Webby stores

Among the lakes, hills and gorges of upstate New York, the Green Hills Market began its retailing life as a farm stand in 1934 just outside of Syracuse. It thrived on local products and service that catered to individual customers. But as it has grown into a modern supermarket known for technology innovation, it has found new ways to offer customers its personal touch.

Green Hills is out to perfect the widely held if elusive desire of retailers to market to a large number of customers on a truly one-to-one basis, says proprietor Gary Hawkins. And he’s doing it by applying web-based analytics—the same principle that lets web sites analyze online shopping behavior and create highly personalized shopping experiences and marketing offers—to the physical store. “One of our goals is to bring to brick-and-mortar retailing the capabilities of the online world,” he says.

So when a shopper participating in his store’s loyalty program walks in the door, the first thing she does is touch a finger to a web-connected biometrics scanning device at a SmartShop kiosk, placed prominently near the store entrance. Within seconds, the kiosk prints out a list of coupons tailored to her recorded shopping behavior. When she’s done shopping, the shopper touches another fingerprint scanner at checkout, which sends a record of her purchases through a web-services-enabled network to a back-end database, where special algorithms work with sales data and promotional data to configure a new personalized batch of coupon offers.

And so the cycle starts all over. The system is designed so that, when the shopper returns a few days later and again touches the SmartShop fingerprint scanner upon entering the store, it will print out a new list of coupons based on her up-to-date shopping behavior.

Customers respond
The SmartShop system is just one example of how retailers are bringing the web into stores as a way of better understanding and engaging customers. The applications differ, but all focus on developing relationships with shoppers to turn them into long-term, profitable customers—and for most that means across multiple channels. “In-store web-enabled devices provide a foundation to provide the highest level of customer service and provide a link to other channels,” says Sunita Gupta, executive vice president of retail consultants LakeWest Group LLC in Cleveland. “And two things that most retailers talk to us about are how to offer better customer service, and how to satisfy the requirements of multi-channel retailing.”

Deployed a year ago in Green Hills Market, SmartShop has elicited an unusually high coupon redemption rate of 20%, Hawkins says. By comparison, the retail industry average for coupon redemptions is about 1%, according to several sources including research and consulting firm Aberdeen Group Inc.

The program is also helping to generate more repeat store traffic and sales, Hawkins adds. “The SmartShop service has been extremely popular, and shopper participation is already impacting 50% of store revenue,” he says. Shoppers enrolled in SmartShop have increased their visits by 10% over a comparable period a year ago before the program was available, he adds.

Hawkins and his separate consulting practice, Hawkins Strategic, helped develop the SmartShop system with Pay By Touch, a company that also provides fingerprint-activated payment devices. Following a test of the SmartShop system by Green Hills, Pay By Touch made it generally available in January and is talking with at least two other retail chains about deploying the biometrics version.

Entertaining shoppers
Verizon Communications Inc. is also using the Internet to extend the retailing capability of its cell phone and wireless services stores. It is installing Demo Zones that let shoppers, either by themselves or assisted by store staff, play video games, watch movies and listen to music downloaded from Verizon’s Internet services through computers connected to the high-speed fiber-optic web access that it’s also beginning to roll out across much of the U.S.

And The North Face, the manufacturer and retailer of sports equipment and apparel, is promoting through web-connected in-store, touch-screen kiosks displays of merchandise selected for their popularity among consumers according to analysis of store and web site customer sales data. “Most of its stores are small footprints that offer only 30-40% of its inventory, so The North Face uses web-based kiosks to show other products,” says Andy Lloyd, CEO of Fluid Inc., which provides the software behind the kiosks.

The North Face web site managers configure content to appear on the kiosks, including videos and three-dimensional images that customers can manipulate with touch-screen controls, after looking at the popularity of products as indicated by clickstream and sales data from TheNorthFace.com.

But while the kiosks use the same data and infrastructure, including content management applications and product databases, as the web site, they serve more like highly interactive televisions, says Andrew Sirotnik, chief experience officer for Fluid. “It’s important not to put just a web site in a store, especially for any kind of branding effort,” he says. “Store shopping is an experience, so we’ve made these in-store kiosks more like a broadband TV experience to create an emotional connection between the consumer and products they can’t actually touch.” Store shoppers can touch the 17-inch kiosk screens, which are soon to be supported by very large format overhead screens, to do things like zoom in and out of product images, change colors and activate videos, he adds.

The efforts by Green Hills, Verizon and North Face, however, may just be signs of more to come in terms of how retailers will engage the web in stores. In a recent LakeWest Group survey of plans among retailers for multi-channel systems and strategies, web-enabled in-store kiosks that serve customers with product information and the ability to shop across channels scored the highest. 40% of respondents named customer-serving kiosks as the “auxiliary sales support tools” they planned to deploy over the next two years.

Learning curve
Retailers are still on a learning curve, however, and new systems like SmartShop are not without their challenges. Some consumers have expressed concerns about the security of putting a fingerprint into a network system; connecting biometrics scanning data into back-end databases is still a new process; and there are more basic concerns such as keeping the scanners clean enough so that they accurately read fingerprints, experts say. “There are concerns that biometrics systems have to overcome, and a retailer has to decide if the value proposition is great enough to sway a lot of customers to use them,” says Tamara Mendelsohn, e-commerce technology analyst at research and advisory firm Forrester Research Inc.

Moreover, much of the same features are available through traditional plastic card loyalty programs. Carlisle, Pa.-based Giant Supermarkets is using a card-based kiosk loyalty program powered by software from St. Clair Interactive Communications Inc. that, like SmartShop, lets participating customers check in at a kiosk to print out coupons based on their shopping history. And while other supermarkets have signed on for the card version of SmartShop, they haven’t decided whether to migrate to the biometrics version.

Consumers presented with the SmartShop option have been wary of how it operates. About 10% think it’s great without question, another 10% want no part of it, says Shannon Riordan, vice president of marketing for Pay By Touch. “The remainder think it’s cool, but want to first know how it works, such as how we protect data privacy,” she says.

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Pay By Touch and Green Hills have not aggressively marketed SmartShop, preferring to let shoppers gradually get accustomed to it, Riordan adds. An important part of the rollout strategy, however, is to educate store employees so they can explain how the system works. “We always have someone on hand to answer questions,” Riordan says.

The SmartShop system is designed so that it doesn’t transmit entire fingerprints each time a customer touches a scanning device, says Steve Ritacco, chief technology officer at SNH Solutions, a Pay By Touch subsidiary that configures the SmartShop software. Instead, it compares minute parts of the currently scanned fingerprint, such as the distance between curves, with data recorded for the same shopper’s fingerprint in a secured database.

Big on biometrics
Pay By Touch installs a network server within a SmartShop store to collect point-of-sale data, but it transfers this and the fingerprint scan through a web connection to its own hosted applications, where it runs the algorithms against shopping and promotional data to produce the personalized coupons. “This is all controlled via web-based applications,” Ritacco says, adding that XML and other web services integration technology make it feasible to collect, analyze and distribute the data on which SmartShop is based.

Hawkins, who launched his own plastic card loyalty program in the early ‘90s and ran it for about 10 years, says the fingerprint-based program provides enough advantages to give biometrics significant performance advantages over plastic cards. A big advantage, he says, is that biometrics makes it easier to collect and analyze shopping data for individual consumers, while card programs, to control the costs of the cards, typically issue one card account per household.

Another advantage, he adds, is that fingerprint scanners make participation easy for consumers, who often forget or misplace loyalty cards, while also assuring that merchants collect shopping data to support the loyalty program. When a cashier swipes an extra loyalty card to grant loyalty program discounts to a shopper without her own card, the retailer doesn’t get the benefit of recording that customer’s shopping activity to support future marketing efforts, Hawkins says.

All about the customer
“This is something up and coming to ease the customer experience,” says analyst Sahir Anand of Aberdeen Group. “At the end of the day, it’s all about the customer experience.”

The cost to deploy the SmartShop system starts at about $200 per checkout lane for fingerprint scanners, plus $1,000 to $2,000 per kiosk, according to Pay By Touch. In addition, Pay By Touch charges from 10 to 20 cents per transaction or fingerprint scan.

Shoppers signed up for the SmartShop system can request e-mailed notices of coupons, and they can log onto the Green Hills SmartShop web site to check available coupons and configure a shopping list. When they enter the store and touch the fingerprint scanner, the kiosk will automatically print out their coupons and the shopping list they configured online.

Hawkins compares Green Hills, an independent, single-store operation, to Google Inc. in its ability to improve marketing and boost sales by building on consumer preferences. “At Google, the web pages that come up in searches are keyed to how well they relate to search terms,” he says. “The analogy for Green Hills is that each time a customer buys a product in our store, she tells us what she’s interested in and we’re providing the web-enabled systems and capabilities to truly act on her interests.”

paul@verticalwebmedia.com

Calling all store shoppers

Verizon Communications Inc. is bridging the gap between virtual and real shopping experiences by letting store shoppers play online games and download movies and music on computers served by the same high-speed fiber-optic Internet access that it’s beginning to offer to homes.

Verizon has set up Demo Zones in two Verizon Experience Stores to both expand the number of products and services it offers through its wireless services and cell phone stores as well as to introduce the fiber-optic Internet access that it’s rolling out across the U.S. The stores offer customers access to about 30 web-connected terminals, each with touch-screen interfaces developed by web technology firm R/GA.

The fiber-optic home service offers Internet access speeds from 5 to 50 megabytes per second, depending on a home’s location. By comparison, the maximum speed offered by broadband cable Internet access ranges from 1.5 to 5 megabytes per second, according to the Federal Communications Commission and the information service High-Speed-Internet-Access-Guide.com.

“Many consumers can’t fathom what it’s like to use fiber-optic Internet access, so our store customers can sit down at a Demo Zone and play an online game or download a movie,” says Joseph Purdy, Verizon’s manager of store design and visual merchandising.

Verizon’s digital products and services include online games through its Gaming On Demand service, and music and video downloads through its FiOS TV service. FiOS TV offers hundreds of digital TV and music channels, high-definition TV programs and video-on-demand. As of the end of last year, Verizon had made FiOS TV available to 1.8 million households and had signed about 175,000 subscribers, Verizon says.