Sunday, 14 March 2010

Is it the end for traditional retail (or the beginning)

starbucks-sml.jpgEver since the first e-commerce site was launched there has been a perceived battle of online and offline retail.

Online retail with it's apparent advantages of economies of scale, the ability to focus on the niche and the low start-up costs. Offline retail with it's higher costs to serve, reduced range (compare a high street book store with Amazon) and limited catchment areas.

But offline retail has one real advantage - it's physical.

I can see, and touch what i'd like to buy. I can compare products next to each other. I can assess size and appearance. This physical connection is not required across all product categories - which is why traditional music shops have struggled - but for many types of product, seeing it in person can be a necessity.

However, the lines are blurring and its less about offline or online shopping and more about convergence (or multi-channel retailing in retail lingo) - and the mobile device in your pocket is enabling this.

In a recent article in the Wall Street Journal, Forrester's e-commerce analyst Sucharita Mulpuru asked the question
"If somebody buys from a mobile device in your store, is that a Web sale or a store sale?"

This is interesting as for many people, one of the issues of buying in a store is actually the costly sales assistant. Yes I need someone to help sort out the actual purchasing of an item, but I'm less inclined to believe they can help me to select the right product - do they have the knowledge - and that they have my best interests at heart - how are they compensated.

The great thing about the integration of online and offline through the mobile device is that I can stand in front of a product in store and access reviews and pricing information instantly. I don't need a sales assistant to tell me why it's a great product, I have access to hundreds of reviews from real people to tell me if its a great product.

One retailer who gets this is Best Buy.

In a recent video they did for the National Retail Federation's 2010 Retail Innovation & Marketing Conference, they demonstrated their view of mobile integration within offline retail.

One thing I particularly liked in this thought piece from Best Buy is the linking of the physical product to online information. This was something I discussed on this blog back in 2008 and it's great to see a retailer with this on their radar.

Another interesting retailer is Starbucks. They have recently partnered with "new kid on the block", social network FourSquare, which they describe as:-
People use foursquare to "check-in", which is a way of telling us your whereabouts. When you check-in someplace, we'll tell your friends where they can find you and recommend places to go & things to do nearby. People check-in at all kind of places - cafes, bars, restaurants, parks, homes, offices.

So basically I can let FourSquare know where I am at any time, and they will let me know if my friends are there as well, plus it will automatically update my other social networks like Twitter and Facebook with my location. However, FourSquare aren't doing this just for fun as their website goes on to say:-
We all have our local hangouts and foursquare keeps tabs on who's the most loyal of all the regulars. If you've been to a place more than anyone else, you'll become "the mayor"... until someone else comes along and steals your title. It may sound a little silly until you see the list of places that are offering freebies to our mayors - free coffees, free ice-cream, free hotel stays - it pays to be a foursquare loyalist and check-in whenever you go!

And there's the magic.

FourSquare get to know where you go and how often - and this is what Starbucks is buying into.

They have partnered with FourSquare to develop a reward programme which recognises people for frequent visits. The rewards at this time are simply a "Barista Badge" (badges are a big thing on FourSquare), but this is just the beginning. Speaking in the New York times Bits blog, Chris Bruzzo, Vice President for Brand, Content and Online at Starbucks says:-
“It’s where the intersection between digital and physical starts to get interesting. Starbucks loves that, because we’re always looking for that intersection, which we think is the evolution of social networks.”

I think this is a very interesting development - whilst it may be the evolution of social networks I think it's actually the evolution of retail.

This "intersection between digital and physical" is all about enabling and tracking customer interactions. Regular readers of this blog will know I've spoken about recognising and rewarding this interaction before - and this is what Starbucks are doing.

In some senses the interaction is more important than the transaction as the interaction is further back in the buying process - if you can get someone to interact with you more often you have a better chance of converting this into a transaction - a sale.

The forward thinking retailers are recognising this and also recognising that traditional retail loyalty solutions are in the most part reactive - rewarding a decision that has already been made.

Of course there is a hope that the loyalty programme influenced this decision, but retailers like Starbucks and Best Buy are also ensuring that their loyalty initiatives are working harder and smarter - engaging customers before the purchase - and this is the traditional space for more mass above the line marketing; another area which is seeing a convergence - this time between above the line and below the line.

To me this is the real future of retail and retail loyalty.

Not only the convergence of channels but also the convergence of marketing. Engaging, recognising and rewarding customers across channels - before they purchase - before they are even a customer.

This isn't the end of traditional retail - it looks to me like it's just moved up a gear.

[Image credit Physorg]


Flexible Packaging Companies said...

Thank you for all the great posts from last year! I look forward to reading your blog, because they are always full of information that I can put to use. Thank you again, and God bless you in 2010.

Mark Sage said...

Thanks for the feedback - great to know you enjoy reading it.

Zhenhong Bao said...

michael kors handbags
celine outlet
michael kors uk outlet
asics,asics israel,asics shoes,asics running shoes,asics israel,asics gel,asics running,asics gel nimbus,asics gel kayano
tiffany jewelry
ferragamo shoes
versace sunglasses
tiffany and co
michael kors outlet
nike air max 90
longchamp solde
jordan shoes
tiffany outlet
beats by dre
rolex watches
oakley sunglasses
cheap jordan shoes
christian louboutin outlet
michael kors outlet
michael kors outlet
kate spade uk outlet
nfl jerseys wholesale
louboutin pas cher
fitflops shoes
cheap snapbacks
michael kors factory outlet
oakley sunglasses sale
cheap nba jerseys
gucci sunglasses uk
hollister clothing store
coach outlet online
reebok outlet store
michael kors outlet online
christian louboutin outlet
true religion outlet

Gege Dai said...

true religion outlet
michael kors handbags outlet
mlb jerseys
ugg boots
tiffany and co jewelry
omega watches
michael kors outlet
football shirts
ray ban sunglasses
louis vuitton sunglasses
longchamp outlet
mbt shoes
cheap uggs
fitflops sale
uggs outlet
christian louboutin outlet
prada outlet
converse shoes sale
fitflops uk
tory burch outlet online
foamposite shoes
ugg boots
lululemon uk
ferragamo shoes
coach outlet online
air max 90
longchamp outlet
true religion outlet
ugg boots
nfl jerseys
ugg boots on sale
true religion outlet
ugg boots clearance
longchamp solde
ray ban sunglasses sale

dong dong23 said...

ray ban sunglasses outlet
ray ban sunglasses
giuseppe zanotti sneakers
louis vuitton
louis vuitton outlet stores
michael kors handbags
michael kors uk
christian louboutin outlet
michael kors handbags
michael kors outlet
jordans for sale
coach outlet online
cheap nfl jerseys
gucci handbags
supra sneakers
kate spade outlet
longchamp outlet
louis vuitton
louis vuitton outlet
oakley sunglasses
louis vuitton outlet
timberland boots
michael kors handbags
christian louboutin shoes
vans shoes outlet
coach outlet
ray ban sunglasses outlet
louis vuitton outlet
louis vuitton outlet
ray ban sunglasses
true religion jeans
retro jordans
cheap jordans
gucci outlet
cheap jordans
nike roshe run
adidas outlet
michael kors purses
supra shoes