Stop talking about digital & physical retail as if they’re two separate things. Doug McMillon, CEO Walmart
Omnichannel has been a buzzword for years. However, the shift is accelerating among retailers and the convergence between digital and physical retail is happening fast, thanks to the emerging new technology platforms and services.
The shopping behavior and the retail customer journeys have changed in the last few years. Google introduced this new phenomenon (using multi-channels and multi-devices in making purchase decisions) in 2011: Zero Moment of Truth.
However, what is different and fascinating now is that we can quantify and understand the influence mobile device usage before or in a store has on in-store retail sales. Deloitte research report (April 2014) found that the use of mobile devices influenced almost $600 billion in U.S. in-store retail sales in 2013, which amounted to about 19% of total brick-and-mortar sales. In 2012, mobile devices only influenced $159 billion in retail sales, a 272% increase. Amazing.
Let’s take a look at how the brands/retailers are catching up with omni-channel from the six digital senses perspective:
Everything starts with data – Big Data. The power in data lies in one keyword: ‘actionable’.
There are three challenges in this arena.
- The first challenge is that there are too many siloed data sources, and too many data itself to manage. DMPs offer great opportunities to combine first party data with the third and take advantage of universal ID implementation.
- The second challenge is to make sense of the vast data that is available, which is the hardest part. The strategic goals are to create customer profiling/segmentation and build smart models for advanced personalization initiatives. There is no one solution for this and is unique to each brand/retailer hence is the game changer in my opinion.
- The third challenge is the ‘Analytics’. Anything one off, or anything batch style reporting does not help the marketers in this day and age. Retailers need real-time analytics, dashboards to take action and apply the learnings. Analytics is as important as the first two, if not more.
Kraft Food is a great example of this kind of data transformation. One of the biggest changes for Kraft was the rewiring of its data systems, i.e. merging the content platform Kraftrecipes.com with its data management platform. Out of 34,000 attributes, Kraft established 800 unique customer segments to buy ads against.
It is the bridge between digital and physical goods/locations. Probably one of the most important sense that any retailer is focusing on who invest in omnichannel strategies.
When it comes to effectively using mobile applications, the drugstore sector, fronted by CVS/pharmacy and Walgreens, leads the way. These brands make it easy for customers to fill prescriptions, shop by smartphone, manage rewards programs, or send pictures to in-store photo centers for printing. Customers who engage with Walgreens online and via mobile applications spend six times more than those who only visit its stores, according to Interbrand’s research.
Another good example is Cartwheel, a market-leading coupon clipping app that launched in 2013. Cartwheel has generated $1 billion in sales and is seen as the leader in such apps—and most of the increase in Target’s online surge comes from mobile. Some 40% of all digital orders were placed via a mobile device.
Micro-location marketing is gaining traction fast. Location, especially for brick and mortar retailers, is the key to context, and we know ‘context’ is the new king – sorry content. Combining location-based mobile apps, with in-store beacon technology, along with advanced customer intelligence via big data, is the ideal recipe for smart micro-location marketing.
There are many technology partners and applications (e.g. inMarket, Shopkick, Swirl) in this arena and the growth in the next three years is inevitable. A study conducted by beacon platform Swirl found that 73 percent of shoppers who received a beacon-triggered message on their smartphone said it increased their likelihood of making a purchase during a store visit, while 61 percent said the message would prompt them to visit the store more often.
However, beacon technology does not only help the marketing. It can be a very powerful analytics tool for retailers to understand the in-store behavior of users. The applications of this kind of data are many, including inventory management and store layout design.
This sense is another key element in the whole omnichannel discussion. Let’s give a context to the sense called: Interface. It is essentially all kinds of customer-facing services, applications, and even the store experience. I want to focus more on the in-store experience part of the equation in this context. Last year, for example, Nordstrom implemented a new function on its hand-held mobile checkout devices in Nordstrom Rack stores. Dubbed Search & Send, the new function allows salespeople to use mobile registers to search entire Rack inventory for desired items and sizes and have the items delivered to the customer. Search & Send is available on more than 18,000 devices company-wide.
Another interesting trending program is the Curbside Pickup program. The curbside pickup has become increasingly popular with major retailers like Best Buy and Nordstrom, and even on the grocery side of retail, as Meijer has also been testing the omnichannel solution. For Best Buy, the curbside pickup has seen significant success as the company said it is processing thousands of orders a week.
Beacon technology can also change the whole experience of customers with the store representatives. Mobile loyalty programs are on the rise, and that can also give a substantial opportunity for the representatives to know about their loyal customers’ in-store via mobile apps designed for the internal use with iBeacons.
The home improvement sector is doing an exceptional job with omnichannel marketing, especially in social media. Stores such as Lowe’s and Home Depot have created social communities where consumers can get help planning and buying for projects. Shoppers are encouraged, inspired, and supported with service and instruction.
Furthermore, Nordstrom (another leader in omnichannel efforts) recently made it possible to buy the items featured on Instagram instantly. Workers at Nordstrom also merchandise stores using input from its Pinterest page. Items that are popular on the social media site are featured more prominently on the sales floor.
This is another sense that needs an explanation for the retail setting. Live applies to anything real-time. In the retail setting, it is all about real-time marketing and personalization based on the context of the customer (e.g. location, time, online/offline behavior, even weather, etc.)
One good example of this is the email campaign Yahoo Travel tailored for its customers. The email included a voting option among two choices to travel (Hawaii or Tahiti), asking customers. This voting functionality encouraged subscribers to participate in gamified email while allowing Yahoo to progressively profile and segment by subscriber preference going forward.
I am very excited to be part of the Office Depot team, that is working on many interesting projects to make omnichannel a reality in retail.