The "Store" of the Future isn't a Store: It's an Experience

3/26/2014
A lot of predictions are being made about the store of the future. Suggestions range from the demise of the brick-and-mortar model to a world where all we need to do is think about a purchase and our Google-based brain-to-store link will do the rest. So what's the reality? In truth, it's hard to say. But new technologies are transforming the way consumers think about the shopping experience and how they define what a "store" means to them.

In essence, the store of the future may not even be a store anymore. At least not in the traditional sense. The store of the future may actually be a holistic brand experience that ultimately leads to a purchase. Prompted by this transformation, retailers are quickly evaluating how to leverage cutting-edge technologies to influence buying behavior based on this new consumer perspective.

Getting your brand out to consumers
Think about how the typical shopper decides to spend her money on an item – it doesn't matter if it's a tube of mascara, a new dress or a car. Every shopper follows a "path to purchase." The shorthand version of path to purchase is awareness, trial and purchase. A shopper becomes aware of an item, they become interested, they opt to "try" the product and they decide if they want to buy it or not.

Long before we had access to an array of digital tools, awareness was likely to be driven by traditional advertising and word of mouth. Trial was a hands-on, in-person experience leading to decision to purchase or not.

Over time, shopping has become less of a linear decision-making process. We gain awareness through every traditional and digital medium from billboards to bus wraps to mobile devices and social media – all of which have an impact on product awareness and brand perception.

With all these inputs, it's challenging for any one message to get through to the consumer. Even at the trial stage, consumer behavior is vastly different today. Now, our "trials" may be based on digital versions of a product or reliant on other consumers' reviews – no longer a hands-on approach. While the implications of this virtual trial are yet to be seen, it's an important enough debate that organizations are attempting to understand the value of physically handling a product compared to a digital version of it.  Some items can be trialed and compared online via "showrooming," but many products tend to be tactile buys, like original fashion items, and the store experience will continue to play a significant role.

Instead of adding to the volume of touch points, which risk getting lost among all the noise, some retailers are taking a more targeted approach. It's less about driving people to the products (to the traditional "store") and more about improving the experience individual shoppers have with the brand regardless of the medium.

Thinking like a shopper
We're all shoppers. So why, when marketing to shoppers, do retailers tend to forget how shoppers shop? Carl Richards, an American financial planner and author on consumer spending, recently pointed out in The New York Times that there are two main types of shoppers: the ones that shop because it makes them feel good; and the ones that shop because they need stuff.

Case in point, Sarah plans a weekend getaway to her favorite shopping destination. She takes along some girlfriends and they spend hours over dinner planning the types of items they want to look at, what they've researched online before the trip, and how much they would be willing to pay for that perfect pair of silver sandals. They want the total experience; a fashion brand that knows how they like to shop and serves up customized options based on past purchases. They want loyalty points and personalized offers that make their shopping experience rewarding; and they want store associates willing to spend time with them in the role of a fashion consultant.

Brad on the other hand, needs new golf gloves and some golf balls before his weekend outing. He always buys the same brand and he wants a fair price. He doesn't need to be given myriad options; he just wants a quick overview of anything new so he can compare. Brad wants an easy experience; a brand that knows how he likes to shop and serves up the information he needs without a lot of other content. He wants a store associate who can show him exactly where the gloves and balls are in the store and doesn't waste his time.

The key is that each type of shopper requires a completely different experience to consider that experience a success. Think about it. A retail store can treat two customers exactly the same way and one walks away ecstatic while the other walks away frustrated, or worse. If a fashion retailer simply told Sarah where to find blue shirts, she'd walk away disappointed. Likewise, if the sports store associate tried to distract Brad with a hard sell on golf shirts and shoes, he'd leave the store thinking that they didn't listen to what he wanted.

Putting data to the test
Technology is helping us get closer to understanding the customer – we call it "getting a 360 degree view of the customer." Data points can tell us how, where and when a consumer shops, and even how she felt about the experience. Acquiring this data doesn't come easily. Information is collected at many points in the path to purchase and must be integrated, dissected and analyzed before retailers can apply it to real-world situations. 

Sephora, a global beauty products brand, is an example of one company that can greatly benefit from knowing how, when and why customers make purchases. Beauty products are a very personal experience, and every shopper buys beauty products for different reasons. Knowing this, Sephora has been progressively creating an information system that places the customer at the core of its processes.

An information system will help us bridge that knowledge gap by creating closer relationships with our customers, with direct marketing playing a major role, explained Denis Levy, CIO for the Europe/Asia regions at Sephora. "We believe that technology offers a clear-cut competitive advantage."

In 2012, Sephora announced an integration of its website and mobile apps to integrate the in-store and online experience. Customers' online searches and purchases are integrated as part of the customer's loyalty program profile. With this information, Sephora can better target marketing programs based on data the customer has on file.

Beauty retailers are already working to create a seamless brand experience based on shopper data. For example, imagine the following hypothetical scenario, which isn't out of reach for retailers today.

Let's use Sarah's friend Lindsey, a long-time BeautyBrandX customer and HotBuys member (the BeautyBrandX customer loyalty program) who rarely shops for beauty products anywhere else.  Through Lindsey's HotBuys membership, BeautyBrandX knows what products Lindsey has purchased. They know her preferred price point and what days she buys most often. They also know which physical location she shops at most and which categories of products she prefers. 

Lindsey also uses the BeautyBrandX mobile iPhone app and the tablet app because each offers a unique experience. Based on the type of articles she reads on the tablet app BeautyBrandX can anticipate what products she may be interested in. From there, the retailer can send Lindsey customized promotional offers or coupons for products that she has already expressed interest in. Through geo-targeting tied into mobile phone apps, BeautyBrandX could even identify when Lindsey is within 50 feet of a physical store and text her an instant coupon if she stops in.

Because BeautyBrandX has integrated its online and offline shopping experiences, Lindsey doesn't have to wonder if she'd get a better price via the store or the web channel – she knows it's the same – so she can focus on buying through whichever channel is most convenient at the time. When she's in a physical store, the store associate can immediately access her purchase history and help Lindsey find complementary products. The store associate can even suggest items she may want to replace, based on how long ago they were purchased.

Through social media, BeautyBrandX can even determine how Lindsey felt about her recent make-up purchase. Because Lindsey's social communities and posts are tied into her personal data, BeautyBrandX knows how many compliments she received on her new "smokey eye" application – and can generate a digital mailer with more tips on makeup application; autogenerated based on keywords the BeautyBrandX system tagged in her social posts.

Most retailers aren't integrating information at a level where this is possible…yet. But in some countries, consumers are starting to value personalization over privacy, which is spurring a move in this direction.  The key is to make sure the relevance of the experience creates value for the customer that decreases skepticism of information-sharing. 

A place for hardware
Fashion retailers can experience many of the same benefits as our beauty products retailer highlighted in the instance above. While software clearly runs the backend systems that crunch customer data and help retailers serve up custom content, hardware has its place, too.

One new fashion idea is to place securely wall-mounted tablets in dressing rooms. In addition to getting personal attention from the store associate, tablets in dressing rooms can help shoppers choose clothing and accessories from the dressing room "catalog" and have those items delivered right to the room. This approach allows even the most basic fashion brands that normally compete on price to add an element of the "personal shopper" experience.

Tablets can also be used to call an associate and request a different size or color. In the future retailers could integrate online ordering of items that are unavailable or even mobile payments to the tablets, effectively creating a one-stop-shop for everything the shopper needs.

Our fashionista Sarah from the earlier weekend getaway example might even want to take her experience further – imagine that the tablet in the dressing room allows her to securely snap a photo of her outfit and email it to Brad, who is off golfing but still wants to help Sarah pick out some new styles. Because Sarah has scanned her loyalty card into the tablet, the system now knows what she's tried on and what she actually purchased, further helping to customize future experiences.

Breaking the store mold
In all these examples, the physical store hasn't changed very much – although the way shoppers interact with the brand has.

But some retailers are breaking the mold of the physical store all together. Hointer, a fashion jeans retailer in the U.S. is a store where there are no salespeople. Designed for shoppers like Brad, who just want the very basic level of service, Hointer customers use a mobile phone app to scan in jean styles (they have 150 to choose from) and sizes which are then automatically delivered to a dressing room by robotic technology.

Each pair of jeans carries a wireless tag that tells the robotic system all the information it needs to know. Shoppers toss any unwanted merchandise into a "discard chute" which puts the jeans back in rotation. Buyers don't even need to talk to a human to pay – they simply swipe a credit card, grab a bag and off they go. Hointer is clearly catering to the "less is more" crowd. A shopper like Sarah would likely find this experience cold and unrewarding. But it speaks to the idea that retailers need to know their buyer's preferences and design an experience to match.

Whether the changes are physical or technological, the store of the future looks a lot like an integrated brand experience, played out across every communication channel imaginable. A seamless stream of information guides the retailer toward better service and the shopper toward endless purchase opportunities customized just for him or her. In the end, not all of these strategies will work — and what the future really looks like? Only time will tell.


Mark Ledbetter is global vice president of retail strategy for SAP.
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