Separating the fads from the favourites
Five senior marketers advise on which technologies are proving indispensable for retailers, how to keep pace with developments and marrying the online and in-store experiences.
The panel (l-r above)
Peter Wright, UK marketing manager, Ikea
Alison Sagar, UK marketing director, PayPal
Orla Barrett, marketing director, Styloko.com
Lorna Westwood, head of ecommerce and online marketing, Pandora
James Foord, vice president of business development, mySupermarket
Marketing Week (MW): Is it important for retailers to keep up with the latest technology, or can it prove distracting?
Peter Wright (PW): As retailers we should be keeping pace with the latest in technology but we always need to keep at the back of our minds the commercial and consumer benefit. Essentially, it should all come back to what is best for the customer, and how we as retailers can make their lives easier.
For Ikea, incorporating augmented reality into our app isn’t a gimmick; it is a way of providing people with a really useful tool that gives them the opportunity to ‘try before they buy’.
James Foord (JF): It’s all about the right technology. Consumers want a simple, hassle-free shop, so if technology helps towards this then great. There is a huge graveyard of technical innovations that have been adopted by retailers over the years and then ditched. The key is to know what technology is important to customers. It’s often not what you would assume.
Alison Sagar (AS): As retailers think about how consumer behaviour is changing and how they can connect the online information they have about customers with their shopping behaviour in-store, technology – and in particular payment technology – can really help join those dots. Retailers face a challenge of how to provide an omnichannel, seamless experience no matter how the consumer decides to interact with them.
Lorna Westwood (LW): If you ignore developments in technology then you’ll quickly be left behind and find it hard to catch up with your competitors in the long term.
That said, there will always be certain fads that are hailed as the next big thing but which disappear as fast as they’ve arrived. Take augmented reality or QR codes for example, which haven’t really been embraced in the UK in the same way as they have in the Asian market.
Orla Barrett (OB): In today’s retail environment, customers’ expectations of service, convenience and immediacy are higher than ever before. Keeping informed about the latest technology can help retailers assess if there are advances in an area that could complement their offering.
PW: Using augmented reality is based on an insight [about an aspect of shopping] that many of our customers struggle with – visualising how furniture might look in a given space – and that 14 per cent of people have bought items of furniture that are too big or small for their homes.
MW: What particular piece of consumer-facing technology excites you the most at the moment?
JF: Mobile is developing faster than anyone really realises and businesses are being left behind. Everything is moving toward the smartphone – it’s the essential component of modern life that controls everything we need and do. Everything else pales into insignificance.
OB: Our service is shaking up online fashion retail by making the shopping experience curated and convenient. Users of styloko.com get personalised daily product feeds and updates from only the brands they are interested in, helping to cut through all the millions of products on offer out there. It works with social sharing which means that when someone spots an outfit they like there’s no more copying and pasting URLs into emails to send on to friends.
LW: I’m excited about the massive potential of mobile technology. This year, 75 per cent of the UK population will own a smartphone, reaching for it an average of 120 times a day. For many of us it’s the first thing we see in the morning as we turn off our alarm. From an ecommerce perspective, retailers need to start developing a stronger mobile presence and a user experience with simple, secure payment options to take advantage of the potential of the mobile commerce market.
AS: We’re very excited about the recent ‘check in’ feature we’ve launched in the PayPal mobile payments app. Some of the retailers that we’ve been trialling it with talk about how it helps them to speed through the queues because people don’t have to faff around with their cards at the till point. They just have to check in and use their phone. Because users’ names and photos appear on the retailer’s payment system, it allows businesses to have a personal relationship with a customer in store that they couldn’t have before.
MW: Do you feel that mobile commerce is reaching a level of maturity, or is it still a relatively small part of ecommerce?
JF: Not even close; it’s barely started. It’s a small part at the moment but growing beyond all expectations and industry projections. It will dominate ecommerce – in fact it will be ecommerce in a matter of a few years.
PW: Mobile commerce is being driven by consumer behaviour, where mobiles are becoming the primary platform from which to access information, and businesses can’t afford to downplay that. When communicating to our Ikea Family [loyalty scheme] customers, we know that 54 per cent of them are reading their emails on hand-held devices, which is a massive amount. We therefore have to consider mobile commerce in all aspects of activity, ensuring that our ecommerce site is compatible with mobile devices, while also providing unique and inspirational content.
AS: The UK is very much leading the way in terms of mobile commerce globally and that makes it a very exciting market to be in. We at PayPal are seeing that more than a quarter of our ecommerce is now being done through some sort of mobile device, so it’s really changing how consumers behave. They are becoming much more omnichannel. They might browse on their mobile for something and then buy it in-store, or they might buy it on their mobile device or laptop but want to do a refund in-store.
LW: Mobile commerce is nowhere near reaching maturity. We’re continually seeing well over 40 per cent of visitors to Pandora’s ecommerce site from mobile and tablet devices. Customers are using mobile technology to shop on the go or from their sofas while watching TV. Tablet users tend to spend longer browsing and have a larger basket size, so we need to create that same confidence in smartphone shoppers to encourage them to spend from their phones.
MW: Is it difficult for retailers to keep up with the latest technology and develop the necessary expertise within their businesses?
OB: Business leaders right through to social media interns should be tasked with keeping abreast of technological developments, relating to every element of business. Technology can not only expand your customer base and enable market research, it can also improve the day to day workings of a business – for example by using mobile apps to create expenses reports or monitor cash flow.
JF: It’s not difficult but it requires courage to lead with what may or may not be the next big technological innovation. Convincing internal stakeholders that have not grown up with some of today’s tech is difficult as it involves investment and a leap of faith. Most retailers are not prepared to take that risk – it’s more about ‘short termism’. Take Morrisons: it took it over 10 years to figure out that it needed an online grocery delivery service because customers were demanding it and now it has to play a huge game of catch-up.
PW: The pace of change can be testing for retailers, but it’s about assessing the needs of the customers and implementing technology that is going to be most useful to them. It’s really about deciding what will make their shopping experience easier and also gives them more points of inspiration. I would say it’s far better to take a bit longer and do a better job of it than to rush to keep up and fail at the first hurdle.
MW: Is technology making it easier to track consumer behaviour and tailor products and services to their needs?
AS: Absolutely, and particularly if retailers embrace the growth in mobile usage. We’ll shortly be launching the functionality to enable retailers to offer loyalty-type schemes and rewards for certain activities [through PayPal’s app]. For example, if a regular customer is in the vicinity of a merchant then they can send an offer to encourage the customer to come into the store.
JF: The data and the means to target [through mobile devices] is all there; the challenge is how to do it in a way that makes sense for the customer and does not turn them off your brand or business. No one has really figured this out yet – it’s early days and the rules are yet to be written.
LW: With the huge growth in social media adoption by companies in recent years, we can find out from our customers what they want and need via conversations with them all day, every day. However, as such consumers are becoming increasingly demanding and expect you to listen and respond quickly.
OB: There are numerous paid-for and free analytics platforms at every marketer’s disposal, some sophisticated, some clunky. The real benefit is knowing what to do with the data that is in front of you, and the ability to turn it into something valuable for your business.
MW: How can technology support bricks-and-mortar stores, rather than undermine them?
PW: For Ikea, the store is still the primary shopping channel for our customers. Visiting our stores should feel like a day out for all the family and you can’t beat a physical shop for inspiration, theatre and experience. Our customers tell us they like to look, feel and touch our products. Yet at the same time the retail environment is evolving and we have to embrace technology to ensure we’re keeping pace with how our customers want to shop with us, and when. We believe there’s a place for both a physical experience and a virtual one.
OB: The proliferation of smartphones alone is truly enhancing the in-store experience, whether it is simply locating a bricks-and-mortar store, adopting Foursquare-type loyalty campaigns to reward customers or geo-targeting within a certain radius of your store with a targeted message. The possibilities are endless.
LW: Click and collect technology can support bricks-and-mortar stores by delivering footfall and cross-selling and up-selling opportunities. I feel it won’t be long before consumers expect to order out-of-stock items via in-store tablets and have them delivered to their homes or a different store of their choosing – a challenge for anyone working in supply chain.
Augmented reality (AR) is one of the more experimental options available to retailers seeking to offer innovative, digital experiences to their customers. The technology, available through apps like Aurasma and Blippar, uses a smartphone or tablet camera to identify real-world images before overlaying them with additional media such as animations, 3D graphics or websites.
Although the technology has been widely available on mobile devices for the past couple of years, retailers have been tentative and slow in adopting it. This is partly due to uncertainty over its benefits and its ability to generate worthwhile returns.
However, as brands seek to stay on top of the rapid growth in mobile usage and present customers with unique experiences, a handful of retail names are testing out the technology.
Last month, for example, Ikea decided to integrate AR into its 2014 Ikea Catalogue app. The software allows people to scan a room and see how different Ikea products will look in that space based on their size, shape, colour and positioning. The products appear on a phone or tablet screen as though they were in the room.
Ikea UK marketing manager Peter Wright believes AR is the most exciting piece of consumer-facing technology available to the retailer at the moment. “It has been around for a while yes, but it’s by no means mainstream yet, and it’s exciting to explore the opportunities that it gives us as a business,” he says.
Ikea’s use of AR follows the lead of some of the country’s biggest supermarkets such as Sainsbury’s, which launched the first AR version of its customer magazine last autumn. Content includes how-to cookery videos, an editor’s message, competitions and AR advertising campaigns by featured brands.
While some marketers maintain that AR is a fad that is of little interest to consumers, brands like Ikea and Sainsbury’s are aiming to make the most of the creativity and flexibility that the technology offers while also demonstrating their mobile-friendly credentials to consumers.
Aurasma recently announced that it has passed 6 million active monthly users worldwide, while the brands themselves justify their use of AR technology with their own figures. Ikea, for example, says it created the new app following research that showed more than 70 per cent of customers do not really know how big their own rooms are and 14 per cent have bought the wrong size of furniture in the past.
In recent months a number of major payment brands have launched new technology platforms aimed at improving the retail experience. Not surprisingly, each has focused on providing easier and more secure payment options via mobile devices.
Last month, for example, PayPal launched its new ‘check in’ mobile payment service through a trial in Richmond, west London. The app displays nearby shops and restaurants that accept PayPal payments and then asks users to check in to a shop by clicking on its icon. The user’s name and photo appears on the shop’s payment system so that the retailer can verify that the person making the payment is the account owner.
PayPal UK marketing director Alison Sagar says the service is intended to provide a speedier and more convenient purchasing process, while also boosting engagement between retailers and customers. She reveals that the company also plans to integrate “loyalty-type schemes and rewards” into the app to further drive consumers into stores.
“Through the ‘check in’ feature, merchants are able to get to know the names of customers, see their faces and create a personal relationship, which is very important in terms of driving customer loyalty,” adds Sagar. “It allows them to have that relationship from the moment they walk through the door and check in, rather than just at the end of the process when they’re paying for their goods and services.”
The trial comes shortly after Mastercard announced the UK rollout of its digital wallet service MasterPass, alongside launch retailers including Argos, Boots and House of Fraser. The service allows users to upload their payment and loyalty card details to a digital wallet that is compatible with near field communication (NFC) technology and in-store QR codes.
Meanwhile Weve, a joint venture between the UK’s three largest mobile phone operators, is currently developing a mobile loyalty app aimed at giving users a single point of access to their various store cards on their smartphones.
Sagar believes that consumers will become increasingly reliant on their mobiles for making purchases and that as a result, they will carry less cash. “PayPal recently ran a survey that showed that nearly a third of Britons would choose a smartphone over a wallet if they could only choose one thing to take out with them,” she says. “Consumer behaviour is becoming much more mobile-focused and retailers must adapt.”