Two strikes and you’re out

The store no longer operates in isolation. Walk down any aisle and you’re likely to see shoppers browsing their smartphone to check they’re getting the best deal, receiving consultative selling from a sales associate with a tablet computer, or paying for goods independently through a self-service checkout. But how efficiently do these technologies work in the bricks-and-mortar environment – and what’s the cost of a poor digital experience to retail stores?

Vodat recently commissioned research among 1,000 consumers for our latest report, Battle of the Bandwidths: Why customers are won and lost on the strength of retail networks, which reveals that many shoppers are feeling let down by the quality of digital services they receive. We found that more than a three quarters of consumers (78% of men and 76% of women) have encountered problems with slow running store technology in the past 12 months.

But even more alarming for retailers is the knock on impact on customer loyalty. Our research shows that while 30% of shoppers will give a brand the benefit of the doubt after experiencing slow running technology issues in-store, they won’t return if it happens a second time.
So how can retailers create a digital-ready store? Their number one priority should be to invest in a network that is business strength. Many organisations are falling into the trap of investing in software and hardware to bridge the online/offline divide, but failing to support this new technology with a robust network, capable of managing the increasing number of customer and staff devices logging on.

Our research has found that slow running networks are impacting the service shoppers are receiving within the store. Nearly all (95%) of the shoppers we surveyed have experienced network issues that forced them to wait up to 30 minutes for the problem to be resolved.

The strain of more technology being added to the bricks-and-mortar environment is already beginning to show. It is not only a matter of providing enough bandwidth capacity to ensure speed and performance; networks must be able to effectively connect all stores and other sites.

It’s clear that technical problems can dramatically affect consumer experiences. But for many organisations their biggest worry is that they don’t have adequately specialised staff to problem solve, either at a network level, or in-store. They know they need to invest in a resilient network and ensure failover systems are in place, but they want a solution that is crisis ready.

Alongside providing training to empower their staff with all the information they need, retail businesses should consider investing in managed data networks to address this problem. It is important to consider what level of support is on offer in the event of a technical problem.  By using a third party provider, retailers can tap in to their telecommunications experience and technological insight, rather than needing experts in-house. This provides access to support to resolve issues quickly and efficiently, as and when it is needed.

As retailers start experimenting with connectivity, both behind the scenes and to power customer engagement, it is vital they invest in solutions that are future-proof. Taking into account bandwidth capacity and management services will help create a network which is able to scale and flex as businesses and estates grow.

To find out more download our report Battle of the Bandwidths: why customers are won and lost on the strength of retail networks

How can retailers drive store sales in this climate of uncertainty?

The retail industry is not keeping pace with the growth of the rest of the economy, as consumers prioritise entertainment and leisure spending. Exacerbating this, the BRC’s recent Retail 2020 report forecasts the combined cost of the Living Wage, apprenticeships and rising business rates will as £14 billion in costs over the next 4 years – approximately 20% of industry profits.

It is clear the industry faces many challenges ahead, and that’s not even taking into account the repercussions of the UK leaving the European Union, the full impact of which we are yet to discover.

However, while the forecast may seem gloomy, we’re seeing a quiet revolution which is repositioning the physical store at the heart of the retail experience. As Helen Dickinson, BRC CEO, describes, ‘what customers are looking for is experience, excitement and theatre, and often the physical environment is a better place to do that’.

So how can retailers optimise the in-store experience to drive sales in this current climate of uncertainty? Here are three strategies being used to great effect on the UK High Street right now:

Create social experiences

James Daunt, MD at Waterstones, has refocused the once troubled bookstore’s efforts on creating a more social retail experience. The retailer’s new Tottenham Court Road flagship store features a bar and a popup cinema in the basements, and many of its shops feature cafés. Daunt calls it an ‘old-fashioned approach to customer interactions’. However, other initiatives such as book clubs and a reservation app show that Waterstones is clearly reinventing the bookstore for the modern age.

With Amazon launching 400 bricks-and-mortar venues in the US, it seems that the store is still central to the future of the bookshop, and Waterstones are taking the physical buying of books to new levels.

Rethink the role of the store

O2’s latest flagships in Manchester and London offer complimentary coffee and working spaces, similar to a model Apple developed for its larger format stores, which included WiFi and seating.

Both O2 and Apple encourage shoppers to spend time in their stores, irrelevant of whether they make purchases. Bridget Lea, head of stores O2, claims that the technology company has ‘ripped up the rule book of a traditional mobile phone shop and set out to create inspiring and creative spaces where people can experience and learn about the possibilities of technology’. O2 want people to spend time in these stores and come back regularly, whatever network they are on.

For technology and telecoms retailers, fostering a community and creating brand awareness is a significant part of the sales strategy.

Tackle the limits of physical space

There has been a lot of noise around bringing technology in-store, and sport retailer Adidas provides a brilliant example of how cutting edge tech can provide an outstanding customer experience and solve the very real retailer problem of limited stock room space.

Adidas’ shops have large digital displays, which add endless aisle capabilities, allowing them brand to display every shoe it offers, beyond what is available in that specific location. By using this technology, Adidas has found it can combine the online and in-store experience for the shopper, answering a real demand from customers to try on the products while having the choice from the full range of stock.

Speak to Vodat’s experts to find out how to increase revenue through technology-enabled customer experiences.

How can retailers make in-store a more flexible shopping environment?

For every positive story in the retail press at the moment, there seems to be a contrasting tale of lesser fortunes. For example, Ocado has announced a first-quarter jump in sales, with average orders increasing nearly 17%, and weekly orders passing a quarter of a million for the first time. Compare this to the wider grocery industry, where profits are falling and sales are stalling, and it’s clear that more needs to be done to keep customers satisfied.  It’s not a just supermarket thing either; only last week, John Lewis revealed a near 10% fall in pre-tax profit.

What makes John Lewis unlike some of the other retail brands to have suffered a dip in sales is that they simultaneously announced a plan to drive recovery. The department store chain is moving their services to 7-day delivery, driven by the “need to reflect how and when our customers are shopping with us” in the words of Managing Director, Andy Street, as “customers increasingly want flexible shopping and delivery times”.

The fact that John Lewis wants flexible shopping as well as delivery is important. The recent success of Ocado would indicate that fulfilment is high up the priority list for consumers, but convenience and seamlessness rank highly also. PWC’s Total Retail Global Report 2016 shows 55% of UK consumers cite convenience as their main attraction to online shopping, compared to just 37% being motivated by price.

Bearing this in mind, retailers need to focus on making the store more flexible and agile, in line with shopper priorities. Click-and-collect has been the first hugely successful cross over service in this area; 60% of consumer report they have used it, and a huge 98% recognise the concept. This illustrates that, despite drops in foot traffic, shopping in-store is still an important channel for most consumers.

So how can retailers create a store environment that not only attracts shoppers, but also meets their expectations and encourages them to spend? PWC asked a sample group of online shoppers how retailers could enhance their physical stores, and better alignment of in-store and online services ranked highly. With this in mind, we would recommend retailers focus on enhancing three core aspects of their bricks-and-mortar business:

  1. Increase communication between staff, and locations, to streamline the customers experience

Poor in-store communication has long been a problem for some retailers, but improving it needs to be a priority. We know that a third of consumers have abandoned a shopping trip because they couldn’t get the information they needed prior to purchase, while 4 in 10 have left a store and sought the item elsewhere. The industry needs to understand that consumers place value on the ability to check online stock quickly (32%) and sales associates with a deep knowledge of the product range (40%).

Alongside providing training to empower their staff with all the information they need, retailers should consider investing in managed data networks to address this problem. Giving sales associates connected devices can improve their access to knowledge about the customer, as well as giving instant access to stock information, store transfers, and transactional capabilities, but these will only run efficiently with a robust supporting network

  1. Improve systems to reduce waiting times

Shoppers, rightly, demand the speediest checkout experience (35%) possible, and retailers know queuing times can have a negative effect on sales. Yet many are working with overloaded systems, which can affect not only payments, customer queries, and processing orders, but also core tasks including inventory. This has huge potential impacts on customer loyalty, with a third (32%) of consumers not returning to stores with slow service, and 1 in 5 being put off buying from that brand over any channel.

In response, retailers should review their systems and consider updating them, or even just increasing bandwidth, to avoid technical downtime.

  1. Invest in the customer across all channels, to deliver a joined up experience

PWC’s report clearly demonstrates that technology is as important in-store as online. A fifth of customers are interested in store WiFi (22%) and most use their mobile phone as an important research tool when wandering the aisles. Alongside this, many shoppers would like to receive mobile promotions in-store, be able to access loyalty programs, and make mobile payments.

With 3 in 10 believing the quickest way to answer queries is to look up the question on their own mobile device, retailers can better facilitate consumer needs by ensuring there is a fast, secure WiFi offering in place, and also providing independent technology experiences such as in-store tablet information points.

To find out more download our report More than words – Why retailers and customers are becoming disconnected by the store network – and how to fix it

Morrisons invests in its staff – but in the right way?

Savvy retailers will already know just how important its staff are to their success. As the faces to their name, it’s essential that the happiness of the workforce is prioritised.

Morrisons is certainly attempting to do this with its latest move, which will see the supermarket chain invest a huge £30 million into facilities for its staff. Not only will this include a décor revamp, but employees will be treated to perks like subsidised coffee.

However, the change that is likely to result in the most enthusiasm from its workers is to wages. Employee benefits and pay is a hot topic right now, as retailers prepare the implement the new National Living Wage in April. And Morrisons is staying ahead of the curve on this one, promising its 90,000 staff a 20% pay rise to £8.20 an hour, more than the expected £7.20.

This is sure to boost staff morale– much needed considering Morrisons has been suffering falling sales for quite some time now. But are the changes actually going to help staff do their jobs any better?

Being the ones who work in the stores every day, store associates are the only ones who can really know what needs improving. Yet, they’re often the ones who retailers listen to the least. For example, new research from Miura Systems claims that UK retail businesses are losing millions of pounds in sales by not listening to staff who’ve spotted a vital need to improve store technology.

Today’s shopper is tech-reliant, so it’s no surprise that this is a major factor in how they rate a store experience. Whether it be a speedy checkout service, or the ability to browse the web as they navigate the shop, consumers expect technology to run seamlessly – and it’s often the staff they’ll blame if it doesn’t.

So, even with a free cup of coffee in hand, it’s unlikely that Morrisons staff will feel very motivated if shop floor processes aren’t optimised.

Miura also revealed that 72% of retail employees think customers are more demanding than ever before, even asking them questions when they’re serving others. With this mind, retailers should be doing all they can to help employees in high-pressure situations. Arming them with tablets so they can check product information and stock availability quickly, perhaps, or placing interactive kiosks in-store to allow shoppers to serve themselves easily when a staff member is unavailable.

A further 80% of retail staff said shoppers put pressure on them to hurry when there is a queue. In busy trading periods this can’t always be avoided, but it can certainly be improved. A speedy payment process is absolutely essential here; as the final stage in their journey, this is the memory most shoppers will take away when they leave. Therefore, retailers must in the most cutting-edge payments technology to keep queues flowing – such as contactless and mobile.

Of course, this is no discredit to what businesses like Morrisons are doing. Rewarding staff with treats is a great way to show appreciation for all their hard work, and happy store associates tend to be more productive. However, this work will do little good to the performance of their business if they’re not armed with the right tools to keep customers happy too.

Argos’ Fast Track delivery is a real traffic driver – if it works in-store

An eyebrow or two was likely raised in the retail industry this week, when Argos announced its new Fast Track delivery service – same-day service any day of the week, provided the order is placed before 10pm.

While it might seem like a reaction to the UK launch of Amazon Prime Now to some, it makes a lot of sense. We’re about to hit the busiest trading period of the year, so taking its delivery services in-house gives Argos the opportunity to scale up workforce and logistics to cope with spikes in activity, such as Black Friday.

And as a multichannel retailer, naturally Argos is also rolling out the service into stores, offering free delivery to the customer’s local outlet – as opposed to the £3.95 charge for home delivery. Again, this is logical, as the cost to fulfil into store is going to be lower than home delivery (if the product isn’t sitting there already), and it takes some of the pressure off fulfilment networks.

Argos’ big money promise for store collectors is that they can collect the item within 60-seconds of being served, as the retailer’s stock management is able show estate-wide location and availability of products.

60 seconds is a big gauntlet to throw down – especially when you consider we’re about to career into the Christmas trading period. Its investment may give Argos greater control over fulfilment of Black Friday orders, but we can see the ‘quick click-and-collect’ promise really catching on as we move through December, and this could cause serious headaches.

Although Argos is taking on 1,000 extra staff for the Christmas period, those personnel are going to need to get up to speed quickly to cope with a potentially even bigger than usual late rush.

Its retail park locations and extended opening hours are a natural magnet for consumers fitting their festive shopping around a busy schedule, especially if they can secure speedy service at no extra charge.

But what seems to the customer like a simple act of picking something up, is reliant on a well-oiled machine at the back end. Argos has the inventory visibility, but it needs to perfect the chain of events between order and collection to deliver on time – and to expectation – in the store environment.

Argos will also need to upskill these temporary staff very quickly on how to work the technology required to complete transactions – and of course they will need a robust network to cope with the increase in order volumes. Customers are going to be twice as grumpy if they have to wait due to technical problems AND they are in a hurry.

As we mentioned in a blog post earlier this year, Argos is doing some really savvy things around technology, which reinforces its credentials as a cutting-edge, customer focused retailer. During this highly pressured trading period, let’s hope its new scheme is optimised for the tidal wave of store pick-ups as well as home deliveries.

Is retail ready for the mobile-obsessed shopper’s rise to power?

123: that’s the number of times the average 17-25 year-old checks their iPhone every single day. To put this into context, that’s 30 times more than 26-35 year-olds, and a whopping 86 times more than those aged 55+, according to the latest Kantar data.

This information is not surprising – we all know the younger generations are glued to their phones most of the time – but it does beg the question as to whether retailers are listening to such statistics?

Right now, it doesn’t matter too much on the whole, because older shoppers are those with the greatest disposable income. Last year, the average 30-49 year-old could enjoy up to £1,400 to spend on goods and services each month, compared to around £100 for the 18-30s.

However, today’s tech-obsessed shoppers are tomorrow’s young professionals, and today’s young professionals are tomorrow’s high flyers. And when their disposable income starts to grow, they’re going to be just as (if not even more) affiliated to their mobile device.

To capture this audience when they reach their most profitable, retailers need to be creating a mobile-first strategy today, which puts in place the foundations for effectively reaching customers via this ever-growing channel.

Some companies already are; Walmart recently announced the launch of an SMS service, which sends shoppers verbal directions through their smartphone to the item they’re trying to find. They can then text the word ‘chat’ to receive one-to-one customer service.

Others are beginning to incorporate mobile into their outbound marketing strategy. Just this week, Pizza Hut launched a number of ‘smart restaurants’ in mainland China, which uses iBeacon technology to beam coupons, special offers and competitions to patrons’ devices.

But there is one absolutely fundamental component to any mobile-based retail and hospitality strategy, and that’s the network. To connect with customers, customers first must be able to connect – and this means having a robust, secure public Wi-Fi connection.

Free Wi-Fi is still not a universal concept in UK retail, so a huge step forward must be taken by the industry if we want to truly engage with shoppers across the devices that have come to dominate their lives.

Until consumers are able to get online in-store in a frictionless manner, retailers are missing an opportunity to build and strengthen relationships with them. This needs to be addressed as a priority, before Millennials grow up to become the country’s biggest spending group, or the chance to drive mobile revenue could slip through companies’ fingers.

Everything is connected

How many times have you wanted to plug in a new device at home and had to go searching for a spare plug point, forcing you to search for an adaptor or an extension lead? By the time you find one, you just want to get connected – concerns about cheap extension leads or incorrect fuse ratings leading to current spikes, go out of the window.

While most domestic networks can cope with device after device being bolted on, the store network has to deal with a host of device, signal, security and availability issues, as retailers add more and more innovations in a bid to improve the customer experience.

The problem is, the network is often the last thing to be considered, on the assumption that it can cope.

It can’t.

In a recent survey we conducted for Vodat International’s report – why retailers and customers are becoming disconnected by the store network – and how to fix it – 1 in 10 customers complained about both the lack of WiFi connection, and the number of sales associates not equipped with the right technology to answer their questions on the shop floor.

In addition, clearly, not all WiFi is the same, as some networks simply do not perform to the same standards as consumers take for granted in their own homes. And for the store, when the network is unavailable, trading can grind to a halt with money lost until it is restored; on a recent visit to a well-known health foods chain store, one of the tills had been down for more than 24 hours – apparently due to a simple network issue.

Smart retailers will create networks on a sliding scale: flagships get the most robust and layered network, while smaller, satellite stores will get a more basic service.

However, more and more retailers are now upgrading all their networks simply to reflect the fact that they are adding mobile payment devices, doing more online business in the store, and trying to give both customers and staff a better digital experience.

These are taking the form of either dual ADSL or 3G/4G for customers who want more bandwidth.  Those wanting business class connections with SLAs are moving to EFM and Ethernet connections.

Ultimately – particularly in an omnichannel world, where the store is the gateway not just to itself, but the retailer’s entire inventory – the network is the store, and as such deserves broad, capable and reliable connectivity.

Amazon’s Prime Day highlights the gap between online and in-store promotions

You have to hand it to Amazon; never one to stand still, in the last couple of weeks alone, the e-tailer has announced a new one-hour fulfilment service in London for Prime customers, along with a one-day flash sale – Prime Day – held today (15th July).

Designed to mimic Black Friday, although it is unlikely to have the same furore initially, it’s a clever way to clear the decks of unwanted stock, stimulate demand in what is a traditionally quiet retail month, and get more customers signed up to its premium delivery service.

Many online rivals will feel a certain degree of tension about Prime Day; yet again, Amazon is using a loss-leading fulfilment strategy to create marketing headlines. However, it’s not just ecommerce that should be concerned.

The increasing frequency with which ecommerce providers are launching flash sales is widening the gap between what promotions look like online, and what they look like in-store.

Of course, the digital world is always going to move quicker than bricks-and-mortar – it’s a lot easier to roll out something virtually – but the faster shoppers have access to discounts or multi-buy deals on a website, the less value for money they feel they are getting in the store.

To combat this perception, retailers need to be drawing on technology to bring real-time capabilities to the store. For example, rather than building marketing campaigns around direct marketing and paper vouchers, they need to be running ‘on the spot’ promotions through shoppers’ mobile devices when they visit the store.

This way, rather than hitting them with special offers when they’re not ready to buy, they can dangle something real to their agenda at that point in time as they browse the aisles. Targeting consumers’ smartphones also enables them to tailor that offering based on their exact location, or their purchasing history, to make the proposition even more relevant.

Don’t forget – if bricks-and-mortar can get the offer right, it has the added advantage of giving shoppers the chance to touch and try a product before they buy. Online can’t do this, which ultimately limits the appeal of some products.

 

6 stories that redefined retail in the first 6 months of 2015

It’s hard to believe we’re already in July; where has the first 6 months of the year disappeared to?!

As we pass the halfway point of 2015, let’s look at some of the retail stories we could not have predicted on New Year’s Day, and the trends that are likely to shape the months ahead.

  1. The demise and (sort of) rise of Tesco

2014 wasn’t a great year for Tesco – and 2015 didn’t start well either, with the company announcing the biggest ever loss in its 96-year history in April. However, once incoming CEO Dave Lewis got his feet settled under the table, things started to improve for the supermarket chain, which defied analyst predictions to post lower-than-expected sales falls in June.

  1. Cheaper by the dozen

There’s just no stopping shoppers’ appetite for low-budget bargains; in May, the Local Data Company announced that Aldi and Lidl are now opening at least 5 UK stores each week – growing at twice the rate of the Big Four supermarkets – while Iceland and Farmfoods are also rapidly increasing their retail footprint.

Poundland is proving another unstoppable force, entering into talks with regulators to acquire fellow discount brand, 99p Stores.

  1. Apple Pay hits the UK

July is an important month for the UK payments industry, as Apple Pay hits shop floors and restaurant tables for the first time. Though consumer awareness of mobile wallets remains conservative, the fact that major corporations such as Boots, Costa, New Look and Nando’s have signed up to the service, indicates that the industry expects great things in the long run.

Read our blog: there’s a lot more retail & hospitality needs to get right before taking a bite out of Apple Pay.

  1. The £1 takeover

A pound can’t get you much these days: 1.3 Mars Bars, half a bottle of shampoo… an entire retail chain?!

That’s exactly what private consortium Retail Acquisitions paid for BHS in March, as Sir Phillip Green offloaded the struggling retail chain from his Arcadia Group.

Despite its name, Retail Acquisitions has a lack of experience in the sector, and its early plans include heavy-handed measures such as the potential closure of BHS’ flagship store on London’s Oxford Street. Watch this space.

  1. Retail delivery take-Uber

Uber takes the title of 2015’s most controversial company to date, with disgruntled taxi drivers in France and the USA protesting against the service within the last few days. However, it’s not just the travel sector that Uber wants to change; it has reportedly joined forces with the likes of Tiffany and Hugo Boss to pilot a luxury goods home delivery service for designer shoppers.

Over time, Uber’s aim is to combine retail fulfilment and passenger services, to bring down the cost of transporting goods – definitely one story to keep an eye on.

  1. Honey, I shrunk the high street

They say size doesn’t matter, but everything seems to be getting smaller in 2015. Supermarket chains have turned their attention to the c-store market, while another traditional big box retailer – Ikea – has announced its first UK foray into small format stores.

Even larger retail space is being divided and conquered; Asda has teamed up with Decathlon to launch a ‘store within a store’, while Argos will be rolling out a number of collection points within larger Sainsbury’s supermarkets.

Which stories have defined your retail year to date? Tweet us @Vodat_Int with your views.

 

Apple Pay: there’s a lot more retail and hospitality needs to get right before taking a bite

Like most technology vendors, we’ve been eagerly awaiting the formalisation of Apple Pay’s launch in the UK – and paid particular interest to which retailers and hospitality vendors will be first to launch the service.

Boots, Dune, JD Sports and New Look are early retail adopters, while Costa, KFC, Pret A Manger, Nando’s and Wagamama are all flagship Apple Pay candidates on the hospitality side.

Of course, whilst this has novelty value at the moment, there is still a consumer adoption mountain for Apple Pay’s advocates to climb. For starters, the function is only available to Apple Watch, iPhone 6 and iPhone 6 Plus users – those devices equipped with NFC technology – so it will take time for earlier technology users to make an upgrade.

Also, the concept of mobile payments is still very young. Don’t forget, it’s only in the last 18-24 months that we’ve seen contactless take off as a convenient transaction method; and that’s using debit cards, a familiar means of paying for goods.

Speaking of contactless, this brings me to another point. The purpose of these emerging payment technologies is to make life quicker and more convenient for the consumer. Giving them the chance to use a niche payment service like Apple Pay is fair enough, but many retailers and hospitality vendors still haven’t perfected their current transactional offering.

In today’s customer-centric society, getting the basics right cannot be underestimated. Adding new payment channels puts greater strain on stores and hospitality venues – devices, data, networks, staff knowledge, customer service etc. Without a solid foundation to build on, businesses risk adding to a house of cards that could collapse at any second.

One thing we do know is that mobile commerce has increased significantly in importance over the past 12 months, so it’s likely that mobile payments will follow suit. While consumers are coming to terms with using their smartphones as a payment device, retailers and hospitality companies have a prime opportunity to refine their existing transactional technology, ahead of Apple Pay’s widespread launch further down the line.

For more payments insights visit our sister site, The Payments Network.