“Mike” may be an avid golfer who enjoys meandering through the sporting goods section of his local retailer. But he would be a very different shopper the morning his plumbing fails and threatens to flood his basement. In such a context, efficiency rules, and it is critical for the retailer to speed his shopping journey — from product research to fast checkout and payment. Friendly, by-name greetings offering prompts for new golf products on Mike’s smartphone would seem irrelevant at best, and intrusive at worst.
Checkout optimization, in-store sensors, augmented-reality solutions, and real-time analytics at the “edge” of the network are just a few of the capabilities that could give the retailer a clear picture of Mike’s shopping habits in that particular context — time, place, and situation — while helping Mike meet his plumbing crisis in a timely and efficient manner.
In effect, Mike is one customer, but he can be many different shoppers. And retailers need to know them all. Technology — specifically Internet of Everything (IoE) solutions that connect people, process, data, and things — is the way to do it.
To better illuminate the competitive dynamics and opportunities for retailers, Cisco this week shared its fifth annual retail consumer survey. Released at the National Retail Federation (NRF) “Big Show” in New York, the study includes a survey of 1240 consumer respondents from the United States and United Kingdom. Later this year, Cisco will release the complete global findings from 6,000 respondents across 10 countries.
At NRF, we also met with retailers from around the world, who shared their successes and challenges. Technology, of course, can be a headache for retailers. From disruptive innovations to rapidly changing customer behaviors, today’s retailers are challenged on multiple fronts. As the Cisco study found, however, IoE-enabled solutions offer retailers an opportunity to provide their customers with hyper-relevant experiences that blend the best of online shopping with the advantages of the in-store experience.
The key is to gain insight into the real-time nuances and context of the many shopping journeys available to consumers. That requires investments in the right technology. But how can retailers avoid the kinds of investments that have not paid off in the past?
In the Cisco study, we tested 19 IoE-enabled shopping experiences, spanning all stages of the shopping journey and addressing many maturing digital enablers, including video, mobility, and analytics. Overall, consumers indicated that they are very interested in using these applications to get more value. The table below illustrates our respondents’ interest level in the 19 individual concept tests, along with the financial opportunity from each of three value proposition categories: efficiency, savings, and engagement. Our economic analysis revealed that roughly two-thirds of the total potential opportunity (or $208 million for an illustrative retailer with $20 billion in annual revenue) comes from applications that deliver greater efficiency for consumers.
In the United States, disruptive innovators (e.g., Groupon, LivingSocial, Gilt) have successfully targeted consumer savings, which has served to exacerbate margin compression for retailers in some categories. We are now exploring these trends in Europe, Asia Pacific, and Latin America. We find that most incumbent retailers, by contrast, are investing heavily in solutions that engage consumers at all points of their shopping journey, including bringing them into the store and cross-selling and up-selling to them (indeed, this is the underlying strategy of today’s discount wars).
Consumers have always been preoccupied with savings. So it is no surprise that savings remain the area of most interest to our survey respondents. Efficiency, however, is a close second in terms of interest. When asked about the areas where they would like to see improvements, 39 percent of our respondents identified the process of selecting and purchasing goods, showing a need for greater ease and efficiency. By contrast, only 13 percent sought improvements that would create a more personalized shopping experience.
In this year’s survey, consumers made it clear that experiences must be efficient, contextual (that is, reflecting a shopper’s individual situation, real-time environment, history, and so forth), relevant to real-time needs, and easy in which to participate. In the retail environment, such situational awareness is essential to creating a better customer experience. Retailers must increase the value to the consumer throughout the shopping journey, demonstrably providing a combination of efficiency, savings, and engagement.
By exploring these solutions today, retailers can begin to realize a new level of innovation and competitive dynamism. And customers like Mike can look forward to getting their plumbing fixed ASAP (and maybe even return to the store later that day to try out some of those new golf products).
Tags: Anabelle Pinto, analytics, Cisco, Cisco Consulting Services, connected retail, consumer, customer experience, digital, hyper-relevance, Internet of Everything, IoE, National Retail Federation, NRF, privacy, retail, shopping, smart retail, trust