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.

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. 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. 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. 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 Steven.Skinner@cognizant.com.
Deepthi Timmasarthy is a Consultant in the Retail Practice within Cognizant Business Consulting. She
can be reached at Deepthi.Timmasarthy@cognizant.com.
About Cognizant
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