This presentation, given at the Fall Conference of the Home Improvement Research Institute, focuses on emerging consumer trends in Home Improvement retail and how technology might help address these.
Marketing in 2013 customer conversations using social media slideshare versi...
Technology Trends Shaping Home Improvement Retail
1. Technology Trends in Home Improvement Retail
Presented at Fall 2012 HIRI Conference
Winston Ledet – COO
Wledet@premiumretail.com
678-279-8252
www.premiumretailsolutions.com
October 17, 2012
2. My Background www.premiumretailsolutions.com
Premium Business Model
Winston Ledet
Premium Retail Solutions - Chief
Operating Officer
• Co-Founder of Retail’s Solutions
group focused on strategy,
analytics and insight
• Worked with over 50 current and
prospective suppliers
• Former Home Depot
Merchandising Vice President -
Merchandising Strategy and
Innovation
• Led corporate strategy at Home
Depot for three years prior.
• Strategic consulting background
with McKinsey and Company
3. Last Year at HIRI www.premiumretailsolutions.com
Building a Consumer A warning about the future-
Across all of retail:
Brand.
Expand Into Adjacent Areas • Single formats are almost never
dominant for more than 30
years
Current Playing Field
• Almost all major retailers from
• Traffic
• Conversion 40 years ago are either out of
• Share business or in decline
• Real Estate location, once a
Driving Bottom Line Profitability. strength becomes a burden
• The market goes to those who
find a new way
What does the future look like?
4. Technology in Home Improvement www.premiumretailsolutions.com
Retailers have gained influence over Home Improvement has been a slow follower
the last 35 years in retail technology for most of its history
60% Consumer
Share
• While the consumer
and retail trends are
undeniable…
• …the approaches to
deal with them
1978 2012 presented may be very
different than the
ultimate solutions
Most categories in Home Improvement: • The challenge for
1 of the top 5 Brands is “I don’t industry participants is
remember” / “I don’t know” to keep working on the
trends without locking
in to just one solution
Technology change is a wild card that …however, it rarely moves in a
could re-shift the balance of power… straight predictable line
5. The New Way to shop www.premiumretailsolutions.com
PRE-TAIL RETAIL
Inspiration / Shopping /
Consideration Location
Browsing &
Repurchase / Evaluating
Advocate Bond
POST-TAIL
Use Purchase
Consumer actions / Moments of Truth
Source: Modified from McKinsey & Co and Coca-Cola Retailing Research Council & The Integer Group
6. Trends to Watch www.premiumretailsolutions.com
• Pre-Tail and Post-Tail
• Social Media
• Search
• Content
• Retail
• Utilizing online sales
• On-demand data to shoppers
• Showrooming
• Video and Photo Insights
• Tele-presence
Source: IBM Consumer Research
7. Online Usage in Home Improvement www.premiumretailsolutions.com
Online resources used to research products or projects in Home
Improvement
Retailer websites (e.g., www.homedepot.com,
Retailer Website 50%
www.lowes.com) 18%
I type the product or project into a search engine and go to the 42%
websites where it directs me
Search 20%
Product Reviews
Product reviews 40%
18%
Manufacturer Websites
Product manufacturer websites 7%
35%
Social Media
Social media sites (e.g., Facebook, Pinterest, YouTube, etc.) 27%
9%
18%
Home ImprovementHome Improvement Publications
Publications focused on / Home Décor or Home Decor 3%
Blogs
Blogs 18%
2%
I do not use any online resources to research Home
None 14%
Improvement products or projects 20%
Other
Other 8%
3%
Select all sources Primary source
Source: Premium Retail Solutions Consumer Research, September 2012
8. Social Media in Home Improvement www.premiumretailsolutions.com
Ever used social media to learn about or
• 38% of respondents said they have used social
research anything in HI?
media to learn about or research something in
Home Improvement
• Facebook (80%) is the primary source used Yes,
followed by YouTube (58%) 38%
• Top uses are get inspired, product reviews, and No,
research a project 62%
Of those that used Social Media in HI - Of those that used Social Media –
Where did they go? How did they use it?
Facebook 80%
Get inspired 68%
YouTube 58%
Product reviews 62%
Twitter 40%
Research a home improvement
Pinterest 31% 60%
project
GooglePlus+ 28% Know how (how to's) 42%
MySpace 18% Share my project ideas with
40%
Linked In 17% friends
Other 9% Other uses 22%
Source: Premium Retail Solutions Consumer Research, September 2012
9. Engaging & Delivering Content www.premiumretailsolutions.com
PRE-TAIL How Brands and Retailers Can Participate RETAIL
Inspiration /1. Monitor 2. Respond 3. Amplify
Shopping /
4. Create
Consideration Monitoring
Inspire Brand Addressing Issues
and answering
Connect potential
Location with
purchasers
Awareness
campaigns / Deals
questions advocates How to (confidence)
How the Consumer Shops
Shop
Browsing &
Product Launches
Evaluate Repurchase / Evaluating
Advocate
Purchase Bond Deals / Offers
Use Customer Service Foster communities Consumer Insights
How to Customer Input
Advocate Encourage trial,
rating and
recommendation
POST-TAIL
Bond
Use Purchase
A new lease on life – Brand Building
Source: Modified from McKinsey & Co
10. Monitor and Respond www.premiumretailsolutions.com
Don’t Abandon Monitor and Respond
Answer Questions
Watch for fake or derogatory entries
11. Connecting – Building Trust www.premiumretailsolutions.com
1 in 4 Consumers Already Engage in Advocacy Have you ever posted a product review
(good or bad) online?
Yes, 41%
No, 59%
Advocacy
40%
Building your post purchase interactions with clients of HI shoppers said they often
can improve this or always read reviews prior to
product purchase
Source: Google – “Zero Moment of Truth” – ZMOT macro study Source: Premium Retail Solutions Consumer Research, September 2012
12. Inspire www.premiumretailsolutions.com
Understand the inspiration
process for your category.
Where will consumers go first?
Don’t just rely on the endemic
user base on these platforms
Post links in twitter feeds,
Facebook postings, review
responses and product web
pages
13. Encouraging Trial www.premiumretailsolutions.com
Create Awareness Make Offers
14. Consumer Insights www.premiumretailsolutions.com
Out of the Lab… …and into the Wild
Customer interactions for sales Customer interactions are often linked
were separate and distinct
from research • Mining review data and social media
conversations for issues and latent needs
• Surveys • Creating user communities
• Focus Groups (Comunispace) and interacting
• Copy Tests • Mining trends from social media postings
• Crowd Sourcing
• Mining POS transactions
• Ethnography / Digital
15. Search www.premiumretailsolutions.com
Implications For Research and Marketing
How and when do consumers research your
category?
What terms do they search for?
Example: The term “Paint Colors” is Can you build those terms into organic
searched 2.4M times a month. search?
Neither Behr nor Valspar make the Should you purchase terms through a search
first page engine?
Source: Google Trends and Google Ad Words
Search - the #2 source of information – are you managing
16. Content www.premiumretailsolutions.com
Retailers and aggregators are starved for content – package yours
in a way that it can be easily shared and used
Building your content What you need
• Video is viewed about 1000 • A team and/or agency
times more than text focused on creating digital
• Simplify the buying process content
• Simplify the installation process – • A team or agency focused on
build confidence linking content to user
• Make it interactive touchpoints
(configuration, comments, • A strategy on what platforms
linkable…) leverage consumer will best suit your needs
stories
• Tell dynamic stories – to build
your brand – you are a
contributor and the editor
• Make it easily linkable
Superior content allows you to expand your digital footprint
17. Do’s and Don’ts www.premiumretailsolutions.com
Do Don’t
• Focus on interacting with people not just • Focus on consumer networking sites
technology alone if your product is an infrequent
• Monitor the traffic on your brand(s) and purchase – who interacts with your
answer bad reviews quickly product daily or weekly?
• Understand where your target customer is • Put up access points that you are not
interacting. What touchpoints you can going to staff and monitor
tap into • Assume most of your customers are
• Leverage the retailer’s traffic (they are actively engaged on all social media sites.
hungry for content) Steer them to your content
• Invest in content – especially video • Focus on just one technology/platform
• Publish new, meaningful content regularly
• Collaborate in your space with other
manufacturers to make your content
more project rather than product based
• Focus on Know-How content
• Collect reviews on your site and link to
retailers
18. Online Shopping and Buying www.premiumretailsolutions.com
Percent of Sales Online Percent who shop online
Power Tools 15% Power Tools 39%
9% 30%
Lighting 14% Lighting 34%
6% 25%
13% Storage 32%
Storage 7% 28%
10% Bath Fixtures 31%
Bath Fixtures 4% 25%
10% Faucets 27%
Faucets 6% 22%
8% OPE 41%
OPE 36%
5%
Major Appliances 51%
Major Appliances 8% 41%
5% 15%
6% Hand Tools 11%
Hand Tools 4%
Hardware 16%
Hardware 4% 11%
3% 27%
4% Plumbing 26%
Plumbing 4%
Hard Flooring 51%
Hard Flooring 4% 43%
2% Live Goods and… 11%
3% 11%
Live Goods and… 3% 27%
Millwork 24%
Millwork 3%
2% Kitchens 22%
2% 22%
Kitchens 1% 8%
Electrical 5%
Electrical 2%
2% Soft Flooring 13%
13%
Soft Flooring 2% 14%
1% Building Materials 15%
Building Materials 1% 7%
2% Paint 5%
Paint 0% 2012 2007
0%
Source: Internal Tracking Survey Huge variability by category
19. Online Share Can be Very Different www.premiumretailsolutions.com
Power tools 15% purchased Online
Online Outlet Share ($)
Other
29% Amazon
31%
Harbor Freight
Home
2%
Depot
Ebay.Com Sears 12%
6% 10%
Lowe's
6%
Source: Internal Tracking Survey Know where your category is purchased
20. What Sells Online www.premiumretailsolutions.com
• Easily comparable products with clear
specs and especially with known brands
• Large products that customer will
struggle to get home from stores (e.g.,
grills, patio furniture, riding mowers)
• Products with customization or semi-
customization
• “Long-tail” products – hard to find niche
products
Open up your catalog to online – Rethink your product for online
21. Online Shopping and Buying- Takeaways www.premiumretailsolutions.com
Marketing and Operations: Implications for Research:
• Handling the shipping yourself • Understand the online behaviors
reconnects you to the consumer for your category (Where, When,
What information, Purchase or
• Enhance your content with pictures, Research)
videos, accurate descriptions, tags to
related items, Q&A and answered • Understand where your
poor reviews customers shop online
• Price shop your online offering (both • What are the barriers to
for internal consistency and purchase online
competitive purposes)
22. On-Demand Product Information www.premiumretailsolutions.com
Categories that customers look up in
Have you ever used a Smartphone while store: (Mentions - in order of # of
shopping in a Home Improvement store? mentions)
Appliances
Paint
Yes, I have used a Smartphone to look Lights, light fixtures
18%
up pricing on a product Work Clothes
Lumber / Wood
Flooring
Yes, I have used a Smartphone to look Lawn mowers, weed eaters
20%
up product reviews Faucets
42% Have
Toilets
Used Smart Grills
Yes, I have used a Smartphone to scan Phone While
22% Tools
a QR code
shopping Plants, care needed for plants
Electronics
Yes, I have used a Smartphone for Furniture
16% Doors and windows
another use
Tool box
Bath fixtures
No, I have a Smartphone but have Countertops
never used it while shopping in Home 20% Bathroom
Improvement stores
Weed eaters
Cabinets
Vents
No, I do not own a Smartphone 38%
Railing
Columns
Fertilizer
Source: Premium Retail Solutions Consumer Research, September 2012
Cement
23. On-Demand Product Information www.premiumretailsolutions.com
In addition to user initiated search, other ways that retailers can deliver information
QR Codes Digital Signage and
Interactive displays
• Fairly ubiquitous • Making a comeback in HI
• Retailers have largely taken retail
control • Getting to be very big in Best
• Lightly used so far (22% Buy and other CE retailers
consumers report having • Very hard to maintain and
used them in HI*) keep operational
• Decentralize the technology • Very expensive Innovation End Caps at
investment • Digital kiosks making a Lowes
reappearance for wayfinding
and “endless” aisle shopping
Interactive displays Customer Kiosks at
exploding in CE Channel Home Depot
24. Showrooming www.premiumretailsolutions.com
Dealing with Showrooming
18% of Home Owners It is the wave of the future. Find ways to embrace it and guide
report checking prices online it to your advantage rather than resist it.
in HI retail stores
Manufacturer:
Make sure your brands are on the relevant places customers
will search.
Integrate your online and in-store pricing
Retailer:
Insist on your own codes to keep customers in your system
When possible get exclusives for the store, even if in name only
Try to limit the premium for in-store over online to 5% or less
Deliver superior service in store that justifies any premium
However, customers who interact with an Collaboration:
Romance the product with live demos, customer interactions,
associate are 12.5% give your customers a chance to interact with the product
Sources: PRS Research, September 2012; GroupM Next study –
more likely to purchase in-store “Showrooming & The Price of Keeping Buyers in Store, August 2012
25. QuantiView Process: Video Capture to Data Analytics
www.premiumretailsolutions.com
Hi-tech Passively Quantify Report
cameras collect data behavior insights
Set up in store or Passive = silent, Recorded behavior is Multimedia PowerPoint
wherever behavior must unnoticed, anonymous quantified using automated report with key insights,
be understood and semi-automated charts, graphs, tabular
techniques data, highlight footage,
Capture natural customer
summary and
Motion-triggered behavior
recommendations
Measure pre-determined
metrics and new, unexpected
High-resolution, 24/7 recording for days,
behaviors Key insights have vivid
>“Full HD” weeks, ongoing
visual proof
Collaborate with clients
“Open-ended”
throughout
quantitative
Bringing Ethnographic studies to the digital age
26. STATIONARY CAMERAS
Usually combine:
wide contextual views
&
zoom views of key
products
30. EXAMPLES OF FULLY-AUTOMATED MEASURES
State of the art video analytics identify every human, record their path as a function
of time, and log the info to a database for analysis.
In: 1
Out: 0
0:04
0:15
Heat Mapping People Count Across Lines Region Dwell Times
Video analytics Boundary lines are drawn on screen Rectangles and parallelograms
hardware/software can detect during configuration. are drawn on screen during
and track people, even a crowd of configuration.
people at once. As motion (i.e., pixel change) from
identified people cross the lines, the The time that each identified
A curved path line is recorded for “in” or “out” count is incremented person spends in each defined
each person, and as the lines depending on the direction of travel. region is logged.
overlap, the software makes the
colors “hotter”.
31. Semi-Automated Measures www.premiumretailsolutions.com
Anything viewed can be measured by QuantiView human analysts using QuantiView software.
• Every person entering a defined threshold becomes a record (or row if you prefer).
• A screen snip of the person is databased to keep that person’s behavior organized across
time and multiple analysts.
• Sample measures:
– Gender – Product interaction
– Age range • Before or after sales assistance
– Alone or with others • Which products
• Look, touch, both
– With, without kids
• Time begin/end look, touch products
– Display has salesperson or not when arrive • Total products looked at, touched
– Time points • Specific actions
• Time enter/exit general area – Finger brush overs
• Time enter/exit sub-regions – Turn overs (or attempts)
– Ingress and Egress – Point out something to companion
– Sign interaction – Push buttons, turn dials, press keys
• Which signs
• Level of attention
• Total count of signs noticed
32. STILL IMAGES
Same wide &
zoom principle:
Full shelf view
plus close-ups
of key products
33. EXAMPLES OF SEMI-AUTOMATED MEASURES
Anything viewed can be measured by QuantiView human analysts using QuantiView software.
• General condition of shelf
• Deviation from planogram
• Presence/absence of products
Status of Merchandising Displays • Presence/absence of signage
(e.g., lit, unlit; obstruction, • Presence/absence of price tags
general condition)
• Accuracy of price tags
• Aisle obstructions Products
on
• Shelf dimensions
hangars
# Product
Facings ANYTHING SEEN CAN BE
QUANTIFIED... INCLUDING THE
UNKNOWN.
Out of
Stocks CAN COORDINATE MULTIPLE
PHOTOS OF SAME STORE.
34. SOME REAL DATA FROM REAL STORES
• Snapshots of the LED shelf were gathered in over 100 stores as part of a
recent stack-out service.
POP Displays Present
Socket into 54%
Savings
Compare Color 15%
Temperature
Neither 31%
Missing Display Bulbs - 0
35. SOME REAL DATA FROM REAL STORES
• Snapshots of the LED shelf were gathered in over 100 stores as part of a
recent stack-out service.
Empty Facings Empty Horizontal Inches
28%
24% 25%
Mean = 13.4”
Mean = 1.49
Max = 52.4”
6%
3% 1% 1% 1%
0%
0 1 2 3 4 5 6 7 8 0 15 30 45
36. Tele-Presence www.premiumretailsolutions.com
Where it makes sense
What is it
• When you are not staffed you are “out of stock”
• When you are staffed and traffic is light you are
wasting payroll
• 30-40% turnover means that you struggle to keep
qualified people in-store and low volume stores do not
allow for apprenticeship
Countertop Sales by Store
900
800
Significant staffing issues
Large Specialty Departments:
Number of Stores
700
600 in over 1300 stores • Kitchens and countertops
• Carpeting
500
400
300
200
• Doors and Windows
100 • Outdoor Power Equipment
0
-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 • Appliances
Weekly Countertop Sales - Transactions
Source: Premium Retail Solutions Consumer Research, September 2012
37. Tele-Presence www.premiumretailsolutions.com
Combating the “Ghost Town Effect”
9 – store test with Cisco at Home Depot
• Limited functionality
• Requires a lot of initiative by the customer to engage
38. Traiting and Clustered Assortments www.premiumretailsolutions.com
What is it? Will it happen? How do you prepare?
• Creating clustered • While this is by no means a • Must be doing weekly
assortments based on new technology for retail, tracking of sales by store
the store trade area Home Improvement has been by SKU
demographics slow to adopt
• Analytics to look at
• Used to drive sales and • It appears that the major productivity of SKUs by
minimize dead inventory players are now serious about planogram type
implementing this approach
• Requires a way to and we will likely see • Need store trade area
manage a large number movement consumer data – who
of assortments
shops there
• An understanding on how
to add value – not sell in
but sell through
39. Wrap up www.premiumretailsolutions.com
• What technology is relevant for you depends on how your
customer shops
• Change is inevitable and seems to be coming faster now in
the HI industry than ever before
• Technology will not move in a straight line. Instead of big
bets in one area, make a few bets in the most promising areas