The secret of retail tech innovation? Never forget the customer

First published by Retail Week on 4th August 2016

While I spend most of my working life looking to the future, I’m not afraid to take inspiration from the past.

I still occasionally dance around to my 1980s alternative singles and remain fond of classic movies such as The Belly of an Architect.

The return of a 1990s phenomenon in the format of Pokémon Go illustrates the point nicely, showing the power of brand affinity, of past associations, to engage a vast audience.

More importantly for retailers, the craze demonstrates that it’s possible to drive engagement very quickly if you get it right with mobile innovation.

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French retailer BUT has already used the popularity of Pokémon Go to drive store Traffic and offer discounts to shoppers.

While the rise of the game is set to benefit retailers greatly, through sponsored locations, promotions and merchandising, what it says more broadly is that consumers crave fantastic and entertaining experiences alongside a sense of community and adventure.

AdTech AdThis was heavily in evidence at the recent Cannes Lions advertising and marketing festival. Many winning campaigns in categories such as mobile provided examples of innovation that deliver a human and interactive customer experience.
They included Burger King’s activity in Argentina, where it created an interactive Snapchat game, Snapking, using an entertainment experience to drive a voucher-based mechanic for participants.

Perhaps the best use of innovation applicable to retail was the Sydney Opera House’s #comeonin, using social platforms and location data to create and then invite people to a personalised experience.

Retailers that understand the need to build human connections into their technology innovation have a greater chance of success.

However, when Cheil spoke recently to more than 150 senior global retailers we revealed a disconnection between the focus of their technology innovation and the delivery of better customer experience.

It is very clear that consumers want innovation in technology to be rooted in delivering customer benefits. Yet the conversations with retailers highlight that innovation budgets are not primarily focused on meeting unfulfilled consumer need.

A majority are confident that they have a world-class innovation culture. And, in many cases, this is driven by new technology. That sounds encouraging.

The issue that emerges, though, is that technology displaces meeting unfulfilled consumer need as the driving factor in innovation.

Meeting consumer need was identified by just 18% of retailers as the main reason for innovation, indicating a danger that retailers are losing sight of the consumer.

Consumer research shows that this is an issue for customers. Amazon emerges as the most innovative retailer because it uses technology to make it quicker to find, pay for and receive products.

Where Amazon is identified as less strong is in providing a ‘human service’, but it has maintained customer perceptions in this area at acceptable levels while more traditional offline rivals struggle to deliver against even this hygiene factor.

Retailers could gain greater competitive advantage by using technology in ways that improve perceptions of human service, with a big opportunity in focusing on the greater personalisation of the shopping experience.

This is where they can learn from the success of experiences such as Pokémon Go and brands that use mobile not only to bombard people with messages and offers but to entertain and delight.

In doing this, retailers shouldn’t lose sight of the need to improve the customer experience by using technology to simplify and accelerate the retail experience.

This should be the main focus of retail innovation budgets, rather than investing in mobile and other tech merely for its own sake.

2016: Back to the Future of Retail

This article was first published by Retail Week on 31st December 2015

Star Wars caught the imagination at the close of 2015 but the film franchise that holds greater resonance for retail is surely Back to the Future.

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October 21, 2015, was the date on which Marty McFly and Dr. Emmett “Doc” Brown arrived to the future in the second instalment of trilogy. The film debuted in 1989 and the passing of its most famous date last October prompted reflection on what had altered in 25 years. For retail the changes were seismic. In 1989, Walmart was the world’s third largest retailer with $25.8 billion in sales. Amazon didn’t exist. Neither did Alibaba. On 11th November 2015, Alibaba posted sales of $14.32 billion in a single day. Singles’ Day in China.

Given these significant transformations, just what will 2016 bring for retail?

Rubbish into fuel

The COP21 conference in Paris provided impetus for retailers to bring environmental issues into sharp focus as their customers demand transparency from business and value for their values. The reality in 2016 will be new stores that aim to be self-sufficient in energy, more electric delivery vehicles, and the roll out of charging points in car parks.

Robotic Retail

The movies might suggest plastic characters taking orders but the reality is more profound in the shape of Robotic process automation (RPA) in the supply chain and in-store systems that can provide digitally-led customer experiences.

 Machine-to-machine interfaces have the ability to predict and match a consumer’s needs to real-time availability, location, price and delivery. The customer experience is improved and increasingly personal, while the retailer can improve responsiveness while reducing costs and inefficiency.

Wearable tech

Assuming retailers have not replaced their staff with robots, the simplest way to connect them with the cloud and the rest of the salesforce will be a wearable device. This will simplify regular retail procedures and improve customer experience.

CXO trumps CMO

“We can’t advertise our way out of a problem we behaved our way into”. Tesco CEO, Dave Lewis, talking about the challenges the global retailer faces.

Proactive retailers are looking at their organizational behaviours to ensure they stay connected with their customers. UK retailer Game has taken an innovative approach to customer experience, not only building an award-winning app that brings together all its store tools and loyalty scheme into a very convenient mobile solution for the customer, but also empowering its managers to create a community of gamers around each store.

Everywhere, Instant & personal

People do not care about on-line, bricks and mortar or m-commerce, they want to move seamlessly between environments, platforms and devices to fulfill their shopping missions. They don’t care if something is advertising or design, shopper-marketing or promotion, social or CRM, they simply want the best experience.

Back to the Future of Retail will require brands and retailers to inspire the three human behaviours that drive purchase: search, shop and share. But, in tackling the most modern of shopping behaviours, they must not lose the shop keeping skills of the past. Know your customer and give them what they want, when they want it. Make it easy and convenient to buy and deliver value for their values.

Now what would Marty McFly make of all that?

Black Friday now firmly established as heavyweight champion of UK retail events

This article was first published in Marketing on 30 November 2015

If the £1 billion retail sales forecasts for Black Friday are confirmed, followed by the predicted £3.2bn for the weekend and Cyber Monday being met, we will have another heavyweight champion event in UK retail. And just like the Fury and Klitschko bout, 2015’s Black Friday will have been about going the distance and winning on points. And that’s going to be margin points.

Black Friday is about big discounts and even the most premium brands were in on the action to win a share of that shopper spend. This year it has been very clear that it is not about Friday, but a whole week of shopping hype, with more deals every day. TV ads, social media and a spamtastic amount of email told us all that it was time to buy. 2015 will see Black Friday firmly established in the British psyche as the official start of the Christmas shopping spree.

The import from the US always falls on the Friday after Thanksgiving, when most Americans take a day off. But I’ve struggled to rationalise the reasons for its existence in the UK, when no one is taking holiday and at a time of year when people have traditionally been happy to spend at full price.

Perhaps the US hype is what made its UK counterpart the success it is becoming. ASDA, which played a significant role in bringing it across the pond, was heavily criticised for allowing cameras into its stores last year to capture the shopping frenzy. This year it scaled back its involvement and, like many other retailers, increased its security. So what made Black Friday infamous – a good fight for a bargain – was missing this time around.

I’m certainly not condoning any fisticuffs in the aisles, but inspiring competition amongst shoppers with huge WIGIG (When It’s Gone, It’s Gone) offers is now a mainstay of retail promotion. This year the only knock-out blows involved retailer websites going down as shoppers punched into their keyboards looking for bargains.

The John Lewis site crashed mid-afternoon and Argos shoppers had to endure page load times of more than 10 seconds. Meanwhile, Amazon didn’t pull any punches with 0.5 second page load times and reported that more than 6 million items were ordered on its site, making Black Friday 2015 its biggest-ever sales day in the UK.

However, if the stores I visited are anything to go by, Black Friday was a bit of a non-event on the high street. It could have been any other Friday morning and I suspect all the action was on-line. Certainly my email and social feeds were full of offers, social media mentions of Black Friday rose 20 per cent over last year, according to data from Salesforce Marketing Cloud, and there were interesting Instagram campaigns from Game, JDSports, Liz Earle, New Look, and Victoria’s Secret among others.

I suspect that the final Black Friday sales stats will reveal Black Friday in the UK to not only be the biggest ever, but also the most digital. The big issue though, is how much profit retailers and brands will have made. Despite the critics, the “Buy Nothing Day” campaign included, 2015 has seen Black Friday firmly establish itself in the UK due to the strength of online sales. It is now the heavyweight champion that all other retail events will be measured by.

 

Does Black Friday signal dark days ahead for brands and retailers?

This article was first published by the Guardian on 18th November 2015

Things were much simpler growing up. I still have vivid recollections of the media coverage of the big shopping events: turning on the Oxford Street Christmas lights to herald the start of the festive shopping period; and the people camping outside Harrods the night before the sale.

After the seasonal bargains were snapped up, we experienced a sustained period of normality. There wasn’t much else to distract shoppers from their regular habits and the retail promotional calendar reflected the lives we lived.

Since then we’ve seen the huge commercialisation of key calendar dates. All Hallows’ Eve is now the full-on American Halloween experience and running alongside the more child-centric activities, there’s the increasing popular Día de Muertos, known more commonly as Mexico’s Day of the Dead.

Mothering Sunday, Father’s Day and Valentine’s Day are all key dates in the retail calendar. Singles’ Day in China, originally created by Alibaba for those without valentines, is now the biggest shopping event in the world. This year’s event marked the first time Chinese shoppers could buy global brands and sales topped $14.3bn, a 60% increase on 2014, making it bigger than Black Friday and Cyber Monday combined.

The challenge, now that hardly a month goes by without a big retail event, pre-season, mid-season or end of season sale, is that we’re training shoppers never to pay full price.

Events such as Black Friday involve deep discounts and often include products that are at the premium or luxury end of the market and would never usually be available at less than full price. The cost in margin and brand values is not sustainable, which means that brands and retailers must now reconsider this approach.

In the UK, Asda has done just that and will shun the Black Friday sales this year. My favourite is US outdoor retailer REI’s approach. Its #OptOutside initiative will mean that it closes on Black Friday – the idea being that the American public will be inspired to get outdoors and not go shopping on the day after Thanksgiving.

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There are routes that provide brands and retailers with the opportunity to create value rather than destroy it. Dynamic pricing – big in the travel sector and used by online retailers such as Amazon and Net-a-Porter – will become a larger feature in retail as brands and retailers work towards offering price flexibility based on day part or by targeting offers to distinct groups of people via email campaigns and vouchers for mobile devices.

As the level of personalisation in retail increases, personalised pricing and data-driven offers will create a more rewarding and targeted experience than Black Friday.

Collaborations between brands, or brands and retailers, provide another way of creating interest without recourse to discounting. I call this “the power of X”. However, as was the case of the chaos around the Balmain x H&M launch, these collaborations now carry the risk that the real value isn’t created for the retailer and brands involved, but for profiteering eBay traders.

But it’s still possible to create product ranges based around new and exclusive features that provide resistance to the discounting trend. For example, discounting became such an issue in the electronics sector that when Samsung partnered with designers Ronan and Erwan Bouroullec to launch Serif TV, it decided only to sell them through its own e-commerce platform and in high-end furniture stores.

Serif provides a good example of where brands are working hard to circumvent traditional retail models. Clearly things have changed since my childhood and I’m not suggesting we go back to those times. But retailers and brands need to wean themselves off the addiction of Black Friday discounts and focus instead on reframing value for their customers.

Has H&M lost control of its fashion collaborations?

This article was first published by Marketing on 6th November 2015

I’m a big fan of H&M’s collaborations with the famous designers of the world, writes Simon Hathaway, global chief retail officer at Cheil.

They are collaborations that result in one-off clothing ranges each year that bring high fashion to the high street.H&M’s initiative is a brilliant example of what I term “The Power of X, because collaboration between brands, or between retailers and brands, on new product lines has become one of the most powerful ideas today in retail.

The high street retailer was one of the first in fashion to understand the power of collaboration, its designer partnerships dating back to 2004 (when Karl Lagerfeld created his limited edition range for H&M).

But the scenes of chaos that met the launch of the Balmain x H&M limited edition range yesterday threaten to undermine much of its good work.

H&M hit trouble after the doors of its Regent Street store opened.

The police were called following reports of scuffles between people desperate to get their hands on some affordable Balmain gear. H&M was forced to close the store while its website also crashed due to high demand for the new range.

Enthusiasm and an element of chaos is not unusual at these H&M launches but this time around the situation seemed more extreme.

There’s no doubt that Balmain x H&M is a strong brand collaboration that drives value for H&M and also for French fashion label Balmain.

It’s a relatively small but desirable fashion house when compared to the Versaces of this world, getting a presence on the high street and free advertising in return for its designs.

As expected with this type of launch, where PR and generating word of mouth is an important factor, there’s an element of deliberate scarcity at play from H&M here, heavily advertising and publicising the product range then under-stocking it to create a buzz.

But I’d say the scenes outside H&M tip over from cleverly engineered scarcity into not understanding the amount of stock required to fulfil even basic levels of initial demand.

There’s a fine line between success and failure in these things: it’s great PR when people are camping outside the store the night before, but I’d argue your stock control is out of kilter when you’re forced to close the store with unhappy shoppers outside.

I wonder on this occasion if H&M totally understood the demand for the products.

It’s not as if the clues weren’t there. Balmain designer Olivier Rousteing has 1.6m Instagram followers and his friendship with the Kardashians and Kendall Jenner (pictured above), who have modelled his clothes, has made the Balmain brand highly desirable among high street fashionistas.

There is another significant concern for me in the way the stock management has been handled.

I’d suggest that a range like this fails to benefit retailer, brand and shoppers when it begins to look like a profiteering opportunity for the kings and queens of eBay rather than providing a genuinely exciting product experience for the dedicated followers of fashion.

When a H&M item is going for £650 on eBay within hours you have to start questioning who is really profiting here.

The situation is not irredeemable for H&M. If this happens consistently, though, then people will lose interest.

But it’s now all about resetting things for the next promotion. To focus on better planning, stock availability and making sure the web servers are up to the task. That way H&M will make money and boost its brand rather than provoking anger on the streets.

How subscription models could revolutionise retail

This article was first published in Retail Week on the 13th May 2015

“I wish someone would invent something just like Spotify but a bit more expensive,” said Alex Kapranos, the frontman of rock band Franz Ferdinand recently on Twitter. Kapranos was reflecting, perhaps, on Spotify’s payment structure that sees rights holders receive a maximum of $0.0084 per stream.

Other musicians have also raised objections to their share of the spoils from Spotify’s mixed advertising and subscription-based model. Last year Taylor Swift announced her decision to remove her music from Spotify.

As subscription models extend beyond music to other categories such complaints could become common from stores and the brands stocked in them. The evolution of subscription is likely to raise fundamental questions including “what is a retailer?” and “how do people shop?” as the ‘internet of things’, connected technology in the household and beyond, transforms shopping.

Spotify and equivalents such as Deezer have already placed great pressure on definitions of retail in a category where traditional ‘bricks and mortar’ retailers such as HMV have already had to face the disruptional industry challenges created by downloads, iTunes and piracy. Other sectors are seeing subscription-based services cutting out the retailer to go direct. Subscribers to the Dollar Shave Club in the US get all they need to shave delivered each month. Meanwhile HP’s ‘Instant Ink’ service uses technology in connected printers to arrange delivery of ink direct to people’s doors when they are running low.

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As IOT (Internet of Things) becomes a reality, such services are likely to move to a more sophisticated subscription model that doesn’t necessarily include the supermarket or local retailer. Home and appliances will become truly connected and automation will lead to category management based on subscription.

There’s something of a ‘back to the future’ element operating because, decades ago, most UK homes received their daily milk via subscription in the form of the milkman. However, the issue for retailers and brand owners with the new model is that tech companies, appliance manufacturers and online platforms are blurring traditional boundaries.

Retailers and brands have already been disrupted by the rise of Aldi and Lidl showing they don’t need famous brands and extensive shopper marketing campaigns to grow. Now retailers and brand owners like Procter & Gamble and Unilever should fear an internet of things that manages our shopping for us.Dash-Button

P&G has reacted and Gillette now offers shaving subscription from its website in partnership with Amazon. P&G was also quick to jump in with Amazon Dash and its branded buttons that enables a consumer to order a product when it runs out automatically through Amazon Prime.

The likes of Amazon Dash might look good for brand owners now – providing another route direct to consumers in the home – but no-one worried about what brand the milkman delivered. Convenience was everything, so what can we do when full machine to machine automation of shopping begins to put brands and traditional retailers at risk?

Those retailers with data and logistical muscle will evolve into subscription as Amazon is already doing and we will see business models akin to the mobile phone category, with monthly subscriptions that bundle durable device and consumable. Ikea’s latest prediction is that we won’t have fridges by 2025 and our food will be delivered fresh each day by Amazon’s drones. But 10 years is a lifetime for technology companies and retailers, so by then our fridges might just be so smart that they’ve become convenience stores in our connected homes.

Can Amazon deliver emotion for Christmas with its first bricks and mortar store?

First published by the Drum on 15th October 2014

The news that Amazon is set to go physical this Christmas with the first bricks and mortar store in its 20-year history should be anything but a surprise. The category-leading retailer seems to have no fear when it comes to exploring the retail space, whether that’s by drone, digital or delivery van. Why not a physical store?

This year has seen a flurry of exciting innovations from the Seattle giant. In February, an update to its app called Flow introduced image recognition so products could be photographed and added to your shopping cart.

Then came Amazon dash in April, a Wi-Fi device combining voice recognition and barcode scanner to instantly add items to your Amazon Fresh shopping list. The retailer then added social to its own list of options with the buy button, social shopping cart link on Twitter.

Amazon continues to sell more products in more ways. It is the ultimate Everywhere, Instant and Personal retailer.

The Amazon store, in Downtown New York, is not primarily about sales. It’s a canny way of avoiding the logistical problem of ‘we called, you were out’ that can bedevil Christmas. This ‘conversion gap’ can also put consumers off at Christmas when it’s all about no fail shopping. It’s one reason why physical retail is still the largest element at Christmas. Who wouldn’t want a piece of that action?

The stores – and they will be multiple if New York is a success – are likely to be functional and more Argos than Apple as some commentators have suggested.

But is this anything more than a holiday gimmick? Seasonal stores have become a feature of a retail market in recent years, with no shortage of empty space and plenty of landlords willing to be flexible on short-term lets. Look at the boom in pop-ups in recent years. Is Amazon simply taking advantage of this to help it over a logistical hump?

The good news for customers is that the stores look likely to be putting customer service to the fore. This could be an interesting longer-term strategy for Amazon, which puts great store in its service offering. If returning goods to Amazon becomes as easy as doing so to M&S, that’s a great piece of service design.

This isn’t the first time Amazon has looked to get physical. It already has secure collection lockers in cities to make pick up easier. It has also used pop-ups to sell product and has sold Kindles through store groups Target and Walmart. It even looked to open stores in Seattle two years ago before going cold on the idea.

With the store development it will need to ensure that its famed slick online service is replicated in-store. The prospect of joining a queue to pick up Amazon deliveries could be more Royal Mail sorting office than titan of ecommerce. Same day delivery in New York or click and pick sounds great, but the experience needs to be Amazon-like.

Arguably Amazon is the most convenient retailer in the world: it delivers a huge assortment at highly competitive prices in a way that is simple to shop, and the more we shop, the more personal the experience becomes. We like that, but we don’t love it like we love other retailers. That is because other retailers, especially those that deliver an omnichannel experience like John Lewis, build emotion into everything they do, especially at Christmas.

Amazon isn’t scared of breaking boundaries and taking shopping everywhere. Perhaps the bricks-and-mortar format is an opportunity for Amazon to stand for more than convenience and price, and start to establish an emotional bond with shoppers at that most emotional (not to mention key trading) time of the year – Christmas.