Retailers missing the real in-store link to the online world

An article published today in eMarketer discusses the ways multichannel retailers bring the Web into the store. Among the methods listed are internet kiosks, WAP enabled handheld devices, and point of sale terminals. Almost all of the emphasis is on the ability of the consumer to access online inventory when/if the store itself is out of stock. Pushing it one step further is the ability to present a significantly expanded assortment, with range and depth beyond that available on the shelf.

Still, the most powerful opportunity to bring the Web into the store is being missed completely, and it does revolve around mobile phones. That opportunity involves the use of 2d or QR codes. What are these? Simply, they are powerful open source 2d barcodes designed to bridge the gap between the offline and online worlds. I've recently reviewed the beta version of a new site, 2dCodeMe.com, which has been created to educate consumers about this technology. I was immediately struck by the powerful potential of the technology to vastly improve in-store customer service.

2d or QR codes are scan-able by almost any smartphone (after downloading a scan app....check out 2dCodeMe's at the iPhone App Store, it's excellent). The codes can be configured to auto-launch an array of applications in the smartphone, from uploading a text document (warranties, additional specifications, customer testimonials) to downloading a coupon (gee....see a product, scan a code, have a coupon on your iPhone!) to linking to a page deep within a retailer's website offering specific customer support (product demos, customer reviews, video programming, even the item page itself). The point is that all of this happens solely as a result of the consumer scanning the code and letting the phone do the rest of the work.

The Web has an almost infinite amount of purchase support available to the consumer. Instead of letting a consumer wander around aimlessly in that soup of information, why not send them directly to the content you've already created?

The real power of bringing the Web into the store is doing exactly that. Bring the real power of the Web. Accessing online inventory is not ground breaking, and honestly, could be done from most current point of sale registers simply by integrating the inventory in the data base. No, the real power of the Web is to engage, inform, entertain and empower. Imagine doing all that at the point of sale.

Accessing customer reviews (which already exist online and cost you nothing to make available), specifications and buying guides (which also already exist onlin and cost nothing), or product videos (which already exist too!)....these are the ways retailers need to be thinking. And the really amazing thing is that the technology is open source, already mature, and could be implemented with almost no additional resources.

Ecommerce websites add video: no consistency or sustainability

In January of 2009, Internet Retailer reported that 43% of merchants surveyed intended to add video to their site for the coming year. To test the actual penetration of video into ecommerce sites, a study completed in October 2009 by Future Merchants, Inc., shows that 67 of the Internet Retailer Top 100 have some form of video on their site. However, the adoption and incorporation of video remains, at best, an inconsistent and difficult to sustain effort for most of Internet Retailer’s Top 100.

Although retail as an industry seems to be acting on the desire for site video, there is very little consistency and seemingly no emerging consensus on what type of video programming to include. Nor does any of the Top 100 demonstrate a consistently sustainable model that delivers fresh and relevant content with any form of coherent frequency.

Despite the actual presence of some form of video content on a large percentage of retail websites, a follow up study published in November of this year by Internet Retailer shows that 36% of the respondents still list video as the most desired site enhancement. So even though a large number of retailers have actually added some form of video content, the topic remains one of the most cited for desired enhancements. There’s a disconnect somewhere! The explanation lies in the type of video assets ecommerce organizations found economically and technically feasible to implement.

Proprietary video programming and repurposed content have limitations of cost, availability and “fit”. Although a few retailers have a large amount of this content most have one or two pieces. The number of video assets found for both product demos and image animation has to be considered against a SKU base in the thousands for most of the Internet Retailer Top 100.

More insight into the issues and answers to retail websites and video programming will be delivered at the upcoming eTail West convention. Don Delzell, Managing Director of Future Merchants will be a Panelist on the Day Two Session: Driving Returns from Online Video With An Understanding of the Nuts and Bolts Behind Execution. Don will be offering a unique perspective on the issues behind the current industry experience with video.

Future Merchants has created RetailTV®, a revolutionary innovation combining over 50 years experience in retail merchandising, the art and science of master storytelling, and best in class technology to bring retail clients a powerful new method for driving cross-channel volume for key items.

Combining Solutions™ programming with the RetailTV® platform enables retailers to easily integrate powerful video storytelling anywhere on their website, while creating an interactive and seamlessly shoppable experience for their customers, driving sales on featured items across all channels.

The Future Merchants mission is to provide multi-channel retailers an affordable, high impact alternative to the declining effectiveness of traditional key item marketing techniques; an alternative that simultaneously engages the consumer, enhances the brand, and drives volume.

Do Black Friday Specials Really Serve the Consumer

This weekend I had planned to awaken at 3 am, rush off to my local Best Buy, and obtain one of the amazing deals being offered. In the process, I fully expected to pick up one or two other things, if the pricing seemed enticing. Unfortunately, the entire Black Friday phenomenon came to a crashing halt when I drove by Best Buy on Thanksgiving evening, around 8 pm, and found literally over a hundred people already in line. Already.

Being a well informed shopper, I'm aware that limited supplies exist of the amazing deals. Doing a quick calculus, I decided that by the time I was willing to arrive, say around 3:15 am, that line would be at least twice it's current length......lending me to believe my probability of scoring that deal was remote in the extreme. I did not make the attempt.

While anecdotal, the story bears paying attention to in retail marketing sessions. Who, exactly is it that camps out for these stellar savings? Is this customer valuable? Do they buy other, less deeply discounted items? I am beginning to believe that the answer is becoming "NO". I think, instead, that many of the line-campers are simply deal shoppers, there for a specific item. Not for their holiday lists.

I had no sense, in Best Buy, that the entire store was on sale, or that excitement existed for the store.....only for the limited quantity treasures everyone was hunting. By 8 am on Friday, the store was virtually empty. I asked some associates if it had been madness, and aside from the initial crush, the answer was no.

Is this the recession, or an inevitable life cycle on what truly is a promotional gimmick? The later, I think. Who is being served by limited quantities of outrageously low priced merchandise? Is brand loyalty being built, enhanced or developed? Lacking the research, I cannot say. However, I will argue that the time is NOW to actually do some research and find out if this tactic has run it's course.

Is technology limiting retail adoption of video?

Beyond the limitations imposed by an unfamiliarity with the medium, are there technology constraints keeping retailers from embracing video programming as a selling tool online? I use the phrase "video programming" rather than "video" because retailers have no trouble embracing "video". It's the programming part that seems to be a struggle! I digress......my apologies.

Technologically, what would a perfect integration of video programming into an ecommerce site look like? Let's start from what it should and should not do. Here are few observations from my research into the subject.

First, it should not take the consumer outside a normal shopping pattern or behavior. Any deviation from an expected and comfortable path will have an impact on site abandonment. Period. Second, it should be easily accessed without making the consumer an expert on site search options. Third, it should be linked to the ability to buy, easily and seamlessly. If the intent of the programming is to establish an emotional connection designed to sell merchandise, it makes sense to streamline the ability to act on that connection (not impulse, but connection). Fourth, it must be browser agnostic, avoid pop-up blockers and be functionally displayed without regard to the consumer's screen size or resolution.

Here are some things on what it should NOT do. First, it should not open a new browser window or separate and distinct window of any kind. Site abandonment rises immediately with new windows and off-page pop-ups. New windows of any kind do not keep the consumer within the existing experience....which is and should be the shopping page. Second, it should not take the viewer away from the video programming in order to shop. Current research categorically indicates that multi-product videos have a much higher trust and acceptance rate than single product videos. More on this another time. Suffice it to say that if you are going to create a video with multiple opportunities to purchase in it, it's just not smart to use technology that knocks the consumer out of that video experience when they try to shop the items shown. Third, it should not present a materially different shopping experience than the one the consumer could have had at the item level.

Imagine: a technology which integrates seamlessly into existing nav patterns, doesn't open new windows, provides item-level comparable conversion support and is completely shoppable from within the video program experience. Clearly there are a number of other best practices in UI to review, but this would be a good start, wouldn't it?

Video Commerce

Have retailers really embraced the concept of video commerce? What is video commerce anyway!

Video commerce: enabling commerce through video. The key being "commerce". Commerce is the transaction of business. Retail commerce is the transaction of business by providing goods and services to consumers. So Video commerce, in the retail world, would be enabling consumers to purchase goods and services through the medium of video.

Is this happening today? No. It is not. Retailers have begun to embrace the medium, yet have struggled with effective ways to link video content to commerce....making a sale. Why? Two key elements conspire to limit the impact of video in driving sales. Let's take a step back though. Why is this a big deal? Again, simply, in the advertising world, television commercials have proven to be the most powerful and effective mechanism for creating emotional connections and enabling branding. Period. Taking this one step forward, retail, at it's core, outside of commodities, is all about making emotional connections. And it better be about branding too....or it's all about price. Price retail is a bad business to be in unless you have the scale...of say Walmart.

So: waht are the two elements holding back retailers from using the full power of video programming? First it is a lack of familiarity with what the medium is actually best at doing. CPG firms and ad agencies know this because they deal with it all the time. Most retailers do not. TV has not been the easiest vehicle for any retailer to use, and even when used, tends to be solely a seasonal or brand related proposition. Very seldom has TV been used effectively to drive volume behind specific products. Makes sense: 30 seconds is not enough time to communicate much in the way of product benefits. Let alone consumer needs. So it makes sense that retailer marketers don't have the understanding of the power of video that other types of marketers with more familiarity do.

CPG and branding types know all about telling a story: it's what creates that emotional connection. And emotional connections are the holy grail of storytelling. Retailers know about pictures of products and descriptions of products ...... and do those very, very well. They do not know about storytelling. It's not their forte. However, without an appreciation for what storytelling does for SALES, video programming at the retail level will remain essentially animated still photographs, enhanced with music (maybe).

I'll post later about the second problem: technology. Before we get into that, it's important to take in the limitations imposed on anyone in business by what you know and what you don't know. If you don't know how powerful a tool, strategy, tactic or process can be.....and you don't know you don't know.....there's nothing you can do about it. Such is the case for video programming. Retail marketers, with some exceptions, simply do not know what they are missing.

Look beyond a consistent experience

As luck would have it, Forrester Research just released a study in which 32% of retail business executives responsible for e-commerce and/or channel strategy say their company lacks a vision for providing consumers a consistent multichannel experience. There are at least two immediate observations on this point.

First, is it really a critical element to a multi-channel strategy that there by consistent consumer experiences? As brand touchpoints, there do, of course, need to be consistent delivery of brand messages and branding visuals. However, that's a bit obvious. What is less obvious is the assumption that the actual experience of the consumer should be consistent. Why? Is it really necessary, possible or desirable for consumers at Walmart.com to have the same experience as shoppers at Walmart stores? OK, so that's a bit tongue in cheek. The Forrester study isn't really about mimicking the physical attributes, but rather delivering on those aspects of the brand premise which can be consistent across channels.

So after abandoning humor, I'm still left with: is it really a critical element? Isn't it possible that the makeup of the shopper universe differs between channels? That the experience expectations are different, and that the shopping behavioral mindset alters between channels? I think it does. So given that SOME degree of consistently of experience is essential to reinforcing brand attributes, the next question is which ones? And I have an all-to-familiar feeling that this question isn't being asked. Rather, the focus continues to be on transactional or surface level "experience" consistency. Look beyond, to what is really important, really practical, and really relevant to both the channel and to the synergy which is the inherent business purpose behind consistency.

Where has all the innovation gone?

This is not a stagnant era with regard to advances in technology, sciences, and other related areas. The internet continues to change on an almost daily basis, and how we communicate seems to evolve almost as fast. So where are the real innovations in retail? And why aren't we seeing any? Is the entire industry so mature that any form of innovation, continuous or otherwise, simply isn't probable? Or is there something culturally limiting within the industry that keeps innovation from being adopted?

As a retailer, a senior marketer selling products to retailers, and as an entrepreneur selling services to retailers, the most common question I can recall when something "new" is in question is "who have you sold this to?". And in the past decades, the world of retail contained sufficient pioneering smaller companies that new things could get bootstrapped up to the attention of the big players....often simply because the product or service WASN'T being sold or used by one of the big boys. So adoption of innovation followed a chartable path, generally beginning with small, niched or accounts needing to/able to take more risks. If the product or service performed, and performed well enough to catch the attention of someone in the big leagues, one of the major players could usually be induced to try it. From there, the public got to vote.

Today, that chartable path doesn't really exist. Yes, there are a few pioneer type retailers, but by and large, the "sell it into specialty and then broaden distribution" strategy isn't viable. Which means that innovation is becoming an endangered species in the merchandise mix. Sad, but understandable. What about the rest of the organization? Why isn't there innovation there?

What new marketing methods have been developed by retailers? Wouldn't you think they'd be prime and fertile grounds for new ways to communicate with consumers? After all, communicating with consumers is the sole objective of retail marketing. Adoption of social networking...yes....but is any of it innovative?

I think one of the critical questions to ask of any organization isn't "why aren't you producing innovations" but rather "what have you done to intentionally create and sustain innovation". Really.... if you can't articulate a specific and measurable approach to stimulating, nurturing and incorporating innovation....then you don't have one. And if you are not innovating, you are following. Followers reap lower returns, fight over scraps, and generally lead dull and limited brand lives.

Multichannel Synergy

What exactly does this term mean? Multichannel synergy. Using the dictionary, it would appear to mean the behavior of different channels of retail distribution acting in concert to produce a result different than if they were managed independently. So where, exactly, is this happening today?

Too often this phrase is used to describe such tactics as making store inventories visible online, or ship-to-store, buy online and pick up in store, using the website to make local store promotions visible....etc. Are these things really causing a unique outcome different than if the channels were acting independently? Not really.

In the end, it appears that multichannel synergy has become jargon for marketing techniques that use one channel to stimulate sales in another channel. How is this synergistic? Smart marketing....absolutely. If you have millions of monthly unique visitors to your website, it is a good idea to try to influence those people to shop your brick and mortar locations as well. Or at least to facilitate any latent or activated intention which exists regarding your brand. Similarly if you have millions of monthly footsteps moving through your brick and mortar chain, it makes sense to try to stimulate awareness of your online channel (although not quite as much sense as the reverse). But are these efforts truly synergistic?

What would multichannel synergistic behavior look like in the retail world? What if you could visit a retail website, and download/print the forms (postage prepaid) to return something you bought in a store? Certainly the online channel would not act in this way independently, and certainly customer service, and by extension brand appreciation would be enhanced. Alternatively, what if you could return an online purchase in any brick and mortar location? ALl you had to do was bring the item in, know your name, and the POS system would look you up, verify that you had bought it, and refund your money. Right there. In that amount of time. Certainly taking back unsellable returns from the online channel is NOT a way that the brick and mortar store would act independently....it takes time and effort with limited personnel resources to then actually send the product back somewhere....time and effort without immediate benefit to that channel.

So ask yourself: are you actually producing multichannel synergy? Or just being smart marketers.

Operational Exellence

The consumer shopping mood this holiday is unlikely to be festive. With unemployment at levels never seen by most families, credit card costs continuing to soar, and wages frozen, despite the upbeat indications for an economic recovery, most consumers simply are not feeling it yet.

While not as dire as last year, and with the entire year to potentially save or manage cash to make holiday gift giving more feasible, the outlook cannot be overly optimistic. Retail stores may post flat or even marginal comp store gains, but remember, those are measured against the deepest drop in retail sales in recent history. Dropping even further from those depths would be a very bad sign indeed.

Given this highly pessimistic view of the shopping climate, the focus this year should be on operational performance. Or, make the shopping experience as painless, fulfilling, easy and quick as possible. Spending less than you would like to, at places you might not usually shop, isn't going to be "fun" no matter what the retailer does. However: it CAN be a positive experience. The consumer isn't interested in "fun". They are interested in efficiency. This is not going to be a "fun" holiday season. It won't be as dismal as last year, but there is a very long leap from "dismal" to "fun". And we're not there yet.

What is operational exellence? Clean floors, easily shopped race tracks, racks straightened and made attractive. Customer service personnel (what few of them you can afford) focused on helping the consumer through the experience, NOT on selling them something they don't really want. This starts with store management, and has to be reinforced and provided with oversight. Turn this holiday season into the season where you made a difference. Courtesy, attention to detail, commitment to service and efficiency will be deeply valued......and in the long run, rewarded by the consumer through brand preference.

It's too late to alter the merchandise mix (although it is unfortunately never too late to alter the promotional posture), change the seasonal advertising, or significantly impact price ladders. What it is NOT too late for is to galvanize in-store execution. Send your merchants back out into the stores. They aren't doing you much good peering over reports which aren't critical right now anyway. Get your store personnel focused and motivated. It doesn't take a ton money. Just effort and management attention.

Cautious Optimism

The most critical component to managing through the slow and still unproven economic recovery is to provide the possibility for growth while maintaining a risk adverse posture in gross margin. Not even easy to write, let alone to accomplish. Essentially, and fundamentally, it involves planning inventory utilization near but not beyond historical peak efficiency, and certainly at but not above current or recent results.

Provide your merchants with the assets to perform, while helping them to manage against the natural tendency to aggressively pursue opportunities. It has been over a year for most merchants of constant and unremittingly difficult if not outright negative comp sales performances. Any silver lining, however slight, any break in the dark clouds of bleak results is absolutely going to awaken tendencies to be aggressive. And...that's a good thing! Pessimistic, overly cautious, and careful merchants will NOT lead you into the recovery. Just as overly aggressive, incautious and optimistic merchants COULD lead you into further difficulty.

So this time period requires extraordinary cooperation and joint merchandising efforts between those who select product and those who help manage inventory and gross margin. It is far from as simple as it sounds, yet the basis for a successful approach lies in the ability of senior management to create a joint appreciation for the necessity of each part of the organization to be involved in the recovery. Merchants, as a general rule, no matter what they say, tend NOT to appreciate Planning or Financial types who seem bent on limiting possibilities and guarding against failure. Financial or Planning executives, no matter what they say, tend NOT to appreciate that inherent optimism is a requirement to be a successful merchant, as is a short memory with convenient wholes in it.

So work together....you'll need to....or the opportunities (which are going to be both discrete and small) will be missed, and instead of participating in a recovery, you'll be watching others steal market share, engage the consumer, and position themselves to be the big winners when employment begins to rebound next year.