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
* 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.
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.
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?
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 (2015-16). 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.
WHAT CHANNELS DOES YOUR OPERATION USE TODAY, OR HAVE PLANS TO USE IN THE FUTURE?
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.
WHICH OF THE FOLLOWING TECHNOLOGIES DO YOU PLAN TO USE?
*Phone apps; inventory mgt.; customer suggestions and follow-up
Source: © 2014 Brickstream Global Retailer Survey “Retail Analytics: What’s In-Store?” TECHNOLOGIES COUNT FOR RETAILERS;
RETAILERS PLAN TO USE THE FOLLOWING TECHNOLOGIES BY 2015:
Stores Ecommerce Customer Loyalty Social Media Apps Mobile Apps 88% 86% 81% 76% 74%
Wi-Fi in the store
68%
Loyalty system
68%
Mobile payment or wireless POS
52%
Queue management
52%
Bluetooth Low Energy
33%
NFC/BLE-enabled signage
29%
Others*
BELIEVE MULTI-CHANNEL RETAILING WILL HELP SALES
ACROSS ALL CHANNELS
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.
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.
Ecommerce Store sales Mobile sales Social sales Call centers Catalog sales Other sales channels MULTI-CHANNEL INCREASES SALES FOR ALL CHANNELS
Anticipated impact on sales by channel
WHICH GROUPS DO YOU FEEL BENEFIT THE MOST FROM UNDERSTANDING THE DATA ABOUT WHAT GOES ON IN THE STORE (“10” IS AVERAGE)?
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?
MEANS BY TYPE OF RETAIL MEANS BY ROLE
Group Super Big Box Elect/Cell Dep’t. Drug/Other Operations Mktg. IT Loss Prev/Other
Marketing 16.2 12.3 17.1 17.2 12.9 14.4 15.9 19.2 14.3
Merchandising 13.9 11.9 15.0 15.7 13.4 12.7 14.1 16.2 14.4 Operations 13.9 12.2 14.4 13.6 12.3 12.0 12.8 17.4* 12.8 Loss Prevention 12.3 12.0 11.9 1.2 9.3 9.8 11.9 14.3* 12.4
Group Mean Med. S.D. Freq.
Marketing 15.7 10.0 10.3 124 Merchandising 14.1 10.0 9.3 124 Operations 13.5 10.0 9.3 124 Loss Prevention 11.7 9.0 9.0 124
Other 10.5 6.0 11.9 6
Type of Retail Average Budget
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.
Topics Mean Median S.D. Freq.
How many customers enter the store 20.7 20.0 9.8 124
How many customers who enter the store buy something 20.5 20.0 9.9 124
Which promotions attract customers 18.5 20.0 10.4 124
Where the customers go in the store 18.2 20.0 10.8 124
Times customers pick up own brand products instead of national brands 18.0 16.5 10.4 112 Where specific type of customer goes in the store 17.4 16.0 10.5 124 How many times a specific customer enters a specific store 17.0 15.0 10.1 124
Service times 16.4 15.0 10.2 124
Out of stock items 16.4 15.0 10.9 124
Track demographics of private level credit card holders 16.4 14.5 11.2 112
How long customers wait in line 16.3 10.0 10.9 124
Whether customers are checking prices online from smart phones while in a store
(i.e. show-rooming) 15.8 13.0 10.2 124
Wait times in lines 15.8 12.0 10.3 124
Lengths of lines for customers who wait 15.8 15.0 10.1 124 Times customers select and the de-select own brand items 15.8 11.5 10.4 112 How long customers dwell at a specific display 15.6 14.0 10.4 124
Compliance on end cap displays 15.3 12.0 10.6 124
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 store➍
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
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: HOW CAN IN-STORE ANALYTICS HELP?
Challenges Mean Median S.D. Freq.
Hiring good people 11.4 9 8.1 124
Differentiating your company from the competitor 11.4 9 8.8 124
Getting new technologies rolled out in stores 11.3 10 8.2 124
Bring a more digital/online experience to the stores 11.3 9 8.5 124
Solving customer disatisfaction caused by lack of integration between store/other channel sales 10.9 9 7.8 112 Creating a more convenient customer experience 10.9 9 8.1 124 Improving customer service while holding the line on payroll costs 10.8 9 7.6 124
Customer price sensitivity 10.8 9 7.8 124
Providing ability to locate and sell merchandise from anywhere in the company 10.8 8 8.7 124 Offering personalized attention from our employees to customers 10.8 9 8.3 112 Helping store managers stay focused on driving store results 10.7 8 7.9 124 Staying top of mind with customers in the face of competition 10.6 8 8.5 124 Implementing cross-channel processes in stores 10.5 9 7.9 124 Understanding the customer’s journey across all channels 10.4 8 7.5 124 Helping employees respond to informed, smartphone-enabled shoppers 10.4 9 7.7 112
Improving employee productivity 10.4 8 8.3 124
Improving our product mix 10.3 8 8.2 124
Solving store managers’ lack of information needed on the selling floor 10.2 8 7.5 124 Educate our in-store employees in the use of technology 10.1 8 7.9 124
Reducing shrink 10.0 8 8.1 124
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.
ROLE OF IN-STORE ANALYTICS: MOTIVATIONS TO INVEST AND
INHIBITORS TO TRY
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*** 11.8 9 8.1 124
Investing in technology to support consumer smartphone abilities helps drive sales
within our stores 11.2 9 8.0 124
In-store analytics are crucial to our future success 11.2 10 8.0 124 Understanding the customer’s experience in the store is critical to delivering a successful
multi-channel experience 11.1 9 7.6 124
Our store employees are key to giving our customers more reasons to visit our stores 11.1 9 8.0 112 Our company is on a solid strategic path for meetng our goals 11.0 9 7.6 124 Future retail sales growth will come primarily from digital channels ather than stores 10.7 8 8.5 124 In-store technology helps our stores compete with an online experience 10.2 9 7.2 124 Our store results will continue to erode unless we find a way to incorporate technology as part
of the store experience 9.8 8 7.4 124
Our current store technology will be capable of enabling our future store shopping experience 9.7 8 7.2 124 OPINIONS ABOUT VALUE AND ROLE OF IN-STORE ANALYTICS
REASONS TO INVEST
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.
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
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 multi-channel 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: Mean
Challenges companies have experienced and how they have
overcome them 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 6.0
READY, SET . . .
Retailers who recognize themselves in this report are in good company. Multi-channel 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 www.hamlinharkins.com or contact:
