building the intelligent store
TRANSCRIPT
Building the Intelligent Store
• Cognizant20-20Insights
Executive Summary
Asfarascustomersareconcerned,onlineretail
is now the state-of-the-art in shopping. Online
customersenjoyasmart,personalizedexperience
withrapidpriceandproductcomparisons,plenty
of informationandoften spot-on recommenda-
tionsbasedontheirpurchasehistoryandprefer-
ences.
Shopping in retail stores can’t compare. Most
merchandisesits orhangs insilence, a sortof
take-it-or-leave-itproposition that does little to
helpcustomersmakeabuyingdecision.
The networked “intelligent store” is about to
change the balance of power. By leveraging
customers’ mobile devices, retailers can now
integrate online and mobile channels with
in-storeshopping.Theobviousadvantageisthat
themerchandise theywant canbe takenhome
immediately.
Rethinking the Model
Thegoalisn’tjust“modernization”butrethinking
theconceptsofsellingand customerservice to
createa true21st-century shoppingexperience.
Inanetworkedstoretheexperienceisenhanced
through customer recognition, information
“pushed” to customers based on preferences,
specialoffersmadeinreal-time,theaggregation
and redemption of digital coupons and greatly
expedited“dynamiccheckout.”
For retailers, the intelligent store lowers costs
through process streamlining, less reliance on
xedPOSandthereductionofcouponhandling
fees.Atthesametime,itmakesthedeploymentof
salespersonnelmoreefcientandimprovestheir
interactionwithcustomerswhile increasing the
effectivenessofin-storepromotions.Theobvious
potential:increasedbasketsize,greatercustomer
satisfactionandloyaltyandhigherprots.
The Growing Challenges
of Bricks-and-Mortar
Makenomistake:storesstillmatter.Theyarethe
most critical partof themanufacturer-to-retail
supplychain.Thebeststoresaredoingmoreto
helpcustomersmakedecisions,nalizeopinions
and exitquickly to serve assatisedambassa-
dors.And thedesire to shop inpersonhasnot
abatedamongcommittedshoppers.
But store retailers face many challenges.
Obtaining genuine value from store business
processeshasneverbeenmoredifcult.Margins
arecompressed.The Internet and socialmedia
are funneling information to an increasingly
sophisticatedcustomer.Competitivedistribution
channelsareemerging.
Asa result,protableretailershave tobalance
storeand infrastructure costswiththeneedto
improve customersatisfactionanddifferentiate
thein-storeexperience.That’sa tallorderwhen
your storetrafc isbleedingattheedges from
onlinecompetition.
cognizant20-20Insights |october2011
Five Critical Questions
Retailersneedtoaddressvecriticalquestionsto
deliverthe21st-centurystoreexperience:
1. Howdoes theretailer-to-shopperrelationship
changeintheworldofsocialmedia?
2.Howdoyoubringintothestoreenvironment
theserviceoptionsavailableonline?
3.How can you reduce the cost to servewhile
increasingcustomerloyalty?
4.Howdoyouautomaterepetitivelabortasks?
5.How do you make the shopping experience
memorable?
The Five Things People Want
InaMay 2011columnonhis dailyblog [“What
(people)want”],marketingguruSethGodinlisted
the ve thingshebelievesallofuswant.They
happentocapturepreciselywhattheintelligent
storeisallabout:
•Noticeme.
•Likeme.
•Touchme.
•DowhatIsay.
•MissmeifI’mgone.
Emulating the Online
Experience In-store
ThebestretailWebsitesdoitall.Shoppingonline
offers customer recognition, customer appre-
ciationandcustomerresponsiveness.And they
claimtomissuswhenwearegone.
The intelligent store brings that same level of
service and technology to physical stores. It
offers retailers theopportunity to reinvent the
physicalshoppingexperiencesoitexesrespon-
sively depending onhow consumers choose to
interactwithit.
Theintelligentstorewillcometoshopperswith
servicesandadd-onsthatconsumersarewaiting
for.(Seesidebar,“WhatDoShoppersSay?”)
•Mobile Support:Theintelligentstoresupports
mobile applications like couponing to serve
customers who are increasingly comfortable
withsophisticated smartphones. In fact, it is
nowpossibletocaptureandautomatecoupon
redemption — so customers don’t have to
personallymanagetheirpapercoupons.
•Loyalty Data: Smartphones (and in-store
touch screens) will link to loyalty data and
providepersonalizedcommunications.
•Social Networking: Through social network-
ing,customerswillbuildcommunity,getfeed-
backandshareinformationrightinthestore.
•Real-Time Targeted Information: Product
informationwillbeavailabledigitallythrough
signsorshoppers’handhelddevices.
•Dynamic Checkout: Payment will be made
almost anywhere in the store, so no more
checkoutlineupsandfarmoresalesassociates
workingtheoor.
High Integration, High Touch
Theintelligentstoretakesmulti-channelintegra-
tiontothenextlevel.Anin-storeshoppermight
runaprice-comparisonapplicationwhiletapping
into one ormore social networks for opinions.
GPS-enabled geo-location services can draw
consumers to in-store promotions at nearby
locations.
Theintelligentstorealsomakessmarteruseof
staff, which is in keeping with a recent major
pushbyretailers.According toaJanuary2010
studybyRISNews, in2009planned upgrades
ofworkforcemanagement applications jumped
61%.1 Suchhuge interest reectsapronounced
desiretohire,trainandschedulemoreefciently
andtobetterdeploystafftopersonalizein-store
service,likeonlineretailersdo.
Point-of-service is where the intelligent store
really shines. The shopping experience can be
enhancedwith a high-touch option that keeps
customers coming back. Staff can spendmore
timewithandimpartmorehelpfulinformationto
shoppers,increasingsatisfactionandbasketsize.
Mobile device links or self-service kiosks ease
store navigation,promote the in-store“endless
aisle” concept and bringWeb delivery alterna-
tivestoin-storeshoppers.
How Do You Build the
Intelligent Store?
Here are seven fundamental prerequisites that
makeastore“intelligent”:
1. Take the store to the customer.Storesneed
tobeeverywherethatshoppersare—ofine,
online and on the road. Retailers need to
leverage the latest technologies to provide
20-20Insights 2
shopperswithproductinformation,detailson
promotions, checkout opportunities, delivery
alternativesandotherservices, regardlessof
location.
2.Integrate stores with other supply chain
elements.Agilesupplychainsincludestores.By
integratingwithmerchandising,sourcing,logis-
tics,ordermanagement and orderfulllment,
the intelligent store enables exible demand
responsenomatterwherecustomersare.
3.Support social networking.Intelligentstores
areanextensionofcustomers’socialnetworks.
Smart retailers tap social media to engage
theircustomers.
4.Be customer-centric. Intelligentstorestrack
andexpanduponcustomertrendsandrelation-
ships.Yougrowyour customerbase through
targeted promotions, personalized messages
and in-store loyalty management programs.
Customersoptintothesecapabilitiesbecause
theyrecognizethevalue.
5.Empower store managers. Intelligent stores
should be outcome-oriented. They provide
store managers with the data needed to
reacttoexceptionsin-store,generatingalerts
(whenashelfisoutofstock,forexample)and
decisions(assigningthere-stocktasktoastore
associate).Thisempowersstoremanagersto
bemoreeffectivebybeingontheoor,helping
customersanddrivingrevenue.
6.Manage the store efciently.Moreeffective
use of employees is another major benet.
With dynamic checkout, reliance on POS is
reduced, freeingpersonnel towork thesales
oor. The intelligent store also provides
associatesreal-timeaccesstoenterprisedata
andhelps toplanworkschedules toimprove
customerservice.Analyzingkeytrendssuchas
shrink patterns enables store managers to
target their activities and drive bottom-line
productivity.
7. Shift from point-of-sale to point-of-service.
Point-of-sale is the most important and
often theonlypointofcustomer interaction.
Strategies that reducePOS dependence and
create differentiated at-shelf, mobile “point-
of-service,” or customer handheld “applet”
solutions let shoppers execute checkout
services fromanywhere within oroutside of
thestore.
The Intelligent Store Has Arrived
Allsevenprerequisitesoftheintelligentstoreare
possible today in the networked in-store envi-
ronment.Butrealityisn’tremotelyclose.Infact,
in-store shoppinghasn’tchangedall thatmuch
foracentury.
Yes, store environments are radically different
tolookat,as ismerchandizing.Butanonymous
customers still stroll through stores without
information to evaluate goods, and goods still
just sitmutelyona shelforhang froma rack.
Eventechnologicaladvancessuchaspromotional
videosarereallyjusttapeloopswithoutatarget
audience.
Untilrecently,shoppingonlineandin-store,have
beencompletelydifferentexperiences,often to
thefrustrationofcustomers.OurintelliSTORE SM
solutionbridgesthegapbetweentheonlineand
physicalstoreexperiencewithleadingedgetech-
nologiestomakecustomershappierandretailers
moreprotable.
In this networked store, customers connect to
thestore’sdatasystemwiththeirmobiledevices.
They are recognized based on loyalty and
shoppinghistory.Real-timeofferscanbemade.
Helpful information can be “pushed”basedon
preferences.Digitalcouponscanbeaggregated
andredeemedautomatically.Checkout is faster
andmoreinformation-rich.
Conclusions
1. Shoppers are empowered. Retailers need to
rethinktheirstorestrategyandadapttonew
technology/trends.
2.Theanswerinallcasesistoavoiddislikesand
amplifywhatcustomerswant.Intelligentstore
technologydoesboth.
Getting Started
The intelligent store is the future of physical
retailing. The technology exists today. It’s up
to retailers to begin innovating so they can
developtheirownstrongplatformaheadofthe
competition.
20-20Insights 3
20-20Insights 4
What Do Shoppers Say?
In lateAprilof 2011,we conductedour second
annual Shopper Experience Study, tracking the
preferences of 2,427 shoppers in the U.S. and
Canada.2
Thesearesomeofthehighlightsmostrelevantto
ourIntelliSTORESMservices:
Shoppersmostdislikewhileshopping:
• Outofstock(73%)
• Slowcheckout(67%)
• Storeassociatewithpoorknowledge(47%)
Mobileservicesthatshoppersarewaitingfor:
• Couponswasthetopchoice(5.9of10)for
servicesshopperswilluseifofferedona
mobiledevice
• Loyaltyprogramawards/offers(5.3of10)
• Productcomparisons(5.3of10)
• Product/pricelookup(5.3of10)
Deals,discountsandsocialnetworkingarehere
tostay.Inorderofimportance,shoppersprefer
thesetypesofsitestotakeadvantageofspecials:
• Groupbuying/deals(Groupon,LivingSocial,
DailyDeals)
• Discounts(Ideeli,RueLaLa,Beyond
theRack,Gilt)
• Socialnetworkingplatforms(Facebook,
Twitter,MySpace)
• Geolocation(ShopKick,Foursquare,Gowalla)
Shopperswouldliketoseestorepersonnelmake
theseimprovements:
• Abilitytomatchcompetitiveonlineprices
(68%)
• Improvedcustomerserviceskillsenabledby
technology(64%)
• Morestoreassociatecontactintheaisleswith
checkoutprocessingcapabilities(58%)
• Betterelectronicaccesstoproductinforma-
tion,inventorylocationandordering(53%)
• Betterproductknowledgeenabledby
smartphone,tablettechnologyanddigital
signage(27%)
Customersmostappreciatedordesiredthe
followingservices:
• Homedeliveryofin-storepurchasesatno
extra
charge(29%)
• Automaticredemptionofcouponsfromthe
retailerandmanufacturers(25%)
• Storepickupofonlinepurchases(20%)
• Returnstostoresafteronlinepurchaseand
homedelivery(19%)
Shopperswereveryinterestedinusingcoupons/
giftcardsasanalternatepaymentmethod(8.3
outof10).
Footnotes1 “StoreSystemsStudy2010,”RISNews,January2010,page16.
2WithMarketTools,Inc.weconductedanonlinesurveyof2,427shoppersintheU.S.andCanadainApril2011.
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AbouttheAuthors
StevenSkinnerisaVicePresidentwithCognizantBusinessConsultingandleadstheRetail,Consumer
GoodsandHospitalityPractice.Hehasover21yearsexperienceinprofessionalservicesandretail,with
expertiseintheareasofstrategicplanning,innovation,retailoperationsandmulti-channelstrategy.
Steven’sworkexperienceincludesleadershippositionsatHomeDepot,MicrosoftandAccenture.Heis
agraduateoftheU.S.NavalAcademyreachingtherankofCommander,U.S.Navy.Stevenreceivedhis
MBAfromtheUniversityofChicago.HecanbereachedatSteven.Skinner@cognizant.com .
DeepthiTimmasarthy isaConsultantwithCognizantBusinessConsultingandisacoreteammember
of theRetailStoreOperations lineofbusinessconsulting forCognizant.Shehasover sixyearsof
experienceandvariedexperience leadingconsultingengagements, requirementsgathering, vendor
evaluationandfunctionalprojects—apartfromnicheassignmentsinPoint-of-Sale(POS).Deepthihas
anMBAfromIndianInstituteofManagementBangalore,IndiaandaBTechfromtheIndianInstituteof
TechnologyMadras.ShecanbereachedatDeepthi.Timmasarthy@cognizant.com .