By Adam Forrest, Director of Product Marketing
The way technology is driving change in retail takes the spotlight this week as an increasing number of stories explore the impact of digital on the traditional shopping channel.
Here are some of the top items I read to help inspire new thoughts for you this week.
Summary: Though an increasing number of many big box retailers are reducing the size of their in-city stores, Target is taking a different approach. Next year, the retailer will open a 160,000 sq.ft. store near Fenway in Boston, using an urban concept they’re calling “CityTarget.”
My thoughts: We’ve talked about Target as an exception to the rule in a previous post; their strategy is to get people into their stores so they find – and buy – things they didn’t know they needed. So even though most big box retailers are moving away from the significant physical presence within urban areas, it seems to make sense for Target to continue to invest in their physical stores. They are focused on having an assortment of goods, so a smaller format doesn’t make sense for their customers. In addition to this, CityTarget could also prove to be a strategic move for them because the company can use the store as a distribution center. This would allow them to expand on their already existing buy online/pick up in store model, and possibly explore same-day deliveries within Boston, as well.
Summary: Macy’s is planning to open its doors at 6 p.m. on Thanksgiving, two hours earlier than last year. And last year’s 8 p.m. opening was the first time retailers opened doors before 12 a.m., which had been the “early” opening time for several years. What it boils down to is that the traditional weekend kick-off to holiday shopping is now becoming a week-long retail showdown.
My thoughts: We’ve seen Black Friday change dramatically as a result of this continual creep to grab market share. Just last year, for example, we saw a lot of pre-Black Friday and pre-holiday sales. I think there’s significantly more change to come due in large part to digital, which is driving a big shift in holiday spend. Black Friday won’t be the benchmark that retailers have traditionally looked to because consumer spend stretches across multiple days and channels. Retailers will need to redefine their metrics to determine what a successful holiday shopping season looks like, and how they can effectively compare performance year-over-year.
Summary: According to a June 2014 study by ORC International, 72% of shoppers still cite a traditional store experience is important when making a purchase. But there are some changes happening there, too: consumers are increasingly expecting digital in-store shopping experiences.
My thoughts: This is really interesting data, but not because the traditional store experience is the leading factor when making a purchase. It’s the fact that the Internet comes in as the second most important factor, just a few percentage points behind the physical store. This has huge implications for retailers and illustrates why investing in the digital shopping experience is so important. Regardless of where your customers choose to shop, an increasing number of purchases made are influenced by digital. The takeaway? Think about the overall impact of digital and invest in it the same way your customers are using it. It’s not just about the revenue potential.
Summary: Endpoint security is gaining popularity among retailers, especially with some of the recent breaches. Consumer loyalty starts with trust, and the only way to build and maintain that trust is to ensure you have strong privacy and security protocols in place.
My thoughts: Consumers are becoming increasingly less loyal to a brand, which is why consumer trust is even more important today than before. With the number of recent data breaches, it’s been a painful lesson for some retailers to learn just how small the acceptance window is for errors made by retailers. And this extends to the shopping experience, both in-store and online, as well. The use of targeted ads and personalized experiences walks that fine line between helpful and creepy. Retailers need to ensure they keep their customers at the center of their overall strategy; when consumer trust is clearly valued, they’re more willing to stay loyal.
Summary: Facebook recently announced the launch of its hyper-local ads that target users within a specific distance of a physical retailer; Facebook’s geo-targeting feature is slated to go live in a few weeks. With this capability, marketers have the opportunity to share targeted messages – like real-time deals and how long the wait in line is – with mobile users who are within a designated geography.
My thoughts: Geo-targeting capabilities could be immensely valuable for retailers, but it needs to be done in a very precise way to provide clear benefits for consumers. It ties back directly to the trust component we previously discussed; people don’t want to be tracked and don’t want to feel like they’re losing their privacy. I personally believe we’re only scratching the surface when it comes to the opportunity these technologies present, but retailers need to really think about how they’re executing on these strategies. There is little room for error; if you frustrate your customer, there’s a very strong chance they may not come back again.