Retailers shift their ad spending from TV, radio and print ads to digital ads.
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The first store opened in Estero, Fla., last spring, measuring less than 2,000-square feet, with approximately 26% of that space dedicated to a designated consultation and fitting room space. In that area consumers and clerks—all of whom carry iPads that can access all of Boston Proper's products—can sit and interact with a large "TechTable," (see photo, page 18) putting together outfits digitally, saving them to the customer's HerCloset account (her customer record for previous orders and item she's liked), and placing orders for products not in the store. Kramer says the main part of the store is merchandised to look like the "ultimate girl closet that you wish you had," with merchandise displayed as complete outfits rather than endless racks of every color in every size. That's what the iPad-wielding clerks and TechTable are for. Shoppers, working with a salesperson, select an item on display, and then the salesperson can use the iPad to show her the additional colors it comes in or other products it complements. If the shopper wants them, an order is placed and it is delivered to the consumer's home as soon as the next day.
Salespeople are trained to continue engaging with repeat customers by adding product suggestions to those customers' HerCloset accounts when new products are launched. "The associate is much more a consultant rather than a 'Can I help you? Do you want to try that on?' interaction," Kramer says. "It's more about the lost art of keeping customer books and building relationships. Digital helps you do that."
The first store has a traditional point-of-sale terminal, but the other three stores currently open (all in Florida) don't have the traditional checkout. Instead, clerks complete transactions on the iPads. Boston Proper—and Chico's FAS stores more broadly—will this year roll out a more flexible POS system with mobile transaction capabilities and more advanced merchandising functionality from Fijitsu, the company says. It replaces a POS system that's been in place for 12 years.
Chico's CEO Dave Dyer in recent earnings calls has talked up the early success of the Boston Proper store format; the company has plans to open 16 to 20 more in 2014, expanding into Texas and Arizona. "I can't wait to get 100 of them. They have been nothing short of spectacular…. Their dollars per square foot are well above the company average," he said in a Q3 earnings call, without revealing details. "I think you'll see the other brands, as we get the technology stabilized, following soon behind."
He said Boston Proper customers who shop across channels are seven times more profitable than single-channel shoppers, and more than half of store customers are new to the brand, which drives down acquisition costs. That's because Boston Proper doesn't have to spend money marketing to them in other ways, like mailing catalogs.
"Buzzword or not, there's no question in my mind that omnichannel will be a crucial component to retail success over the coming years," he said. "Piecing together the omnichannel puzzle will be essential for brands to forge lasting connections with their customers."
While store retailers are learning as they go, they hope to create a stronger foundation for sales so as not to risk losing further relevance to increasingly digital shoppers, and sales to e-retailers.
Retailers are slowly beginning to add homing devices to lure consumers into stores and make their shopping journeys more fulfilling. Called beacons, the devices communicate using a form of Bluetooth technology installed in many late-model smartphones. Apple Inc. and eBay Inc.'s PayPal are both rolling out systems, as are other vendors.
Apple installed its iBeacon system in its more than 250 U.S. stores in December. That means iPhone owners who opt in to receive push notifications may, when they walk into an Apple store, get a message telling them about phone trade-ins or upgrades, or other store information. PayPal, meanwhile is testing the PayPal Beacon in several locations; PayPal's version enables consumers with the PayPal Here app on their phones to pay for in-store purchases with PayPal without having to remove their phone from their pocket. Retailers can also use PayPal's beacon to send promotional messages to consumers in their stores.
Both systems use Bluetooth Low Energy, which works similarly to the traditional Bluetooth technology that lets consumers wirelessly connect devices like a phone and a Jawbone earpiece, but it doesn't drain phone battery. Hasty Granbery, lead engineer of PayPal Beacon, says consumers can leave Bluetooth Low Energy running on their devices "for years" without adverse effects. "You can be scanning for blue low energy all the time without any perceptible drain on your battery," he says. The beacon devices retailers install in stores can run on batteries or plug into an outlet.
American Eagle Outfitters began using the iBeacon system in 100 of its U.S. stores last month, through an integration with Shopkick, a loyalty program shopping app used by multiple retailers that gives points redeemable for rewards to consumers for visiting participating stores. Macy's Inc., too, is trying beacons in a handful of stores.
Telegraphe Café, a coffee and sandwich shop in New York, began testing the PayPal Beacon last fall. The test lets it collect payments from PayPal's employees with the PayPal Here app on their phones—PayPal's New York office is located next door to the cafe. When the employee walks in the door the system asks her if she wants to use PayPal Here to pay; if she taps "yes"on her phone the store's POS system displays her photo and tells the clerk that she wants to pay with PayPal. The clerk taps "OK" to complete the transaction, and the customer gets a notification that she's been charged.
Telegraphe Café co-owner Anne Abikhzir says the technology's presence lets her dedicate her time to customers, rather than spend time completing transactions. About 10 to 20 transactions a day—PayPal workers coming in for their morning or afternoon caffeine fix—are using the beacon/app combination. "It gives us a way more personal touch and lets us concentrate on the most joyous part of our business," she says. Granbery says when PayPal's Beacon device officially rolls out later in 2014 it will cost retailers less than $100 apiece.