THINKING BEYOND SMARTPHONES: BUILDING IN-STORE EXPERIENCESRYAN SCOTT

INDUSTRY VOICES & GAME CHANGERS

Retailers and venue operators have always faced massive challenges, but the latest wave of disruption has made many of them yearn for the simpler days of sales-per-square-foot reports, staff turnover mitigation, product planograms, and endless campaigns to curb shrink.

Declining in-store traffic, an embold-ened competitive set, and new tech-nologies – beacons, mobile payment, till-less checkout, and other technolo-gies – have kept folks up at night in the home offices and back offices of nearly every retailer.

And retailers have responded. In the past five years, we’ve witnessed and participated in significant digital experi-mentation and pilots.

For many retailers, mobile apps have been a first area of focus. We believe that while this makes sense pre- and post-visit, there is a more limited role to be played by mobile tools while in the store. Barcode scanning, wayfinding (for some audiences), product infor-mation and reviews, and gift registry management are some effective applications. But brands should take care that they don’t push their best customers toward a “heads-down” shopping experience.

Instead, retailers should look beyond these small, bring-your-own-device approaches and really rethink the

venue. Interactive screens, in-store analytics, sales associate tools, and full-fledged digital experiences have the potential to bring customers into the physical space, and then create a compelling experience that ultimately results in improved conversion and a positive return on investment (ROI).

These approaches maximize traditional retailers’ key advantages – most signi- ficantly, the physical environment and employee interactions (sales associa- tes boost conversion significantly) – to create compelling brand experiences and loyal customers daily.

And with e-commerce representing only 9 percent of all commerce interac-tions in the U.S., retailers who integrate the digital and physical worlds will have a significant competitive advantage.1

The limits of a mobile-only strategyObviously, mobile remains table stakes for supporting customer engagement, but retailers need to get away from the idea that they’re going to win in-store with just a bring-your-own-device strategy.

There are important use cases. As we noted before, the customer will check prices, read reviews and ratings, and maybe even use wayfinding in-store.

1Forrester Research, 2015. Notes from Forrester’s Forum for Marketing Leaders, April 2015, New York.

INDUSTRY VOICES & GAME CHANGERS

We’ve also seen success with digital couponing, beacons announcing pro-motions, and mobile tools supporting wedding, baby, and college registries (see Target Registry, next page). There has also been some success in live sports and entertainment events by both the MLS (Major League Soccer) and MLB (Major League Baseball) offering game-related statistics, order-from-your-seat technology, and stream-ing video of recent highlights during live games.

But other applications – including shop- ping lists embedded in the mobile app, product videos and other promotional data, and traditional e-commerce product exploration – have had less success.

We’ve seen great companies design great apps that don’t get the usage they deserve – particularly in pure

retailers – because customers find little compelling reason to use them either in-store or at home. Even if the “hook” is present, there is still strategy work to be done around promoting the app, enticing guests to download in the moment, and removing barriers from getting the app open and used.

Therefore, many retailers are starting to ask the next provocative question: How can we enhance our in-store experiences sufficiently to deliver a modern, digital, and personalized shopping experience that enables the sales associate and creates the desired experience in the store?

The next level of in-venue engagement will mean broadening the aperture on digital possibilities beyond custo- mers’ smartphones.

In some ways, we’re just getting the right set of technologies to enable an affordable and sophisticated in-venue experience. Here are seven of the most significant and promising developments.

BEACONSIn the last two years, beacons have grown in popularity and sophis-tication. There are few clothing retailers, for example, who have not done at least a pilot with them. And the metrics, in our experience, are promising – coupon-based beacon messages have driven an average 5% to 10% increase in purchases of a promoted item.

Major installations include Macy’s installation of 4,000 beacons in all U.S. stores (in collaboration with Shopkick’s Loyalty platform), the 2015 SXSW Interactive Festival, and MLB’s 2014 World Series.2

But for all that, beacons remain primarily marketing & promotional tools; beacon installations aren’t yet solving essential, unmet customer needs. Until they do, they will remain a promising technology still in the experimental phase.

DROPPING HARDWARE COSTS The annual drop in hardware costs of consumer electronics means that we have now reached the point where in-venue investment in digital displays can generate a positive ROI. For example, in 2009, a 60-inch Pioneer Kura Plasma TV was $10,000, while by 2015 a similar display was $1,000. Similar patterns are seen in the support hardware, as well. For the first time, retailers are installing tens or even hundreds of screens in a given location at an affordable price.

REAL-TIME COUPONINGCoupons have long been an essential method of shaping demand at little direct cost to the retailer. But only recently have retailers embraced digital couponing. And leading retailers have moved beyond just digital delivery of flyers to the crea-tion of bespoke coupon apps – tied to that user’s online ID. This allows personalized coupons, as well as closed-loop data and analytics, to precisely measure promotion – and store – performance.

INSTRUMENTED STORESAnalytics data from in-venue displays equipped with cameras are being combined with sensors (in-store and in-the-cart) and mobile data (including couponing data) to create a greater understanding of in-store activity. These measures enable segmentation by age, gender, family size, and other metrics to provide stronger insight.

SALES ASSOCIATE CLOSED-LOOP MARKETINGLonger-term, we believe there is sig-nificant opportunity in connecting sales associates to customers. What if retailers sent notifications to sales associates based on nearby activity on an online channel? For example, if a high-value customer has a large basket or recently had a major issue on the website, a local sales associate could reach out to help or assemble the entire basket for in-store pickup. Leading retailers could consider bringing the sales associate into the loop, offering the customer an integrated experience.

APPLE PAY AND MOBILE POSThe continued growth of Apple Pay – now supported by 700,000 retail locations in the U.S. – and the launch of the Apple Watch (with integrated payment) represents the long-awaited mainstream adoption of mobile payment tools. In-venue, sales associate point-of-sale (POS) tools are also showing signs of promise.

AUTO-REPLENISHMENTOriginally for the B2B space, auto-replenishment is coming to the retail customer. Amazon’s Dash Button, for example, is an inexpen-sive networked “button” that enables the instant reordering of a variety of single products (e.g., laundry detergent) when linked to a Prime account. Partnering manufacturer brands (including Whirlpool, Brita, and Brother) are also integrating replenishment services into their hardware, so that replacement wa-ter filters, for example, are ordered when needed based on a customer’s actual usage.

2ZDNet. “Macy’s rolls out retail’s largest beacon installation.” http://www.zdnet.com/article/macys-rolls-out-retails-largest-beacon-installation/.

A SERIES OF NEW TECHNOLOGIES

OUR PERSPECTIVES

INDUSTRY VOICES & GAME CHANGERS

Four in-venue, killer modelsWe are finding that the in-venue, digital experience is a powerful tool to deliver demonstrably richer interactions. In assessing what is working well across venue categories, we see four powerful models for breaking out of the face-to-phone lockstep. These examples take advantage of the reality that venue operators may control their floors, walls, and employees more than they do their customers’ mobile phones.

3Retail Touchpoints. “Adobe Summit: Convergence of Brick-and-Mortar.” http://www.retailtouchpoints.com/topics/digital-marketing/adobe-summit-the-convergence-of-brick-and- mortar-and-digital-takes-center-stage.

4Medical Motion. “Gait Analysis Training – Medical Motion Partners with SportChek.” http://www.medicalmotion.pro/component/content/article/210-gait-analysis-training.

5Adobe Marketing Summit on March 9-13th, 2015.

Sometimes it requires an ambitious redesign to deliver on a vision. Coming off a number two rating in the 2014 SapientNitro “In-Store Digital Retail Study,” Canadian retailer SportChek doubled-down on in-store digital, completely gutting and rehabbing their West Edmonton flagship store. In the end, they installed 470 digital screens and integrated touch, gesture, trans-lucent displays, and radio-frequency identification (RFID) technology into the in-store experience.

In its first full year of operation (2014-2015 YTD), the store posted a 50 percent year-on-year sales growth, and SportChek is seeing a similar trend at its just-opened, similarly-configured Vancouver location.3

The West Edmonton store renovation added 21,000 square feet, and now allows customers to experience the products in-use with dedicated spaces for a video gait analysis tool, dynamic

bicycle fitting, a climbing treadmill, and a golf simulator.4

“Digitizing the store is about redefining the experience to create value for the customer,” SportChek’s VP of Digital Solutions, Frederic Lecoq, noted.5

Lecoq’s five keys:

Content is key in the new media world.

Move from broadcast to unicast by replacing print flyers with digital flyers.

Every impression should be the result of a calculation.

ROI and spending effectiveness — not marketing spend — drive the business.

Remodel the POS into point of experience.

“The future of retail is all about content, data, and connectivity. Be nice to your tech people,” Lecoq concluded.

The network: SportChek’s digital transformation

SportChek’s West Edmonton flagship store features 470 screens and has seen a 50 percent year-over-year sales growth through 2015.

INDUSTRY VOICES & GAME CHANGERS

Driving additional sales should be a top goal when it comes to next-generation in-store tools. Target’s latest generation of registry tools does just that, enabling guests to easily create and maintain baby, wedding, and college lists for themselves, family, and friends.

Launched in 2014, the Target Registry app runs on iPad Minis and is installed in more than half of Target’s stores nationwide.6 Guests can set up their device in-store or at home, and then use their own device or scanners placed on dedicated carts to maintain their shopping lists. Sales associates offer personalized help to guests in the baby registry locations.7

While specific ROI numbers are not publicly available, the registries have been successful enough to push the new platform from pilot to nation-wide rollout.

The connector: Target’s gift registry

Target’s gift registry kiosk allows guests to manage their online baby and wedding registries, while also connecting them to sales associates.

6Target.com Help Site. “Target Gift Registry.” http://www.target.com/gift-registry/.

7Star Tribune. “Target Launches two new apps, updates others.” http://www.startribune.com/target-launches-two-new-apps-updates-others/278273561/.

INDUSTRY VOICES & GAME CHANGERS

“Unfortunately, no one can be told what the Matrix is,” Morpheus notes in the 1999 film The Matrix, “you have to see it for yourself.” Virtual reality (VR) is an experience that is difficult to describe unless you’ve put on the goggles. Available in select Best Buy stores nationwide, the Samsung Gear VR Experience allows customers to demo the Gear VR headset paired with a Samsung phone.8

Best Buy’s survival in the highly competitive home electronics space is

The lure: Best Buy’s Samsung Gear VR Experience

The Samsung Gear VR Experience allows customers to spend time in virtual worlds in the store, driving trial of the technology, as well as store traffic. For many visitors, this is the first time they experience VR.

8The Verge. “You can try Samsung’s Gear VR in dozens of Best Buy stores.” https://www.theverge.com/2015/2/6/7991803/samsung-gear-vr-demo-best-buy-stores-feb-8th.

dependent on convincing tech-savvy customers to visit its web and physical properties regularly, and to convert them while they are there. Demonstra- ting the latest in gaming and enter-tainment technology – from VR to the latest TVs – is a key element of Best Buy’s strategy.

In-store technology like VR is particular-ly important for getting visitors further into the store and for making the store more of a destination for its younger, connected customers.

INDUSTRY VOICES & GAME CHANGERS

Navigating large stores and complex venues (such as airports, stadiums, and hotels) can be daunting experiences. And people are not always comfortable asking for help when faced with new or complex environments. Large-scale displays can provide interactive wayfin-ding and general information, as well as branded communications.

With beacons and Bluetooth techno- logy, these screens now have an active dimension, directly reminding passers- by of a range of options. Better yet, those message programs can be intel-ligently segmented by demographics, driving new behaviors in data-driven ways – all while delivering a much- needed customer service.

And the results from these new screens have been significant, with an initial pilot seeing 2,500 unique interac-tions per week across five directories on the property. Analytics indicate a 40/60 male/female split on usage, with 46 percent of users being young adults. Phase 2, now in development, will add locations and introduce new form factors and screen designs in additional parts of the facility.

The informant: Ionos platform

In-venue touchscreen technology like this display at the TD Garden in Boston, Massachusetts, not only provides context and location-aware recommendations, but also provides real-time data on traffic volume, age, and gender.

INDUSTRY VOICES & GAME CHANGERS

What does it take to carpe venue? First, you can’t rely solely on mobile for your in-store strategy. Instead, focus on connecting and blending your channels to provide real value and customer tools. In-venue digital screens are the right tools for delivering product information, guidance, and sales engagement in the store.

Second, scale should drive ROI, not break it. As hardware costs collapse, in-venue experiences can now have a positive ROI. Simultaneously, you likely already have the mature “dot com” in-frastructure – and the associated con-tent – to support these experiences. Brands can leverage their existing in- vestments in content to deliver great experiences. The cost side can be ad-dressed, as well. Look for hidden oper-ational costs that digital can eliminate.

Third, adopt the appropriate technolo- gy. Avoiding a “stove-pipe” mentality is essential. An in-venue screen is not another website, but rather a complete-ly different technology stack. Initial, pro-duct-based solutions have proved too siloed and closed off, too proprie- tary, and too tied to playlists and chan- nels (blanket content distribution).Instead, consider extending your exist- ing enterprise digital ecosystem as the system of record. Use the rest of your digital ecosystem to inform and complement your in-venue experiences. Digital platforms enable microtargeting based on location in the store, time of

day, and advertising/monetization algo-rithms. Longer term, it may be wise to consider beacons and mobile extensions.

Finally, close the loop on your analytics. In-venue experiences can be instru-mented just like the web – and the ROI lives in the analytics. For example, every in-venue installation could include cam-eras and software to recognize gender, age, and other baseline data. Retailers must link online and mobile activity with physical store activity and sales. These data can then be linked to the massive online analytics database, as well as augmented with cutting-edge, in-store instrumentation using infrared, beacons, Wi-Fi, and other technologies to identify in-store activity. Everything a retailer does from a design stand-point should be validated by data. And nearly everything in data influences the design.

ConclusionBrands have a unique opportunity to deliver compelling in-venue experien- ces. However, they must look beyond their mobile apps in order to build expe-riences that compel visitors to look up, not down, and engage in-store.

This is an exciting time for retailers and operators to get aggressive and embrace the opportunity. Whether you choose the network, the connector, the lure, or the informant, make sure to carpe venue!

Everything a retailer does from a design standpoint should be validated by data. And nearly everything in data influences the design.

SapientNitro®, part of Publicis.Sapient, is a new breed of agency redefining storytelling for an always-on world. We’re changing the way our clients engage today’s connected consumers by uniquely creating integrated, immersive stories across brand communications, digital engagement, and omnichannel commerce. We call it our Storyscaping® approach, where art and imagination meet the power and scale of systems thinking. SapientNitro’s unique combination of creative, brand, and technology expertise results in one global team collaborating across disciplines, perspectives, and continents to create game-changing success for our Global 1000 clients, such as Chrysler, Citi, The Coca-Cola Company, Lufthansa, Target, and Vodafone, in thirty-one cities across The Americas, Europe, and Asia-Pacific. For more information, visit www.sapientnitro.com.

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Ryan Scott Vice President, Global Strategy Lead Digital Marketing, SapientNitro Boston

rscott@sapient.com

Being responsible for defining capabilities, technologies, and partnerships (including our global partnership with Adobe), Ryan is able to lead development of SapientNitro offerings including our Integrated Experience Architecture to serve clients across a range of industries.

A special thanks to Sarah Traylor for her contributions to this article.