Cheil s Up II Written by Jiyoung Shon, Retail Marketing Team 06 Omni-channel stores offer seamless offline and online retail experiences With the spread of mobile devices, more people are purchasing things online, where they can shop anytime and anywhere they want. Some people collect information about a product online, check out the actual product at an offline store, and then finally purchase the product online at a discount. Such shopping behavior is called showrooming. a Also, as the retail industry evolves toward a seamless Omni-channel b environment, consumers opt for the most satisfactory shopping experience regardless of channel or device, leading to greater sales online. Against this backdrop, offline retailers are making all-out efforts to attract consumers who are migrating to online shops. Success formula for an offline store in an Omni-channel environment In 2013, four major retailers in the UK including Comet, Jessops, HMV, and Blockbuster filed for bankruptcy one after the other within one month, sending shockwaves across the British retail industry. In the United States, several big retailers had already declared bankruptcy since 2009 and in Korea, the sales of department stores that lead the retail industry turned negative in 2013 for the first time in history. In other words, retailers big and small were faltering all across the world and there were some commonalities: They were all traditional brick-and-mortar retailers that offer items available online, and they are all losing customers to online competitors. As the online channels took the retail industry by storm, traditional retailers have fought back with various strategies based on the Omni-channel retail environment. The main goal of the traditional retailers is to strengthen the competitive edge of the offline store and offer customers a seamless shopping experience that incorporates both online and offline channels. Pick-up service lets customers collect products at a selected time and place One of the biggest advantages of an offline store is that the 1
07 a. Showrooming: Shopping behavior that embraces the benefits of both the online and offline store. This describes how traditional brick-and-mortar retail stores are turned into showrooms. b. Omni-channel: Retail environment in which the lines between online and offline stores blur and various channels are combined together. Online stores, mobile stores, SNS, and other channels are integrated under one brand to provide the customers with seamless shopping experience. Omni-channel strategy lets customers find the products they want regardless of channel or device. c. Cross-selling: Inducing customers to buy products from other categories than the product being viewed or purchased d. Up-selling: Enticing customers to buy more expensive products or services than they originally intended 1. Click & Collect service allows customers to conveniently pick up John Lewis products bought online at a selected store at a particular time. 2. Lotte.com s Smart Pick allows customers to pick up low-priced products they purchased online at an offline department store. 3,4. Walmart s In-Store Mode app puts shopping at your fingertips customer can actually see the product before buying it. Pick-up services evolved from this advantage. Most traditional retailers have set it up so that customers can place an order online in advance then collect the product at the offline store at a certain date. Offline stores can use this service to attract customers and boost sales. John Lewis, a prominent department store in UK, was the pioneer of it there, with a service called Click and Collect. It s allowed customers to conveniently pick up products bought online at local convenience stores at selected Waitrose shops. It was well-received because customers can shop anytime they want via online shopping channels while also having the certainty of being able to pick it up at an appointed time instead of having to rely on an unpredictable delivery system. The company used this service to boost sales in 2013 by 49%, year-on-year. And with more customers visiting the offline store, the company found lucrative opportunities for cross-selling c and up-selling d. This kind of pick-up service was also introduced by Lotte Group in Korea, which has since expanded its offerings. Customers who order via the mobile online store "Lotte.com" can visit the offline outlet, Lotte Department Store, to try out the product and request refunds if necessary. This is a prime example of combining the advantages of both online and offline shopping, which in turn led to greater sales at Lotte.com and more visitors at the Lotte Department Store. 2 3 Smarter shopping through in-store mobile Another practical solution to retaining-store shoppers is offering in-store mobile experiences. If consumers are using mobile devices to research and compare products before making the purchasing decision, why not help them search for information online at the offline shop? Retailers can adapt and use this consumer behavior to their advantage by providing apps and free Wi-Fiso that store visitors can easily find the information they need to make their purchase decisions. In fact, most successful retailers have already introduced this 4
08 1. Digital kiosk installed at John Lewis lets shoppers easily compare and look for products that are not available in-store. 2. Macy s Magic Fitting Room features multi-touch technology that enables shoppers to try on clothes without physically taking any off. 3. John Lewis offers fun and interactive virtual fitting experiences using a motion controller with the Virtual StyleMe Mirror. 1 4 2 concept. Mobile apps can feature a wide range of functions and Walmart s In-store Mode is a prime example. Before arriving at Walmart, customers can use In-store Mode to find the location of the store, get promotional information, and search through the inventory list. Then, customers can enhance their in-store shopping experience by using a variety of self-help features such as In-store Navigation and Scan & Go. In particular, the Scan & Go function allows customers to scan the bar code and pay for the product immediately, which in turn led to higher turnover and greater customer satisfaction. With Walmart s app, in-store shoppers can view price comparison information while enjoying customized shopping experiences just as if they are shopping online. By combining the benefits of offline and online stores, Walmart offers a seamless Omni-channel shopping experience to its customers. 3 Digital screens broaden the in-store shopping experience Digital screens installed in offline store sallow customers to take their online web-based shopping experience into the physical store. Customers can get product information or read reviews online and purchase the product offline. The touch screen displayed in the store is linked with the online site, enabling customers to easily
09 4. The Adiverse Project shows a product in detail using interactive and visual sources. 5. M&S Virtual Rail allows customers to easily browse and compare products. The zoom-in feature provides a detailed image of the product. 6,7. 8SECONDS stores are equipped with digital showwindows and multi LFD displays to showcase the brand and various products at each touch point. The setup lets the company adapt to rapid changes in the fast-fashion industry. search for information or compare different products. These digital screens are installed to boost purchase rates among customers who went online after showrooming. If there is a wide range of products available, customers can easily browse through the list on the screen. When the product that the customer wants is in stock, the customer can check out the product on the digital screen and compare it with other brands or models. They can also purchase products not on the shelves by placing an order on the digital screen. Some retailers have encouraged active consumer participation by introducing interactive contents specific to different types of media. For example, the U.S. department store Macy s recently introduced the Magic Fitting Room. It works by projecting an image of a dress that been selected onto a mirror image, letting shoppers virtually try on the clothes. After this interactive service was launched in 2010, other fashion retailers jumped onto the augmented-reality shopping bandwagon by making improvements in UI and UX. However, the virtual dress-up tool cannot replace the actual fitting experience so there has been limited impact on the bottom line. In the case of John Lewis, the Virtual StyleMe Mirror is considered unsuccessful because, while it provided new experiences to the customers, it failed to boost sales. Other retailers have adopted a slightly different approach by installing large-scale, high-resolution 5 screens to show enlarged images of products, letting customers get close up and detailed views so they can compare features. In addition, tools such as Digital Showwindow and Media Wall are used to enhance the customer experience at each touch point by showing pertinent information or images. These digital tools can be very useful if there is a wide assortment of products that cannot be fully displayed in a crowded store or if it is difficult for the shopper to compare all the in-store products at once. Seen in this way, retailers undergoing the trial-and-error process of incorporating digital tools to provide better in-store experiences do so not only to generate buzz but also to boost sales. And it turns out to be effective. However, if the digital tool is too fancy or the interaction 5 6 7
10 1. Best Buy s Brand Shop-in-Shop allows customers to view and compare various products. Samsung Entertainment Experience(VD/AV) and Sony Experience. 2. Samsung Experience Shop(Mobile)and Apple Store. 3. Best Buy s Geek Squad provides professional consulting and customer service. itself is emphasized too much, then targets may lose interest in the actual products. So it s important for retailers to think carefully about the product display when installing digital devices as well as the contents that are shown on the screen. 1 2 Ultimate Showroom, the optimal product display The biggest advantage of an offline store is that the customers can actually see the product. Although there is a vast amount of information and testimonials online, customers still value the experience of seeing the product for themselves and selecting it at the physical store. Therefore, offline retailers are focusing on store displays to effectively showcase their signature products and encourage customers to make in-store purchase decisions. When purchasing large home appliances, the customer experience at the physical store doing things like opening a refrigerator or turning a dial can be particularly important. In fact, customers show a greater tendency to check out the home appliances at offline stores before making the final purchasing decision. The leading electronics retailer Best Buy took note of such customer behavior and launched the Ultimate Showroom to help customers along. At first, it might seem odd that the offline retailers are willing to do this, considering that showrooming is what is hurting them in the first place. But if the showrooming trend is here to stay, why not attract these customers to your store? This is what Best Buy is trying to do. To this end, Best Buy increased the number of Shop-in-Shop e brands and allowed customers to easily do brand comparisons. The company also strengthened the customer service department to boost its edge in face-to-face interaction with the in-store shoppers. Above all, Best Buy introduced a new pricematching policy to guarantee that the price of its products match that of its online competitors so that the customers no longer have 3 e. Shop-In-Shop: One retailer takes space in another s store to sell a product or a service
11 4. Best Buy s price matching policy guarantees the lowest price. 5,6. New Connected retail experience uses i-beacon which is based on Bluetooth technology. an incentive to look for a lower offer online. Best Buy s strategy is already proving effective. Integrated and seamless retail experience Offline retailers are now working hard on multiple fronts. Retailers offer pick-up services to attract customers to the offline store and provide in-store mobile apps so customers can easily find what they want. They can also find detailed product information or do product comparisons using digital screens installed in the stores, giving them the confidence to make purchasing decisions on the spot. If a product is out of stock, then the customer can order it online using in-store digital screens and have it delivered. As such, retailers are now actively incorporating mobile and digital technologies throughout the entire shopping process. The greatest challenge facing retailers now is figuring out how to seamlessly weave mobile shopping with brick-and-mortar shopping experiences to create greater synergy. Up until now, mobile and digital technologies were simply add-ons to traditional offline stores, failing to provide a seamless shopping experience. At times, encouraging in-store shoppers to use online apps backfired. And while the experiences were fun, they did not always lead to increased sales. Beacon offers a great example of providing customers with a seamless retail experience. It sends customized advertisements or relevant information to the customer s mobile device based on data such as customer location or shopping purpose. Beacon guides the customer throughout the entire shopping experience from the moment he steps into the store to the moment he leaves after purchasing something. Macy s and other retail chains have introduced the Beacon service, and Korea s Shinsegae Department Store has launched customized location based services f to provide a more personal shopping experience. Ideas for new solutions based 5 4 6 on Beacon services or similar devices are springing up and retailers should work hard to stay on top of the trend. Cheil Worldwide RX(Retail Experience) Group strives to provide the most optimized and comprehensive experiences in this rapidly changing retail environment. The RX Group outlines, plans, and designs the shopper experience in the retail environment, encouraging customers along in their purchase decision making. In order to provide an integrated environment base on good understandings of the product(brand), space(retailer), shopper, and digital technology, the RX Group cooperates with the DX, UX and DnA Center. Retailers can no longer attract customers by simply focusing on the physical display. The RX Group keeps a close eye on the constantly changing behavior of the shoppers and works hard to design optimal retail environments and superlative customer experiences. f. Location Based Service: combining mobile communications and information technology Cheil s up is a column that introduces the stories of Cheilers who garnered a lot of attention and the performance status & results of Cheil Worldwide.