Store of the Future: In-Store Convergence

Technology convergence in future stores will alter the customer/retailer relationship

Even more than today, the competitive environment of the near future will require a convergence of technologies to more strategically reach consumers from the moment they enter the store. The key result will be an enhanced consumer shopping experience with new value and real-time information.

This objective has already started a strategic trend toward an extensive in-store convergence of customer-facing technologies such as kiosks, loyalty programs, digital signage, shelf displays, product data, customer-operated shopping devices and POS in stores. To facilitate the in-store convergence of these technologies, all data will be linked through central databases that will be accessible to centralized teams for marketing, branding, promotion, loyalty and relationship management. Many retailers have begun the journey today by linking a growing number of technologies to reach the future convergence objective.

Prada and Metro have great experimental stores that test the future with RFID, customer shopping devices, as well as product and customer information access. Other retailers are beginning to roll out components of their future stores more broadly, beginning the process of converging customer-facing technologies for up-selling and cross selling, while shifting volume toward private label and generally helping consumers select a high-margin market basket.

Key Tools Promise Big Gains
Customers make 70 percent of their purchase decisions in the aisles, yet retailers spend less than 1 percent of their marketing and promotion dollars there. In the future store environment, converged technologies will change that. Today, most retailers promote with on-sale signs, or at POS when customers are leaving the store — with debatable results. According to Point Of Purchase Advertising International statistics, half of POP advertising has zero effect on sales. Clearly the impact potential on the bottom line from converged in-store technologies is vast.

One tool gaining favor is digital signage that is moving, colorful, interactive and dynamic. Already, kiosks that provide personalized offers based on customer knowledge are proving extremely effective.

Borders Books is rolling out vertical plasma screens of Convergent Media dynamic digital content with merchandise and at POS. The content involves lifestyle entertainment in keeping with the coffee house environment as well as education about a topic and books that cover it. Advance Auto is another retailer using in-store dynamic signage for both sales and lifestyle positioning, while Duty Free Shops in North America is one of the first users of digital signage technology from Australia-headquartered provider SignIQ. The key is to have signage flexibility at the local store, so store staff can make price changes to combat promotional moves by local competitors.

Convergent Information
Giant Eagle has integrated its loyalty systems, kiosks with printers and POS to deliver personalized 1:1 marketing offers to customers in real time. In a pilot program, which uses NCR's Copient interactive direct marketing system, the company is strengthening one-to-one relationships with loyal customers with targeted offers based on each customer's purchase history from the Giant Eagle loyalty program.

Kiosks at each store's entrance enable the delivery of offers to impact customer behavior before she shops — far more effective than at POS when she just wants to get out as fast a possible. Marketing staff at headquarters can create the rules for the offers and download to stores. As part of that trend, deli ordering is proving a valuable mechanism for drawing consumers to interactive informational kiosks early in their store visits. This is being used in both grocery and convenience store outlets.

The $2.8-billion Wawa chain of convenience stores has a very busy deli counter. By integrating kiosks, kitchen displays and POS, Wawa is increasing peak sales, while reducing labor costs and promoting new products at low cost. The new customer-facing system starts with the customer entering a deli/food order on a kiosk because it's quicker and more convenient. The customer gets an order number and shops the store while the order is prepared.

According to Patrick Dougherty, Wawa's manager of store automation, order error rates have dropped and more customers can order simultaneously with the system — important at peak meal times — and get served faster. Moreover, they get served at lower cost to Wawa because the former order taker is now preparing food, which represents a labor savings of 10 percent to 30 percent. When ready, the customer picks up the order, which has a bar code attached that syncs up with information at the checkout POS. At Wawa, an XML file created by the Radiant kiosk/deli system is tied to the order bar code as it flows into the Triversity POS system. Wawa is also able to use the kiosk as an opportunity to display new items for the customer, increasing up-selling to more, or higher-margin items.

What futurist William Gibson once said, "The future is here, it's just not evenly distributed," has never been more true. The retailers mentioned in this story are already traveling down the road to a future that holds an expansive convergence of in-store technologies that will strategically meet customers every shopping step of the way.