Why shoppers are demanding fresh thinking from retailers

Click here!First published in Retail Week 12th May 2016
Chewing the fat with retail leaders is usually a fascinating experience, but a chat with the people who shop in their stores can prove equally illuminating.

That’s why Cheil spoke to 150 leaders in the top global retailers and also to a representative group of shoppers. The aim? To test our belief that retail success is increasingly linked to a strong internal culture and a focus on innovation.

And by innovation I don’t just mean the bells and whistles, the phones and the drones, that are coming to play a key role in the business, but also in terms of adopting a progressive approach to all elements of the business, especially the customer.

What’s startling is that the results, especially from the consumer angle, suggest innovation is not only essential for retail success but also for survival. But first, a bit more about the findings. While the retail leaders identify Apple as the most innovative retailer in the world, consumers don’t agree. They select Amazon, for very clear reasons to do with innovation around providing shopper benefit.

In the eyes of retailers, Apple leads the way in terms of consumer and shopper innovation. Amazon is placed second, with Google third, followed by Walmart. The other companies, completing a top 10 dominated by tech brands, are Dell, HP, IBM, Microsoft, Samsung and eBay.

Regional variations

Some striking regional variations emerge from the research. While Apple’s reputation for consumer and shopper innovation is consistently high across the world, there is some good news for those at the more established end of retail, because US retailers consider Walmart to be the gold standard. This most likely reflects a rounded view of innovation that considers Walmart’s attempts to try new things in areas such as community engagement.

But what do shoppers think? Well, they agree with retailers that the more traditional store-owners are lagging behind tech-driven companies in providing innovation. With shoppers, though, it’s Amazon, not Apple, which wins the plaudits. Globally, 23% of shoppers identify Amazon as providing the best retail experience, followed by eBay on 5%.

Several traditional retailers, offering a combination of online and offline experience, have made the top 10 from a shoppers’ perspective. These include Target, John Lewis and Walmart. Overall, though, they lag far behind retail brands that have evolved out of the online space in terms of providing the best experiences for shoppers.This is supported by the UK-specific findings, which show Amazon is identified by 29% of shoppers as offering the best retail experience, well ahead of John Lewis on 14% and our biggest grocer, which is at the bottom of the list, just below some well known high-street names.

Generally, these findings support the idea that customer expectations of retail experience are being reset by digital-first retailers (such as Amazon and eBay) and the legacy retailers, particularly the grocers, have much work to do to bring innovation to their stores.

Shoppers identified Amazon as providing the best retail experience

When it comes to providing an innovative shopper experience, it’s clear that consumers crave, above all, technological innovation that delivers convenience, personalisation and simplicity of service. This supports my own belief that where retail innovation does involve technology it must be driven by customer need above all else.

Brands, such as the aforementioned Amazon and eBay, are seen to understand this, while others have much to learn at the same time as falling down on basic hygiene factors, such as providing a human service and being helpful. What’s emerged from our conversations with retailers and shoppers is that delivering innovation that truly benefits the consumer provides a clearer path to retail success than any other.

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Will a cashless retail vision work in the wider world?

The future of the cashless shopping experience creeps ever closer. Adobe recently announced a new prototype of the retail store featuring RFID chip-enabled bags that enable shoppers to automatically buy items by placing them on the checkout counter. In Adobe’s prototype store in Las Vegas, there’s no cash, no card, no mobile payment. Just a step towards a retail world connected through the Internet of Things.

This innovation, providing a truly cashless store, inspired me to use a recent visit to the United States to test something I’d wondered for sometime. With the rise of retail technology and new payment models such as Apple Pay and Samsung Pay, how possible is it to live and travel without any cash at all?

The cashless, week-long work visit started well on arrival in Chicago and the easy journey with Uber to the hotel. Initially, it was easy to exist with just a credit card.

The first problem arose the following morning when the time came to catch the free hotel shuttle bus to the airport. It soon became clear that tipping would be a big issue in the cashless society. A surly bag attendant, expecting his five bucks for shifting my luggage, wasn’t pleased with a half-whispered explanation about trialling society’s future of electronic monetisation.

Smooth progress was resumed quickly. Next came the flight to North West Arkansas and a local taxi to a business meeting. This was only a small firm but it was easy to pay by card. Then, after the meeting, I took another Uber (apparently in plentiful supply in Arkansas) to Starbucks, where the coffee retailer’s app delivered a much-needed shot of caffeine.

International boundaries

Next came the Bentonville Square Walmart where, at the self-service till, I was about to pay by credit card before being offered another cashless solution in the shape of the Walmart Pay App.

This was all set to be another seamless cashless situation before an issue arose in the shape of international boundaries. Convenient as the Wal-Mart app option looked, it was a no-go as the US app wouldn’t work with my version of Google Play Apps. Uber has managed to solve this compatibility across borders issue, which is an important one for retailers to address if they’re to grab a share of payments revenue. You can be sure Apple and Samsung Pay are moving towards this cross-border functionality as contactless payments gain traction, with transactions expected to reach 148 million this year.

Musing on this, it was time to travel from Arkansas to New York City for the final leg of my trip. And an experience that highlighted the current limits of cashless society.

Tipping crisis

Talking to a friend at the shopper marketing event we were attending in New York, it soon became clear she thought I wouldn’t get far in the city without cash. She insistently forced a dollar into my hand to at least get me somewhere when tipping. And she was right. In several situations in hotels and other places it was hard to get very far without tipping with cash. Too embarrassed to offer one measly bill, I managed to hold onto my dollar but received more than a few frosty looks and not much in the way of good service. Sure, in bars and restaurants it’s easy to tip electronically but it gets tricky when you go further into the service economy. An economy that soon merges into the grey economy and, eventually, into the black economy.

There are serious consequences of a cashless society that will require everybody to have a bank account to exist and where every transaction is traceable and accountable. Let’s face it, beyond the equality issues at play here, there are a whole lot of things people will want to pay for and yet not have a record of.

It won’t be long until Adobe’s connected vision becomes the reality for millions of shoppers but my US trip clearly showed me that society is moving towards a largely cashless environment built around straightforward use of mobile apps to pay for almost everything. It’s not going to be difficult in places like London and US towns and cities. But what about the “grey” areas of the world, where are the solutions for the difficult deals in the service economy?

This is a perplexing problem for society and for those in some parts of the service economy, if not for mainstream retailers. There’s a short-term solution at least because, for the foreseeable future, I’ll travel with a bunch of dollar bills to pacify combustible luggage attendants.