Retail Analytics: What s In-Store?

Transcription

1 Retail Analytics: What s In-Store? THIS STUDY IS BASED ON A SURVEY OF 124 EXECUTIVES FROM GLOBAL RETAIL CORPORATIONS. IT EXPLORES THE INTERESTS, NEEDS AND PLANS OF THOSE EXECUTIVES FOR USING IN-STORE ANALYTICS. IT ADDRESSES THE CHALLENGES AND OPPORTUNITIES INVOLVED IN USING IN-STORE ANALYTICS TO IMPROVE IN-STORE PERFORMANCE AND TO TRANSITION TO MULTI- CHANNEL RETAILING. THE STUDY WAS SPONSORED BY BRICKSTREAM AND CONDUCTED BY HAMLIN HARKINS, LTD. Participants included executives from top tier, high growth (5%+ in 2013*) retailers from eight major industry types: supermarkets, department stores, specialty electronics, warehouse, drug stores/ pharmacies, cell phone stores and big box retailers. The survey spanned four geographic regions: U.S., Europe, South America, and Asia. More than half of the sample (54%) consists of retailers with revenues of $1B and more. The balance consists of retailers with revenues between $100 million and $1 billion. Perspectives come from heads of operations, marketing, IT, loss prevention, executive management, and analytics Brickstream Corp. All Rights Reserved.

2 RETAILER MULTI-CHANNEL READINESS: EARLY EXPLORERS Multi-channel retailing means delivering a seamless retail experience to consumers across store, e-commerce, mobile, and social channels. The retail community is optimistic about using in-store analytics to deliver that experience for brick-and-mortar retail operations. Executives are aware that they need to make the transition to multi-channel retailing. Yet, most are still in the early stages of exploring options, learning about how in-store analytics can help, and considering what applications to try first. While top-tier retailers are moving into multi-channel activity, overall patterns in executives reactions for the larger retail market indicate four major trends: ➊ They do not feel adequately informed. ➋ They are unclear about which in-store analytics they need and about realistic expectations for investing in the technology to capture in-store analytics. ➌ They are learning about in-store analytics within their functional and departmental silos. This creates confusion and disjointed thinking about whether they have the analytics they need and about how to best make use of analytics for the transition. ➍ They welcome advice from credible, neutral resources that can help them learn about available tools, and a cost-effective, practical approach to deploying and realizing ROI from in-store analytics. * This criteria was used because RSRs research shows retailers which are growing faster than the average are early adopters of technology, are more aggressive in their plans for moving to multi-channel and are more motivated to improve customer experience. Our data validates this group is adopting multi-channel practices sooner than other retailers. Retailers in this market require education and support to smooth their path in becoming early adopters. While many technology vendors present select information about retail analytics, retailers seek a trustworthy resource that can educate them about proven methods for improving performance, customer loyalty, and revenue. 2 Retail Analytics: What s In-Store?

3 TRANSITION TO MULTI-CHANNEL MARKETING Multichannel retailing is an emerging concept that many retailers are just beginning to understand. There is no single owner responsible for multi-channel retailing. However, the survey shows that most retail professionals look to marketing leaders for guidance and leadership on this new model. At the same time, retailers concede that distributed parties including marketing, IT, sales, executives, finance, merchandising, buyers, and public relations are involved in multi-channel efforts. These parties all see a need for in-store analytics and believe it will benefit their work. Interviews indicate these parties work independently (rather than as a team) to evaluate the overall strategic value of this to the enterprise. The timeline for becoming fully multi-channel is typically within one to four years. IN WHAT TIMEFRAME DO YOU EXPECT YOUR ORGANIZATION WILL BE FULLY MULTI-CHANNEL? 19 % % We are now 50 % SUPERMARKETS AND DEPARTMENT STORES ARE EARLY ADOPTERS The store is the dominant transaction channel in retail. And yet, it is the one channel where retailers lack customer behavior analytics beyond transactions, mystery shopper data, and surveys. In support of this, retailers are examining how to collect and use in-store analytics. These retailers anticipate investments one year to 18 months out ( ). Currently, supermarkets and department stores adopt and invest in in-store analytics and multi-channel activities earlier than other retailers. Drug stores are slower to adopt. Retailers report using multiple channels today. Store, e-commerce, and customer loyalty data are the most commonly used. Social and mobile channels are emerging. Social media and mobile applications are less frequently used. 3 Retail Analytics: What s In-Store?

4 WHAT CHANNELS DOES YOUR OPERATION USE TODAY, OR HAVE PLANS TO USE IN THE FUTURE? WHICH OF THE FOLLOWING TECHNOLOGIES DO YOU PLAN TO USE? 88 % Stores 68 % Wi-Fi in the store 86 % Ecommerce 68 % Loyalty system 81 % Customer Loyalty 52 % Mobile payment or wireless POS 76 % Social Media Apps 52 % Queue management 74 % Mobile Apps 33 % Bluetooth Low Energy 29 % NFC/BLE-enabled signage 4 % Others* Interest is high for using in-store technologies in the future. Strategies include people counting, Wi-Fi in the store, loyalty programs, mobile payments, customer product preferences, queue management and Bluetooth Low Energy (BLE), and electronic signage to gain a deeper understanding of customer purchase patterns. *Phone apps; inventory mgt.; customer suggestions and follow-up TECHNOLOGIES COUNT FOR RETAILERS; RETAILERS PLAN TO USE THE FOLLOWING TECHNOLOGIES BY 2015: Source: 2014 Brickstream Global Retailer Survey Retail Analytics: What s In-Store? 4 Retail Analytics: What s In-Store?

5 BELIEVE MULTI-CHANNEL RETAILING WILL HELP SALES ACROSS ALL CHANNELS MULTI-CHANNEL INCREASES SALES FOR ALL CHANNELS Anticipated impact on sales by channel Consistently, retailers feel developing a seamless experience for customers across all channels will have a positive impact on their businesses and will produce stronger sales revenue in every channel. This belief is a strong motivator for the difficult changes required to move from multiple non-integrated channels to seamless channels. When asked to rate the anticipated impact on sales by channel within their businesses, retailers are positive across all key channels. Ecommerce Store sales Mobile sales Social sales Call centers Catalog sales Other sales channels Source: 2014 Brickstream Global Retailer Survey Retail Analytics: What s In-Store? E-commerce and the store are expected to enjoy the biggest impact. To truly understand how multi-channel retailing affects each channel, the retailer must have comparable analytics from each channel. In-store analytics comparable to e-commerce, mobile commerce, social commerce and call-center commerce are sorely lacking. IT S NOT JUST MARKETING THAT BENEFITS Retailers consistently identify marketing as the lead function that can benefit from in-store analytics, although they solidly cite several other functions that can benefit as well. They mention merchandising, operations and loss prevention as other areas that will be able to effectively use customer behavior data from the store for overall business improvements. By and large, there is a clear rallying cry for marketing to take the lead on coordinating and driving the case for value. 5 Retail Analytics: What s In-Store?

6 WHICH GROUPS DO YOU FEEL BENEFIT THE MOST FROM UNDERSTANDING THE DATA ABOUT WHAT GOES ON IN THE STORE ( 10 IS AVERAGE)? Group Mean Med. S.D. Freq. Marketing Merchandising Operations Loss Prevention Other MEANS BY TYPE OF RETAIL Group Super Big Box Elect/Cell Dep t. Drug/ Other MEANS BY ROLE Operations Mktg. IT Loss Prev/ Other Marketing Merchandising Operations * 12.8 Loss Prevention * 12.4 There are two significant exceptions in expectations ➊ Asian participants expect merchandising to benefit their business more than other retailers do. ➋ IT executives expect operations and loss prevention to benefit the business more than other functions. ANTICIPATED INVESTMENTS NEED REFINEMENT Anticipated investments to capture useful in-store analytics range broadly by industry-type. The average amount spent is $12.8 million. However, the range by industry is wide: $25.6 million for department stores to $.5 million for drug stores. The range of estimates and uncertainty in responses signals the need to support retailers with helpful guidance about realistic budgeting and expectations. They want to know what it will cost to get in-store analytics. RELATIVE TO BUDGETS, HOW MUCH HAS YOUR ORGANIZATION BUDGETED FOR ANALYTICS? Type of Retail Average Budget Overall $12,868,000 Electronics/Cell Phone $25,554,800 Department Store $25,626,200 Supermarket $6,458,700 Big Box/Warehouse $2,819,500 Drug Store/Other $510,000 6 Retail Analytics: What s In-Store?

7 INFORMATION SOUGHT ABOUT IN-STORE ANALYTICS Retailers see the potential value of securing a robust range of in-store analytics. Because they are familiar with people counting, they place a premium on customer traffic data. They specifically value counts of how many customers enter the store and how many customers who enter the store actually buy something, also known as sales conversion. Next, they most value knowing which promotions attract customers, where various customers go in the store, and how many times customers pick up their own brand products instead of national brands. The values placed on in-store analytics are predominantly consistent across industries and regions. Small differences in this data exist by retailers. Department stores score the value of promotion effectiveness more highly than other retailers. Supermarkets score customer dwell time at specific displays and knowing the number of incidents of sweet-hearting more highly than other retailers. IF 0 IS NOT AT ALL VALUABLE AND 10 IS AVERAGE, WHAT SCORE WOULD YOU GIVE FOR HOW VALUABLE IT WOULD BE FOR YOU TO KNOW. Topics Mean Median S.D. Freq. How many customers enter the store How many customers who enter the store buy something Which promotions attract customers Where the customers go in the store Times customers pick up own brand products instead of national brands Where specific type of customer goes in the store How many times a specific customer enters a specific store Service times Out of stock items Track demographics of private level credit card holders How long customers wait in line Whether customers are checking prices online from smart phones while in a store (i.e. show-rooming) Wait times in lines Lengths of lines for customers who wait Times customers select and the de-select own brand items How long customers dwell at a specific display Compliance on end cap displays Determine how many incidents of posible sweet-hearting Retail Analytics: What s In-Store?

8 By department respondent, IT executives more highly value data about sales conversion and information about service time. Retailers who believe in-store analytics will improve their overall business results value key types of information. These include: ➊ How many customers enter the store ➋ How many customers who enter the store buy something ➌ Where the customer goes in the store ➍ Out of stock items ➎ Whether customers check prices online from smart phones while in the store ➏ Lengths of lines and wait times for customers ➐ Times customers select and then de-select own brand items and ➑ How long customers dwell at a specific display Select regional differences exist. Retailers in Europe and the U.S. score the value of knowing whether customers check prices online from smart phones lower than retailers in other regions. Retailers in South America and Asia value knowing how long customers will wait in line more highly than retailers in other regions. European retailers value knowledge about compliance on end cap displays less than their counterparts. South American and U.S. retailers value data about how long customers dwell more highly than other retailers. 8 Retail Analytics: What s In-Store?

9 STRATEGIC PRIORITIES: HOW CAN IN-STORE ANALYTICS HELP? To investigate what operational priorities and challenges retailers have, this study asked respondents to rate 22 challenges, some of which were previously examined in RSR s 2013 Study: The Relevant Store in the Digital Age. Results in RSR s study ranked getting new technologies rolled out to stores as the top priority. In this data, we find a difference in that getting new technologies rolled out in stores is but one of a top group of four challenges competing for the interest and mindshare of executives. It is important to note these many operating challenges that compete for people s attention and focus. A critical exercise for retailers is to identify as many easy-to-use and concrete ways as possible that in-store analytics can help resolve operational challenges. STRATEGIC PRIORITIES IN KEY OPERATIONAL CHALLENGES Challenges Mean Median S.D. Freq. Hiring good people Differentiating your company from the competitor Getting new technologies rolled out in stores Bring a more digital/online experience to the stores Solving customer disatisfaction caused by lack of integration between store/other channel sales Creating a more convenient customer experience Improving customer service while holding the line on payroll costs Customer price sensitivity Providing ability to locate and sell merchandise from anywhere in the company Offering personalized attention from our employees to customers Helping store managers stay focused on driving store results Staying top of mind with customers in the face of competition Implementing cross-channel processes in stores Understanding the customer s journey across all channels Helping employees respond to informed, smartphone-enabled shoppers Improving employee productivity Improving our product mix Solving store managers lack of information needed on the selling floor Educate our in-store employees in the use of technology Reducing shrink Handling transparency in increase competitive pricing Adding self-service customer-facing technologies Retail Analytics: What s In-Store?

10 ROLE OF IN-STORE ANALYTICS: MOTIVATIONS TO INVEST AND INHIBITORS TO TRY Respondents predominantly believe there is value to investing in technology that provides insights that support a full customer experience and increase revenue and overall performance. Most especially, this relates to supporting the use of smartphones to drive customers to the store and to increase sales. They note that investment in in-store analytics can help them anticipate and understand customer needs and expectations, improve store operations, and identify and plan new offerings for customers. On the other hand, retailers are not jumping to take advantage of this. They are investigating what it will take to leverage these new tools. OPINIONS ABOUT VALUE AND ROLE OF IN-STORE ANALYTICS How true is it... Mean Median S.D. Freq. There is value in investing in technology to support use of smartphones to drive consumers into our stores*** Investing in technology to support consumer smartphone abilities helps drive sales within our stores In-store analytics are crucial to our future success Understanding the customer s experience in the store is critical to delivering a successful multi-channel experience Our store employees are key to giving our customers more reasons to visit our stores Our company is on a solid strategic path for meetng our goals Future retail sales growth will come primarily from digital channels ather than stores In-store technology helps our stores compete with an online experience Our store results will continue to erode unless we find a way to incorporate technology as part of the store experience Our current store technology will be capable of enabling our future store shopping experience *** Belief about high impact on the business correlates significantly with value in investing in technology to support use of smartphones to drive consumers into stores (r=.46; sig.=.04) 10 Retail Analytics: What s In-Store?

11 REASONS TO INVEST Reasons to Invest Mean Anticipate and understand customer needs and expectations in the store 13.3 Improve store operations, such as better Staffing/customer experience 12.9 Identify and plan for new offerings for customers 12.6 There are many reasons retailers prefer to wait and see. ➊ They question the price and return on investment for in-store analytics (32%). ➋ They need assurance that the tools will provide the valuable data claimed (10%). ➌ They are not ready to adopt new tools when current methods are adequate for now (10%). ➍ The attention on tools distracts from a more important focus on building personal relationships with customers while in the store (6%). Moreover, retailers are unconvinced that store results will actually erode if they don t incorporate in-store analytics quickly even though they believe revenue will increase with multi-channel retailing that relies on in-store analytics. They question the speed with which they should adopt. Overall, the reasons to wait and see suggest retailers are exercising caution, with a clear desire to learn how best to step forward in cost-effective, smart ways. Without a credible resource to guide them, adoption of in-store analytics will be paced. 11 Retail Analytics: What s In-Store?

12 A LEARNING FORUM EXECUTIVES WANT TO LEARN FROM EARLY-ADOPTERS Brick-and-mortar retailers seek a credible resource to serve as a trusted guide to success with in-store analytics and the transition to multi-channel retailing. Retailers would like to see well-established business cases, documented testimonials, early stage advisory services, consultative abilities, and training to bring disparate functional departments together to understand the integrated value proposition of analytics and accurate return on investment calculations for users. Multi-channel is about delivery of full-value to the consumers, regardless of where they choose to shop with the retailer in the store, online, or on their mobile devices. Retailers welcome a resource that offers a full suite of services to educate and aid multi-channel retailers to confidently gain the value they need. When asked about the value of a free, private membership-only forum for multichannel retail executives using in-store analytics, respondents scored it above average. They favor creating a safe-house that enables them to learn alongside peers in non-competing companies so they can explore this opportunity. VALUE OF FREE, PRIVATE, MEMBERSHIP ONLY RETAIL EXECUTIVE FORUM Where 10 is average value of a forum for retail executives... Mean = 14.2 Value of specific topics to discuss in the forum: Challenges companies have experienced and how they have overcome them Mean 12.4 Advice and updates about the best use of technology for you 12.3 Insights about adoption of new technologies 12.3 Solutions for how best to do multichannel marketing 12.0 Speakers on key topics, trends and advances to help your business 11.6 Other Retail Analytics: What s In-Store?

13 CONCLUSION READY, SET... Retailers who recognize themselves in this report are in good company. Multichannel retailing is coming, but it s not here yet. In-store analytics are critical for a successful transition. Executives are eager to learn more about how to best take advantage of in-store analytics to make the transition and about how to set realistic expectations for a successful adoption. This study was conducted by Hamlin Harkins, Ltd. Since its inception in 1982, Hamlin Harkins, Ltd. has assisted in the growth and evolution of more than four hundred of the world s leading corporations by providing The Hamlin Harkins, Ltd. Advantage: delivering fresh, effective, accelerated solutions in every stage of a company s development. Cascade, the proprietary attitudinal research system of Hamlin Harkins, Ltd. delivers a complete solution to the research needs of more than one hundred of the world s leading companies including: Apple Computer, Chrysler, General Electric, IBM, Intel and Phillips Corporation. Results from Cascade have earned Hamlin Harkins, Ltd. two awards for its contributions to organizational research. The Cascade attitudinal research system was designed to deliver a complete solution to these and many other client organizations seeking to attain key strategic goals related to corporate identity, product positioning, market research, employee attitudes, change navigation and corporate communication. For more information, review the company website at or contact: donna.hamlin@hamlinharkins.com. 13 Retail Analytics: What s In-Store?