Bricks and Mobile · Mobile · Omni-channel · Uncategorized

A very mobile Christmas?

It’s no secret that mobile is becoming increasingly important in consumers’ shopping journeys. Retail brands as diverse as Target and Neiman Marcus have alluded to the pivotal role that digital plays in driving both their online and physical store sales. And of course when we say “digital,” often we mean mobile. In fact, for many retailers, mobile is becoming the front door to the store.

If a just-released study by Adobe Analytics proves to be correct, an important milestone will be reached this holiday season. For the first time ever, more U.S. shoppers will visit a retailer’s site using a mobile device than a desktop computer. Because conversion rates remain higher on “traditional” devices, the amount of actual purchases made on desktops will still exceed those made on a smartphone or tablet. But that’s not likely to be true very much longer.

This shift is profound, and mirrors what other studies have shown about the growing integration of mobile devices across all dimensions of retail. For example, Deloitte has been tracking digital’s influence on physical store shopping, and their research shows that in 2016 some 37% of all brick & mortar sales were influenced by a mobile device. It seems certain that number will easily surpass 40% this year.

The reasons this year’s holiday numbers are so important are twofold. First, and most obviously, it’s the busiest shopping time of the year, so shifts in customer behavior are amplified. Second, for consumers seeking great gift ideas, in many cases they’ll be visiting new or infrequently trafficked sites. A poor (or even less than remarkable) experience can have a significant impact on customers’ future buying intent.

It would appear that there is no going back in the move to mobile. As the folks at Google like to say (full disclosure: a recent client), we no longer go online; we live online. More and more, our smart devices are a constant companion in the shopping process. Whether it’s for product research, checking prices, locating the nearest store, downloading a coupon or making a transaction, employing mobile technology to enhance the customer experience is moving from novelty to habit.

The growing challenge for retail marketers therefore is to win these mobile moments that matter by being relevant and remarkable throughout the critical aspects of the shopping journey. Here the increasing role of mobile presents many important opportunities, most notably the chance to leverage context awareness in consumer engagement. But the limitations of mobile are apparent as well and must be navigated carefully.

A few things seem certain. Mobile will play a much larger role this holiday season and that momentum is likely to carry forward into 2018. Brands that have a compelling mobile presence will reap great benefits. For those where that is not the case, they can expect a big lump of goal in their stockings.

Shopping-Apps

A version of this story appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here

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Digital · Mobile · Omni-channel · Retail

Retail’s Single Biggest Disruptor. Spoiler Alert: It’s Not E-commerce

There is no question that the retail industry is under-going a tremendous amount of change. Record numbers of store closings. Legacy brands going out of business–or teetering on the brink of bankruptcy. Venture capital funded start-ups wreaking havoc upon traditional distribution models and pricing structures. Discount-oriented retailers stealing share away from once mighty department stores. And, oh yeah, then there’s Amazon.

In assessing what is driving retailers’ shifting fortunes most observers point to a single factor: the rapid growth of e-commerce. But they’d be wrong.

To be sure, online shopping has, and will continue to have, a dramatic impact on virtually every aspect of retail. One simply cannot ignore the dramatic share shift from physical stores to digital commerce, nor can we under-estimate the transformative effect of e-commerce on pricing, product availability and shopping convenience.

Yet a far more profound dynamic is at play, namely what some have termed “digital-first retail.” Digital-first retail is the growing tendency of consumers’ shopping journeys to be influenced by digital channels, regardless of where the ultimate transaction takes place. It’s obvious that this shift helps explain the success of Amazon and other e-commerce players. But when it comes to how traditional retailers need to reinvent themselves, several factors related to this phenomenon need to be better understood and, most importantly, acted upon.

The majority of physical store sales start online. Deloitte has done a great job tracking digitally influenced sales and its most recent report indicates 56% of in-store sales involved a digital device–and this will only continue to grow. Moreover, quite a few major retailers, across a spectrum of categories, have publicly commented that they are experiencing 60-70% digital influence of physical stores sales.

Digitally-influenced brick & mortar sales dwarf e-commerce. While e-commerce now accounts for (depending on the source) some 10% of all retail sales, both Forrester and Deloitte have estimated that web-influenced physical store sales are about 5X online sales.

Increasingly, mobile is the gateway. We no longer go online, we live online and smartphones are the main reason. As the penetration of mobile devices–and time spent on them–grows, mobile is becoming the front door to the retail store. Digital-first now often means mobile-first. It may not be the predominant behavior today, but it won’t be long before it is.

It’s a search driven world. Sometimes consumers turn to the web for rather mundane tasks: confirming store hours or looking up the address of a retailer’s location. Other times they are engaged in a more robust discovery process, seeking to find the best item, the best price, the best overall experience and so forth. Retailers need to position themselves to win these moments that matter (what Google calls “micro-moments.” Full disclosure: Google’s been a client of mine).

Digital-first can be (really) expensive: Part 1. Having a good transactional e-commerce site is table stakes. Becoming great at enabling a digital-first brick & mortar shopping experience is the next frontier. As customers turn to digital channels to help facilitate brick & mortar activity, be that a sale or a return, retailers need to be really good at creating a harmonious shopping experience across all relevant engagement points. This isn’t about being everything to everybody in all channels. It isn’t about integrating everything. It is about understanding the customer journey for key customer segments, rooting out the friction points and discovering points of amplification, i.e. where the experience can be made unique, intensely relevant and remarkable at scale. It’s not easy, and it’s rarely cheap to implement. It turns out, however, it’s a really bad time to be so boring.

Digital-first can be (really) expensive: Part 2. Estimates vary, but it’s clear that search (or engaging on social media) is an intrinsic part of most consumers’ shopping process. And that means that an awful lot of customer journeys intersect with Google, Amazon, Facebook or some other toll-booth operator. I say toll-booth operator because so often a brand’s ultimate success in capturing the consumer’s attention, driving traffic to a website or store and converting that traffic into sales requires paying one of these companies a fee. And that can add up. Fast. Of course the best brands generate consumer awareness and interest through word-of-mouth, not paying to interrupt the consumer’s attention. The best brands get repeat business through the inherent attractiveness of their offering, not chasing promiscuous consumers through incessant bribes. The best brands don’t engage in a race to the bottom because they are afraid they might win. This shift in who “owns” (or at least can dictate) access to the customer is profound. A strategy of attraction rather than (expensive) promotion is the far better course, but not so easily done.

While e-commerce–and Amazon in particular–is re-shaping the retail industry, having a compelling online business is necessary, not sufficient. In fact, in my humble opinion, many of the retailers that are reeling today got into trouble because they spent too much time and money focused on building their e-commerce capabilities as a stand-alone silo, to the detriment of their physical stores and without understanding the digital-first dynamic that determines overall brand success and the ultimate viability of their brick & mortar footprint.

Blaming struggling retailers’ woes on Amazon, or e-commerce more broadly, is only part of the story. Figuring out how to thrive, much less survive, in the age of digital-first disruption requires a lot more than shutting down a bunch of stores and getting better at e-commerce. A whole lot more.

A version of this story recently appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.

 

Digital · Frictionless commerce · Mobile · Retail · Share of attention · Winning on Experience

Retail’s new front door

In a “brick & mortar first” world, retailer’s embraced the old adage: location, location, location.

Once the site was determined, a lot of time and money went into the design of the store–with a particular emphasis on making it as strong a magnet for consumer traffic as budget and inspiration would allow. Then the visual and marketing teams went to work, creating attractive window displays and generating eye-catching promotional signage, all with the goal of capturing the customer’s attention as she walked or drove by. If these marketing strategies worked, they would lure her across the threshold and the retailer would have a chance at a sale.

Today, it’s rapidly becoming a “digital first” retail world. More retailers are reporting that the majority of customers start their consumer decision journey online. More and more brands are discovering that a very high (and growing) percentage of new customer acquisition is occurring through a digital channel, not a physical one. And when we say “digital”, it’s increasingly likely we mean some sort of smart mobile device. The power of the traditional store front is waning.

In the vast majority of categories, brick & mortar is not going away. As I like to say, physical retail will be different, not dead. In many cases, stores will remain critical to generating sales, but their role in acquiring a new customer, generating repeat business or building on-going customer engagement and loyalty is diminishing–and, in many cases, quite rapidly.

Right now, for many brands, for many consumers, for many shopping occasions, retail’s new front door is a smart mobile device.

So if your brand’s mobile experience isn’t compelling, the odds of capturing a new customer aren’t that great. If the mobile experience doesn’t help reduce friction for an existing customer (in or out of a store), good luck getting that repeat business. If the mobile experience doesn’t position your brand well in those key decision points that my friends at Google call “micro-moments”,  there’s a pretty good chance you aren’t making that sale.

Embracing the notion that mobile is becoming your brand’s new front door can be profound.

It forces process redesign and budget re-allocation. It requires breaking down the silos that exist in the channel-centric thinking, organization and metrics that persist in so many retailers. It causes us to admit that if we don’t win in a digital channel it barely matters where our stores are located, how good they look, what products we carry or whether we’ve got great salespeople. Heresy, some might say.

It’s apparent that there are quite a few retailers that get this new reality and are acting accordingly–and often boldly. For them, the precise end-game is anything but clear, the path is hardly smooth, but they are in the arena, taking risks, investing where they need to be.

Yet far too many others are merely treading water or paying lip service to this new world order. Sadly they are crippled by legacy thinking and systems, burdened by a store-first culture, unwilling to let go of the past, even when it’s obvious it’s not working. Unless they pivot soon and decisively it’s fairly certain that this will end badly.

 

 

Frictionless commerce · Mobile · Multi-channel · Omni-channel

As the channels evaporate . . .

By now, it should be readily apparent that a very large–and growing–percentage of customers bounce back and forth between digital and physical channels when shopping.

By now, it’s obvious that the exploding usage of mobile devices is blurring the distinction between e-commerce and bricks & mortar.

By now, we should understand that, in fact, it’s only retailers that talk about channels. You never hear customers speak in that way.

And yet…

And yet, we obsess over same-same stores sales, rather than same-market or same-customer segment performance.

We close under-performing stores in a quest to boost profitability, only to discover that we’ve often made matters worse.

We organize our teams, metrics and incentives around sales channels instead of customers, and wonder why we struggle with consumer relevance and engagement.

As the channels evaporate in the minds of our customers, the only two questions for us are: do we accept this reality and are we ready to act accordingly?

Oh, and one more: just what the heck are we waiting for?

 

 

Innovation · Mobile · Omni-channel

Innovating to parity

Let’s face it, most traditional retailers aren’t very good at innovation. There is no such thing as an R&D budget at most of them. Many barely even have any real process or tangible goals centered on bringing new things to market. Labeling your typical large retailer “reactive” when it comes to innovation is being generous and polite.  Not surprisingly, most of the useful disruption in the retail space has come from outsiders and start-ups.

Recently we have seen a number of sleeping giants begin to awaken to the need to raise their game and pick up the pace. The digital transformation that has swept through retail, and the resulting blurring of the channels, makes it impossible for even the most conservative of brands to sit idle.

Yet, here’s the problem. Most of these retailers are merely focused on closing the gap between them and the obvious or emerging leaders. Once some new technology or marketing technique or experiential dimension begins to prove itself out, then these companies kick into action. Apple starts doing untethered checkout, a couple of  years later mobile POS starts springing up nearly everywhere. A few brands have success with order online, pick up in store, and soon that is on everyone’s list of 2015 projects.

There’s nothing inherently wrong with being mindful of which new strategies are gaining consumer and economic traction and positioning yourself to be a fast follower. And to be sure, if a company finds itself in trouble, it is completely sensible to find the areas of innovation that can quickly deliver the greatest near-term leverage.

But most of these brands are really just innovating to parity. By the time their innovation efforts get to scale, the next big thing is beginning to emerge and once again they themselves behind. It’s the proverbial difference between skating to where the puck is, rather than skating to where it’s going to be.

It’s great that more companies are embracing innovation. But it’s not enough to merely step on the innovation treadmill.

Winning in today’s environment requires a commitment to anticipate, to leap, to experiment, to fail, to refine and get up and try again.

Leading from behind has never worked.

And hoping to lead from parity probably won’t cut it either.

 

 

 

 

Customer Growth Strategy · Mobile · Multi-channel · Omni-channel

Merge ahead

More and more, your web presence is the front-door to your brand, not just a sales channel.

More and more, mobile, and all things digital, blur the lines between e-commerce and brick-and-mortar.

More and more, your channel-centric thinking–and organization, metrics, incentives and budgeting–are becoming barriers to meeting the customer where she is.

More and more, your mission, if you choose to accept it, is embrace the world of channel hop and focus on delivering a frictionless customer experience.

Merge ahead.

Or risk being side-swiped.

 

 

Customer-centric · Innovation · Mobile · Omni-channel · Personalization · Share of attention

The shopper genome project

No doubt you’ve heard of The Human Genome Project–the effort to decode our species by identifying and mapping all of our genes. Ultimately it’s an effort to better understand what makes us tick, from both a functional and physical standpoint.

As a business or brand leader you have a similar challenge when it comes to decoding your current and potential consumers’ attitudes, needs and behaviors.

In a world of vast and growing choices, the pressure is only increasing to develop deep, actionable insight into your customer base.

In a world where most segments are growing slowly, your only chance for out-sized growth is to gain market share. And that requires understanding which levers to pull that are compelling enough to win new clients or grow share of wallet with existing ones.

In a world where most competitors are either engaged in a race to the bottom or stuck in tired old mass marketing techniques, you have the chance to win big by embracing a “treat different customers differently” strategy. But you need to understand how to meaningfully segment your customer base and exactly which value propositions to deliver to which segments. And you need to get into action.

In a world where smart devices are growing like crazy and (finally!) offer the promise of the right offer to the right customer at the right time, you had better be able to follow consumers as they channel hop and to deliver permission-based, highly relevant and personalized communications.

More than a decade ago Don Peppers and Martha Rodgers opined that the only true lasting competitive advantage is to know more about your customers than the competition–and to be willing to act on that insight.

That’s never been more true than right now.

 

Mobile · Omni-channel · Retail

Learning to harmonize

Let’s face it, nobody’s likely to be happy to hear you join Mumford & Sons on stage–or Crosby, Stills & Nash if you are old like me–to belt out a few tunes together. But that’s just some incredibly unlikely scenario.

What’s much more real is the need to harmonize in your business.

Your brick and mortar presence, e-commerce business, mobile offering, call center, marketing, and all other branded consumer touch-points, don’t need to be identical, but they need to be harmonious.

Perhaps you’ve experienced a musical performance where someone hits a discordant note. It’s obvious and not very pleasing. If it persists you’re not likely to want to hear more and you’re not likely to want to come back.

Chances are there are quite a few discordant notes in your marketing and your customer experience.

Maybe it’s time to hold a choir practice?