Positioning paper_US_2015

CONNECTING MEDIA, TECHNOLOGY AND
BRANDS TO TOMORROW’S CONSUMER
The retail industry is undergoing a dramatic
shift - one punctuated by many opportunities
and challenges. Technology is having a
profound impact on the way consumers engage
with brands... and this impact is accelerating.
Seismic changes are significantly affecting
brands as they move through the retail system,
and raise some vitally critical questions.
What’s Going On?
Jose Avalos
Worldwide Director, Visual Retail,
Intel Corporation
Barry Frey
President and CEO,
Digital Place-Based Advertising
Association (DPAA)
David Roth
CEO, The Store WPP, EMEA and Asia
Positioning Paper 2015
Today’s consumers are seeking closer relationships with
brands, demanding more interaction, richer experiences,
more personalization, customization and increased
transparency. Consumers expect their relationship with
brands to be relevant and 1:1.
Some progress is being made by store and network
operators to help brands engage with consumers but
more needs to be done to make the consumer experience
relevant, personal, measured and secure – and in essentially
real time.
In the good old days (as recently as five years ago!) the
formula was simple: create a retail concept, test it out,
eliminate all unnecessary costs, and then roll it out as fast
and in as many locations as possible. Economics required
increased volume and an increasing number of outlets.
Today, scaling no longer provides the advantage it once
did. You can start up an online business and use Amazon
cloud at a fraction of the cost it took just a few years ago.
At the same time, stores are running out of ideas. In this
still traditional model, retailers spend much time looking
at the back-end, supply chain and costs, rather than
thinking about the front-end, experience, and how to ignite
customer sales.
The old retail model is broken.
1
Why is this Happening?
L
ook no further than
the Gen Y/Millennials.
There are two billion Gen
Y’s globally between the
ages of 18-34, and they
will represent $2.5 trillion
in spending by 2020. Per
Jamie Gutfreund, CMO
at Deep Focus, “They
represent 50% of the
global workforce now, but
75% in about 10 years.”
I watch on TV. If I spend money on a
product, I’m voting for that company,
and I want to be treated the same way
as if I bought stock in that company.”
Led by Gen Y, consumers now expect
only the smallest of differences between
online and offline; the experiences
should match.
Consumers also want true omni-channel
experiences where the customer is in the
center of the engagement. This is easy
to say but very difficult to deliver. Instore technology architectures are built
in silos. And it’s impossible to deliver
omni-channel if an organization isn’t
organized as omni-channel. The path
to purchase has become anything but
linear. And purchase is not the end, but
rather the beginning of another phase.
Per Dick Cantwell, Vice President,
Cisco Consulting Services, “the number
one reason companies are failing or
succeeding was speed of innovation.
Only 24% of companies on Fortune 100
are there from 25 years ago. They used
innovation to drive shareholder value.”
It used to be that when you bought
something, you bought it as a passive
consumer. You went to a store, got
the best deal you could, and then
went home. Those days are gone. Per
Gutfreund, “Consumers are now active
participants. Not just talking about
customer service, but also wanting
brands to talk to them via social media.
They want companies to speak with
them the way they speak to investors.
Social currency is about…I am what I
share, I am what I buy, and I am what
Positioning Paper 2015
But technology for the sake of
technology is not innovation – we have
to connect to the shopper. Just throwing
a coffee shop into a store to “create an
experience” is not innovation. A wireless
provider in London put an experience
store on Regent Street, opposite the
Apple store. The provider had all the
“things” for an experience store –
experts, café, etc. Yet they created
nothing that connected it all together for
consumers; there was nothing to entice
repeat visits.
2
So What’s the Path to Success?
P
ersonalization is king.
Data fusion, real time
decision making, knowing
shoppers, creating a
conversation with shoppers
and being predictive have
become absolutely critical.
Data-driven insight aligned
with the traditional and
often forgotten skill of the
best in breed merchant is
now the differentiator.
Some of this is happening already
– some retailers are surrounding
the consumer with sensors, RFIDs,
cameras, infrared, etc.…to capture
traffic intelligence in real-time. They
are meshing such data with other
data sources, including transactional,
behavioral, environmental and back-end
management systems.
They are using all this as a platform to
allow them to push decision-making
closer to the consumer; to enable
satisfying experiences that are relevant
and personal; to drive operational
excellence in the store; to free up labor
to be more customer facing and give
Positioning Paper 2015
them a better experience in ways that
are meaningful to them as individuals.
The gap is widening, though, between
leaders and laggards. The latter are
stuck in the old model of simple
analytics.
People consume different media at
different times of the day (mobile,
desktop, tablet, digital place based,
television, etc) so brands and retailers
need to interact with consumers across
all those devices, at all times. Retailers
and brands also need to be able to use
data to interact with the customer of
one, giving their customers meaningful
and individual experiences.
One of the biggest challenges facing
retailers and digital out of home
operators today is the fact that the
existing IT infrastructure, for the most
part, has been developed in-house
and based on proprietary solutions.
The retail IT infrastructures will need to
morph again in a way that is based on
standard and broad selection of offthe-shelf tools, and support the delivery
of next generation experiences for the
next 10-15 years. The infrastructure will
need to support elongated shopping
experiences, which begin before the
shopper sets foot in the store and
continue post-visit. It will also have to
support real-time analytics enabled by
in-store technologies and other types
of sensors. The infrastructure will have
to integrate seamlessly with every
technology touch point in the store to
make every experience seamless and
relevant, and with the multiplicity of
devices that consumers bring into the
stores.
3
Who Is Leading The Way?
A
ll over the world,
we are witnessing
unprecedented innovations
made possible by technology.
IKEA in Japan created rooms in train
cars to create uniquely comfortable
experiences. In Asia, the paper menu
is fast disappearing, moving to tablets
and adding more focus on engagement
and experience. Adidas is scaling their
“Virtual Footwear Wall” in their stores,
putting many of their shoes at shoppers’
fingertips in a futuristic mash-up of
e-commerce and the mall. Lego has
developed the Digital Box, a leading
augmented reality experience. Costa
Coffee, the UK’s largest coffeehouse
chain and the second largest in the world,
is re-inventing self-serve coffee kiosks.
With a sensor that sees an approaching
customer, an HD video screen that sets
the mood and a coffee fragrance that
is emitted from the device, they have
created an intelligent coffee machine
that grinds to customer preference and
satisfaction. And then there’s Argos,
moving from a pen/paper catalog
showroom business to new experimental
stores… a total digital experience. They
didn’t change the core proposition, just
the experience. That’s key.
Digital place based advertising is being
used by brands to deliver relevant,
persuasive connections with consumers.
Pilot TV, for example, which is Taiwan’s
largest digital signage media operator,
has 6,000 screens and more than four
million viewers daily. Over half of those
installations are audience aware, remotely
managed, secure and integrated as
part of a smart IT infrastructure that
delivers engaging programming, targeted
advertisements, real-time content
customizations and relevant and personal
viewing experiences. Per Mac Ma, General
Manager of Pilot TV, “the investment that
we have made in the IT infrastructure
including intelligent screens is what’s
driving our 28% annual revenue growth
from media operations.”
Luxottica, a leader in premium fashion,
luxury and sports eyewear, with 7,000
retail stores worldwide and iconic brands
such as Ray Ban, Oakley and Persol, has
been making strategic investments to
transform their IT infrastructure to enable
them to deliver rich and relevant in-store
customer experiences, which in turn
help increase revenue, drive traffic and
conversion, and create a unique brand
experience. Per Tom Schuetz, Senior
VP and CTO Americas/Asia Pacific, “the
future of retail is all about the experience
with the brand. Our use of in-store
tablets for personalization of frames and
engaging digital signage has made our instore experience engaging and consistent
with the customer’s online experience. As
we move to an increased segmentation/
personalization capability model through
the use of CRM and analytics, the
customer will be engaged both pre- and
post-purchase knowing that Luxottica
is caring for them, their preferences,
their eye care, and providing personally
relevant information and communicating
directly to them when they want, and
how they want”.
continued
Positioning Paper 2015
4
Continued from page 4
FITCH, which is a leading global retail
and brand consultancy firm, with an
integrated offer of strategy, design
and implementation, has been at the
forefront of designing the future of
stores. Per Tim Greengalgh, Chairman,
“We worked with Asian Paints, India’s
largest commercial paint manufacturer,
to change their brand perception to be
seen as the home and décor experts in
Asia. We created the ‘Color with Asian
Paints’ experience, an inspirational and
educational color experience that offers
a highly personalized color solution for
each and every customer. Guests interact
and experience what color can do for
their homes without buying a single pot
of paint.
Using RFID ‘color cards,’ guests collect
their ideas and experiences, which are
downloaded and incorporated in their
own personalized take-home color
magazine. On the back wall of the store,
the full range of Asian Paints colors is
displayed on small cubes. After guests
choose their preferred combination,
guests are guided by a Color Consultant
to visualize their ideas in a virtual room
on screen – spin the Color 3D cubes to
fine tune the colors; one way to darken;
the other and it lightens.” The result: the
Color Store experience has fundamentally
changed the brand of Asian Paints. They
are now the brand and décor experts in
India. Sales increased by 35% by selling
lots of tins of paint in their adjacent
dealer stores.
Positioning Paper 2015
Adspace Digital Mall Network which has
over 3600 screens in U.S malls delivers
to retailers “real time advertising” using
product visuals and information on the
screens…like a digital catalog. The same
messages are also displayed on the
network’s mobile app (Clip’d) providing
shoppers mall-specific product and sale
information. In addition, Adspace directly
feeds the retailer’s Instagram post of
product or sale information also on to the
mall screens.
Blue Bite, the NYC based mobile
solutions provider for the digital place
based and retail industries, along with
SMARTRAC, developer and supplier of
RFID and NFC transponders and inlays,
add a digital layer to everyday objects
in the real-world. From embedding
NFC into sneakers for one of the largest
athletic shoe manufacturers, to enabling
check-ins and customer loyalty at major
retailers, they allow users to communicate
with objects, and objects to communicate
with each other. In addition to the billions
of connected devices that consumers
are using from smartphones to cars and
tvs, the ability to enable seemingly “unconnected” objects through NFC and
RFID will introduce exponentially more
touchpoints into the ecosystem. This
will enable consumers to have a richer
experience with the objects around them
as well as give brands and retailers a
much more holistic view of how users are
engaging with their merchandise before,
during and after the sales process.
5
What’s The Bottom Line?
T
he bottom line is
this: The future of
retail and digital out of
home is all about truly
understanding and engaging
with a rapidly changing
consumer, delivering
satisfying, rewarding and
value-creating experiences
wherever and whenever the
consumer wants to buy.
We need to enable infrastructure
to deliver such 1:1 and seamless
experiences. And we need to measure
the impact more effectively and
quantifiably, i.e., audience count,
demographic, dwell, impact.
Successful online retailers have, for
some time, been investing in capabilities
to understand their customers’ digital
Positioning Paper 2015
journey, and in technologies for
delivering easy, more personalized
online experiences. Consumers
now expect that the ease and
personalization they experience in the
online world will be translated to the
physical retail environment as well.
This is challenging to deliver, but it
is absolutely essential in order to be
relevant to consumers in the future.
The pace of innovation in bricks and
mortar environments will need to
be as fast to execute as it is in the
online world. Realistically, this can’t
happen at once but key to successful
step-by-step delivery will be creating
the right IT base and infrastructure.
This will enable and support the
introduction of customer-facing
technologies that deliver shopping
experiences that are relevant for each
and every customer; that are quick
and easy to introduce and intuitively
responsive to the ever-changing
expectations of digital-savvy
consumers.
6
To get ahead of the field:
The Digital Place Based Advertising Association represents
leading companies in the video everywhere ecosystem. DPAA
promotes and fosters collaboration between these companies
and advertisers/agencies; provides standards, best practices
and industry-wide research; and promotes the effectiveness
of digital place based advertising. Digital place based media
is defined as networked digital video screens containing
programming and advertising, reaching consumers on their
daily journeys in places where they dwell. The DPAA is a Video
Everywhere AssociationTM.
www.videoeverywhere.com
Barry Frey, President, CEO,
Digital Place Based Advertising Association (DPAA)
Barry.Frey@dp-aa.org
Twitter: @barryfrey
Intel is a world leader in computing innovation. The company
designs and builds the essential technologies that serve as the
foundation for the world’s computing devices.
For more information on personalizing the shopping
experience, visit us at
www.intel.com/retailsolutions
Intel Retail Solutions Division, IOT Group.
Contact Jose Avalos, Worldwide Director, Visual Retail
jose.a.avalos@intel.com
Twitter: @Intel_Jose
WPP is the world’s largest communications services group. Through
its operating companies, the Group provides a comprehensive
range of advertising and marketing services including extensive
eCommerce, digital, retail and shopper marketing services across
the globe. For more information, visit
www.wpp.com
The Store WPP is the WPP global retail practice.
Contact David Roth, CEO, The Store WPP, EMEA & Asia
david.roth@wpp.com
Blog: www.davidroth.com
Twitter: @davidrothlondon
Positioning Paper 2015
7