May 1, 2014
By Sarah Sluis,

Retailers Bring the Digital Experience In-Store

The retail experience is on the cusp of tremendous change. While predictions vary depending on whom you speak to, the numbers all point to one outcome: Retail will change more in the next decade than it has in the past century. "It's not an exaggeration to say we're seeing more change now than we have in hundreds and thousands of years of retail," says Doug Stephens, founder of the consultancy Retail Prophet.

Consumers who shop online are used to seeing reviews and detailed product information and receiving recommendations. They now want those same experiences when they're navigating through a store, touching merchandise, and trying to find out which product is the best for them. "Customers' expectations of the stores have changed. They want the benefits of online to exist in-store," says Renato Scaff, managing director of Accenture's retail practice. The principles of e-commerce have to move to the physical world.

A Shopper's Companion: The Smartphone

Walk through any retail location and you'll see consumers browsing while using their phone. Many savvy shoppers are using smartphones to augment their retail experience—and not in the "showrooming" ways retailers once feared. They can look up product information, text a friend a picture of an outfit, or consult a recipe to ensure they're purchasing all the required ingredients. Mobile phones take the place of dozens of tools used in the pre-smartphone era: store maps, price checking, or asking the advice of a sales associate. But for the most part, consumers aren't engaging with a mobile experience designed for them by the retailer. As retailers come up with better and more valuable ways to engage their customers, adoption and use of mobile applications should creep up.

Geo-targeted marketing and services are among the most valuable services retailers can add to their mobile experience. Wouldn't it be nice to ask your phone where to locate that hard-to-find part at a home improvement store instead of tracking down a busy employee?

One player in the space, Point Inside, helps retailers such as Lowe's or Meijer's engage shoppers by providing a "store mode" for their mobile apps. Although it's focused on providing a great in-store customer experience, CMO Todd Sherman says Point Inside's overarching goal is to "integrate it so [the retailer] has one view of the customer, whether they're in-store or online." A customer with a Meijer's app can see his shopping list, clip coupons, track his loyalty program rewards, and even learn which aisle he can find the gluten-free rice cakes in. Free in-store Wi-Fi in most locations helps customers quickly access the app without racking up data charges.

The Meijer's and Lowe's apps take advantage of stores' existing planograms to map items in the store and make it easy for shoppers to find them. They can also increase basket size by making sure customers find everything they're looking for. "If I have twenty items on a shopping list, and only found nineteen, that's five percent you're missing. That's a simple ROI calculation," Sherman says. For something like a bathroom project, customers often have to make multiple trips to assemble all the materials they need. An app with lists for each project increases basket size and ensures customers get everything they need from Lowe's.

While Wi-Fi and GPS can pinpoint a user's location accurately enough to set up broad geographical parameters, newer technologies, such as Apple's iBeacon, can pinpoint a customer's location even further, unlocking a host of other possibilities. "If you read the hype, you would think [iBeacons] were deployed globally," jokes Marc Ferrentino, founder and CEO of Nomi, which offers digital solutions for physical stores, from analytics to marketing to mobile. The technology is still new, but should start appearing in stores by the end of 2014, according to Ferrentino's estimates. Nomi has several ideas for how iBeacon use might play out as the company talks with various retailers.

Discount stores are interested in using iBeacons to gamify the shopping experience, such as setting up scavenger hunts that will reward customers for visiting different sections of the store. A quick service or convenience store could use iBeacons as a substitute for a punch card. There are also more subtle uses of iBeacons in the works. If a customer opens up an app in the jeans section of a department store, the starting page would be specifically tailored to jean content, saving users from extra searches