Building the Intelligent Store


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Findings from a June 2010 survey of thousands of shoppers. The research concludes that retailers need to broaden the idea of what makes a store and take advantage of high-speed networks, decreasing telecommunications costs and the ubiquity of customer handheld devices.

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Building the Intelligent Store

  1. 1. Cognizant White Paper Building the Intelligent Store Smart, sustainable online shopping experiences 1. How does the retailer-to-shopper relation- have come to embody the best of Web-based ship change in the world of social media? retail, and now retailers need to turn their 2. How do you bring into the store environment attention to their brick-and-mortar stores. The the service options that are available online, goal isn’t just modernization but rethinking the and vice-versa? concepts of selling and customer service to 3. How can you reduce the cost to serve while create the 21st century store. increasing customer loyalty? Make no mistake: Stores still matter. They are 4. How do you automate repetitive labor tasks? the most critical part of the retail-to-manufac- 5. How do you make the shopping experience turer supply chain. No longer just four-walled memorable? shopping silos, stores are where customers make decisions, finalize opinions and exit to serve as retailers’ ambassadors to the outside Rethinking the Concept of the consumer world. Store 21st Century Store Retailers need to broaden interactions remain the For a model, retailers need to look no further the idea of what makes driving force behind retail than popular Web retail sites. Shopping online multi-channel strategies. offers speed, selection, presentation, plentiful a store and take advantage reviews and personalized suggestions. To keep of high-speed networks, Obtaining genuine value their physical presence viable, retailers need to decreasing telecommunications from store business broaden the idea of what makes a store and processes has never been take advantage of high-speed network costs and the ubiquity of more difficult. Store mar- bandwidth, decreasing telecommunications customer handheld devices. gins are compressed. The costs and the ubiquity of customer handheld Internet and social media devices and applications. Furthermore, retailers are funneling information to an increasingly need to develop methods to allow stores to sophisticated customer. Competitive distribution make profit-enhancing decisions. channels are emerging. As a result, profitable retailers need to balance store and infrastruc- That’s where the “intelligent store” comes in. It ture costs with increased customer satisfaction emulates Web-based offerings and brings the and a differentiated in-store experience. same level of service and technology to physical stores. The intelligent store offers retailers the Retailers need to address five critical questions opportunity to reinvent a physical shopping to deliver the 21st century store experience: experience that flexes depending on how consumers choose to interact with it. white paper
  2. 2. The intelligent store will come to shoppers with “endless aisle” concept and bring Web delivery services and add-ons that consumers are alternatives to in-store shoppers. waiting for. (See sidebar, “What Do Shoppers Say?”) It will support mobile applications like How Do You Build the Intelligent Store? couponing to serve customers increasingly comfortable with sophisticated PDAs. Future Here are seven fundamental prerequisites that versions of the intelligent store will capture and make a store an intelligent store: automate coupon redemption -- so customers don’t have to. Kiosks or touch screens as well as 1. Take the store to the customer. Stores need shoppers’ PDAs will link to loyalty data and to be everywhere that shoppers are -- offline, provide personalized communications. Social online and on the road. So, networking will engage customers and serve as retailers need to leverage the Point of service is where a platform for community building, feedback latest technologies to provide the intelligent store and information sharing -- in the store and shoppers with product infor- online. Product information will be available mation, details on promotions, shines, offering retailers digitally through signs or shoppers’ PDAs. checkout opportunities, deliv- the opportunity to Alternative checkout and delivery options will ery alternatives and other enhance the shopping be available directly to shoppers. services, regardless of loca- experience with a high- tion. touch option that keeps High Level of Integration, High Touch 2. Integrate stores with other supply chain elements. Agile customers coming back. While multi-channel integration has been an supply chains include stores. By important retail focus, the intelligent store takes integrating with merchandising, sourcing, logis- it to the next step, freeing customers to interact tics, order management and order fulfillment, with multiple channels, simultaneously. An in- the intelligent store enables flexible demand store shopper might run a price-comparison response no matter where customers are. application while tapping into one or more 3. Support social networking. Intelligent stores social networks for opinions. Geolocation are an extension of customers’ social media services -- a new form of mobile advertising that environments, and smart retailers tap social run as applications on GPS-enabled media to engage their customers. smartphones and integrate with Facebook and Twitter -- can draw consumers to in-store 4. Are customer-centric. Intelligent stores promotions at nearby locations. understand customer trends and relation- ships. Because they’re open to new selling The intelligent store also makes smart use of staff. opportunities, they can grow their customer Workforce management applications are seeing a base through targeted promotions, personal- 61% jump in planned upgrades over 2009, ized messages and in-store according to a January 2010 study by RIS News.1 loyalty management pro- Such huge interest reflects stores’ need to hire, grams. Customers opt in to The intelligent store will train and schedule more efficiently. Staff can these capabilities because come to shoppers with then be deployed to better provide in-store they recognize their value. services and add-ons customers the same personalized service and 5. Empower store managers. that consumers are add-ons that the best online shopping Intelligent stores should be experiences offer. waiting for. outcome-oriented. They pro- vide store managers with the Indeed, point of service is where the intelligent data they need to react to exceptions in- store shines, offering retailers the opportunity store, such as generating alerts (such as to enhance the shopping experience with a when a shelf is out of stock) and decisions high-touch option that keeps customers coming (assigning the re-stock task to a store associ- back. Better workforce allocation maximizes ate). Doing so empowers store managers to associates’ time with shoppers, increasing be more effective by being on the floor, help- satisfaction and basket size. Self-service kiosks ing customers and driving revenue. ease store navigation, promote the in-store white paper 2
  3. 3. What Do Shoppers Say? To further understand customers’ store preferences and how they can shape the intelligent store, we conducted an in-depth survey in May 2010.2 Empty shelves are among consumers’ biggest gripes about stores, according to the survey. Thirty-two percent point to out-of-stock items as the one characteristic they most dislike in a store. Poorly trained store associates are a close second, at 26%. What’s interesting, however, is the availability of technology to address those and other dissatisfactions. For example, workforce management applications that provide alerts can go a long way toward deepening store managers’ understanding of their business, freeing them to provide the hands-on services that customers value. Dynamic stores also make smart use of real-time data synchronization that can address important issues for shoppers, such as returns management and price accuracy. When respondents were asked to rank store characteristics in order of dislike, store policies that prohibit cash refunds even with a receipt drew the most ire, with 36% identifying it as Survey respondents least liked. Also irksome were on-sale products that ring ranked inattentive up at the regular price at checkout (31%) and refusal to cashiers (34%), accept returns from other stores in the chain (11%). mail-in rebates Our survey data shows that checkout remains a (25%) and waiting in touchstone in the shopping experience. Inattentive line (13%) as the cashiers stood out to 34% of respondents as the most disliked aspect of the checkout process. But store aspects of checkout policies also create dissatisfaction, with 25% of they most dislike. respondents expressing their dislike for mail-in rebates. Thirteen percent were most dissatisfied about waiting in line. Because customers form opinions of retailers based on their checkout experiences, it bears repeating that point of sale needs to evolve to point of service. Shoppers welcome the improved service that cross-channel integration offers. Thirty-eight percent of survey respondents say the store service they most value is the ability to buy merchandise online and have it delivered to their home, with the option of returning it to a store if necessary. Ranking second at 23% is buying online and picking up at a store. Implementing such options helps retailers avoid lost sales and cultivate customer goodwill. For example, 31% of respondents say they would prefer to order out-of- stock items from the register at checkout and have them delivered at no cost to their home or the store. Twenty percent say they’d most like a 10%-off voucher to be applied to the purchase of the item once it becomes available. A core group of shoppers are poised to take advantage of innovative mobile applications. Forty-three percent of respondents say they’re very likely to use a personal mobile device for coupons and 30% for product and price lookup. New or alternative payment methods are resonating with survey respondents, too, with 57% indicating they’re very likely to use coupons, and 21% very likely to use a mini store-loyalty card on a key ring. Already, 8% say they’re very likely to visit a retailer’s online social network. Although the number is small, it is clear that retailers need to tap into social networking. 3 white paper
  4. 4. 6. Manage the store efficiently. Labor is one of service” or customer PDA “applet” solutions retailers’ top budget line items, so smart, effec- let shoppers execute checkout services from tive use of employees is key to the intelligent anywhere within or outside of the store. store. The store provides associates real-time access to enterprise data and plans schedules Getting Started effectively to improve customer service. Retailers need to support and creatively use Analyzing key trends such as shrink patterns new modes of in-store selling to engage and re- enables store managers to target their activi- engage with shoppers. The intelligent store ties and drive bottom-line productivity. provides an opportunity to create a unique 7. Shift from point-of-sale to point-of-service. shopping experience that’s fresh, exciting and Point-of-sale is the most important and often profitable. Developing a roadmap to the the only point of customer interaction. “intelligent store” will maintain stores’ Strategies that reduce POS dependence and relevance and preserve their vibrant role within create differentiated at-shelf, mobile “point of malls, shopping strips and neighborhoods. References 1 “Store Systems Study 2010,” RIS News, January 2010, page 16. 2 With National Research Network (NRN), we conducted an online survey (May 21-25, 2010) of adults 18 and older across the U.S. focused on store and multi-channel interaction. A total of 2,243 surveys were completed. About the Authors Steven Skinner is a Vice President at Cognizant Business Consulting and leads the Retail and Consumer Goods Consulting Practice. He can be reached at Deepthi Timmasarthy is a Consultant in the Retail Practice within Cognizant Business Consulting. She can be reached at About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting and business process outsourcing services. Cognizant’s single-minded passion is to dedicate our global technology and innovation know-how, our industry expertise and worldwide resources to working together with clients to make their businesses stronger. With over 50 global delivery centers and more than 85,500 employees as of March 31, 2010, we combine a unique global delivery model infused with a distinct culture of customer satisfaction. A member of the NASDAQ-100 Index and S&P 500 Index, Cognizant is a Forbes Global 2000 company and a member of the Fortune 1000 and is ranked among the top information technology companies in BusinessWeek’s Hot Growth and Top 50 Performers listings. Start Today For more information on how to drive your business results with Cognizant, contact us at or visit our website at World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. Haymarket House #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA 28-29 Haymarket Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London SW1Y 4SP UK Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7321 4888 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7321 4890 Fax: +91 (0) 44 4209 6060 Email: Email: Email: © Copyright 2010, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or oth- erwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.