How Brick-And-Mortar Retailers Can Beat ‘Showrooming’ And Amazon.com
Traditional retailing, at least in the U.S., is in a funk. Of the 100 largest U.S.-based retailers according to STORES magazine, only 17 are growing in the double digits. Fast risers are either growing overseas or are in hot categories like mobile phones (Verizon Wireless and AT&T) or discount goods (Dollar General).
You could blame this on the uncertain U.S. economy. But I put equal blame on the mainstreaming of e-commerce. Everyone I know who is my age or younger buys a ton online. There are sexy category specialists – Newegg, Gilt Groupe, GroupOn and Zappos – but Amazon.com gets the lion’s share of their dollars.
Fittingly, Amazon.com is the fastest riser on STORES’ list (42.5% year-on-year growth). Ranked 15th, Amazon.com already sells more than Safeway, Sears and Macy’s. It is the poster child of how to win in e-commerce: low prices, speedy shipping and personalized offers that leverage its rich data on customers. Add a fourth factor: the hot trend of consumers “showrooming” goods at a brick-and-mortar store while checking online prices via a smartphone, from whom they will presumably eventually buy.
How can retailers fight back? I don’t think it’s through expensive attempts to amp up the EQ (Entertainment Quotient) of their stores. It doesn’t fly with time-pressed moms, who control the majority of household budgets.
Nor is the solution to further streamline their supply chain in order to compete with Amazon.com and its ilk on price. Most of the retailers around today survived the initial dot-com onslaught by deploying ERP software and successfully adopting lean and Just-In-Time techniques to cut costs.
In other words, they’ve done a good job of playing defense. Now, it’s time to play a little offense – use technology to enhance customer service, boost sales and, rather than lamenting sales lost through “Showrooming,” take advantage of it.
Mobile Point of Service
On customer service, retailers are arming their floor salespeople with smartphones and tablets and apps that allow them to reprice items, check inventory for customers and speeding transactions by conducting them where-ever they are in the store.
Large retailers doing this include Lowe’s, which has given iPhones to all 42,000 employees, Sear’s, J.C. Penney, Costco, Sam’s Club, Nordstrom, Apple, Urban Outfitters and Sephora, the 1,300-store cosmetics chain.
Sephora is using the Mobile Point of Sale app for iOS developed by SAP and partner, Agilysys. Check it out at the SAP Retail Forum North America in Dallas this week.
Good customer service is not just providing information on demand and accelerating purchases. It’s also about anticipating consumer wants, and delivering them personalized discounts and offers not just in real-time, but at the right time.
If it sounds like I’m going to talk about marrying Big Data and mobile, you’re right. This is taking customer data from every channel, from Web to POS, and applying predictive analytics to it, so that you can augment the in-store shopping experience with mobile coupons and reminders that are relevant and not spammy.
“Instead of old-school loyalty programs with their points and reward schemes, you want to give consumers real, meaningful relevant information based on what they’re looking for,” said Colin Haig, the retail industry principal for SAP.
In other words, the exact opposite of that scene in Minority Report where Tom Cruise is bombarded with ads as he runs through the shopping mall.
That puts the Precision in Precision Retailing.
Rather than describe how this would play out real life, I’ll let this video do it so much better. Click on the image below or this link. Added bonus: there’s a rom-com storyline cuter than a Katherine Heigl movie and a box full of kittens:
SAP is showing off a Precision Retailing solution, which combines a mobile app with cloud-based analytics courtesy of SAP HANA on the back end. Retailers from L’Oreal, European grocer Groupe Casino and the Montreal Transit Agency are already using SAP Precision Retailing, said Haig.
Haig says that Precision Retailing’s ability to help shoppers build lists of recurring items (think kids’ clothes, batteries or toothpaste) and offer them discounts means that the solution today makes it perfect for grocery stores and other general stores (think Wal-Mart or Target).
But Precision Retailing can also help speciality stores, the kind that offer high-ticket items or are beset by showrooming customers. Here’s how.
First, we must note that only 25% of shoppers who check competitor prices in a store actually end up buying the item online.
That means 75% of shoppers or more are potential net new customers for the store. And the amount of sales lost to showrooming can be reduced – through precision.
Imagine a consumer visiting a retailer’s Web site to check if a large-screen TV is in stock. That raises a red flag to a retailer that the consumer may be coming to a store soon to inspect that particular item. When he or she enters the store, the store’s app on the customer’s smartphone can immediately open and buzz, alerting him or her to a coupon that for that item or category of items that would match or beat competitors’ online prices.
Such tactics can win back the shoppers who came into a store fully intending to showroom, says Roland Gonzalez, senior directory for mobile industry marketing at SAP.
“Retailers have always been customer-centric. But now they are trying to be customer-intimate,” Gonzalez said.
Richard Hirsch has a nice technical deep dive into the cloud underpinnings of SAP Precision Retail here, check it out.