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3 Strategies to Blur the Boundaries between Virtual and Physical Spaces

Two friends go to their local computer game store to browse for a new game they want to play online against each other. On arrival, they head to the exploration zone. Their locationaware phones log them in to the store, which immediately knows that both are Xbox owners, and fans of role-playing and first person shooter games. One of them has been browsing games online prior to coming in-store, liking some and disliking others, and the store takes note of this. It brings up several suggestions on a multi-touch surface, allowing them to look at game trailers, see ratings from expert sites and other gamers, and to compare features side by side. They gradually discard the games they are not interested in, until they reach a game they both want to check out. They move into the Xbox arena in the demo zone, where the game loads as they arrive. After five minutes trying it out, they both agree this is the game they want, and decide to buy. Both swipe their phones, clicking buy, and walk out of the store. By the time they get home, the game is already available on the console, ready to play. This is not the scene of a science fiction Currently, in the majority of retailers, the movie, but a retailing scenario that is possible physical, “in-store” customer experience and integrating today’s technology. virtual, “online” customer experience are separate and distinct. In our earlier whitepaper, on “How the Internet is Transforming the Online, the customer has a high degree of Physical Retail Experience”, we control around their own experience: they discussed three main themes that “bricks and are in the driving seat, and use this to look for mortar” stores need to implement to cheaper deals across a greater range of stock, compete against digital competition. One of and to find out what other customers really the key principles was that stores need to think of the products or services they are blur the boundaries between digital and about to buy. physical space. www.flywheel.org.uk


They can integrate other information streams with ease: if checking out a potential holiday destination, for example, they can check both the weather and look at TripAdvisor reviews. Online stores can take advantage of customer profiling to recommend other products and services the customer would like, personalising the experience. Online holds so many benefits that sales are The Diesel interactive mirror, designed by Non-Grid Inc, thriving in comparison to the high street. allows customers to compare images of themselves in Overall spend on Internet shopping for different angles and garments January and February 2011 was £10 billion in Allow your customers to the UK alone. move seamlessly between physical & virtual channels Yet this should not imply that the future is solely online. There are many benefits, too, from being “in-store”. Customers can have "If we have 66 million different customers, we instant gratification, finding and taking away want to have 66 million different stores." – their product on the spot. Jeff Bezos, CEO, Amazon. Physical experiences can be wildly Online recommendation engines account for better at certain types of activities, 10-30% of online retail sales. Increasingly, the most obvious being the ability these are focused on intelligent discovery, to try out certain products, whether helping customers find products and services that is getting a demonstration of a they didn’t know they needed based on prior new camera, or trying on a new pair history. Yet, whenever a customer walks into of jeans. a retail store, no matter what they have already looked at online with the same Yet both these worlds remain, in the eyes of company, they are anonymous; unknown. many retailers, distinct and silo-ed “channels” with different strategies, management and This can be frustrating for customers. A value. Multi-channel retailers, who operate in typical travel agent booking a holiday may both spaces, have seen a rise in sales 12% need to enter in a time-consuming amount of higher than online-only competition. Yet personal information, such as names, dates of there are still boundaries in the multi-channel birth, and address, all of which already exists experience: the customer still belongs to two elsewhere in digital form. distinct worlds. This applies when moving from physical to How can we integrate the two virtual, too. A shopper in a jeans store may channels such that the customer try on five pairs, want to think about their ends up with the ideal buying decision, and show a friend who is not with experience? them at the time. www.flywheel.org.uk

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They go home, but those items have no footprint in their virtual shopping basket. They have to find and locate them again, meaning they have had to find some way of recording that information in store. Increasingly, they may turn to mobile assistants on their smartphones, such as ShopSavvy or RedLaser, scanning barcodes and finding them online later. The risk: they may not be buying them from the same store they browsed them in. It doesn’t have to be like this. Supporting consumers in moving seamlessly between in-store and online creates a more convenient and hassle free buying experience for them, and will hence lead to higher conversation rates for the store. One store experimenting with this is Debenhams. Their latest smartphone app, available on iPhone and Android allows customers to scan barcodes of products in store to see further product details, reviews, save to a wish list and even buy the item. Once they buy it, they can opt to have it delivered home, or collect it in-store. Over 90,000 customers used the barcode scanner in the first five months following launch, with reported sales boosts of £1M.

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Anything that customers can do online, they need to be able to do in-store.

Should a customer in John Lewis be able to see the price of the television they are exploring online? To the retailer, this sounds dangerous. The fact is, they already can, and increasingly are – when in locations with a good 3G connection.

Customer reviews are now second only to word-of-mouth as the most trusted channel of advice when buying a product. Whether the purchase is a significant purchase, such as a television or a holiday, or a regular purchase like a book, customers are becoming more immune to marketing and less impulsive. Supporting them in making on-the-spot decisions to buy may mean supporting them and enabling them to access this information, regardless of price comparisons. Retailers that embrace this, and provide an integrated way of helping customers make a decision, will find customers may prioritise other things than price as long as they are within range of the price point in store. a.  Enable customers to use their own technology by providing wi-fi A basic strategy applicable over the next 3-4 years until 4G technologies become more widespread would be to provide quality instore, free wi-fi to allow consumers to browse quickly and easily using their own browsers and third party applications. This may have side benefits: customers in supermarkets may use recipe sites on the spot, for example, to decide what ingredients they need, and buy more as a result. b. Provide in-store technology that bridges with the online world A variety of retailers are experimenting with providing their own technology to create instore experiences that link to digital space. Non-interactive versions of this have been around for some time, providing, for example, real time information on sales offers.

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However, with the evolution of multi-touch devices such as iPads and touchscreens, more advanced systems are allowing customers to interact with this information. The AllSaints clothing store has integrated iPads around the store that allow customers to browse stock in the immediate vicinity of the store, for example. This is important, since it moves the use of the technology from the control of the store to the control of the consumer, empowering them in the process. This is, however, only a first step in the right direction. The true transformation occurs in our third strategy.

iPads located in All Saints clothing allow customers to easily browse stock in that area of the store.

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The in-store digital experience must surpass the online experience

How can retailers make what customers do in-store a more powerful experience than the equivalent experience online? Moreover, how can retailers support activities that simply are not possible online? It is, after all, now too simplistic to think of the web as the only route for a digital experience.

Just as television did not kill the cinema, which succeeded in creating a social, immersive experience aimed at watching new films, if stores want to compete with online equivalents they need to embrace digital and create experiences impossible to replicate at home.   a.  Create your own smartphone apps to augment the in-store experience Many smartphone apps currently reinforce, rather than blur, the boundaries between bricks and mortar stores, and the web, essentially acting as mobile versions of web channels. One success story, however, comes from Starbucks in the US: the Starbucks Card mobile app, allowing customers to browse, choose, order and pay all from their mobile, bypassing the queue in store and just collecting their coffee. The app has 3 million users so far, and is expected to be rolled out globally. b.  Provide in-store technology that transforms the experience A small number of retailers are beginning to explore truly innovative interactive solutions that move beyond linking just to online catalogues, but create experiences of their own. One of the more famous is the interactive fitting room at Macy’s in the US. The mirror in the fitting room is an interactive touch screen, allowing shoppers to try on different clothes and pre-set outfits without having to change clothes. BMW has also done some work in this field,

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allowing couples to sit around an interactive table when choosing accessories and colours for their future car. Moving different colour tiles and pieces over the interactive table changes the car design instantly for the couple to decide. Yet even smaller retailers can now afford to innovate in this regard. One of the most interesting concepts to emerge recently was that of the Beer Genius in the US, a multitouch screen that supports customers in choosing one of the many beers stocked in a bar. What is powerful about larger multi-touch (and even gesture based) technologies is that they enable collaborative activities – groups of customers, or even between a customer and a member of staff that smartphones and tablets are unsuited for. It also supports more complex comparison. Whether buying a car or a holiday, browsing a number of options with a high degree of variability, and comparing and contrasting, is difficult to do on phones, tablets or PCs. What if travel agencies had an area you could go to, to find the ideal destination and compare options against each other, instantly seeing information from other sources, too, such as the weather? The store would become a destination for people to choose their holiday, instead of a place to collect a brochure. Crucially, these experiences may not be focused directly on transactions, but should enable and support the easy conversation into a sale.

The Beer Genius, by Fresk, is an interactive kiosk in a bar that allows customers to “discover” new beers by guiding them through a short series of questions, designed to reduce the pool of choices to a point that they can easily compare and contrast, before processing their order ready for pick up by the bar. It also allows them to save favorite options for future reference.

How can retailers choose the right solution? The danger of all these possibilities is that it is very easy to get enticed by the technology solution, instead of considering the process of enhancing the customer experience and service process from the customer’s point of view. Instead, think: “experience first, solution last”. Look to understand the needs of your customers, and where their frustrations in their online and offline experiences with you and your competitors lay. Look at designing the ideal experience you want to create, and only then decide the best technology to implement that experience. This way, the technology supports you in transforming revenue, instead of becoming a gimmick and a toy that is fun, briefly, but with a shelf life that fades fast.

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Chris Evans is a Director of Flywheel. Get in touch with us at: chrisevans@flywheel.org.uk


3 Strategies to Blur the Boundaries between Virtual and Physical Spaces