- Category: February 2013 - Multichannel-Marketing
In their 200+ pages report Insights 2013, SapientNitro published a ten page article about a study called the "The Quest for Omnichannel", which we‘ve tried to summarize for your convenience.
Retailers are starting to embed sophisticated interactive tools— from digital displays to interactive exhibits—into the store layout itself. Increasingly, new e-commerce tools are able to directly influence the in-store shopping experience, reshaping the traditional role of the store: What used to be a key step on the path is now optional on the way to the purchase through a digital platform. Retailers are increasingly embedding digital experiences into their physical locations, e.g. mobile apps with built-in scanners to discourage showrooming, inventory visibility and tools to enable cross-channel shopping (e.g., wish list management). Retailers, such as Walmart, are also exploring in-store self-checkout with smartphones.
To measure the degree to which retailers are successfully building links between their digital and physical stores, SapientNitro independently conducted a four-month audit of specialty retailers, evaluating the physical locations of 71 retailers across 7 key criteria, gathering over 500 points of data. The findings were surprising: Of the 71 retailers, only 4 emerged with “baseline” scores. Effectively, in-store digital experiences today are only weakly integrated with in-store goals and activities: The content and functionality - if it exists at all - of these experiences struggle to support in-store goals and activities.
In most stores, digital has a limited effect on the visit. Yet, despite the sad state overall, there were interesting examples that were doing one category very well, such as UNIQLO that had fantastic in- store digital displays and merchandising and Bloomingdale’s great digital brand and merchandising examples in the cosmetics section. JCPenney and Macy’s also offered distinct Levi’s digital touchpoints (the Denim Bar and Levi’s kiosk respectively) and sales associates were enabled with iPads.
The goal of this research was to evaluate the digitization of physical spaces. The study discovered that simply “adding digital” is not the answer for retailers— yet that was an approach too often taken. Retail stores must focus on tools that help sell in-store and extend the visibility of both the customer and the sales associate into the digital space: product reviews, near-infinite inventory and a much broader product assortment. The „Connected Retail“ experience is a fully integrated, digitally enhanced experience that engages the customer in both the virtual and the physical worlds. It enables stores to exploit and extend their unique advantages into the digital realm.
To understand the implications of the research, the study focused on several questions and developed six key findings based on them.
Key finding 1: Digital in-store displays are often poorly executed
When done well, in-store digital branding added tremendous energy and engagement to the retail shopping experience. Unfortunately, most digital experiences suffered from major shortcomings, if they existed at all— 40 of the 71 retailers evaluated had no visible digital displays. Interestingly, many of the best in-store experiences— Chanel’s sleek runway video and Clinique’s iPad skin evaluation— appeared to be created in positive partnerships between vendors or suppliers and retailers. More troubling is that few retailers embraced the interactive element of digital. There was little content focused on product information and utility, and even fewer interactive experiences designed around user goals and actions.
Key finding 2: Poorly planned digital is worse than no digital at all
Digital is a key component of the shopping journey, but retailers that rush to extend digital to the physical store experience won’t win the race. Retailers must plan for the long-term; this includes technology support and sales associate training in how to use the tools and in the value they provide. Staff shouldn’t be surprised when shoppers use smartphones to scan a barcode or interact with a touchscreen. Floor plans have to be redesigned for digital displays and interactive elements.
Key finding 3: Content and software matter, not just the hardware
Great digital signage and interactive digital elements require great material. Nothing emphasized the gap between the promise and the reality better than the lack of software and content to match the hardware. The research found many examples of large-scale runway videos, but there was a lack of other stories. Where were the stories about how a great design came to life? Where was the product information, or even promotional material? There are hundreds of potential stories for strong brands, and digital in-store tools offer the opportunity to tell them. The failure to highlight and feature these stories is a key gap for many retailers. Content needs to be integrated into the development of digital in-store experiences, and content is a powerful tactic within a larger omnichannel strategy. Content must tell a story consistent with the brand.
Key finding 4: The right tools generate positive ROI
One of the key questions to consider, prior to in-store digital investment, is ROI. The cost of installing and supporting these tools is significant, but the question of a positive return is too often unknown. SapientNitro discovered a significant increase in additional in-store sales primarily due to decreased lost sales, the ability to ship- to-home, improved in-store shopping by enabling co-browse with sales associates, and brand contribution. Retailers with a physical presence need to play up the benefit of in-store experiences. Quite simply, sales conversion is much higher in the retail store than anywhere else. It also offers unique advantages such as immersion, direct support of sales associates, immediacy and focus, social elements and the opportunity for fun. It makes sense to invest in the channel that represents more than 90% of most retailers’ sales, although e-commerce continues to grow.
Key finding 5: Retailers should focus on supporting user tasks
Well-designed, task-based tools emerged as being few and far between in the research. The leading examples included wedding registry kiosks, mobile barcode scanners and product explorations, like the skin evaluation and fragrance finder. But much was left on the table. While 43% of brands had some sort of functionality supporting in-store tasks, the majority were digital displays. Even fewer (22%) brands had interactive tools, which support those user tasks. There were none of the digital try-on technologies that various publications have lauded. There were no virtual fitting rooms and some of the experiences that the industry raves about, like iPad kiosks, failed to deliver. There were no future-thinking examples similar to Marks & Spencer’s touchscreen co-browsing experience recently rolled out in Paris, or examples such as LensCrafters’ Magic Mirror, which allows shoppers to quickly try on many new glasses styles while still being able to see the styles properly wearing their own.
Key Finding 6: The omnichannel battle has begun
SapientNitro’s study assessed how well retailers are facilitating cross-channel shopping behaviors, specifically from the web (and mobile web) to the physical store. With the large number of consumers that research online and buy in-store, retailers have a significant opportunity to support these cross-channel purchasers. Across the seven categories evaluated, more retailers were awarded top scores (4 and 5) in Cross-Channel Inventory & Fulfillment than in any other.
The flexibility of cross-channel shipping was also examined, as well as the ability to check store inventory in multiple channels, which is highly relevant to the omnichannel shopper. Other retailers pushed the bar higher to support cross-channel fulfillment, giving shoppers the option to purchase an item online and then pick it up at a nearby store that had the item in stock. Though it does not offer the level of immediacy that in-store pickup provides, some retailers also offered a ship-to-store service, which, when offered for free, might appeal to the large number of shipping fee-averse shoppers.
SapientNitro’s research team found major gaps in the in-store digital experience, demonstrating that substantial pressure is on retailers to meet the connected consumer’s push for a seamless omnichannel experience. And while it is inspiring retailers to consider new ways to extend aisles, create adaptive environments and deliver augmented packaging experiences, the reality is humbling.
Only two stores achieved a “Good” rating in SapientNitro’s Omnichannel Index, which reflects the substantial challenges that remain in developing a strategy for in-store experiences. In the end, no retailer received the top “Excellent” rating, because too few have overcome the underlying challenges of execution: organizational alignment, clear strategy and an actionable roadmap with quick wins.
Achieving an omnichannel digital vision has challenges, but the study found that, as a result, more opportunities remain, too. Thus, the retailer who cracks this nut will receive a disproportionate share of the reward.