GS Logo
The Green Sheet, Inc

Please Log in

Banner Ad
View Archives

View flipbook of this issue

Care to Share?


Table of Contents

Lead Story

Retail strategies converge at merchant threshold

News

Industry Update

NEAA bids farewell to industry leader

Heartland levels host of charges at Mercury

The risky business of bitcoin

Mothballs for XP raises security concerns for ATM ISOs

Features

The development of Payza's mobile strategy

Views

Leading the charge on card data security

Patti Murphy
ProScribes Inc.

Bitcoin bubble: Risks to the payment system

Edward Barton
G2 Web Services

Education

Street SmartsSM:
Who's your data?

Dale S. Laszig
DSL Direct LLC

Marketing: Getting your brand out there

Michael Gavin
Merchant Warehouse

Which sales model is right for you? – Part 1

Aaron Nasseh
Prudential Payment Systems Inc.

Company Profile

Payvision

Tranzlogic

New Products

Streamlined social media payments

Yapyzal
ePaymentAmerica

Inspiration

Simple ways to retain top MLSs

Departments

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

February 24, 2014  •  Issue 14:02:02

previous next

Retail strategies converge at merchant threshold

The growing disparity between overall retail sales and the number of shopper visits to brick-and-mortar locations is causing many merchants to scramble for ways to address recent slippages in foot traffic. ShopperTrak, a firm that measures and analyzes such traffic in 50,000 global retail locations, recently predicted a 2.8 percent increase in first-quarter 2014 year-over-year retail sales and a 9 percent decline in shopper traffic.

Shifting shopping patterns and renewed consumer confidence are shaping this trend, which for savvy merchants can represent tremendous opportunity. "While foot traffic will continue to slow due to changing consumer patterns – with more shoppers purchasing online or researching products online before heading to stores – retailers must remember an overwhelming majority of all retail sales in the U.S. will occur in brick-and-mortar stores," said ShopperTrak founder Bill Martin.

Statistical data suggests economic resilience persists within the brick-and-mortar culture. Internet analytics firm comsScore Inc. attributed 11 percent of total retail spending to online transactions in the fourth quarter of 2013. Martin believes retailers who deliver a seamless customer experience both in-store and across all channels will emerge ahead of the rest. Many industry observers agree. Meeting consumer expectations through channel melding has accelerated an influx of next-generation technology that can not only entice shoppers, but also keep them engaged.

Sense of discovery

In a visceral sense, the battle for consumer dollars has pitted brick-and-mortar against online retail, but in reality one mode can augment the other and thus provide an integrated shopping experience without diminishing either channel.

According to international retail architect Michael Ellis of 5+design, brick-and-mortar merchants today are focused on enhancing the experiential qualities in retail spaces and in bringing a variety of venues to retail environments. The objective is to evoke a sense of discovery and provide consumers who shop in stores something special they wouldn't necessarily get online.

"The pleasure of a really nice store is just what's within those four walls, and you kind of want to get immersed in that," Ellis said. "I think store design is so critical now, because you're painting a 360-degree manifestation of the brand, and that environment says as much about the brand as the service and everything else."

Aging malls continue to dominate the U.S. retail landscape, and many mall operators are repositioning their businesses to remain competitive. "Some retail centers are putting in car washes, dry cleaning pickup, all kinds of things to ensure that their customers can focus on shopping," Ellis said, adding that property managers are incorporating more places where shoppers can linger or meet with friends to alleviate the in-and-out perception of mall shopping.

Ellis also believes small town centers connected wirelessly to serve local communities could gain in popularity. He envisions a "trend of richer, more activated neighborhoods, and it all ties into the whole driving less, walking more societal trends which are leading the way."

In addition, redevelopment projects underway in the United States and economic development in emerging global regions are providing incentive for investment in live-work community hubs. "I think it creates a huge opportunity, perhaps maybe even more so in some developing countries, to create rich, layered environments where retail is really important, but where the other aspects of life, like a post office or whatever, are there as well," Ellis said.

Showroom shadows

The shopper pattern of viewing products in-store only to purchase them later online, known as "showrooming," has been the bane of brick-and-mortar merchants until recently. According to an IBM Corp. study of 30,000 global consumers, 8 percent of consumer respondents admitted to showrooming in the past year, up from 6 percent in 2012, but the incidence of online purchases made as a result of this practice dropped from 50 percent to 30 percent year-over-year, based on those surveyed.

The study also found that consumers who partake in the omnichannel experience were more concerned about such things as price consistency across all channels, the ability to ship items to consumers from warehouses when the items are out-of-stock in-store, consistent assortment across channels and the ability to accept returns of online purchases at physical stores. Thus, the overall experience was fundamentally more important to survey respondents than price alone.

For ISOs and merchant level salespeople (MLSs), delivering an omnichannel program is often complicated by the fact that merchants are at different points in the spectrum. "The challenge for sales folks these days is that it's really a shift from traditional payment sales to solutions sales," said Chris Lee, President of North American Strategic Partners for Moneris Solutions. "They have to ask different questions."

Lee, who is also the Electronic Transactions Association Technology Committee Chair, said ISOs and MLSs should be asking merchants whether they have concerns about keeping track of their inventory or tracking their website sales as well as in-store sales. "You can consolidate that all into one inventory system, where it was traditionally two separate systems, because the POS was separate and they weren't integrated," Lee said. She urges MLSs to probe deeper to uncover merchant pain points.

One such pain point is revenue loss due to showrooming, but this can be counteracted. "We have a number of different things that we've done to prevent showrooming," said Kevin Colao, President of retailcloud. "We are feeding merchant inventory into all the different tools that people use for showrooming." He added that tools can also enable merchants to be in the mix when consumers showroom at competing retailers or at other locations outside of their stores.

Another possible defense is to mobilize e-commerce websites. Once a website is mobile-enabled, anyone entering a store can immediately scan an item or quick response code to launch a merchant's mobile website. "They can peruse the merchant's website, look at products, look to see the quantities on hand and pricing," Colao said. "This is providing consumers with visibility of product lines, product reviews and affiliated products."

For example, with an affiliate product program in place a merchant can alert a shopper that a blue shirt they're interested in has a matching tie, which happens to be in stock. Algorithms are able to track and analyze shopping trends, previous purchases and stock levels, making it possible to adjust affiliate product recommendations in real-time.

Add Wi-Fi device tracking to the mix, and merchants begin to understand how shoppers interact with individual brands, a potent tool when restocking shelves. Electronic shelf-edge labels that connect to shopper devices using two-way radio frequency or Bluetooth low-energy (LE) technology also enhance the in-store experience by giving shoppers immediate access to promotional offers on preferred items.

Mobile thread

The inseparability of mobile devices and their owners presents a retail opportunity of such magnitude that most agree we're only beginning to scratch the surface. "The thing to keep in mind about mobile is that it's a cross-channel enabler," said Richard Crone of Crone Consulting LLC. That's because mobile is present in every other channel experience, whether a potential customer is walking into a store, using an ATM or logging onto the Internet.

"There's an opportunity here to actually enhance the customer experience with more self-service without having to make a new capital expenditure, because the customer has already paid for the phone and they are already on a data plan," Crone said. "The key is how can you enhance an existing channel with this new connection point?" He suggested ISOs and MLSs can step in to help retailers incorporate mobile into the shopping experience.

The next hurdle is determining how to use mobile technology to connect with known, registered customers when most brick-and-mortar merchants do not know who their customers are until shoppers approach the POS to pay for products. "The single greatest opportunity is to change that paradigm, and it is a massive cultural change, moving to a CRM [customer relationship management] -based model where you know who your customers are, and yet you can identify and communicate with them on their terms," Crone said.

Customers can opt in to receive relevant communications based on preferences they select. "The way you do that is with an app," Crone said. "If you expect your customer to interact with you more than once digitally, you need an app. The app enriches the opportunity to provide relevant value before, during and after the sale. It's something we call the five trigger points." (See "The five mobile sales triggers" sidebar accompanying this article.)

An iMobile3 platform could bridge the technology-trust gap for consumers. Dubbed PassMarket, the platform generates passes and inserts them into the leading mobile wallets. "It allows merchants to publish loyalty passes, or loyalty programs, into the consumer marketplace, and then consumers can ingest that loyalty program into their wallet of choice," said Bob Leonard, Chief Executive Officer and Managing Partner of iMobile3. He added that consumers can turn passes on or off at will.

Once inserted into a user's phone, PassMarket's micro-application, geo-fencing capabilities open the channel for two-way communication with all customers who have inserted the pass inside their mobile wallets. "From a merchant's perspective, they can establish a brand presence inside of that wallet at a fraction of the cost of building an actual full-size application," Leonard said, adding that because PassMarket doesn't rely on short message service technology, push notification quantities are unlimited.

With the addition of Bluetooth LE technology to PassMarket, merchants can now place beacon devices both at their thresholds to identity customers entering stores and at other points to track foot traffic patterns. "What's interesting here for the ISO channel is that we actually offer a secure vault by which consumers can store a credit card on file, create a mobile payment pass, which can speak to the beacon, and the beacon is going to notify me that payment is due," Leonard said.

Crone believes mobile payment registration holds the key, noting that "the one who enrolls is the one who controls." The race for enrollment involves three entities: retailers, banks and third-party intermediaries like Google Inc., Isis and PayPal Inc. "The safe bet for the retailer is their brand, their tender, their app," Crone said. "No matter what happens in this market, there is not likely to be one wallet to rule them all."

Virtual assistance

The concept of assisted shopping is nothing new, but the technology behind it has advanced dramatically. In 1983, an early pilot of an interactive video kiosk called TeleTouch was launched by ByVideo Inc. and Compufill, then a division of McKesson Corp. It was installed at San Francisco Bay Area retail, grocery and pharmacy locations, as well as the San Francisco International Airport. Resembling a standalone ATM, the kiosk allowed shoppers to use the touch-screen to browse through multiple retail product catalogs, as well as order and pay for items, such as flowers, and have them shipped.

The interactive technology in TeleTouch was considered revolutionary at the time, but it became a casualty of timing due to limitations in telecommunications bandwidth. Flash forward to today. Mobile and cloud-based technologies can now manage entire infrastructures regardless of size, which has leveled the playing field for merchants in ways previously not possible.

In 2013, Seattle-based Xomni launched an omnichannel retail platform with what it determined to be best-of-breed technology partners. The company stated the platform deploys cost effectively and offers advanced assisted selling features, including three-dimensional interactive customer displays that integrate with sales associate tablet devices. When customers tap items on-screen for product descriptions and comparisons, sales associate devices can be synced with what customers are viewing.

At that point, geo-location technology can extend the interactive experience. Chad Brown, founder and CEO of Xomni, said the company uses OmniPlay, which leverages geo-fencing and is able to say, "Alright, the associate is located here. All OmniPlay compatible digital signs, kiosks, larger form factor signs, such as Magnetic 3D signs, are located near you. Which one do you want to take over to extend your experience and enhance that decision-making process with the consumer?"

With glasses-free, three-dimensional, full-motion visual display capabilities, customers can also preview and preorder items not yet available, such as the next year's vehicle model, or view how a certain appliance might fit into an existing kitchen. With advancements like this, it appears the convergence of high tech with high touch has already arrived.

In the end, some retailers will reinvent themselves as showrooms with most of their inventory available online; others will capitalize on the unique advantage of being a brick-and-mortar merchant, which is the ability to attract loyal "shop local" shoppers with products and services they can buy nowhere else.

With that in mind, today's retail visionaries are more determined than ever to ensure that every step in the shopping experience is as engaging, convenient and memorable as possible, whether those steps are physical, virtual or both.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

previous next

Spotlight Innovators:

North American Bancard | Harbortouch | USAePay | IRISCRM.COM