Insights on the shopping revolution

Slide 1 © Fjord 2012 | Confidential

I’ll take it!

What we’ve learned from the shopping revolution, and what’s coming nextJuly 2012


The last shopping revolution happened over 100 years ago.

1890s: Stone’s Store, in Roselle Park, NJ, becomes the first shop to be lit by Thomas Edison’s carbon filament light bulbs

1916: Clarence Saunders opens Piggly Wiggly, the first self-service

grocery store, in Memphis, TN

1900: Mass-production of clothing becomes commonplace as department stores proliferate, selling ready-to-wear items


Shopping will never be the same.

The High Street is changing. Where the last 50 years have seen a transition from small local merchants to chains and megabrands, the next decade will bring a massive shift in the opposite direction.• Services will become as important as objects• Shared and Pop-up retail will become commonplace• Up to 30% of retail space will permanently disappear… and even more will

radically change


We have entered a new era


Why not ‘The Retail Revolution’?Because that’s not how people think. And if businesses are to survive the revolution, they need to understand the human perspective. Humans don’t “visit retail establishments.” Humans shop.

Shopping doesn’t just happen in shops, either. And in order to identify opportunities, we need to be able to see the whole picture of what shopping is and can be.


Shopping: the human perspective


It’s not a linear experience

give up

price

cool

friends

quality

service

fit

look

trends delivery

supportwait

returns


Many variables = complex challenge

What I’m buyingEveryday purchases

Big ticket items Long term investments

Clothing and accessoriesGifts

Personal factorsCultural context

Age and social statusFinancial comfort and

confidence


Beyond retail: the shopping ecosystem


3 keys to understanding the revolution

Online vs. offline is a

myth

People pay for what makes

them feel good

Changing infrastructure is

changing the rules

Thank you.


The online/offline myth


Online/offline: there is no such thing.

Online/offline has not been a meaningful distinction for some time.

Digital-ness is now ubiquitous - we carry the digital world around with us in our pockets. We can access it all the time, in shops and at home and on the street.


Nearly 50% of US smartphone owners use mobiles in-store

Call/t

ext f

or a

dvice

Compa

re p

rices

Send

pict

ure

of p

rodu

ct

Find

anot

her s

tore

Check

pro

duct

revi

ews

Fill t

ime

in ch

eck

out l

ine

Check

for l

ocat

ion

deal

s

Show

item

to p

erso

nnel

Scan

pro

duct

bar

code

Check

ope

ning

tim

es

Not u

sed

mob

ile in

stor

e0%

10%

20%

30%

40%

50%

60%

Source: GP Bullhound Research, Mobile Commerce, September 2012


…and 53% have abandoned as a result

NO47%

21% Found a better

item online

30%Found a better

price online

38%Found a better

price in another store



Window-shopping & QR codesGrocery shelves are displayed on screens in subway stations. People make purchases by scanning codes.This “shop” is both online and offline – it looks like the real, 3D thing; it’s located in a real, 3D place, and yet the commerce all takes place over Internet Protocol.

From 3D to 2D


eBay’s Give-a-Toy shops enabled shoppers to scan QR codes from the shop window, to donate a toy to a child in need. The window display, in this case, is the shop. Similarly, more and more retailers are including QR codes in their window displays, which enables people to make a digital ‘wish list’ from real-world items in real-world places.

The window is the shop


Like the glassware at the restaurant? Buy it. Fancy that dress Florence wore at last night’s gig? Have it delivered to you today. The continued rise of semantic metadata and interconnected APIs mean that we’ll be able to buy things wherever we see them – in real life, on television, anywhere.

Shop? Who needs a shop?


During

In-store bar code scanningCustomers in brick-and-mortar shops use smartphones to do price checks, look up reviews, add items to gift registries, or even purchase the item from another retailer and have it delivered straight to their home.

“Online” in the real world


During

All Saints in-store kiosk for online orderingSome retailers, including the UK-based chain All Saints, offer an in-store kiosk (or in All Saints, iPad) where customers can order articles that aren’t in stock at that location from their online store. This takes advantage of the customer’s in-store urge to buy, and is far more immediate and effective than sending them to another location to make their purchase. It also introduces brick-and-mortar customers to the online property.



During

C&A has launched a pilot in Brazil of their “Fashion Like” in-store concept. Hangers contain a small display showing how many times that garment has been ‘liked’ on facebook. Instead of scanning a code or launching an app, customers can see this data made manifest where it is most relevant.

Augmented merchandise


During

PayPal HereSquare PayPal Here, Sail and Square take

online payment methods into the brick and mortar world (more on this later).



During

Apple now allows customers to shop in stores without making any contact with staff unless they want to. The concept enables customers to explore the merchandise for as long as they like, make a decision (assisted or not), find the item and pay for it, all on their own. This gives the customer unprecedented freedom in shaping their own experience. Apple can do this because they own every piece of the system – the merchandise, the shop, the payment.

Shopping goes DIY


After

Online purchases returned in-storeMany retailers allow customers to return online purchases to brick-and-mortar locations. This combines the convenience of buying online without the inconvenience of having to go to the post office for returns.

Whenever, wherever


The idea of buying in-store and getting home delivery is not new – appliance dealers have been using this system for decades. But the idea of buying something online and picking it up in-store is more recent, further blurring the lines between ‘online’ and ‘offline’

Whenever, wherever


After

Online registration & support for items purchased in brick & mortar shopsIt has become commonplace for consumer electronics, no matter where they are bought, to be registered online. Support, too, is delivered primarily through online means, with phone support often only available at a premium.

Whenever, wherever

Thank you.


The feel-good factor

“Money, if it does not bring you happiness, will at least help you be miserable in comfort.” - Helen Gurley


There are some things money can’t buy


People pay for what makes them happy.Some people are happy with simply getting the best deal, but many are willing to pay a premium for better service

Recognition and recommendation

Know who I am and what I like

Loyalty

Reward me for repeat custom

Follow-through and support

Resolve my problems and address my complaints


Great technology experiences are in demand

59%Would

purchase more frequently if

the experience were better

42%

Would use mobile

checkout if available

42%Are

interested in mobile wallet

services 40%Want QR &

barcode scanners

36%Find mobile purchasing frustrating,

but do it anyway

36%Want

vouchers & location based

services



Before

Amazon home page with recommendations

Amazon is perhaps the best-known example of recognition and recommendation – it is definitely one of the most widely cited examples in the online world.

Nice to see you again.


Before

Messaging from local merchant/ brick & mortar store/ call from the lady at the DKNY counter Personal service in local stores – for

example, the shop owner who gives you a spontaneous 10% discount because you choose to buy two items when you only intended to buy one – can be quite powerful in driving loyalty. Services like Square, PayPal Here and Sail have the potential to facilitate and support this by giving merchants access to customers’ purchase histories in their shops.

Where everybody knows your name


During

Local merchants taking 10% off when you buy 2 pieces (because you came in only intending to buy 1)Local shop owners are also more likely to know their customers personally, building trust relationships that enable them to advise on purchases – this makes both parties feel better about the transactions, even though the goods may cost more.The best merchants will even call their regular customers when new and relevant merchandise arrives – this makes customers feel like VIPs and drives both store visits and loyalty.

Where everybody knows your name


The Starbucks app is an excellent example of tying the full customer lifecycle together – from locating a shop to ordering to payment to loyalty, all in one well-designed package.


After

Net-a-porter delivery service (guy in the suit, black boxes with ribbons, same day in London)Net-a-porter offers same-day delivery by liveried staff – a luxurious personal touch that makes customers feel better about the price tag of their merchandise.

VIP service, VIP status


With you everywhere

Uniqlo has extended its relationship with customers through a widely-loved alarm app, and encouraged ongoing interaction by awarding discounts to customers who tweet about their products.


20-40 year olds with less income than they’d hoped to have are bridging the gap between expectation and reality by doing their everyday shopping at discounters and putting a large proportion of their disposable income toward high-end designer accessories. These are often purchased at outlet shops such as TK Maxx.

Bridging the expectation gap

Thank you.


Portable infrastructure


Banks take a backseatAs mobile alternatives such as Square, Sail and PayPal Here gain traction in the market, virtually anyone can become a retailer. This enables proliferation of microbusinesses and also threatens more traditional infrastructure providers (banks, credit card companies) who have begun to fade into the background as these OTT players take the spotlight with consumers and merchants alike.

This movement is reminiscent of the challenge faced by Telcos over the past half a decade, as manufacturers and OTT providers have captured customers’ hearts through high-value services.


The great equaliserA street market vendor can suddenly be equal to a high street brand like Topshop – access to affordable payment infrastructure enables the quality conversation to dominate, rather than the power lent by superior infrastructure and presence.


Geofencing allows payment without taking anything out of your pocket.


Customer or merchant?The distinction between customer and merchant is also blurred by this new infrastructure – anyone can be a consumer by day and a merchant by night, or vice versa.


Reach out and touch someoneTraditional traffic drivers like vouchers and coupons have also moved into the mobile domain, with location based services like Groupon and Foursquare, and social curation tools such as Pinterest.


More choice, more pressure

There is now a far greater range of payment choices for retailers as well as individuals. This puts further pressure on traditional service providers to innovate to drive value.

Thank you.


What do we do now?


Beautiful seams, not “seamlessness”Some new shopping experiences are unnerving for customers – the absence of the “the altar of commerce” that is the till is confusing, leaving people wondering whether they’ve actually paid for their purchases or not.

This new behaviour could also cause other problems, as customers grow so accustomed to skipping the till that they do it even when there is no other technology in place.

We must mitigate this by ensuring that customers are aware of the transitions as they take place. Total “seamlessness” is not ideal here – while the transitions should be smooth and not jarring, it is critical that customer/users always know what’s happening and where they stand.


Beware the uncanny valley

This is a well-known concept in the robotics world, but it also applies to “smart” services.

The myth is that the better a service knows me, the more conclusions it draws, the better my experience will be. But that’s not true – beyond a certain point, the service stops being cool and starts to be creepy.

It takes a huge effort to pull the service back out of the valley – and you may never regain the trust you’ve lost.


Where people are concerned, why is more important than what.

It’s not enough to know what your customers are doing – in order to know how best to respond, you need to understand why.


Why isn’t everyone more engaged?Less than 20% of mobile users engage with online retail. Why not more?

48%Awkward shopping

experience

23%Not easy to

view product

information

31%Slow

connection

36%Credit card info

security concerns

20%Takes too

long

18%Product

information too limited


It’s a balancing act

Know ‘what’ but not ‘why’ Confusion

Single point of focus Focus on many areas at once

The trick is to choose a framework of KPIs that work together to show you not just what your customers are doing, but why they might be doing it; not just how your business is performing, but where the opportunities lie to improve.


Look at the system (not just at one part)

For customers, the whole ecosystem works together to create the experience they think of as shopping.


Look at the system (not just at one part)

Understanding how the pieces of your ecosystem work together is the key to creating the best experience possible.


When you put people first, great things can happen for business.

Thank you.


Opportunity Spaces

“Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage” - Niccolo Machiavelli


From Shop to ShowroomWhile Apple’s new ultra-DIY shops have troubled some customers, they are indicative of an interesting shift – from ‘shop’ environment to ‘showroom’. The focus is no longer only on selecting product and paying for it; the focus is on experiencing the products, with or without assistance.

Technology has opened the door to radical change in physical retail spaces. Without the constraints of the counter, the till, maybe even the merchandise, we are free to invent whatever kinds of space are best suited to connecting people to things they will love.


My data earns me money

As customers become more savvy about their data, new opportunities open for merchants to barter discounts or merchandise to access improved information. This means opportunity for deeper, more meaningful relationships with customers.


Let me take my community with me

Location based technology, social graphs and other metadata can be combined to give customers more control over who influences their buying decisions – leaving recommendations and reviews for friends in specific locations, attached to specific merchandise.

Or, customers could choose to follow in the fashion footsteps of the stars they want to emulate - literally, in the physical world.


Make it feel better to buyMany medium- and big-ticket items, from car seats to washing machines, are necessary but uninspiring purchases. Anyone who can make a more satisfying experience of these purchases will win a good deal of trust and affection from customers.


Help me to aspire

There are collections of items – such as home theatre or hi-fi equipment – that many customers continually and incrementally upgrade over longer periods of time. For those who are less technology-savvy, this can be a challenging process of reading reviews and specifications and asking friends and acquaintances for advice. Anyone who can help customers remember what they have and what it will work best with will certainly gain trust and goodwill.


Remember:It’s the system, not the part.


The end.

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