In-Store Digital Retail: Exploring the
Reality of the Digital-Enabled Store

David Bradfield
Strategy
@dbradfield

Hilding...
1. How to plan for and engage in an omnichannel
world

DISCUSSION
HIGHLIGHTS

2. The current state of digital retail
3. Th...
3
4
© 2013 SAPIENT CORPORATION | CONFIDENTIAL
PUSH DRIVEN BRAND ECONOMY

IT WAS SIMPLE
It was all about 360°
marketing, having a great
ad campaign and a robust
media pl...
Each connection
inspires engagement
with another,
ultimately infusing the
brand into the
consumer’s own
story… and the
con...
Stories
People seek affinity. By connecting to consumer 
desires, digital channels deliver compelling stories 
in the mome...
The Future of Digital Retail: Based on
SapientNitro Proprietary Research
About your Speaker: Hilding Anderson
Director of SapientNitro’s Research Institute
15 years of experience
Editor of Insigh...
"That truth is that traditional brick and mortar retailing is an inflection 
point. No longer are many retailers only requ...
16
17
18
19
3 INSIGHTS
DRIVING THE CHANGE

6 HIGHLIGHTS

FROM THE RESEARCH

5 TRUTHS
FOR TOMORROW’S RETAIL

20
Our insights on

THE EVER-CHANGING
retail consumer

21
01: NEW SHOPPING BEHAVIOR: ‘SHOPPING-IN-INCREMENTS’

22
CONNECTED DEVICES DEMAND UNIQUE EXPERIENCES

Minutes

Average Minutes Spent Per Interaction By Device
50
45
40
35
30
25
20...
DRIVEN BY TIME SPENT
U.S. Consumer Media Consumption Share
50%
45%

45%

44%

43%

42%

38%

40%
35%
30%

25%

25%

26% 26...
02: A DIMINISHED AND CHANGING ROLE FOR THE
STORE
U.S. 2013 holiday foot traffic is just
50% of 3 years ago

52%
of Canadia...
03: EXPERIENCE IN DIGITAL + PHYSICAL HAS
IRREVERSIBLY COLLAPSED INTO ONE

62%
of Canadians want to
use all their devices
(...
Highlights from the 2013

IN-STORE DIGITAL
Retail Study

27
28
Methodology:
Approach:
 On-site, unannounced visits to 72 major
retailers
 At least one location, primarily Flagship
sto...
KEY FINDINGS OF IN-STORE DIGITAL RETAIL STUDY

• For first time, three retailers crowned “excellent”
• Just 18 (of 72) ret...
KEY FINDINGS OF IN-STORE DIGITAL RETAIL STUDY
FIVE AREAS OF EVOLUTION (BUT NO REVOLUTION)
• Mobile tools are the area of greatest change
• Omni-channel shopping technol...
01: MOBILE: WAYFINDING AND BARCODE SCANNING
02: OMNICHANNEL SHOPPING
03: IN-STORE DISPLAYS AND LAYOUT
03: IN-STORE DISPLAYS AND LAYOUT CONT’D
03: IN-STORE DISPLAYS AND LAYOUT CONT’D
04: INTERACTIVE AND PERSONALIZED TOOLS
04: INTERACTIVE AND PERSONALIZED TOOLS CONT’D
05: EARLY STEPS IN CROSS CHANNEL STORYTELLING
06: DIGITAL ENGAGEMENT CREATES MEASURABLE VALUE
Rules for Tomorrow’s

RETAIL EXPERIENCES

42
RULES FOR THE NEXT 5 YEARS OF RETAIL
1. A single, connected experience: physical and digital spaces have
irreversibly coll...
More in the IN-STORE DIGITAL RETAIL STUDY

44
THANK YOU!

© 2013 SAPIENT CORPORATION | CONFIDENTIAL
In-Store Digital Retail Study: Exploring the Reality of the Digitally-Enabled Store
In-Store Digital Retail Study: Exploring the Reality of the Digitally-Enabled Store
In-Store Digital Retail Study: Exploring the Reality of the Digitally-Enabled Store
In-Store Digital Retail Study: Exploring the Reality of the Digitally-Enabled Store
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In-Store Digital Retail Study: Exploring the Reality of the Digitally-Enabled Store

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Highlights from SapientNitro's 2014 Digital Retail Study - proprietary research on 72 U.S. and Canadian retailers. To what extent are retailers responding to the challenge of the always-on consumer?

Presented at Toronto Advertising Week in 2014. #FFWD2014

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  • My grandfather grew up in Morrisburg, Ontario on the shores of the St. Lawrence River.
  • His uncles operated the local hardware store, Bradfield Bros on Main Street. Whatever you might need, they would outfit you for homestead renovations, parts for the new barn door or that new carriage that would soon be the envy of the town. But they were more than just nuts and bolts, they were a connection to the community. Most customers were known. They shared their experiences and offered tips.This wasn't unique to Bradfield Bros. Most businesses were founded on a connection to the community.Fast forward more than a century and we find ourselves trying to reconnect with those qualities that make our businesses and brands human, or at least relevant to the people we want to buy and help us improve our products and services.
  • The mass media era leveraged broadcast innovation to craft messages for everyone. After the wars, all people wanted was an ordinary life. Media established new cultural norms and created a broad sense of belonging. It was comfortable. Became a new form of entertainment.
  • Some brands are investing in experience’s that earn their way into our consciousness.
  • Sometimes it takes someone from outside your market or who isn’t threatened – to be able to share the truth about your landscape. In this case, Starbucks – one of the leaders in digitizlation – has done a tremendous job at embracing digital tools – even while their core business can’t be replaced by a web retailer. I believe he’s right about us now arriving at an inflection point – no longer are many retailers required to compete with stores on the other side of the street.
  • Audi represents one vision for the future of retail;<describe the experience> But buying products with a six month lead time and significant cusotmization is a far cry from the expeirence at most retailers today.
  • A second experience is the burberry UK store – which hosts runway shows, probably has 30+ tablets and displays, and can conjure storm clouds and rain from one side of the store to an another in an integrated experience. It was good enough that the leader was hired away to lead Apple’s retail experience.
  • Apple’s Eaton Center store in TorontoA business with just 100 skus, yet pushing the envelop with customer self checkout, a museum quality experience showcasing products, and multiple accessories and additions.
  • Let me tell you about myexperienceI walked into this Banana republic store on a Monday afternoon, the store was a mess, and the associates were busy restocking. I’m looking for a new sports coat, so I try one – unfortunately, it has a 3lb theft-proof sensor hanging through one sleeve, and is a size too small. (I’ve got long arms). But I try it on anyway in the crowded aisle, and then, take it off again. I intercept a sales associate, and ask for a matching shirt. We chat, and he hands me a rumpled shirt whose color works; it is the only one nearby in my size – I try it on with the jacket, but they don’t have my size (those long arms again), so I pull out my mobile phone, take a picture of a bar code, and add the product to my cart the 2 jackets and the shirt, and walk out the store without making a purchase. The question for you: was this a successful retail experience? For the sales associate? For that location?For the chain overall?I tell you this story because I think it highlights what is working well for retailers – primarily which I mean clothing retails – and what isn’t.
  • 3,6,5,And so the rest of the our time together, I wanted to share what we’ve learned about what is working well, what isn’t, and our perspective on what retailers and agencies need to focus upon to make sure the retail store is still relevant in 2020. These findings are based on proprietary research conducted in Q3 2013: our second annual study of 72 retailers across the U.S. and Canada, plus our consumer survey with 1500 respondents on the future of retail.
  • The first idea is ‘Shopping-in-increments’What you see above is a diagram showing a women’s shopping journey during her day, built off of sensored mobile devices – with her permission – to precisely track what and how she engages with customers. Built on these findings, you see a very different experience which spans home, work, on the go – and in, frankly best case scenario for the retailer who walks into the store. Three Examples supporting snackable shopping:OMD found that the average person shifted his attention between his smartphone, tablet, and laptop a staggering 21 times in one hour.Google ad sales chief Neal Mohan, claimed that more than 90% of today's consumers switch effortlessly between devices to complete a task, with 500% more people simultaneously using multiple devices than were three years prior.When consumers shop online, the average time between adding a product to their cart and checking out has grown 38 percent over the last five years, from 2 hours to 2.6 hours.
  • 60% of all connected devices on the web are mobile or tablet (~2 billion such devices!)And when you look how people are using these devices, distinct profiles materialize. PC behaviors are much closer to TV – longer, more focused interactionsThree Examples supporting snackable shopping:OMD found that the average person shifted his attention between his smartphone, tablet, and laptop a staggering 21 times in one hour.Google ad sales chief Neal Mohan, claimed that more than 90% of today's consumers switch effortlessly between devices to complete a task, with 500% more people simultaneously using multiple devices than were three years prior.When consumers shop online, the average time between adding a product to their cart and checking out has grown 38 percent over the last five years, from 2 hours to 2.6 hours.
  • The arrival of Target to Canada is a huge factor in the retail wars. Walmart and Costco are in expansion mode and the grocery segment is more competitive than ever before, said Strapagiel. Online retailing is also an ever-growing factor, with the expansion of Amazon.ca, Shop.ca, RedFlagDeals.ca and others. Walmart is expanding its online channel and Canadian Tire, which abandoned online retailing several years ago, is launching it again. While most analysts are predicting either modest growth or flatlined retail sales overall in both the U.S. and Canada across key sectors of toys, fashion and electronics, BMO is forecasting 23 per cent growth for Amazon. Nearly half of Canadians plan to shop online this Cyber Monday, gearing up to spend an average of $273, according to a survey by BMO.
  • 62% of Canadians strong or somewhat want to be able to use any of their devices (mobile, tablet, laptop) to help them shop
  • Released at NRFWe asked ourselves – to what extent have retailers updated their experiences to respond to these trends? Well, the short answer is, only slowly.
  • For the first time, we crowned three brands– two of them new to our list this year – as“excellent,” on the strength of their in-storedigital tools. Sephora emerged as the leader againthis year, with a significant update to its set ofinteractive and mobile tools. The two “excellent”newcomers are SportChek, highlighting thegrowing sophistication of the Canadian retaillandscape, and Walgreens, which highlights thepower of a smaller digitally enhanced footprintstore with an intense digital experience in liquor,cosmetics, food, and pharmacy.
  • For the first time, we crowned three brands– two of them new to our list this year – as“excellent,” on the strength of their in-storedigital tools. Sephora emerged as the leader againthis year, with a significant update to its set ofinteractive and mobile tools. The two “excellent”newcomers are SportChek, highlighting thegrowing sophistication of the Canadian retaillandscape, and Walgreens, which highlights thepower of a smaller digitally enhanced footprintstore with an intense digital experience in liquor,cosmetics, food, and pharmacy.
  • There’s no question that mobile is the most important trend, and it is seen in our research. Mobile tools for in-store use really inspired this year. You are probably familiar with the stats on U.S. usage of mobile devices: a majority of IP traffic, mobile used 22x per day – some perhaps right now in this room – and the fragmented attention caused by these devices (17 minute average use for mobile vs. 25 for tablet vs. 45 minutes for PC)So it is heartening that retailers have made such strides in this area. Two particular highlights are Macy’s mobile wayfinding, Gap / Banana Republic’s mobile barcode scanner, and American Apparel’s augmented reality experience (above). Augmented reality experience from American Apparel was the only AR experience which worked – others, from Uniqlo, for example, didn’t provide much value.
  • The second major area which really worked well was the Omnichannel platforms based on mobile. By this, I mean inventory, mCommerce and hold-in-store functions. X% of the retailers in our study has this function included. Two examples shown are Bloomingdales and Abercrombie & Fitch
  • The third major area which impressed was the in-store display and layout
  • The third major area which impressed was the in-store display and layoutTop Left: Michael KorsMiddle: GapRight: Cosmetics in Bloomingdales New YorkRight: Burberry 20’ high screen in NY
  • The third major area which impressed was the in-store display and layoutTop Left: Michael KorsMiddle: GapRight: Cosmetics in Bloomingdales New YorkRight: Burberry 20’ high screen in NY
  • The third major area which impressed was the in-store display and layout
  • The third major area which impressed was the in-store display and layout
  • Our research found while most retailers had a wish-list on the web, but just 12 retailersoffer a shopping list option in their web and mobile tools. And just one – Target – provideda tool to print out these lists while in-store. Other steps in this cross-channel storytelling– such as location-based push notifications, RFID or kiosk-based changing roomscreens, and product-as-an-interface experiences – were entirely missing this year.Target In-store Displays offer digital circulars and integrate with their mobile tools using QR codes. Their mobile app also offers wayfinding.Crate & Barrel’s offers web browsing and shopping in-store. We would characterize this as a first-generation cross-channel tool. Verizon’s Destination Store: Customize it sectionhttp://www.twincities.com/business/ci_24555287/verizons-new-mall-america-megastore-offers-technology-lifestyle
  • When we as an industry think about retail innovation, this is what we think of…
  • While physical stores aren’t going away, they will be dramatically different by 2019: more specialty stores. Pain between low-cost and experience-led stores.1: Seeing and playing with new merchandise and get value from interacting with helpful sales associates.physical retailers must offer an experience that can’t be found or replicated onlineembrace the Internet and the new connected device realityOmnichannel, as a strategy, must go well beyond using a word to describe having a presence in the online and offline worlds. Omnichannel must deliver a shopping experience that allows consumers to interact with merchants regardless of where and when they want to make a purchase and to receive the same level of service and merchandising across these channels.Many physical retailers, not physical retail overall, are headed for a death spiral..  Reinvention of the physical retail sector is essential, and like Darwin’s theory, only the fittest will survive. 4. the consumer is never entirely passiveLet the player tell the storyProvide immersive experiences for all skill levelsPlan for a lifetime
  • 2. A major home improvement retailer saw a 10 percent lift in appliance sales following installation of interactive digital tools in 20133. JCPenney reported (in its 2012 Q2 quarterly results) that its Levi’s Shop has seen a 25 percent experience increase in revenue in stores using the new experience
  • In particular, SportChek had the best locally relevant community tools of any brand we studied. The company offers interactive digital community boards with photos, messages and the latest scores. Elsewhere, digital directories, digital menu boards, maps and wayfinding were more pervasive than we saw in our U.S. evaluation. For example, digital menus in front of restaurants were common in the shopping center we visited. Chapters features kiosks throughout the store, and Canadian Tire has extensive digital interactive tools as well. Mark’s Work Wearhouse has digital screens, models, and animation but relies as much on physical demonstrations as digital; for example, it sports a large freezer in the middle of the store for evaluating cold-weather clothing. Of what?
  • In particular, SportChek had the best locally relevant community tools of any brand we studied. The company offers interactive digital community boards with photos, messages and the latest scores.  Of what? http://www.artisancomplete.com/blog/2013/01/30/sport-chek-retail-lab/
  • While physical stores aren’t going away, they will be dramatically different by 2019: more specialty stores. Pain between low-cost and experience-led stores.1: Seeing and playing with new merchandise and get value from interacting with helpful sales associates.physical retailers must offer an experience that can’t be found or replicated onlineembrace the Internet and the new connected device realityOmnichannel, as a strategy, must go well beyond using a word to describe having a presence in the online and offline worlds. Omnichannel must deliver a shopping experience that allows consumers to interact with merchants regardless of where and when they want to make a purchase and to receive the same level of service and merchandising across these channels.Many physical retailers, not physical retail overall, are headed for a death spiral..  Reinvention of the physical retail sector is essential, and like Darwin’s theory, only the fittest will survive. 4. the consumer is never entirely passiveLet the player tell the storyProvide immersive experiences for all skill levelsPlan for a lifetime
  • In-Store Digital Retail Study: Exploring the Reality of the Digitally-Enabled Store

    1. 1. In-Store Digital Retail: Exploring the Reality of the Digital-Enabled Store David Bradfield Strategy @dbradfield Hilding Anderson Research & Insights @hildinganderson
    2. 2. 1. How to plan for and engage in an omnichannel world DISCUSSION HIGHLIGHTS 2. The current state of digital retail 3. Three insights driving change 4. Six research highlights 5. Five truths shaping the next wave of retail 2
    3. 3. 3
    4. 4. 4
    5. 5. © 2013 SAPIENT CORPORATION | CONFIDENTIAL
    6. 6. PUSH DRIVEN BRAND ECONOMY IT WAS SIMPLE It was all about 360° marketing, having a great ad campaign and a robust media plan. Consumers watched the commercial and did what they were told. BRAND EXPERIENCE TECHNOLOGY/ PHYSICAL 6
    7. 7. Each connection inspires engagement with another, ultimately infusing the brand into the consumer’s own story… and the consumer into the brand story. BRAND EXPERIENCE TECHNOLOGY/ PHYSICAL
    8. 8. Stories People seek affinity. By connecting to consumer  desires, digital channels deliver compelling stories  in the moment, the ones fans will want be a part of. Experiences We activate channels as an integral part of physical,  digital, commerce and service experiences to  turn engagement into action. We tap into your  community to drive behaviour and growth.  Relationships You’ve worked hard for your fans to take action.  Make them work for you. Tap social, CRM, loyalty or  community programs to turn your best fans into an  always‐on advocate network, moving from  B2C to C2C. 12
    9. 9. The Future of Digital Retail: Based on SapientNitro Proprietary Research
    10. 10. About your Speaker: Hilding Anderson Director of SapientNitro’s Research Institute 15 years of experience Editor of Insights Published in Forbes, speaker at SXSWi Entrepreneur 14
    11. 11. "That truth is that traditional brick and mortar retailing is an inflection  point. No longer are many retailers only required to compete with stores on  the other side of the street. They are now required to compete with stores  on the other side of the country." Starbucks CEO Schultz, January 23, 2014 15
    12. 12. 16
    13. 13. 17
    14. 14. 18
    15. 15. 19
    16. 16. 3 INSIGHTS DRIVING THE CHANGE 6 HIGHLIGHTS FROM THE RESEARCH 5 TRUTHS FOR TOMORROW’S RETAIL 20
    17. 17. Our insights on THE EVER-CHANGING retail consumer 21
    18. 18. 01: NEW SHOPPING BEHAVIOR: ‘SHOPPING-IN-INCREMENTS’ 22
    19. 19. CONNECTED DEVICES DEMAND UNIQUE EXPERIENCES Minutes Average Minutes Spent Per Interaction By Device 50 45 40 35 30 25 20 15 10 5 0 UK consumers switch between devices 43 39 21x 30 17 per hour Source: OMD 2013 Study TV PC/Laptop Tablet Smartphone Source: Google, August 2012 23
    20. 20. DRIVEN BY TIME SPENT U.S. Consumer Media Consumption Share 50% 45% 45% 44% 43% 42% 38% 40% 35% 30% 25% 25% 26% 26% 26% 20% 20% 20% 17% 16% 15% 15% 14% 12% 12% 9% 10% 9% 6% 8% 7% 6% 4% 5% 4% 7% 8% 7% 5% 5% 0% TV Source: eMarketer, August 2013 Online Radio 2009 2010 Mobile 2011 2012 Print 2013 Other 24
    21. 21. 02: A DIMINISHED AND CHANGING ROLE FOR THE STORE U.S. 2013 holiday foot traffic is just 50% of 3 years ago 52% of Canadians report shopping online more than 3 years ago, amid more options than ever Source: SapientNitro 2013 Study 25
    22. 22. 03: EXPERIENCE IN DIGITAL + PHYSICAL HAS IRREVERSIBLY COLLAPSED INTO ONE 62% of Canadians want to use all their devices (mobile, tablet, laptops) to help them shop Source: SapientNitro 2013 Study 26
    23. 23. Highlights from the 2013 IN-STORE DIGITAL Retail Study 27
    24. 24. 28
    25. 25. Methodology: Approach:  On-site, unannounced visits to 72 major retailers  At least one location, primarily Flagship stores in NYC and Toronto, selected Chicago stores  Ipsos Consumer Survey sent to 1,500 customers  Comparison to 2012 survey  July 2013 – September 2013 What we found: • 500 points of data collected • Based list on 2012 with addition of 12 Canadian-based firms, and added several known, leading retailers 29
    26. 26. KEY FINDINGS OF IN-STORE DIGITAL RETAIL STUDY • For first time, three retailers crowned “excellent” • Just 18 (of 72) retailers emerged with scores higher than 45 (out of 75 total points). • Several of last year’s leaders were outpaced by newcomers • Interactive tools and the store experience separated leaders from followers
    27. 27. KEY FINDINGS OF IN-STORE DIGITAL RETAIL STUDY
    28. 28. FIVE AREAS OF EVOLUTION (BUT NO REVOLUTION) • Mobile tools are the area of greatest change • Omni-channel shopping technology is widespread • Retailers have significantly improved the integration of digital content and store design • Not enough focused on interactive tools • Few retailers use their store to create digital + physical experience 32
    29. 29. 01: MOBILE: WAYFINDING AND BARCODE SCANNING
    30. 30. 02: OMNICHANNEL SHOPPING
    31. 31. 03: IN-STORE DISPLAYS AND LAYOUT
    32. 32. 03: IN-STORE DISPLAYS AND LAYOUT CONT’D
    33. 33. 03: IN-STORE DISPLAYS AND LAYOUT CONT’D
    34. 34. 04: INTERACTIVE AND PERSONALIZED TOOLS
    35. 35. 04: INTERACTIVE AND PERSONALIZED TOOLS CONT’D
    36. 36. 05: EARLY STEPS IN CROSS CHANNEL STORYTELLING
    37. 37. 06: DIGITAL ENGAGEMENT CREATES MEASURABLE VALUE
    38. 38. Rules for Tomorrow’s RETAIL EXPERIENCES 42
    39. 39. RULES FOR THE NEXT 5 YEARS OF RETAIL 1. A single, connected experience: physical and digital spaces have irreversibly collapsed into one. Physical stores must enhance our digital spaces. 2. Stores still matter: Consumers still want specialty stores, value the services that they get from them, and the human interaction. 3. CMTOs must embrace new tech: BLE, touch screens, mobile payments, in-store real-time analytics, and even native advertising are enablers for creating new blended experiences. 4. Be participatory: Beyond push advertising, generic merchandising and passive shopping patterns. Shoppers now want to own the experience. 5. Build around themes: To build powerful experiences, shape stories around an organizing idea.
    40. 40. More in the IN-STORE DIGITAL RETAIL STUDY 44
    41. 41. THANK YOU! © 2013 SAPIENT CORPORATION | CONFIDENTIAL
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