Virtual reality apartments, life-sized Wizard of Oz personalized displays and digitally enabled grocery stores all played into my experience at NRF this week. In just over two days of sessions, meetings, meals and more meetings with retailers and the agencies and technology vendors helping them go to market, I came away with a top high and low that I thought were worth sharing for digital commerce marketers. If you’re a Gartner client and want to know more about what else I took away from NRF, let’s set up a call.
Customer-Inspired Business Excites
The speaker I found most compelling was Sir Charlie (Sir Charles Mayfield), CEO of the John Lewis Partnership – the employee-owned, UK conglomerate that operates both department store John Lewis and supermarket Waitrose. He described a business that is in the midst of a critical transformation – a shift that will impact many retail and non-retail businesses faster than they know.
“I hate the word Omnichannel, or any channel, because customers don’t understand that language. They don’t care … If you speak channel, you are thinking about increasing same store sales – but it’s like trying to go against the way of the world,” said Sir Charlie. He is talking about the shift to a customer-centric view and that instead of managing the business by optimizing for sales per square foot or other transactional metrics, brands should focus on which customers they are serving and the ‘sales and profits per customer’. In a sense, Sir Charlie was espousing a long-term, lifetime value (LTV) view of the world – a topic near and dear to my heart.
Though the topic was about retail – both online and in the physical world – the imperatives are the same. The experience cannot be ‘mundane’ and your products cannot be ‘me too’ if you intend to win a buyer’s attention, dollars and ultimately loyalty. He pointed out that this transition is not achieved through mission and vision alone – it requires the entire organization to learn a new language while the brand is investing in a variety of new priorities, all of which are underscored by strategic use of customer and operational data.
The John Lewis Partnership is not a new business, founded in 1864, it’s evolved many times and now boasts online sales of 40% at John Lewis and 15% at Waitrose. With continued growth – but a recognition that things must again evolve – I was excited to see a leader thinking about true long-term customer relationships that are the foundation of an exceptional business.
Store of the Future Assumptions Disappoint
Part of the fun of shows like NRF is the demos and showcases of potentially new and exciting technology or concepts in action. This year, I saw at least five different ‘store of the future’ demos. Each painted a vision that – while compelling (or creepy) in its ‘Minority Report-like’ ability to proactively personalize my shopping experience – relied on digital technologies whose joint adoption rate continues to be negligible.
Each demo, across a wide range of vendors who shall remain nameless, envisioned me (our fictional shopper) passing a store and being greeted by imagery and offers that are uniquely tailored to me – luring me in. There I’m met by interactive displays and associates empowered with tools to style me or make compelling recommendations based on prior knowledge of my preferences, followed by dressing rooms or similar ‘test’ environments that respond to my needs for alternative sizes and options with great ease. Closing out the experience is the option to buy digitally from a mobile terminal and decide when and how I’ll receive my newfound merchandise.
The fallacy: each demo situation relied on me being a loyal customer, who has the app downloaded to my smart phone, who has interacted enough that the merchant has connected my online and offline behavior and who has Bluetooth on at all times. If we just take the ‘Bluetooth on’ and ‘loyalty app downloaded’ assumptions as our baseline we’ve got a tiny target population for whom this scenario will truly work and add value. The most optimistic estimate of Bluetooth ‘always on’ in the US is 40% while an aggregate of customer loyalty statistics suggests that only 12% of loyalty program members have downloaded their favored brand’s app.
That means we are talking about a very small population of loyal customers who have joined the loyalty program, 12% of whom have downloaded the app and around 40% of whom have Bluetooth enabled. My rough estimates – being generous – put that at 1-2% of a brand’s customer base. Though that’s certainly likely to grow – I was dismayed at how many companies are trying to solve the problem with solutions built atop such challenging odds. Though I am all for the art of the possible – I’d like to see a few alternative solutions.
What I really enjoyed hearing about where the brands using anonymous in store data and rich online data to inform merchandising and assortment decisions across both online and offline experiences. It was equally exciting to see how some companies were trying to tackle the anonymity problem with visual analytics to do segment-based in store personalization or anonymous device tracking to recognize and welcome repeat customers – regardless of their likelihood to have an app. What I’m excited about next is the technology that will bring all those ideas together in the most common apps that consumers use every day … whether a shopping app like Shopkick or RetailMeNot, a social network, a messaging or banking app – I feel confident that we’ll be solving the personalization problem soon – I just don’t think it’s going to be with silo’d loyalty apps, iBeacons and Bluetooth in the near term.