PxPixel
The Future of the Retail Transaction - AvNetwork.com

The Future of the Retail Transaction

Author:
Publish date:

Converging Pre-store and In-Store Selling Platforms

Flashback to 1995 and I'm knee deep in data working on what would turn out to be one of the most quoted statistics in the in-store marketing industry: "Two-thirds of purchase decisions are made in-store." – 1995 POPAI Consumer Buying Habits Study.

Circa 1995, this is when the first real insights into the power of in-store marketing began to emerge. Marketers and retailers got smarter about shoppers and embraced a shopper-centric philosophy around in-store marketing. Point-of-purchase was beginning to be seen as the ticket to capturing a larger share of market basket by stimulating impulse purchases. Our mantra was to influence shoppers at the "last three feet."

Flash forward to 2008. Today, I'm elbow deep working with brand marketer and retail clients on developing a holistic view at the path to purchase. Through consumer and shopper insights research we examine each of the steps taken to inform a purchase decision and to synthesize the contribution of each touchpoint into an effective in-store marketing execution. But as we continue to keep the consumer in the center of the decision-making process, we also recognize that new models for shopper marketing are taking shape. In this age of information technology where knowledge is power, shoppers are harnessing their power way before the last three feet. Dare I say that it's an illusion to think that so many of the most important purchase decisions will be made on the spot in the store? Yes, I do. For as we get closer to the next decade, "winning at retail" will no longer be just about the in-store experience.

THE DIGITAL REVOLUTION

Emerging technologies are transforming how we market to consumers. Microsoft's CEO Steve Ballmer predicts that "all marketing will be digital sometime in the next 10 years," and while this change will present a host of opportunities for marketers, the formula for the retail transaction will undoubtedly change. This new era will usher in a paradigm shift that overarches media, retail channels, and the shopper marketing experience.

Electronic retailing began with the internet and interactive TV. These were barely on the radar screen when I was analyzing purchase decision data from the POPAI study. Today, we are beginning to see what is referred to as mobile marketing, which is employed via digital technologies such as cell phones, PDAs, SMS, and devices such as GPShopper as a way to reach consumers, and there are more innovations to come. Today, the U.S. is the largest single market in terms of mobile ad spending with more than $1.5 billion projected to be spent this year and more than $6.5 billion expected to be spent in 2012, according to EMarketer. As the use of these tools accelerates, the future of the retail transaction will be about the convergence of both pre-store and instore selling platforms.

Mobile marketing represents a new way to connect with consumers, build brand imagery, drive loyalty, and lock in the purchase decision way before the brick and mortar store, and many of our brand marketer clients agree that consumers are receptive to mobile marketing as a conduit to their final selection. According to John Lombardi, senior director, marketing and creative services at Callaway Golf, "Some consumers will be receptive in the forefront and some will not, but in the end most will get on the bus. I believe that some products still need to be touched, seen, and held before a final decision to buy is made and mobile technology can keep 'your' message and resources in the hands of the consumer longer and more efficiently until they make the decision."

We are entering a time in which, the use of emerging technologies will convert consumers into shoppers, and, ultimately, buyers in the most unique ways. Marketers and retailers will work together to develop highly targeted, segmentation-based relationships with consumers by sending messages that are relevant to what they need and want while still drawing them into the physical retail space. For example, imagine a retailer promoting a deal on a specific brand of surfboards targeted to not just warm weather coastal states, but specifically to those psycho-demographic surfers that live in areas with that retailer's highest inventory.

Marketers and retailers will be able to reach out to consumers when they are in a state of high receptivity to their messages. Consumers will be able to opt in and take a proactive approach to technology-driven pre-store selling efforts and will think about the physical store as merely a delivery system for products - a concept we need to pay close attention to.

Interactive, tailor-made tools will allow shoppers to make informed decisions way before the store, thereby helping them to make the most out of their shopping trip. Behr Paint is already offering consumers tools such as Paint Your Place, where you can view what any room in your home would look like painted with a color of your choice before applying even one brushstroke of paint.

Consumers will embrace technologies that provide timely, accurate, and helpful information about products in a way that meets their needs, such as saving time. But saving time means providing information that is relevant to making the best decision. It does not mean a dump of specs and features that are impossible to siphon through. For example, a consumer who researches a product online or on a mobile device does not want to go into the store to find more, different, or conflicting information. This will lead to more time spent on the decision and undoubtedly frustration, an attribute that we know is guaranteed to turn a shopper away at the point of sale.

KNOW YOUR CUSTOMER

So then, what exactly should we make of the phrase "winning at retail"? What will that buzz phrase mean to us in the near future? Will it become so yesterday? Well, as I see it, perhaps a future definition of "winning at retail" should be:

"Delivering to consumers the information they need, when and where they want it, and at a time during which they are most receptive in order to build relationships, drive loyalty, and influence purchase decisions that culminate in an in-store transaction and a positive marketing experience."

As this worldwide change begins to take shape, we as brand marketers and retailers should be prepared to take advantage of that change - to be at the cusp of that revolution. In order to do that, we must start planning for the future now and start learning what it is that we need to know. Begin with research that will allow you to form hypotheses that you can build from. Design your research to provide you with an understanding of the following:

• The profile of consumers that will use emerging technologies to obtain product and brand information in your category. Who are the early adopter and innovator subsets in your market segment? Whether you are a paint company, sporting goods manufacturer, or grocery retailer, what segment of your market will be included here? What will their demographics be in three to five years? What are their attitudes towards your category and towards the use of these technologies?

• What kinds of information do those in the market for your products need and want in order to make their choice out of store? Most consumers find shopping frustrating and feel that they don't have time to research a purchase when they are first in the store. What pieces of information would be helpful to them? Is it product features, advantages, and benefits? What will you need to absolutely communicate in the store and what can you give up?

• In addition to saving time, what other benefits do consumers feel that mobile marketing can provide them with when shopping from your category? What are the pain points, if any, that they immediately associate with it?

• When and where will consumers who need or want product and brand information be open to receiving it? When might you be able to employ interceptive techniques and when will opt-in mechanisms be more appropriate for your category, brand, or target group?

• When are target consumers in a receptive state of consciousness to messages regarding your category?

Can we intrusively, but nonoffensively, create digital sales channels that intercept the consumer when they are engaged in related or tertiary activities?

• What types of information formats will be most compelling and useful for your consumers within the context of a technological delivery system?

Many marketers feel that so much of the purchase decision process will occur upstream; therefore in-store marketing will need to become more tactical in an attempt to blend the prestore parts of the process with the instore experience. If you can generate insights to the questions above, you can begin to develop a road map for how to successfully integrate the prestore path to purchase with point-of-purchase effectiveness for your brand.

On a more universal level the fundamentals are budding. Retailers may want to think about the ability to innovate and be able to reinvent their atmosphere to align with pre-store channels. They will need to have tools that will allow them to change rapidly because the flexibility afforded by digital marketing is far greater than today's in-store marketing; digital can be tweaked with a much shorter transition time. Brands need to recognize that, as mobile marketing dials up loyalty and planned purchases, the retail environment will be a more fiercely competitive arena where encouraging brand switching and impulse purchasing will be harder than ever. In-store marketing agencies working with clients in this realm will have to come up with not only compelling designs and messaging, but innovative ways to interchange systems, swap out visuals and create modular exchanges that can revamp a space easily.

INTEGRATION IS KEY

Integrated marketing strategies will be as crucial as ever. While this idea may seem obvious, it is nevertheless the case that the linkage of commercial advertising to point-of-sale is still overlooked by most marketers today. That kind of disconnect cannot exist between mobile marketing and instore. A continuous messaging stream will need to be part of every initiative where the pre-store efforts carry right into the store. The best successes will be those that blend the online and offline worlds by using tools that join all efforts at the juncture of shopper, product, and dollars in the physical store. We see this being carried out very well already by retailers such as Virgin Megastore and Border's Books, who is currently testing its Magic Shelf - a virtual shelf with browsing ability for when you have time to look. Then, whenever you want, you can pick up your selection from the actual retail outlet, which continues to provide a great in-store experience through the availability of other interactive tools. Brand marketer clients, such as Kiss My Face, are also implementing strong tactics to connect pre-store technology with in-store initiatives. According to Lewis Goldstein, VP marketing, Kiss My Face, "We see a huge opportunity to educate consumers who come to our website for product information about going into sections of retail stores that showcase our products that they might not ordinarily venture into."

Some ways on how you can be thinking about the optimal blending may include the following:

• Brick and mortar need to deliver on the expectations built before the store visit. When the shoppers arrive, does the experience live up to what they have built up in their minds? Does it provide confirmation to the shoppers that they have made the right decision?

• Have products available so that shoppers do not need to wait. Once a consumer puts a great degree of research into making a purchase they want their product now, and if you don't have it in stock, technology will tell them who does.

• Drive shoppers into the store for a fun experience supported by powerful integrated in-store marketing and merchandising so that the store does not become just a delivery system for goods. The most successful and effective mobile marketing will be a win for retailers and brand marketers. It should help increase overall retail sales, not detract from bringing shoppers into the store.

• Reward shoppers for following through with their visit to the store outlet and for making their in-store purchase. Make sure the digital dialog continues after you've made the sale.

Provide shoppers with a payoff they can't get through mobile marketing only. Give them something, whether it's tangible or intangible, that you can only deliver between your walls.

• Create tunnel vision for your brand shoppers as they go in-store to locate the products you have sold them on ahead of time. Use consistent visual cues that you have set up pre-store. Have them follow your version of the yellow brick road - a road that starts digitally and ends physically.

• Be prepared to showcase companion items and trade-up items to build on the momentum you have generated pre-store.

This new era of mobile marketing will have us all re-thinking what we've learned about how people buy, the way they make purchase decisions, and the degree to which those decisions are followed through at retail. Our early marketing at-retail tactics concentrated on point-of-purchase as a driver of impulse decisions, but I predict that role will change dramatically to one where in-store marketing will be as much a part of the total retail experience as it is a tool to drive follow-through of planned purchases generated by mobile marketing.

And for those marketers and retailers who are just beginning to catch up to the role that in-store marketing can play for their brands, pay close attention to the next 3-5 years, when the acceleration of mobile marketing will launch those who are already prepared for it into the next dimension of retail merchandising. I hope you're ready for it.

Lily Lev-Glick (LLevGlick@lginstore.com) is vice president of research services at LG&P In-store Agency. Lily recently joined LG&P after seven years heading up the Shopper Insights division at Perception Research Services (PRS). Prior to PRS, Lily held senior research positions at MeyersResearchCenter and POPAI, the Global Association for Marketing at Retail.

Related

The Changing Retail Dynamic

By Matt Baker, AMD I think we've all had our share of look alike trends reports–usually very topical and statistic-heavy but generally leaving us with more questions than we had when we started reading. Going forward from the crossroads in this disruptive time in marketing, where we're seeing a shift to at retail marketing, and a concurrent shift from organizing supply to organizing demand, we need to

The New Face of Retail?

The online shopping experience impacts the retail experience by tipping the balance of what we know as shoppers vs. the sophistication of the retail sales staff.

Retail–at the Crossroads

By Laura Davis-Taylor At new year’s beginning, I’ll cut to the chase. Numbers are being crunched,  and budgets are being honed for 08. What will happen, or should happen, if the writing on the wall or in the books points toward tougher going  in 2008 due to economic fluctuations and spending cuts? Will new at-retail tools, including in-store digital media, make further progress against stumbling older tools? Or will they too become budget cut victims? The retail outlook and 2008 budgets As we are being hit by some analysts with a panic-laced outlook on retail spending and the 2008 economy, many are concerned about the impact on our industry and what has appeared to be steady progress towards strategic innovation. It doesn’t help that 2007 is not panning out as a banner sales year for most retailers, the holiday quarter is being viewed with some trepidation and the effects of the 2008 election year are upon us. A Co

Marketing@Retail: the Demise of the Target Consumer

By: David Sommer, MEC Retail/Mediaedge:cia Advertising executives used to talk obsessively about “reaching” consumers.  “Who is our target?  How do we reach them as efficiently and effectively as possible with a differentiated and relevant message about our product?” Technology has now created a world where consumers no longer have targets painted on their foreheads and the usual marketing weapons miss the mark.

Image placeholder title

The Future of Control

Smartphone ownership in the U.S., currently at 57 percent and rising, has had a real impact on AV control systems manufacturers and third-party developers, as a significant percentage of the population has become increasingly familiar— implicitly, if not necessarily explicitly—with the design concepts of the user interface (UI) and the user experience (UX).