Retailers once had a pretty clear idea of who shopped where and how they did it. After all, there were not that many options available for shoppers. Consumers would see an ad or peruse a catalog, and then visit the physical store with the hope that their preferred item was in stock.
These days, retailers understand there is an entirely new kind of shopper. Indeed, since the advent of e-commerce, retail complexity has increased exponentially, and today’s digital consumer navigates a wide range of channels and potential shopping journeys.
As a recent Cisco survey of retail trends discovered, e-commerce has added about 40 possible shopping options for a typical shopper. With the rise of the Internet of Everything (IoE) — the explosion in networked connections of people process, data, and things — potential shopping journeys will expand to 800 and beyond. Some of the new options coming into play could include mobile devices equipped for live Web engagements, checkout optimization, mobile payments, wearables, augmented reality, and drone delivery.
The variety of journeys available to shoppers is growing exponentially.
Source: Cisco Consulting Services, 2015
This sweeping digital transformation has dramatically altered the shopping behaviors of consumers, who now demand experiences that are contextual and hyper-relevant (enabling consumers to receive what they want, when and how they want it), whether in-store or out. As a result, retailers are reinventing their business models and rethinking much of what they once knew, including traditional customer segmentation.
Video: IoE in Retail: Hyper-Relevance through Consumer Context
Increasingly, we are entering a period that has been referred to as “post-demographic consumerism” in which consumption patterns are no longer defined by traditional demographic segments such as age, gender, location, income, family status, and the like. This presents a significant challenge to retailers already grappling with growing complexity in their operations.
For example, Cisco’s research reveals that Gen Y is far from monolithic. On one hand, Gen Y continues to accelerate the shift to online channels (faster than any other group): although 34 percent make more than half of all purchases online as they seek convenience and greater access to information, 54 percent would shop only in stores for the next month if they had to make a choice. Moreover, just as the physical store remains important to Gen Y, many seniors are shopping online or with mobile devices.
In short, consumer segments are increasingly fragmented and ephemeral. The sheer number of potential shopping journeys is growing exponentially, and the change is occurring faster than ever before. For an individual shopper, however, the journeys are also dynamic. Consumers are constantly shifting to other journeys as new innovations emerge —
and faster than retailers can respond. Compounding this, the velocity of innovation is increasing as IoE dissolves traditional barriers (for example, through the low cost of app creation, the Kickstarter-style funding model, and so forth).
Since every retailer is unique, and there is enormous variation across categories, each retailer must define its own target segments, and then be prepared for the rapid evolution of new “microsegments.” Cisco is working with retailers to define target segments and prepare for the evolution of new ones.
To enable the customer outcomes that will determine the winners of the IoE era, most retailers understand that they need to know their customers as never before and, critically, possess the requisite business agility to adapt. Fortunately, IoE and consumer analytics technology provide the platform to truly understand, engage and respond to their customer.
Analytics is a key competitive frontier in the IoE era, enabling retailers to provide consumer experiences, offers, and interactions that are contextual, relevant, and timely. Moreover, analytics empowers the retailer to respond dynamically to constantly changing customer behavior.
To succeed in this area, retailers need a technology strategy that captures data at the “edge” of the network — from mobile devices, sensors, video cameras, and the like — and analyzes it locally, in real time, to respond to fast-moving opportunities. By leveraging analytics and other key elements of IoE such as video and mobility, retailers can drive greater efficiency in each customer journey, offer real-time savings, and create a more relevant customer engagement.
As shopper segmentation blurs, analytics is critical to understanding the new digital customer. Old or young, rich or poor, all customers have value and want to interact with retailers in new, hyper-relevant ways. IoE-driven solutions are the way to do it.
Tags: Anabelle Pinto, analytics, CCS, Cisco, Cisco Consulting Services, connected retail, data, digital, hyper-relevance, innovation, Internet of Everything, internet of things, IoE, IoT, National Retail Federation, NRF, retail, shopping
“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
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
“The value that we are receiving from Cisco StadiumVision far outweighs just a financial investment. We can easily justify it financially, but the value to our brand identity is immeasurable. We can demonstrate to sponsors and fans that they gain a far better experience, and there is not a more effective way to do it.”
David Peart, Senior Vice President of Sales and Service, CONSOL Energy Center
As many sports organizations are finding out today, technology is a strategic investment, not an expense. The return on that investment can be immediate, powerful, and often the dividends end up reshaping the approach to fan engagement, sales, advertising and sponsorship.
The state-of-the-art CONSOL Energy Center, which opened in 2010, is home to the Pittsburgh Penguins and approximately 170 ticketed events per year. In the planning and building process, the venue decided to install a Cisco Connected Stadium platform to operate Cisco StadiumVision, an innovative digital video and content distribution system that centrally controls and delivers targeted high-definition video and highly relevant digital content to guests. The venue put 781 HD screens and 44 digital menu boards throughout its 18,000+ seat venue, and over the course of the last year the system has paid incredible dividends.
Today the Penguins are reporting that the team and facility have seen a 200% increase in the number of advertisers and a 300% increase in concourse advertising and sponsorship revenues – all directly related to StadiumVision.
Perhaps even more valuable is that the Penguins young, highly connected fan base has had a more memorable and impactful brand experience with 80 percent of fans retaining the digital content they viewed.
“We understood the capabilities of Cisco StadiumVision when it was purchased, but it completely changed our way of thinking to ‘now what else can we do with it?’ The more interactive we become with the StadiumVision system, the more often new things come to mind. Advertising is a moving target, and the Cisco StadiumVision system gives us the ability to innovate at a more rapid pace over time.”
Erik Watts, Senior Director, Technology, Pittsburgh Penguins
What a powerful statement – Cisco technology fostering a wellspring of new ideas and creative capabilities…it orchestrated a shift in the mindset of the organization, thereby setting them on a new course to greater profitability and opportunity.
Later this week, keep a look out for a follow-up post and video on another marquee venue here in the United States seeing incredible returns from this Cisco Sports & Entertainment technology consultation and deployment.
As David Holland said in his last post we have reached a tipping point.
Tags: Anabelle Pinto, Cisco Sports & Entertaiment, Cisco stadiumvision, David Holland, NHL, Pittsburgh Penguins