Retailers shift their ad spending from TV, radio and print ads to digital ads.
The web is working its way into stores via kiosks that help build customer relationships and boost sales.
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.
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.
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.