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Finding New Directions for Retail: The Ever-Changing Store

Hello, everyone! My name is Anne McClelland, and I am the new director for Cisco’s retail and hospitality sales team in the U.S. I’m excited to have the chance to write for Cisco’s retail blog program, and you’ll be hearing from me regularly sharing some insights, musings, and speculations on trends as well as giving you information about Cisco’s resources for the industry.

One of the interesting discussions that I’m having with our customers right now is about the relationship between eCommerce and the physical store, and how this relationship is being significantly redefined. Retailers are wrestling with how to leverage the store to improve online sales (and vice versa) to create a truly omnichannel buying experience for their customers.

To better align these channels, I’m seeing just how much retailers want to do more with consumer analytics. Retail executives are talking to us about their interest in finding new ways to understand who exactly the shoppers are, who is actually coming in their stores (and who is not), why they are or are not responding to promotions, and when they do buy: what was on their list vs. what was incremental to their planned purchases.  Retailers are also anxious to better understand and leverage the technology at the edge – at the store entrance, on the end-caps, in aisles, on the shelves, and on the goods themselves.

To make this all this magic happen, retailers find they need to upgrade network infrastructures; those who were not ready for all of these potential edge analytics are now finding themselves feeling a bit “behind the times.”  We are hearing that many of our retail and hospitality friends are looking to find creative new ways to light up the aisles and the back office. We are hearing very strategic questions such as, “Do we have too many stores?” “Are we over-invested in inventory and store footprint?” “Is there a way to streamline our operations?”  “Can we better integrate online and brick and mortar to gain efficiencies?”  Many retailers are integrating online delivery and returns to stores, as well as testing new models such as third-party package-delivery firms.  I’ll explore these topics in future blogs.

Meanwhile in the store itself, where the rubber meets the road, how are retailers differentiating today?  Where are the crowds of the people congregating?  Why are they there?  I think of the Apple store in our local mall, I think of the Disney store in Times Square. These stores are literally jammed.  Why is this?  Why is Apple’s store so jammed?  What has the Disney store done to evolve to drive crowds and new business concepts?

Innovation is key: Disney has made a business model around glamorizing the Disney princesses for their customers running “The Disney Princess Store,” including new services, videos, games, products.  They have opened up a mega-category that is a logical extension of what their customers love to do… dress up.  Why aren’t the department stores similarly jammed?  It’s all about innovation; it’s all about thinking deeply about the consumer; it’s about driving brand association and attraction; and it’s about executing on the “theater of retail.”

We’ll be joining Cisco’s partner NCR at the Synergy User Conference, being held June 22-25. I’ll be speaking there on the “Internet of Things: Retail Without Boundaries” and discussing how seemingly futuristic technologies are changing the way retailers interact with their customers – I hope to see you there!

I look forward to getting to know you in person and through this blog in the coming months. In the meantime, I invite you to extend your knowledge by attending our free summer retail webcasts:

  • June 16: “Delivering Successful Store-of-the-Future Experiences,” held at 10:00-11:00 am PT/1:00-2:00 pm ET, with Forrester Research’s Adam Silverman on improving store infrastructures and bandwidth. Register today.
  • July 14: “Make Your Data Meaningful: New Strategies for In-Store Shopper Experiences,” held at 10:00-11:00 am PT/1:00-2:00 pm ET, on new analytics capabilities for retail environments. Register today.

Feel free to connect with me at annmccle@cisco.com.

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Achieving a 3D View of Your Shoppers

If every click made by a shopper on an online store can be considered valuable information, surely every step taken by a shopper in a physical store is also a similar wealth of data. While clearly this is valuable input that many stores would like to have, the means to collect and process it is not available everywhere. This fact has resulted in a significant gap in the information available in an online as opposed to a physical store.

Can the power of Internet of Everything and real-time analytics bridge this gap? Can it help capture the shopper behaviors using sensors in the store? Can real-time analytics at the edge transform this data into shopper insights?

Yes indeed. While we see the need for granular and enhanced analytics, we clearly see that many physical store retailers are yet to start their journey in capturing such shopper insights. Let’s take a 3D view of your shoppers.

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You need to gather:

Door Traffic: This is the total traffic coming into your store. This metric is very valuable for understanding loyalty, conversion, staffing needs, and much more use cases as highlighted in the Cisco white paper on Retail Analytics. By filtering new and repeat visitors, we can understand your shopper’s loyalty – but when we bring together this data with point of sale data, it helps us to understand conversion. When we correlate this with marketing campaigns, it helps you get a sense of your store’s and campaign’s effectiveness.

Dwell Time: This is the time that your shoppers are spending in the store and in different areas of the store. It highlights the engagement of shoppers with your products and displays. For example, this metric can be used to understand products that are getting more attention from your shoppers, or can be used to determine more advanced metrics, such as balk rates and predicted wait times.

Demographics: This is the breakdown of segments among your shoppers. The granularity of this data can vary and can provide insights for customer segmentation and the ever changing dynamics of your shoppers, helping you to match shopper preferences and targeted promotions.

While there are no questions about the value of these data to the retailers, achieving it is currently a challenge due to the combination of technologies and sensors required to capture them precisely, effectively, and economically.

The Cisco Connected Analytics for Retail solution focuses on making this journey easier for retailers to capture the data and derive insights. Leveraging Wi-Fi, video, social, PoS, and other sensor data, and bringing together the power of real-time edge analytics, the solution provides retailers a 3D view of their shoppers.

If you are attending Cisco Live 2015 at San Diego, come by to check out the Connected Analytics for Retail solution demo in the World of Solutions pavilion. I look forward to seeing you there!

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Why Your In-Store Web, Mobile, and Video Experiences Matter

The lines between offline and online experiences are blurring. Customers no longer go online, they are online 24/7, and that includes inside your stores. In fact according to recent Google research, 89% of smartphone users leverage their smartphones while shopping in stores. And close to 70% of those used it to look at the retailer’s site and 21% look at apps.

Furthermore, according to Laura Wade-Gery, executive director of Multi-channel eCommerce for Marks & Spencer, “Shoppers who shop on our website as well as in our stores spend four times as much; throw smartphones into the mix and they spend eight times as much.” Enabling web, mobile, and video experiences in the store represents a huge opportunity – whether it is interactive, connected digital signage; Wi-Fi; employee-focused endless aisle apps; and so on.

Yet the majority of our customers face the reality that digital innovation is overwhelming their enterprise network. Everything from web apps, HD video, software updates, mobile apps, and even digital signage are traversing the network eating up valuable bandwidth. In addition, most retailers subscribe to doing more with less – particularly when it comes to IT – so upgrading enterprise network bandwidth across every store every few years is often just not viable, both from a budget and agility perspective. That is not to mention that a lot of Cisco customers can’t upgrade their bandwidth due to store location even if they wanted to.

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But bandwidth constrained enterprise networks are only one side of the story. Latency is the other, whether caused by distance or amplified by enterprise network architectures such as backhauling Internet traffic over the WAN through the datacenter and out to the Internet. Currently, the vast majority of retailers use this network topology for store Internet access.

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And as we all know, high latency is particularly detrimental to web application performance.

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Just look at the difference in latency and bandwidth between in-store and residential Wi-Fi. In fact, latency for in-store Wi-Fi is higher than latency for LTE.

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The bottom line is that congested, high-latency, low bandwidth enterprise networks result in slow HTTP applications, video, and software updates.

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And we all know that video or apps that are slow or not working properly are bad for business. There has been plenty of research highlighting the fact that as web apps get slower, conversion rates decrease, abandonment rates increase, and employee productivity plummets.

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In other words, slow apps – whether inside or outside the store – equals unhappy customers and unproductive employees. The answer to this problem? Retailers need to focus on accelerating HTTP/S applications, video and software updates while maximizing enterprise network bandwidth to ensure fast, high-quality experiences to all of your end users.

To learn more, be sure to register to join us on June 16 for a free one-hour webcast.

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Analytics Opens a Window into Each Shopper’s Journey

The key to retail today is customer understanding —where each customer stands on his or her personal shopping journey, whether in-store or out. Retailers must “know” each shopper as never before. And they must offer the kinds of contextual, personally relevant experiences that will optimize their merchandise mix, create faster inventory turns, and drive greater customer engagement.

Yet, as a recent Cisco study revealed, offline retailers – or retailers that combine on and offline capabilities – have their own unique advantages – if they step up to the opportunities of the Internet of Everything (IoE) economy. By blending the benefits of the physical store — such as the ability to touch, compare, and try on products — with the benefits of the virtual world, retailers can create a new value proposition that can’t be matched by their online-only competitors. In the process, they not only drive their own industry’s disruption but challenge for market leadership.

Learn more by reading Mala Anand’s blog here.

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A Retail Revolution: The Digital Generation Is Changing the Way We Work, Live, Play, Learn, and Shop

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.

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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.

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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.

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