The limitations of in store digital

The retail industry is in disarray, reeling from the blows of e-commerce, changes in tastes, expectations and income distribution. Malls and department stores are closing, the experience at surviving venues is often depressing and frustrating, and even worse, for many brands the web is not making up for lost sales.

How can we modernize our surviving stores, particularly profitable flagships? Since we live in what seems like constant technological change, it might seem only logical to apply some of that technology in our stores, for instance:

Virtual mannequins: as the customer picks up items, they are modeled on a display.

Augmented reality: the customer can see more info about the products she’s browsing on her phone.

NFC (Near Field Communication): The customer can tap her phone to view more product info and purchase the item.

Browser hubs: displays show related product info, like other customer’s reviews.

Virtual reality: the customer can see items as they would look on her.

 

The problem is that all this technology misses the biggest change brought by the web:

1. Customers are taking their purchase decisions before even entering a store,

2. thanks to info from other consumers;

3. and then finish their purchase online, from the comfort of their home or office.

In other words no matter how novel the technology, our brand remains out of the loop. While this change in customer behavior does not yet apply to 100% of all customer segments, it is inexorably growing and cannot be stopped, and is changing not only how customers shop but also what they shop for.

The solution.

Should we throw in the towel and close all brick and mortar stores? If we continue along the current path the decision might be taken off our hands with dwindling sales and an expensive channel, so change is clearly necessary.

To have any impact our projects need to help us participate when customers take their decision, which is why it’s more useful to think of web projects rather than digital or technological projects or online and physical stores: a web of consumers who happen to be connected via certain technologies, in which we need to participate. Technology is necessary but insufficient by itself.

To understand the role physical stores can play, we need to integrate them into our customer’s quest and establish the specific value they can deliver.

a. We need to accept that our customer’s quest starts online, not at the store: it’s a question of convenience and expectations; to integrate our stores we need to establish specific answers they can still provide more effectively, such as sizing, accurate colours, combinations, textures; and, critically, when to provide this connection.

b. Instead of depending on dwindling local traffic, we need to visualize the much larger general online and offline traffic and give the customer new reasons to search or browse at the store: is everyone who is looking for our product finding us? Is everyone with a goal in mind for which our product is relevant finding us?  For instance if our product responds to a specific quest (“I need new shoes”) and we know the customer can only visit during her lunch hour, we can make it easier by pointing out nearby food venues, the time to get to and from, the health advantages of walking after lunch by browsing at out store, and make the quest more productive by narrowing down the styles the customer might be interested in, matched to the styles and sizes available at the store.

c. Only once we are participating in our customer’s purchase decision and  integrated the store into our customer’s quest does it make sense to make search at stores themselves easier and more productive. We will then be in a position to evaluate the technologies we mentioned at the beginning: do they contribute any meaningful value to our customer and to us, or are they merely a superfluous tech veneer? Do they let us understand what our customer is looking for? Do they take advantage of our customer’s willingness to contribute to the experience of other customers?

Takeaway.

There’s life yet in brick and mortar stores, but they will need to be rethought and repurposed, within the context of our customer’s larger quest and changing expectations. Throwing more technology at them does not address the main effects of the web on our business, makes the channel more expensive, and takes away resources where they are most needed.

 

How the web affects our marketing: Effect on our customers.

Questions and limitationsTo give us a better idea of how we can use the web more effectively we can look at its impact on our business through the classic Marketing scheme, as illustrated in the table below; in this first part we’ll be looking at the effect of the web on our customers (for consumer goods).

Analysis: 5 CsValue creationCapturing value (delivery and communication): 4 PsMaintaining value
CustomersMarket segmentationProducts and servicesClient acquisition
CompanySelect target marketPromotionClient retention
CompetitorsProduct and service positioningPrice
Collaborators
Context

Why does our customer buy our product? How does he choose among products? Where does he buy it? These are age old questions which the web is changing as consumers are finding more answers about our products, mostly from other consumers, and because of their exposure to products and prices from around the world.

Cultural, social, personal, psychological impact.

As a mass medium the web is a source of general news, entertainment, a work tool, and is used for personal communication. As such the web is changing our customers’ knowledge of what can better satisfy their needs, as well as their aspirations. They are exposed to other products, other cultural perceptions of our product, can find the latest fashion before it is retransmitted by their local media. They can now belong to online communities for their hobbies or life styles which may go beyond what is available locally; and their own experience is useful to other consumers.

During their search they are also exposed to worldwide prices, which has an impact on their views about ours: Are they perceived as fair? Too high? Are they comparing the same products or services? They also develop views on the difference between what’s available locally and elsewhere: are the same products available? Are they available at the same time? If not do they feel treated as second class customers?

The moment of consumption also has an influence; I define this as the relationship between disposable income and consumers’ aspirations. For instance in a society which has little experience with general consumption aspirations will gravitate towards personal rewards and marking social status by showing one’s wealth; on the web this is confronted with other consumption moments, for instance one in which health and respect for the environment are appreciated, while social status is shown through craftsmanship, as opposed to mass produced products.

Language plays a role in keeping consumers in their silos, with english as a lingua franca that carries the cultural message mostly from the US and Western Europe, but now anyone from the cultural periphery can have a big impact if they choose their language and audience well.

To make sense of the influences of the web on our customers we need to establish the impact on their expectations, on our brand promise and on our delivery of that promise at each stage of their consumption experience, for the different segments we serve. We can already derive a few general lessons for our marketing:

  • Our brand promise needs to adapt to our customer’s evolving expectations, and we then need to fulfill this new promise.
  • We need to participate in our customer’s quest by responding, being relevant and useful, showing the way, earning their trust.
  • Our customers’ experience when they search online can be richer, which can work to our advantage if we want to compete beyond prices, as they are able to better understand the different product attributes, everything that is required to satisfy their needs, and even its social symbolism. We need to compare this possible richer experience with the one customers are currently having (do they only buy mainly on price?).
  • Our customer’s path generates information which is itself useful to other customers and may thus be highly valuable to us.
  • Traditional media which push messages at our consumers and are not part of their search have a limited impact on their purchase decisions, particularly when consumers have learned to tune them out; and this applies to old school ads on the web itself, which can also be easily blocked on their browsers and apps.
  • Digital, Internet connected, viral, social media which isn’t relevant to our customers quest is of little use to us; it may be preventing us from seeing the bigger picture and diverting precious resources.

The danger is that we find ourselves out of loop with respect to our customer’s expectations; the opportunity is first to be part of this conversation and align all our contact points, from the web to our brick and mortar stores, and second, to help our customer have a more productive, interesting, even fun experience with our product.

In conclusion: As marketers we have the opportunity to make a better contribution to our company’s results by using the web more effectively. The web allows us to have a direct, personalized communication with our customers, and in many ways takes us closer to the primary mission for marketing; the other side of the coin is that our customers increasingly expect more relevant, quicker answers, which other media cannot help us provide.

To do this we can take three steps:

  1. Set our own expectations by taking a step back to understand how the web is changing our customer’s experience and expectations and how we can use the web itself to improve them. This will also help us decide on a budget and or marketing mix with other media.
  2. Set our company’s internal expectations by uncovering specific opportunities and their web solutions, and establishing how stakeholders are affected by them.
  3. Understand the resources required for web solutions, including a web project methodology which takes into account the functional differences between the web and other media.