This is the type of post that gets me excited. Today, I’m happy to feature a special customer guest author: Andrew vonNagy, CCIE #28298 (Wireless), and currently Technical Architect for a Fortune 50 retail company. Many of you may know Andrew from his active blog, Revolution Wi-Fi, or his Twitter feed: @revolutionwifi. Stay with us over the next two weeks as Andrew offers his take on the intersection of Retail and the Wireless LAN industry.
Retail Wi-Fi networks have long been dominated by inventory management applications and services that enabled a more productive workforce and leaner operations. However, brick-and-mortar retail is being disrupted due to the explosive growth from pure e-commerce competitors offering [often] lower prices and a more personalized shopping experience. In addition, the e-commerce sales channel offers deeper product information, community reviews, and greater levels of localization and customization that resonate with consumers.
Brick and mortar retail must adapt to compete in this new environment. A key component of this adaptation is delivering new IT solutions while leveraging the physical assets of the storefront, mixing the benefits of in-store product “touch-and-feel” with the personalization of e-commerce shopping. Merging these two worlds together will create an enhanced shopping experience through the use of mobile Internet devices, often connected through Wi-Fi networks.
This week, we will cover the first of 5 trends driving Wi-Fi growth and new capabilities in retail organizations:
Trend 1: Consumer Interaction and Business Analytics
Physical retailers have the most influence over consumer purchase decisions in the store, when they are standing in front of the product they are weighing whether or not to buy. Historically, this has been through in-aisle marketing and signage. However, customers are increasingly equipped with mobile Internet access and turning to external sources of information in real-time while within a retail store. This has been coined the emergence of the “smart shopper”. These external sources of information are much more comprehensive than what the retailer can provide through traditional in-aisle marketing and signage, and this leaves the physical retailer at a big disadvantage.
Physical retailers are turning to multi-channel initiatives to enable in-aisle consumer interaction on mobile devices. Multi-channel is the broad alignment of in-store, online, and mobile retail channels into a cohesive experience and set of services for the consumer. It can also include mail-order, catalog, and telephone channels as well. This is accomplished through cross channel integration of back-end systems for product information, inventory, pricing, promotions, order fulfillment, and unified CRM (customer relationship management) systems for a complete view of the customer across all channels. It provides conveniences and benefits for the consumer such as consistent pricing, ship-to-store, ship-to-home, expanded assortment, unified checkout (in-store and online product), list and gift/wedding registry management, and more.
Guest Wi-Fi is a key enabler of in-store multi-channel initiatives to interaction with consumers on mobile devices. It enables the retailer to provide guests with an avenue for Internet access, product research, and broader access to the retailer’s website and mobile applications, which can often be richer and more personalized than what can be offered in-store. Cellular connections can also provide this access, but coverage is typically poor inside most retail stores. Wi-Fi is preferred over cellular because it is owned and operated by the retailer, and provides reporting insight into consumer behavior and rich business analytics including mobile platform usage, web destinations, and product research. These analytics allow retailers to better understand consumer desires, tailor in-store product assortments, focus marketing campaigns by location, personalize marketing and promotions to individual shoppers, and quickly identify changing consumer and market trends to allow faster adaptation.
Mobile payment and digital wallets can also be provided to allow consumers flexibility in payment options at point of sale. In lieu of a large hardware investment by retailers in touch-to-pay (contactless payment) solutions at the register, mobile payments can leverage mobile applications and guest Wi-Fi data connections to provide similar services at a fraction of the cost. And digital wallet solutions allow retailers to maintain “wallet share” for brand loyalty cards. How many times have you signed up for a retailers rewards card, only to find your wallet too thick, remove cards to save space, and end up without the card when making a purchase?
Imagine walking into a store, automatically connecting to Wi-Fi to easily research products, pricing, and availability, receiving personalized shopping offers on your phone tailored to your shopping history (if you’re a loyalty customer) as well as tailored to your location within the store (leveraging location based services). Or perhaps you’ve scanned a 2D/3D barcode on a product to retrieve additional information on the website and being presented with a coupon in real-time for that very product. Retailers are betting that consumers will be interested in these types of services, which may sound invasive to privacy today, but may become normal in the not-too-distant future. Retailers will need to strike the appropriate balance between privacy concerns, use of consumer opt-in (not opt-out), appropriate use of data, and appropriate levels of consumer interaction to be successful.
There is often a fear that allowing competitive research that will negatively affect retail sales. However, consumer research and analyst predictions have shown that retailers do not need to have the lowest price as long as they are competitively priced or convenient:
Deloitte predicts that in 2011, 25 percent of North American big box and anchor tenant retailers will begin offering free in-store Wi-Fi access to shoppers… [and] cellular signals can be highly variable: weak signals and low speeds are common, especially deep inside a store. Without Wi-Fi, the in-store online experience is often frustrating and dissatisfying… When shoppers do in-store online comparison shopping, preliminary and anecdotal evidence suggests the likelihood of purchasing appears to go up, not down. A common reason why shoppers do not make a purchase is that they are paralyzed by the lack of knowledge: “is this item available elsewhere for a much better price?” When an online search reveals that competitor’s prices are similar, many shoppers proceed with the purchase at the store they are in, rather than drive around just to save a few dollars.
Digital interaction with the consumer through mobile platforms enables retailers to remain competitive and continue to influence purchase decisions where they matter most, in-store. Multi-channel initiatives blend the personalization and convenience of shopping online with the touch and feel of physical products in the store; it allows the retailer to leverage their physical assets most effectively. Wi-Fi will be at the epicenter of this change.
Come back next Thursday for a look into the next 2 retail trends changing the Wi-Fi industry: empowering sales associates and creating in-store digital experiences. Have thoughts of your own? Comment right here or send us a tweet: @Cisco_Mobility and @revolutionwifi.