Shoptalk started as a concept several months ago to bring together retailers, innovative disruptors and venture capitalists under one roof to debate, discuss, and explore the retail industry. Over the past three days the concept became a reality, with over 3,000 attendees in a thought-provoking inaugural event.
The retail industry is in a ferocious state of fast-paced change and there is a strong hunger for information, insights and peer-to-peer networking. Shoptalk provided a format to satiate this hunger with on-stage presentations and panel rich discussions coupled with a large social community that produced several thousand handshakes and tweets over the course of the three days.
While there was a great variety of topics discussed, five key themes emerged at Shoptalk 2016.
1. Stores are more relevant than ever.
It wasn’t too long ago that the industry declared stores were dead, but as Jerry Storch, CEO of Hudson Bay Company stated in his event-opening keynote, “The stores strike back”, putting to rest the long-touted (and erroneous) notion that stores don’t matter. Traditional brick and mortar retailers have core competencies, such as merchandising, customer service and logistics that simply cannot be performed optimally online. According to Storch, direct-to-home shipping costs 3x more compared to store-based models — an advantage difficult for pure play retailers to compete with. Stores also provide the place where human connections occur, which still matter to shoppers. We saw example after example of retailers changing the concept of what a store actually is to meet this need. Jerry Fisher, Global Store Experience & VM Director of Luxottica Group, presented how their Sunglass Hut brand has pursued different store formats: pop-up, mall atrium, outside stores and luxury bars; Steven Lowy, Co-CEO of Westfield Corp, discussed how they are re-inventing the mall, blending technology, food, entertainment and leisure; and Brendan Cahill, VP Corporate Projects at Penguin Random House — a publisher who traditionally has relied on retailers to get to market — opened direct-to-consumer concept stores that introduced consumers to new ways to explore paper books.
2. Pure play retail is dead.
Many retailers who have focused purely online have changed their business model, realizing that the distinction between online and offline is an artificial one and is a barrier to the shopping experience consumers truly want. Former pure plays such as Birchbox, Casper and Bonobos spoke about their pop-up and permanent stores, and we’ve seen other pure plays, such as JustFab and Amazon doing the same, with Amazon recently opening stores and expanding their own private label product offerings to connect more directly with consumers. As Bonobos CEO Andy Dunnexplained, “our guide shops are not a store but a great customer experience.” Digitally native vertical brands like Bonobos, Casper, and Warby Parker are all upending the traditional definition of what an in-store experience can mean for consumers.
3. Digitization of the store is coming of age.
Just a few short years ago, very few retailers were driving digital into the store. This was simply due to the fact that it was (and still is) challenging, expensive and often didn’t demonstrate the necessary ROI to justify the investment. And the retailers that were digitizing the store tended to be larger retailers with deeper pockets, who were focused on solving simpler problems, such as connecting consumer-held mobile experiences to in-store shopping and extending web-inventory into an endless aisle in the store. Fast forward a few years and we’re seeing retailers of all sizes driving innovation into the store, not only solving real problems, but demonstrating real ROI. Perhaps the best example of this is Rebecca Minkoff, who has made the embrace of digital core to their business model. From digital mirrors that allow for suggested accessories to outfits being tried on in the fitting room to empowered store associates who use clienteling to personalize in-store consumer interactions, Rebecca Minkoff has seen in-store basket sizes increase three fold, according to Uri Minkoff, co-founder and CEO of Rebecca Minkoff.
4. Artificial intelligence is on the rise.
While artificial intelligence conjures up futuristic scenes from the Minority Report orTerminator, it was featured as an important topic in retail today at Shoptalk. It’s still early on, however, and artificial intelligence will evolve from existing technologies that are impacting retail in the present day, particularly predictive intelligence and machine-learning, to allow retailers to benefit from a more complete view of the shopper. We also expect to see “shopperbots” (chatbots 2.0) rise as improvements in natural language processing converge with a millennial desire to use messaging platforms to communicate with brands. Identity, behavior and location will drive context, as will shopper-supplied natural language queries, giving retailers an opportunity to render smarter results. Sailthru Founder, Neil Capel, spoke of how Country Outfitter leverages predictive intelligence today to understand which of Country Outfitter’s shoppers are likely to purchase and in what timeframe, providing more focus to their marketing efforts, but also more relevant, personalized experiences to their shoppers, resulting in a 70% increase in revenue. Retailers such as Country Outfitter, who embrace predictive intelligence, are best prepared to innovate and reap the results of artificial intelligence as it emerges.
5. Authenticity matters in retail more than ever.
With all the noise in the market, consumers are demanding authenticity, meaning a desire to truly understand what the brand stands for and hold them accountable for it in the products they deliver. The brands that are able to make their mission well-understood and connect with the story of the consumers’ lives are the ones that will differentiate and win. We saw this from Dollar Shave Club, who has connected with men whose grooming needs have long been ignored to The Honest Company who make it their mission to provide safe, effective home essentials, and to REVOLVE Clothing, who has built a $400m business over the past 13 years, by making female Millennials feel empowered through fashion.
Shoptalk put itself on the map with this event. They laid down a solid foundation of content and a lively, connected community from which they will be able to build in the future and achieve their goal of reshaping how consumers discover, shop, buy, and remain loyal.
Commerce continues to evolve at a rapid pace, with digital experiences continuing to reshape shopping. The transformative impact of digital commerce will continue– and indeed accelerate– in 2013 with six notable trends leading the way:
1. The arrival of more intelligent, digitally-oriented, destination-based stores
The prediction for the ‘death of the store’ has not come true, as stores continue to remain an important and vibrant channel for retailers and shoppers. Rather than disappearing all together, stores will get smarter, more nimble and become more of a social, experience-based destination for shoppers. We’ll start to see smaller footprint stores in 2013, stores that are driven more by virtual inventory than physical inventory and ones that are more flexible and intelligent, displaying product and allocating inventory that is selling best in that local market and a particular location.
Retailers such as Target, with the smaller footprint City Stores, Nordstrom, with a more flexible utilization of cross-channel inventory for smarter merchandising and Vero Moda brand virtual, pop-up stores are good examples of what we will see more of in 2013. We will also see stores, with a greater reliance on virtual inventory that frees up floor space, become utilized more for events that attract shoppers and connect them emotionally with the brand. Retailers such as lululemon, whose stores are destinations for like-minded yoga enthusiasts, are a good example of this.
2. The continued decline of the incredibly shrinking Point of Sale (POS)
The traditional cash wrap in the store is slowly disappearing with retailers looking to replace cash registers, free up retail space for selling and unburden themselves from the cost of legacy POS systems. 2013 will see an influx of “registerless” stores that mark the move towards traditional wraps disappearing and extending beyond the traditional function of a “queue processing” to one augmented by the availability of better customer, product, inventory and order data. Retailers such as Urban Outfitters and JC Penny took major steps in 2012 to end traditional checkout and more retailers will follow suit in 2013.
3. The arrival of smarter mobile shopping experiences
2010 was the year for retailers to get a mobile presence in the market to keep up with consumer expectations, often in the form of mobile optimized websites that were quick and cheap to deploy. 2011 was the year to “do mobile right” and think about ways to optimize their mobile websites. 2012 was the year of the tablet, namely understanding whether a traditional desktop website will suffice for the tablet or a tablet optimized site made more sense.
2013 will be the year that retailers create smarter mobile shopping experiences by designing for mobile first and providing contextual, mobile specific experiences. With the mobile device install base expected to eclipse traditional desktop install base in 2013, we will see traditional “desktop first” design, with its long-form content and larger screen size navigation be replaced by “mobile first” design where the mobile consumer is put front and center. This will greatly simplify user experiences for shoppers and development strategies for retailers. We will also see retailers in 2013 focus on differentiating their mobile experiences with richer, more interactive user interfaces that is very channel and device specific.
Experiences will emerge, such as “in-store mode” for mobile websites that detect when a shopper is in a retailer’s store (through geo-fencing and the device’s GPS) and offers up a store-specific experience that is different from when they are not in the store. Walmart’s In-Store Mode is a good example of this type of experience we can expect to see more of in 2013.
4. The emergence of the elusive digital wallet
The idea of a digital wallet has been around for long time, but has never been fulfilled due to the complexity of the challenges in the ecosystem, namely financial institutions, device manufacturers, credit card companies, technology vendors, retailers and others not being able to agree upon standards. With Apple’s release of Passbook in iOS6, we will see in 2013 the first step towards overcoming these challenges, namely because of Apple’s influence in the industry, the fact that iOS comprises a large percentage of the consumer mobile market, and perhaps most importantly—Passbook solves a real consumer problem.
By aggregating loyalty program information—from coupons to boarding passes—in one central location on their mobile device, consumers no longer need to manage separate, retailer-specific silos of information through email, mobile apps or other digital interactions. In time, Passbook will connect payment processing to retailer purchases online and in-store (Apple intentionally steered clear of payments in the first release), taking the next step towards fulfilling the dream of the elusive digital wallet. Other vendors, such as Googleand PayPal will follow suit with similar solutions, further pushing the digital wallet to reality. While challenges such as card present transaction fees for in-store purchases and what the main technology will be for processing payments (Near Field Communication (NFC), electronic barcode scanning or another standard) will still need to be negotiated, consumer adoption coupled with increased retailer development of integrated solutions with Passbook (similar to pace we’ve seen in 2012 already), will accelerate the emergence of the digital wallet in 2013.
5. The rise in new services to combat the “Amazon effect”
Amazon has been an incredibly disruptive force in the industry—in a good way for consumers by making it easier for them to shop—but in a bad way for retailers, putting the squeeze on their direct-to-consumer model, both online and in the store. 2013 will see a rise in new services provided by retailers to combat the “Amazon effect” to attract consumers and preserve and grow their online sales. Examples include new experiences in shipping services and personalized recommendations. Amazon has competed on shipping for a long-time, enabled through growth in their fulfillment centers and Amazon Prime, aiming to close the shipping window to same day or less.
In 2013, same day shipping will become the norm, with providers such as eBay Now, TaskRabbit and others leading the way. Retailers will leverage these services as well as provide their own same day shipping services through their web shopping experiences, perhaps leveraging these third party services.
Recommendations—a long-time staple of most online experiences—will also see a transformation in 2013. Amazon Friends and Family Gifting will push retailers to make recommendations more personalized and relevant in the online shopping experience. Retailers will seek to enable gifting, leveraging Facebook data and/or other customer data they already have to suggest gifts shoppers can buy for friends that make sense—based on that friend’s past shopping history and a relevant event, such as a birthday or anniversary celebration.
6. The extension of personalized social commerce into the physical world
To date, social commerce has largely been focused on what shoppers can do online, with a heavy focus on Facebook and interactions, such as gameification. 2013 will start to see social commerce become more present and applicable in the physical world, whereby shoppers can get relevant, personalized data from their social networks based upon where they are physically shopping and with the products they are interacting. The consumer-held mobile device will be the connective tissue to make this happen in the physical world, whereby location-based services—activated either actively by the shopper, such as a physical check-in on the mobile device or passively through opt-in, automatic GPS detection and check-in—will activate a number of digital experiences in the store through retailer provider devices, such as tablets, digital signs, digital shelves, and associate-held mobile POS devices.
Data about that shopper and his or her social graph will provide contextual information about products and offers, such as in-store ratings and reviews on digital signs, number of “likes” a product may have displayed on a hangtag or store associate suggestive selling based on social data. Such interactions will happen over time, emerging in 2013 as leading retailers begin to uncork the power of Big Data, particularly by analyzing tweets, Facebook likes, Pinterest pinned products, Instagram product image likes, and other social data and mapping it against customer lists, transaction information and loyalty data.
While other trends will transform shopping in 2013, none, I feel, will be as impactful as these six. What do you think? What trends do you see transforming the way we shop in 2013 and beyond? Share your thoughts in the comment section below.
Shopping is an interactive sport. While smartphone wielding consumers are the main players of the sport, retailers are the ones who set the field of engagement, both online and in the physical world. A variety of methods, tools and technologies exist for retailers to engage consumers, but few are as mature and easy to utilize as 2D codes.
The Rise of 2D Codes
2D codes are two dimensional (hence the name “2D”) images encoded with information. The information can be decoded with a camera-driven scanning application, which will perform a variety of functions including displaying texts, linking to a specific URL, or linking to video content. 2D codes are used for a variety of industrial uses, but 3 key types are used for consumer-facing uses: Quick Response Codes (QR Codes), Microsoft Tags (MS Tags, aka High Capacity Color Barcode) and barcodes. There are different reasons why retailers would use one type over another.
QR Codes and MS Tags in particular have risen in adoption among consumers, especially those that use smartphones. Smartphones provide consumers with the hardware (including the camera) and a platform for the software applications (i.e. ScanLife, ShopSavvy, MS Tag, others), making 2D codes easily accessible and practical for shopping like never before. Forrester estimates that adoption of 2D code reading applications have risen to 15% in 2011 among smartphone shoppers and is expected to continue to rise in the future. Indeed, it’s difficult today to walk down the street or into a store or open a newspaper or magazine without finding a 2D begging to be scanned.
Uses of 2D Codes
2D codes are applicable throughout each stage of brand engagement with the consumer, which make them a great tool for retailers to create a more interactive shopping experience and connect the online and physical worlds. If applied properly, the benefits retailers can reap include greater brand recognition, greater online and in-store sales, an increase in average order value, greater customer satisfaction and repeat purchases, as well as reduced return rates and support costs. To realize these benefits, retailer should focus the application of 2D codes around four main uses, namely to:
1. Create brand awareness with consumers. 2D codes are a great tool for marketers to capture the attention of shoppers—particularly those on the go with mobile devices and those inundated with other information sources– to create market awareness and craft brand perception. Barney’s New York used QR codes as part of a “Back Stage Campaign” in early 2011 where they displayed ads in the New York Times and online that contained QR codes which linked to online, content-rich “backstage” stories of the products. This energized the approach to traditional advertising and helped drive brand awareness among consumers who may have otherwise not been reached.
2. Share information to educate consumers. 2D codes can guide potential consumers towards purchase by providing them information about products, services, events, and more. Columbia Sportswear produces world-class outdoor apparel for consumers who are interested in learning about how the product was produced, what materials were used to produce it, what conditions the products are meant to be used in and what additional features the product contains that may not be readily apparent. They use QR codes as part of in-store signage and hangtags on products in its company stores, as well as other retailers who distribute Columbia gear, to provide consumers with more information about products through video and other content while standing in the store aisle. Electronic Arts, a leading producer of video games, provides its distributors with in-store digital signage that contain QR codes for content samples of their products. For their game Dragon Age II, shoppers could scan the QR code and get a video demo of the game.
3. Drive consumers to purchase. 2D codes give retailers a unique opportunity to convert sales, especially when they help solve specific problems consumers face, such as cutting down on checkout time or offering immediate rewards. In addition to using QR codes to share information about how their coffee beans were produced, Ethical Beans Roastery and Ethical Bean Xpress Café give consumers the ability to scan QR codes on their products, allowing shoppers to skip waiting in lines and pick up the orders at checkout. Axis Salon, a trendy hair salon in Washington DC, uses QR codes in its storefront that link to videos featuring beauty icons and coupons for discount services—all helping to drive consumers to purchase.
4. Foster customer loyalty post-purchase. After the sale, 2D codes can drive foster customer satisfaction by providing extra services, support and personalized offers. Nike uses QR codes in its stores to allow consumers to “Like” a product on Facebook, enabling consumers to share their affinity for a brand through recommendations on Facebook. A logical extension to this concept would be to provide rewards (loyalty points, mobile coupons, immediate discounts, etc.) for shoppers who provide such feedback. Ikea entertained the idea of using QR codes to provide video instructions on how to assemble products, such as furniture, making the post-purchase process a more enjoyable one. Similarly, QR codes can serve as an easy way to locate product manuals online or warranty information, which could be a real benefit to consumers who often do not keep such information that come with the products, and need to locate them immediately when something goes wrong. This would help cut down on support costs for retailers, in addition to fostering customer loyalty post-purchase.
The Future of 2D Codes
While 2D codes have reached a level of maturity where they are an effective tool for retailers today, they still have a number of challenges to overcome– standardization of code technology (open QR codes v proprietary MS Tags), reader availability, and deeper level consumer awareness beyond where it’s at today– optimally reaching the same level of consumer awareness that UPC barcodes enjoy today. They also face long-term obsolescence from Near Field Communication (NFC), but that is a ways off in the future given NFC nascent state at the present. Bottom line is that 2D codes do not require a lot of time or money to implement and can have large potential returns, so retailers should experiment with them while the cost of learning is low.
The store of the future will allow consumers to shop how they want to shop: when they want, where they want, and how they want in a relevant, personalized way. Today retailers cannot deliver on this vision due to legacy retail systems that are not nimble enough to keep up with the speed at which consumer technologies are evolving. The store of the future will eliminate this gap and achieve the “multichannel nirvana” long sought by retailers.
To get there, retailers will need to do five things:
1. Allow Relevant and Real-Time to Become the Norm
Personalization is critical to the future of the store since shoppers will increasingly come to expect retailers to offer them what they want, not what the retailer wants. However, for the shopping experience to be truly personalized, it needs to be real-time and it needs to be relevant. Specifically, real time and relevant information about products, pricing, transaction history, inventory availability and status, loyalty program info, and social graph and profile data must become the norm for both shoppers and in-store associates. Real time means serving up data that is up to the second—not data that is a day old or even a few minutes old. Relevant means providing information that is intelligently filtered and served up in the context of where the shopper is in the cycle of interacting with the retailer’s brand.
2. Eliminate Channel Silos and Build on a Unified Technology Stack
Knocking down the walls that exist across different channels, particularly the one that exists between the two main systems in the retail ecosystem that drive commerce operations—legacy in-store systems and ecommerce—will be critical in building the store of the future. Organizational challenges are also a major obstacle, but are largely symptomatic of the technology divide. The store of the future will operate with truly integrated channels as well as be built on a unified technology stack, bringing together backend and consumer-facing systems. The ecommerce platform, with its natural connection to the online consumer who is increasingly shopping in physical stores, should become a natural platform for building this unified commerce management vision.
3. Build Intelligence into the System
The store of the future will be nimble and intelligent—able to adapt to shopper behavior with precision and speed. Retailers will need to build this concept into their retail operations, allowing for each channel to be optimized based on what the shopper is doing at the moment and expected to do in the future. Brick and mortar stores will be able to eliminate products that are not selling and replace them with those that are selling well or expected to sell well based on store intelligence— at the individual store level, and across stores. They will also be able to allocate inventory smartly, making sure shelves are filled and customers are happy, as well as conduct promotions based on the new real-time and relevant norm. Online channels will be as equally intelligent and nimble, fulfilling shopper needs “in channel” as well as tying the online world to the physical world in the store.
4. Revolutionize the Consumer Experience in the Store
The key enabler of the store of the future is the engaging consumer experiences that retailers can offer in the store. Retailers not only need to ensure they are building engaging consumer experiences, but are revolutionizing the store with engaging consumer experiences– the new consumer expects it. Every retailer will have a mobile-optimized website, which will be an essential buying tool of shoppers. Retailers will need to find ways to utilize this key shopping tool effectively, such as for consumer-driven comparison shopping, experiential shopping such as the use of augmented reality, quicker checkout– including self-checkout—and for providing location based offers and better customer service. Retailers will also need to provide devices in the store, such as tablet kiosks, mobile point of sale (mPOS) devices, tablet clienteling and digital signage. These devices should solve real shopper challenges in innovative new ways, such as avoiding stock-outs by offering an “endless aisle” of in-store and online inventory, cutting down on the amount of time shoppers have to wait for in-store help by a sales associate or to check out, processing returns and refunds no matter where or how the product was originally purchased and providing more intimate and personal one-on-one customer service between sales associate and the shopper.
5. Manage the Consumer Experience Across Digital and In-Person Touch Points
The revolutionized consumer experience in the store will require brand consistency across digital and in-person touch points for the store of the future to succeed. With real-time, relevant data and integrated channels on unified technology stack, management of the digital consumer experience will become more seamless and realistic. The in-store digital touch points– the POS system, sales associate mobile devices, and in-store consumer devices– should serve up consistent experiences to those found on the brand’s online sites, providing better customer service and reinforcing brand loyalty. The in-person touch points or shopping experience should be equally as consistent and powerful. Sales associates should be trained on the latest digital consumer experiences, ensuring they understand the shopper’s point of view, and understand how it integrates with store operations and store policies. The store of future will constantly manage the integrated consumer experience across digital and in-store touch points.
The Future is Now
The store of the future is not years away. The gap between retailer system readiness and consumer expectation are already being addressed by retailers like Apple, Nordstrom, House of Fraser, Tesco, Barnes and Nobles, and others, who are demonstrating today what the store of the future will look like. These retailers are focused on store systems that optimize existing brick and mortar stores, but also extend the store beyond its walls, allowing consumers to shop how they want to shop: when they want, where they want, how they want in a relevant, personalized way.
Note: This article originally appeared in Website Magazine in December 2011.
The world of multichannel commerce is a fast-paced, continually changing environment. Mobile and social in particular are expanding the number of ways you can reach consumers. Keeping the experience consistent and relevant across these touchpoints is your biggest challenge. Figuring out how to approach it can be an overwhelming task. Here are five keys to make it less overwhelming and help you navigate your way through multichannel commerce:
1. Put your shopper hat on. Shoppers don’t think in terms of “channels” and will seamlessly move from website to smartphone native app to iPad kiosk to your fixed point of sale terminal in-store, and expect you to know everything across your channels and have enough information about them to meet their needs in a timely and relevant way. Take some time to really understand your brands unique shopping experience. Put your shopper hat on, go into your stores, get online and shop like your shoppers would shop. Take notes on the good, the bad and ugly. Repeat frequently.
2. Understand what you mean by multichannel. Having a clear understanding of what you mean when you say “multichannel” is important. Define multichannel in terms of your specific business challenges so that you can develop solutions to those challenges. Having put your shopper hat on (see #1 above) will help greatly. For example, you may define multichannel as an ability to get a single view of the shopper across your website, in-store devices and social networks. It may also mean an ability to stop lost sales due to stock outs online and in-store. It could be keeping pricing and promotions consistent across different touchpoints. List them out. This is your definition of multichannel. It may or may not be same as someone else’s or be consistent with the latest term coined in the market. What’s important is that you know how to articulate what the challenges are to your business so that you can develop solutions.
3. Define what’s getting in the way of achieving multichannel nirvana. Each challenge you’ve listed in your definition of multichannel has a cause. Define what those are. For example, your inability to get a single view of the customer may be caused by lack of quality customer data. Or maybe it’s an inability to “mash up” and filter relevant customer data across your CRM, POS and ecommerce system. And/or it could be organizational, such as your in-store guys not talking to your ecommerce guys. Whatever they may be, define what the causes are that are getting in the way of achieving your multichannel nirvana.
4. Map out your pathway to success. Solving the “multichannel challenge” is not easy, but it’s not impossible. It will take time, resources and hard work. Once you understand the causes, take time to map out possible solutions. For example, achieving a single view of the customer may require you to start collecting more quality data on the customer, followed by mapping customer data feeds from your CRM, POS and ecommerce system to a common data warehouse, filtering that data and then serving it up to power the different touchpoints between your sales associates and consumers. There may be other solutions as well. Know what they are.
5. Don’t try to solve it all at once. Experiment & iterate. Some of the solutions will be “quick hits”, but most will take some time to address. The key is striking a balance between moving at the pace your shoppers expect you to move at and what’s realistic within the organizational constraints you face (i.e. budget, people, technology, etc.). A good way to do so is to experiment with some possible solutions, learn from them, and apply those learnings to improve your process. For example, mobile devices have revolutionized what’s possible in the store. New in-store apps that can address your multichannel challenges (such as getting a single view of the customer, etc.) are in the market today.
The pace of innovation and change within multichannel retail is breathtaking. At the same time, it can also be a challenge to understand which technologies will have the most impact with consumers and should be considered by retailers as part of a multichannel strategy.
While there are many technologies that will change how consumers shop, five stand out:
1. Mobile couponing. Mobile couponing has been around for some time, but has seen limited effectiveness due to difficulty in making them relevant, personalized, and timely as well as a lack of consumer willingness to adopt them. However, mobile technology has changed what is possible and mobile couponing is now one of the top activities consumers who use mobile devices for shopping planned on doing. Retailers can now deliver coupons to shoppers on mobile devices based on location, past shopping behavior and preferences, moment of need, and that are paperless, making them convenient to redeem.
How to think about it: What will separate retailers who are successful with mobile couponing from those who are not, will be the approach they take to mobile coupons. Specifically, we believe that retailers who will succeed with mobile couponing are those who approach it differently. Consider integrating mobile coupons throughout the core mobile shopping experience, delivering them beyond traditional push approaches like SMS and rather through LBS, 2D codes, NFC as well as integrating mobile coupons through all touch points, including social networks.
2. 2D Codes. 2D codes suddenly seem to be everywhere—from billboards to magazines to in-store displays—mainly because they are a quick and relatively inexpensive way for marketers to connect the physical world to the online world. They are also effective. Retailers such as Barney’s New York have used QR codes to energize traditional media efforts, while others such as Columbia Sportswear have used QR codes to bring products to life to shoppers in-store.
How to think about it: 2D codes still have a number of challenges to overcome before reaching critical mass. Standardization of code technology (open QR codes v proprietary MS Tags), reader availability, and consumer awareness are the main challenges. They also face long-term obsolescence from NFC (see below), but that is a ways off in the future. 2D codes do not require a lot of time or money to implement and can have large potential returns, so experimenting with them while the cost of learning is low is worth considering.
3. Location based services. Utilizing location based services (LBS) to its fullest potential has eluded retailers mainly due to poor location technologies, cost, user experience, and consumer awareness and adoption. However, that is quickly changing with the emergence of mobile technology as an enabler (i.e. GPS, push technology, app multi-tasking), and the rise of consumer awareness (mainly led by the success of consumer apps such as Foursquare, Gowalla, and SCVNGR) as well as increased consumer willingness to receive location-based offers. Location-based services give retailers a way to take the in-store experience to a much richer, deeper level, which in turn increases brand loyalty and transactions. Examples include: using LBS to provide contextual and relevant offers as consumers are nearby or enter a location, greeting customers when they visit a particular location, informing them of in-store events (the Apple Store app is a great example of this), assisting in locating items (see Tesco’s Finder app), offering rewards for visiting a particular location and providing timely upsell opportunities so customers do not leave empty handed.
How to think about it: LBS is a reality today and will continue to grow in the future, so retailers should consider it part of the multichannel mix. LBS should be thought of in two buckets— third party services (or apps) and what can be provided in the retailer’s mobile shopping app. Third party services, such as Foursquare and Facebook Deals give retailers the opportunity to offer shopping incentives and should be viewed as a channel to reach consumers. Retailers should also seek to build LBS services directly into their own mobile shopping applications Also, looking for ways to integrate third party services into the retailers shopping app (such as ability to check-in on Foursquare directly in the retailers shopping app) represents another opportunity.
4. Augmented reality. We believe that augmented reality (AR) will be a disruptive technology that changes how consumers interact with their environments, being a primary conduit for connecting the digital world and the real world. While AR is in its infancy today, global revenue for augmented reality (AR) is expected to hit $1.5 billion by 2015, much of that coming from leading brands and retailers investing in AR apps and services. We’ve already seen some early successes with AR technology, such as Converse’s The Sampler mobile app, Ikea’s iPhone app, and Lego’s AR kiosk. Some have even yielded noteworthy results, such as Dabs Acer’s AR ad, where 70% of the users to the site chose the live experience and of those 13% converted—not bad results when compared to a normal low single digit conversion rate of most ecommerce sites.
How to think about it: Most early AR success is on mobile devices since it taps into the unique capabilities of mobile: personalization, context and immediacy. They also solve a practical problem for the shopper. Eventually, AR will propagate more widely to other multichannel touchpoints, including merging with other technologies such as LBS, 2D codes and NFC. Consequently, in the short-term, look for ways to use AR as part of your existing mobile native app while monitoring AR technology and consumer adoption for longer-term opportunities.
5. NFC. Perhaps more than any other emerging technology, near field communications (NFC) has the potential to be the most disruptive and have the biggest impact for retailers. NFC will impact much more than mobile payments. It will link together applications and services across different industries, including mobile commerce, mobile marketing, and mobile customer relationship management. For shopping, consumers will be able use NFC to check-in to locations, acquire and redeem loyalty points and coupons, learn more about products, and use it as a form of payment. However, NFC must overcome some challenges before it’s an every-day reality for consumers: standards must be agreed upon, the NFC ecosystem must be built out (device manufacturers including NFC chips in devices, merchants upgrading POS, financial institutions, network operators and others agreeing upon transaction flow and fees), and consumer awareness must be raised significantly. NFC is already used widely throughout Japan and increasingly in Europe. Device manufacturers will play the biggest role in pushing NFC forward in the US and into more wide scale use globally, along with mobile OS and payment providers, such as Paypal and Google. An early example of this is the Nexus S on Android being the first NFC-compatible device on the market. As more NFC devices ship and mobile payment providers push what is possible at POS in-store, NFC will start to realize its potential to transform how consumers shop.
How to think about it: While NFC has a ways to go before mass adoption, retailers should learn from other technologies, such as 2D codes and mobile point of sale (mPOS), as ways to learn consumer habits and apply those lessons to the NFC when the ecosystem matures. Also, thinking about NFC in terms of consumer interaction before driving transactions will help raise consumer uptake. For example, Google is using NFC-enables smart stickers with Google Places to help consumers learn more about local businesses as well as rate and review their products. Not only are local businesses providing valuable information to the consumer with the Google Places NFC stickers, but they are also helping consumers build trust of NFC technology and are paving the way for consumer trust of NFC for transacting in the future.
Photo credit: Jorge Gonzalez