m of spending. This just demonstrates the importance of recognising mixed realities for the sales and marketing agenda.

Marcus Torchia, research director of IDC customer insights & analysis, said: “Phone-based AR is likely to garner most of the excitement for the near term and many companies are already experimenting with AR apps and services. Some of these will be useful, many won’t be, but over the course of the next 12–18 months, we should start to see developers beginning to grasp the potential of AR.” In the UK, there has been a decline in high street shopping with the advent of online but Warwick Business School believes that AR apps can transform the high street for the better. A study based on a survey of almost 21,500 smartphone users in the US revealed that 48.8% were happier with goods bought through an AR app. Integration of AR is therefore expected to help stores stand against rivals on the web, as 41.2% said they’re more likely to

4

There is currently a huge appetite from companies that see tremendous potential in the technology, from product design to retail sales to employee training purchase items from a retailer using an app.

Notable AR benefits include tracking down extra information and testing out products before they buy. Meanwhile, full integration, fast speed and ease of use are key areas that retailers integrating AR into stores will need to be on top of, as respondents highlighted those as issues stifling use.

Bose, the audio equipment manufacturer and retailer, is one business capitalising on the AR movement this year as it revealed Bose AR, which was dubbed “the world’s first audio augmented reality platform”. The idea is that AR needn’t just be visual – businesses effectively have the means to mould it to suit their needs, whether that be interaction, brand awareness or, in the case of Bose, sound-based.

In what is specific to its audio business model, Bose AR was showcased in the form of a pair of glasses that allow the wearer to hear what they’re seeing rather than primarily amending it with an

alternate visual reality. The wearable is said to know where the user is looking, thereby adding music, travel, educational and other layers to the experience, such as weather updates or restaurants nearby, for example.

To that end, the business has opened its doors to collaborate with others, counting TripAdvisor and Yelp among partners.

“Bose AR represents a new kind of augmented reality – one that’s made for anyone and every day,” said John Gordon, vice president of the consumer electronics division at Bose.

“It places audio in your surroundings, not digital images, so you can focus on the amazing world around you— rather than a tiny display.”

According to Forrester, the research firm, the previous “immaturity” of AR meant that marketers had failed to lock onto the opportunity of mixed realities. As such, it would be prudent to wake up to the technology’s potential.

Certainly, as was the case of Bose, it would seem that brands need to keep their eyes, and ears, open.

www.flixmedia.eu

FLIXMEDIA

THE POWER OF THE USER EXPERIENCE Tunnel vision can be useful for focusing on company projects. However, being blinkered in the retail space will leave firms out of pocket if they don’t listen to customer needs – which should include a solid user experience IT’S EASY TO ASSUME that you know what a customer needs. After all, who knows your business better than you? However, it’s easy to overlook obvious options and seemingly ‘simple’ solutions in favour of chasing ‘bigger and better’ agendas with which to dazzle your customers.

But frankly, from a consumer’s point of view, nothing is more frustrating

www.flixmedia.eu

than a poor user experience (UX) when shopping on the web. Regardless of the ease of today’s technological wonders, from augmented reality to mobile shopping, basic factors such as slow-loading times and confusing navigation are widely known to send users heading to rivals instead. So what goes on in the minds of customers the moment they make that critical decision to switch off?

For a start, it’s something desired within all good relationships, consumers want to be understood by businesses. Yes, it really is that simple. KPMG, the professional services firm, surveyed 18,000 consumers across 51 countries to ascertain that much.

Findings showed the crucial thing to do is think of consumers as always shopping rather than just going shopping. Indeed, the average respondent makes 17 purchases online each year, so there’s a lucrative opportunity ready and waiting.

With the majority of users checking out of a webpage within zero to eight seconds, even a one-second delay on the website of a retailer turning over $36.4m annually could cost $2.5m, as KissMetrics, the UX business, discovered in its research.

While there may not be a big bad wolf huffing and puffing at your bricks and mortar store, the high street overall has certainly been rocked by change and that can have a knock-on effect. The best thing retailers can do is be prepared should that time come and a userfriendly e-commerce presence will be a step in the right direction to batten down the hatches.

5

FUTURE-PROOFING RETAIL

69% 30%

76.7%

of those aged between 21 and 35 have made an online purchase in the past month

of Black Friday 2017 purchases were made online

of those aged between 36 and 49 have made an online purchase in the past month

65%

63%

of shoppers wouldn’t shop with online vendors who’ve ghosted them in the past and not followed up on purchases

of consumers expect to make more online purchases in 2018 than in 2017

88%

77% of customers research products online before buying in-store

£3.4bn total worth of online shopping baskets are abandoned each year

17.5% of millennials’ shopping choices were influenced by social-media platform content

84%

of customers research products online before buying things online

6

47.9% UK shoppers buy online because it’s more convenient than buying in-store

54% of consumers find what they want to buy by googling it

£10.5bn

is how much UK retailers could earn over the next five years by buying retargeting ads encouraging customers to complete purchases and by making online shopping more convenient

www.flixmedia.eu

Sources: Advantech, Amazon, Barclays, Episerver, KPMG, Narvar, PwC, Salesforce

of retailers plan to provide an online shopping experience by the end of 2018

FLIX MEDIA

Q&A

REMOVING RETAIL ROADBLOCKS As the retail market evolves it can be tricky to stay abreast of trends – especially if you’re used to a certain tried and tested formula. But to give you a head-start, we’ve answered a few questions to help your business adapt What’s the most common trap we as retail companies repeatedly fall into?

The retailers that I’ve seen fall behind or even go bankrupt had two common themes.

Firstly, a lack of accountability for progress from the top management down. Without progressive leadership, only incremental momentum is possible. Treading water gets you nowhere.

Secondly, a reticence to change. The ‘we don’t do it that way around here’ syndrome. Vision is vital. Retailers must remain relevant to their shoppers. They must evolve with, or get ahead of, their shoppers. Most are too slow to execute on good ideas. You can’t rest on your laurels when the market, and the shopper, is constantly in flux.

www.flixmedia.eu

How can our business be more reactive to changes that are taking place in the market?

Don’t try and do it all in-house. Be open and welcome to suppliers. For too long many retailers have employed a closed-door approach to suppliers who could genuinely add value. Retailers can’t and shouldn’t do it all themselves. Reinventing the wheel is a wasted effort and, without experience and expertise, you won’t do it well in any case. Sort your problems into ‘how’ and ‘who’. Find out who has the expertise in the field. Ask your suppliers, ‘how can you help me’.

7

FUTURE-PROOFING RETAIL

What will be the major retail breakthrough in 2018?

Can we win back consumers that have left us for competitors?

Always. Of course, it’s twice as hard (or more) to win back a lost customer than to ensure you don’t lose them in the first place. But shoppers will pay more and travel further if the service level is differentiated enough and positively executed. This takes clear thought, detailed evaluation of the market and of shopper behaviour and world-class execution. All of which only the best retailers seem to do. It’s hard work. But successful retailing is hard. It’s supposed to be hard. Once the evaluation has been completed, it’s surprising just how simple some of the adjustments need to be. The challenge is for the management who have to get those adjustments understood internally and executed at ground zero, quickly.

8

We’ve only just scratched the surface of augmented reality (AR) when it comes to application and this year we’re going to see AR break through into retail in a big way.

Last year, a number of retail players launched AR apps such as Ikea Place and we also saw Amazon launch its AR View. By 2023, the AR market is predicted to be worth $61.39bn and I believe this will largely be to the part it plays in revolutionising the shopping experience.

AR technology is capable of delivering the benefits of traditional bricks-and-mortar reality, whilst utilising digital technology to enhance the customer experience.

We will see the emergence of AR-asa-service, with the introduction of whitelabelled point-and-place type AR solutions to enable retailers to provide immersive shopping experiences to their customers, at a snip of the price. Instead of developing the technology themselves, a monthly subscription will allow retailers to enter the AR scene inexpensively and meet the demands of consumers.

What’s the best way to go about future-proofing our business?

Understand your core values as a company. Almost every element of your business will change over time but your company values should never change and the strategy should come from those values. They will be the only constant in an ever-changing environment.

We’re constantly seeing new and exciting technologies grabbing the headlines but the key to success lies in using technology effectively. Allow the technology to support your core values and remember to place the customer at the heart of the decision. A customercentric approach should always come first and will help future-proof your offering.

www.flixmedia.eu

HELPING BRANDS AND RETAILERS SELL MORE Flixmedia helps optimise & influence sales across all your channels, with an engaging and personalised experience for your shoppers so you sell more.

flixmedia.eu

FUTURE-PROOFING RETAIL

MIXING THE OMNI-CHANNEL COCKTAIL Innovation has become a buzzword for businesses to the extent its usage can seem meaningless but that’s not to say that it should be ignored. Only through innovation can a retailer move forward in a sector that’s rapidly changing through technology – which has led to the rise of omni-channel 10

THERE COMES A TIME in every business when doing what has always been done can’t be the strategy just because ‘that’s how it’s always been’. This is true for all firms, startups and corporates alike – some of the latter have even collaborated with the former to get an innovation injection. And it’s fair to say, doing what has always been done in retail seems to be the kiss of death. As the online world evolves, the offline world truly has no choice but to adapt alongside it.

According to Visa’s UK Consumer Spending Index, March 2018 continued the decline of household spending at a fall of 2.1% yearon-year. However, while online shopping is often linked to high street woes, e-commerce spending also fell, Visa found.

“We are in the midst of a dip in consumer confidence and this – coupled with other economic factors – is causing shoppers to continue to restrain themselves,” said Mark Antipof, chief commercial officer at Visa. “High street sales suffered once again, however it is also noteworthy that e-commerce spend fell for

www.flixmedia.eu

FLIXMEDIA

Retail technology in particular is evolving at a rapid pace the first time in ten months, and by its fastest rate since 2012.”

This doesn’t mean a business is damned if it does or damned if it doesn’t. It means a complementary omni-channel proposition is the way forward in order to reinforce a retail organisation. Meeting the needs of shoppers in the real and digital worlds is to effectively deliver a robust experience to cover all angles and expectations.

Take John Lewis for example.

The retailer, like any long-standing enterprise, has had highs and lows.

But it’s always swinging towards the next branch rather than clinging onto its existing one in hope that it’s strong enough to last. That much has been proven with its work alongside L Marks, the innovation specialist, to forge a retail tech accelerator called the JLAB. Introduced back in 2014 in line with the firm’s 150th anniversary, JLAB invited startups to enter for the chance to receive John Lewis mentoring and investment. It was pitched as ‘Your chance to help shape the retail experience of the future’. As a business, integration of technology into the John Lewis model may not have immediately leapt off the page – and that’s the point.

That’s innovation. Standing still will not necessarily generate results but thinking ahead at the very least has the potential to do so.

Commenting on the 2017 JLAB, Paul Coby, then-CIO at John Lewis, said at the time: “Industries are being

www.flixmedia.eu

disrupted almost overnight and retail technology in particular is evolving at a rapid pace. JLAB enables us to augment our understanding of innovation and partner with these disruptors to offer the next generation of customer experiences.”

Research from Google and OC&C, the consultancy firm, supports Coby’s comments – disruption is taking place in the blink of an eye, so preparation is essential. Transactions via smartphones in the UK, France and Germany account for half of all retail purchases and searches, according to the findings, though that’s not to say things will remain that way.

It’s expected 10% of e-commerce transactions will take place via social channels by 2025. And this shift has already started.

In November 2016, Instagram begun tests to give businesses the power to sell products through the app with selected US retailers including Kate Spade, the designer brand. “With this seamless shopping experience launching on Instagram, the possibilities for selling our products are endless,” said Mary Beech, executive VP and CMO at Kate Spade.

This functionality was launched in the UK in March, which companies have already been harnessing.

Commenting on its effectiveness, Savannah Boysen, marketing manager at TYME, a haircare business operating in the US and UK, said: “Our traffic from Instagram has increased by 44% since implementing

shopping on Instagram. It’s a clean and simple way to show your product in a lifestyle setting, without affecting the user experience.”

That’s crucial because the user experience is everything, no matter how the shopper has found the business. The key thing to remember with omni-channel is that all bases must be covered – neglecting one spinning plate is only going to end with your prized crockery shattered the floor.

Darty, a French electrical retailer headquartered in London, has made efforts to ensure the online component of the site retains an in-store element to offer familiarity to customers. With virtual advisors, those browsing the site can get additional product information and experience a human touch simultaneously through an assistant offering insights via video.

Toys R Us, a business that quite literally revolved around new inventions, failed to reinvent itself, ultimately resulting in the UK operation falling into administration to the point of no return.

“As more toy sales move online Toys R Us has struggled, but other toy specialist chains have managed to steal market share, with The Entertainer and Smyths Toys both rolling out stores and delivering growth,” said Fiona Paton, retail analyst at Globaldata, the analytics company. “Additionally, the market has remained steady in toys & games growing 16.8% over the last five years, meaning Toys R Us’ position is not one of external market conditions but rather its own strategy.”

The thing in all of this is to remember the consumer. What are their habits? What are their needs? And how will you meet them? It isn’t a case of choosing online or offline but mixing them both together to create an omnichannel cocktail – a satisfying blend that should refresh even the most parched of operations.

11

PROUD TO SERVE THE WORLD’S BIGGEST BRANDS & RETAILERS Flixmedia generates new insights for the world’s leading online retailers to help you sell more.

flixmedia.eu