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Why our phones are the future of checkout

The retail industry is firmly in the crosshairs of change. Consumers’ need for convenience and limited tolerance for frustrating checkout processes is driving retailers to find creative ways to remove friction from the shopping experience.

Amazon has aggressive plans to open as many as 3,000 Amazon Go stores by 2021 that allow shoppers to walk in and check out without ever standing in line. Using machine learning and technology similar to what is found in self-driving cars, the shopper’s virtual cart is updated as they pick up items and charged to their payment card stored in their account when they walk out. Several retailers have introduced, or are testing apps. that enable customers to scan items themselves in the stores as they shop and pay via their smartphones.

Since most consumers carry a smartphone with them, retailers should leverage the convenience of customers having a powerful device that is always connected in their purse or pocket. Retailers can develop store apps with checkout software to easily turn a shopper’s smartphone into a mobile checkout. The benefits of transitioning to mobile checkout are many as the data collected can improve merchandising decisions, augment store replenishment, and enhance customer personalization and loyalty. If the physical store is to thrive and survive, retailers must merge some of the digital characteristics from online shopping into the physical environment, to create a convenient and frictionless shopping experience. Since consumers are becoming accustomed to shopping on their smartphones, phones are the logical solution to help improve the in-store checkout experience.

Smartphones have changed the way we live our lives, including the way we shop. The time is now for retailers to bring the ease and convenience of online shopping into the store experience. This will serve to create more efficient stores, less frustrated customers, and a better overall retail experience. Consumers’ phones are cornerstones of the future of retail and smart retailers are harnessing the power of smartphones to improve the customer experience.

The Store Still Matters

Despite what the media and industry analysts want us to believe, the store still matters. 79% of the consumers in our recent Consumer Study indicate they purchase merchandise in a store frequently. So, the store is not likely going away any time soon. In fact, this is likely to rise as 27% of consumers indicate their in-store shopping frequency will increase over the next 24 months.

With the store still a major part of the customer journey, the point of sale or commerce platform plays a critical role in shaping the customer shopping experience.Since the checkout process in stores is often the most frustrating aspect of an in-store shopping experience, it is important for retailers to ensure that this technology is efficient to make the process quick and easy. Most consumers (96%) feel that the ease of checkout and payment is an important factor in choosing where they shop so getting it correct is important.The right technology foundation is essential to support the best in-store customer experience and allow it to continue to evolve.

Instead of a simple checkout device, your commerce platform needs to serve as the link to customer information, shopping history and purchasing behavior across channels, not just in the store. Unfortunately, many retailers are utilizing old, outdated hardware and software that can’t support today’s requirements. This leads to associate and customer frustration because of slow transactions, lack of accessible information and potentially, increased theft and fraud. The challenge for retailers is to identify and implement a new holistic commerce platform across channels that addresses these issues and avoids being obsolete in a year or two.

More than half (53%) of the retailers in our 2019 POS/Customer Engagement Survey are focused on adding capabilities to their current POS with 41% focused on implementing a unified commerce platform so retailers are heading in the right direction. But we challenge retailers to look at cloud-based solutions to enable real-time capabilities and create a scalable and agile platform that supports your evolving business needs.

A cloud approach enables you to significantly reduce infrastructure, improve security and increase operational effectiveness by centralizing data management and processes. This allows you to be more agile so you can continue to meet your ever-changing customer needs and make sure that your store still matters.

I encourage you to download the BRP SPECIAL REPORT: The State of Store Technology for more information on what today’s store environment requires.

Brian

The Amazing Disappearing Checkout

Digital Transactions – Amazon’s tech-laden Go stores are disrupting in-store checkout. But as other merchants look to follow suit, it’s becoming clear there are lots of ways to get the checkout to check out.

Consumers so loathe waiting in line at checkout that half of all shoppers avoid entering stores with long lines, according to data from RetailCustomerExperience.com, a Web portal for retailers. Additionally, one-third of shoppers who enter a store will leave without buying if they think checkout will take longer than seven minutes.

That’s a lot of lost traffic and sales. To reduce friction and speed up service at checkout, retailers are looking at ways to marry more aspects of the e-commerce shopping experience to the physical point of sale.

“While Amazon can afford to spend that kind of money per location, most retailers can’t,” says Ken Morris, principal for BRP, retail consulting firm. “Self-service technology can be an expensive proposition for retailers, just look at in-store kiosks. But if the phone can be the gateway to a frictionless checkout environment, it’s worth a look, provided it can deliver the adoption levels needed to make it work.”

Read Full Article: The Amazing Disappearing Checkout

Mobile Payments Becoming Frictionless

Convenience Store News – More c-stores are looking into frictionless payment options as Amazon raises the bar.
BRP’s 20th annual “POS/Customer Engagement Benchmark Survey” found 63% of consumers use mobile phones while shopping in stores to compare prices, view offers and check inventory. Meanwhile, 49% of retailers list customer mobile experience as a top customer engagement priority.

“C-stores completing their EMV upgrades at the pump can take a large leap forward with mobile payments at the pump to improve the customer experience,” said Perry Kramer, senior vice president and practice lead, BRP, a retail-management consulting firm. “Moving towards mobile payments is a low-cost way of offering consumers an experience of being able to pay with their phone and removing the task of finding their credit card and swiping or inserting at the payment terminal.”

“Frictionless payments, mobile applications and loyalty must all be viewed as a single, holistic solution. Not doing so can significantly jeopardize retailers’ top and bottom lines by impacting total transaction count and units per transaction in the stores,” Kramer said. Wawa could have added mobile payment to its food ordering kiosks, but that may have deterred impulse purchases as customers walk around the store, he said.

Read Full Article: Mobile Payments Becoming Frictionless

Walmart Makes a Play for U.S. Sports Fanatics

The Motley Fool – Walmart (NYSE:WMT) has lagged behind Amazon (NASDAQ:AMZN) when it comes to licensed sports apparel and being able to offer certain prestigious brands in that space. But that’s no longer the case, as the retail giant has partnered with Fanatics to launch a specialty store selling licensed sports apparel on Walmart.com. As part of the deal, Fanatics will be the exclusive provider of officially licensed sports merchandise on Walmart.com moving forward.

Fanatics operates NFLShop.com, NBAStore.com, and MLBShop.com. It makes its own merchandise and sells a number of brands that Walmart previously did not have access to. This includes Nike (NYSE:NKE), New Era, Mitchell & Ness, and others.

Nike has sold select merchandise on Amazon.com since 2017. It has worked with Walmart’s Jet.com since October.

This deal fills a major hole for Walmart while greatly increasing distribution for Fanatics. It takes merchandise that consumers want and makes it easier for them to get it. That’s more important in a challenging retail climate where chains like Dick’s Sporting Goods (NYSE:DKS) lose a top rival in Sports Authority (back in 2016) and don’t show significant growth despite the reduced competition.

“The Fanatics partnership with Walmart will certainly benefit both companies,” Ken Morris, principal at BRP, retail consulting firm. “For Walmart, it increases the traffic on and brand image of the Walmart.com marketplace. As Walmart adds more leading brands to the marketplace, more consumers will think of it as a first place to do product searches, which Amazon currently dominates.”

Read Full Article: Walmart Makes a Play for U.S. Sports Fanatics

Despite Push For Personalization, Just 18% Of Retailers Identify Shoppers In-Store

Retail TouchPoints – A robust 61% of retailers plan to use customer-identifying technology in their stores within three years. However, there’s a lot of work to be done to turn these plans into realities: only 18% of retailers currently use this technology, and just 4% say it is implemented and working well, according to the 2018 Digital Commerce Survey from BRP, retail consulting firm.

Even when retailers are able to identify the customer in the store, in many cases this doesn’t occur until the point of checkout — too late for associates to personalize the shopper’s experience. This delay presents a challenge for retailers, especially since 51% of shoppers feel it is important to get a personalized experience across all digital channels.

“The new retail model requires retailers to transform their business and reinvent themselves to create a successful blend of the physical and digital worlds to maintain their customers’ loyalty,” said Jeffrey Neville, Senior VP and Practice Lead at BRP in a statement. “The speed of these changes requires organizational agility to quickly and easily react to increasing customer expectations and changing consumer behavior.”

Read Full Article: Despite Push For Personalization, Just 18% Of Retailers Identify Shoppers In-Store

A Personalized Brand Experience Across Digital Channels is Imperative

Consumers now start and stop their shopping journey in different channels, including online marketplaces and social media, and frequently shop for the same product across different retailers, both online and in the store. Consumers don’t think in terms of channels, they think in terms of brands and experiences.

According to the 2018 Digital Commerce Survey, 51% of consumers feel it is important to get a personalized experience across all digital channels within a brand.

The good news is that retailers recognize the importance of the cross-channel, personalized customer experience, as their top digital customer experience priorities are creating a consistent brand experience across channels (57%) and improving personalization (38%).

The challenge for retailers is to “keep up” with continually evolving customer expectations. The growth of mobile is driving demand for increased digital capabilities bundled with personalization in the store. The gap between consumer demand for digital experiences and retailers’ current capabilities is what we call the “great digital divide,” and is driving additional changes in the industry.

The new retail model requires retailers to transform their business and reinvent themselves to create a successful blend of the physical and digital worlds to maintain their customers’ loyalty. New and innovative methods of shopping – driven by mobile technology, artificial intelligence and rapidly changing fulfillment methods – are elevating customer expectations. The speed of these changes requires organizational agility to quickly and easily react to increasing customer expectations and changing consumer behavior.

I encourage you to download and read the 2018 Digital Commerce Survey for more insights on the cross channel digital experience:

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As always, I appreciate your insights on this topic.  Please share your feedback and opinions below.

 

Jeffrey

What’s on the Menu?

Frozen and Refrigerated Buyer – Industry observers say consumers’ appetite for frozen foods will only grow in 2019. Key ingredients include e-commerce, premium private label, meal kits, small formats and targeted promotions.

2018 is shaping up to be a banner year for the frozen department. During the 52 weeks ended Aug. 12, reports Chicago-based market research firm IRI (iriworldwide.com), sales of frozen foods shot up 2.8% to more than $54.95 billion across channels, while volume rose 2.2%, as consumers gravitated to a slew of new offerings in categories like meals, pizza and veggies that better meet their needs.

Comments from Ken Morris:

Page 43-44:
Ken Morris, principal at BRP, retail consulting firm, tends to agree, calling Walmart “a much bigger threat” to traditional grocers because its stores can act as distribution centers for 90% of Americans who live within 10 miles of one. In addition, “Walmart continues to make it easier for busy consumers to buy online and pick up at the store or at free-standing kiosks or have items delivered to their homes. As these options become accepted and expected, most grocers are going to have to offer these same services to protect their sales — even for frozen and refrigerated items.”

Page 46:
“Consumers continue to spend more of their food dollars at restaurants,” explains Morris. “As more restaurants offer convenient pick-up and delivery options, they’ll pose an additional threat to retailers.” And then there are restaurants like Chick-fil-A that are dipping their toes into the meal kits business as well. In response, says Morris, grocers will likely need to add more prepared food options and continue to blur the lines between super- markets and restaurants.

Page 48:
Morris adds increased supply chain efficiency and technology enhancements to the list of margin enhancers. Topping Morris’ list of technologies (outside of e-commerce) most likely to gain traction in 2019 are those designed to minimize out of stocks by identifying potential problems in real-time so retailers can react before a bad customer moment occurs. Other technologies likely to take hold in the coming year include port- able self-checkout (not quite Amazon Go but a step in that direction), more European-style kiosks, and AI for difficult and/or labor-intensive activities like building ads or setting prices and offers.

Morris says the Amazon Prime program at Whole Foods is a great example of grocery promotion done right. “Promotions exist, but they’re truly invisible,” he says, citing the dawn of the customer-based pricing era. “Pricing used to by chain, then division, then zone, then store, and now it’s moving to the individual customer.”

Read Full Article: What’s on the Menu? (pages 42-48)

Retail’s Superpower: Leveraging Digital to Reinvent the Enterprise

Incisiv – Recent research from Incisiv and Windstream/BRP show that retailers are actively investing in digital initiatives across the enterprise, yet they still face challenges across many areas. We sat down with two key executives to understand where retailers should prioritize and focus to ensure success.

Dave Weinand, Chief Customer Officer, Incisiv:

The increasing influence of digital is driving retailers to experiment with new store experiences and formats to deliver on customer expectations. In your opinion, what are the most compelling new in-store applications and/or formats you are seeing in the market?

Jeffrey Neville, Senior Vice President and Practice Lead, BRP Retail Consulting Firm:

One of the more compelling store formats is the “new retail” concept, called Hema, run by China’s e-commerce giant, Alibaba. The Hema stores simultaneously act as marketplaces, commerce platforms, fulfillment centers and innovation hubs where they allow customers to experience new brands and products. The 25 Hema stores are a unique and entertaining experience that act as a destination.

The in-store shopping experience is centered around the Hema mobile app and shoppers must use the app to fully optimize the services. These include:

Scan barcodes on products for information on sourcing, branding, pricing and nutritional value.
Pay for products by scanning them at a self-checkout counter and pay using the app, which is integrated with the Alibaba mobile payment service, Alipay.
Request products delivered to their home free of charge within 30 minutes. Hema associates collect the products, bag them and place them on an in-house transportation network that spans the store’s ceiling.

The mandatory use of the Hema app allows the store to leverage big data to optimize the store’s offerings.

Ken Feyder, Senior Director, IT Business Solutions, Tapestry (Coach):

With so many applications available on the marketplace, it is difficult for me to pinpoint a particular app or concept that I would rate dramatically more innovative than others. That being said, I think we are experiencing a significant shift in customer behavior. We’re seeing this globally and I’ll use as a example a scenario we experienced with the world’s foremost luxury shoppers – Chinese consumers.

About 6 or 7 years ago, I remember seeing a Chinese tourists’ group schedule for visiting Paris. It allocated more time to visiting Galleries Lafayette Department Store for shopping than it did for visiting The Louvre! Over the last decade, this notable group of customers has shaped the retail experience of many brands. The retail-centric behavior of Chinese shoppers continued to drive a more focused response from many retailers. That, in turn, created a market place for countless point-solutions related to improving a particular aspect of the shopping experience.

However, I have recently observed a shift in this group’s behavior. When traveling to tourist destinations like Paris, New York, or London, today’s Chinese tourists are less inclined to adhere to a shopping-centric itineraries in lieu of cultural experiences. Less time is being spent on shopping. To me it signifies the beginning of the evolution where a retail experience becomes a logical bi-product of tourism, as opposed to its former position “at the center” of travel. Hence, digital technology that focuses strictly on retail (i.e. improvements in payment, seamless omni-channel, ease of returns etc.) while remaining important, will only deliver marginal results. In my opinion, better focus on digital technology that is NOT dedicated to purely commerce (such as partnerships with Chinese travel service CTrip, or integrations with hospitality technology providers etc.) would ultimately deliver better results as it relates to delivering a more logical and cohesive retail experience many brands desire.

Read full article: Retail’s Superpower: Leveraging Digital to Reinvent the Enterprise

Amazon’s New 4-star Store Concept – Thoughts from BRP

Today, Amazon extended its physical store presence with a totally new concept. Amazon 4-star is a new physical store where everything for sale is rated 4 stars and above, is a top seller, or is new and trend

Photo: Jordan Stead, Amazon

ing on Amazon.com. The first store is located in one of New York’s most vibrant neighborhoods—SoHo—on Spring Street between Crosby and Lafayette Streets.

Here is my take on this new venture from Amazon…

First and foremost, the physical store is not dead! It is great to see the renewed interest in brick-and-mortar stores and Amazon is making a full court press. As Amazon continues to expand its store presence from book, to grocery and convenience and now to stores focus on trending/hot products from its online commerce nearly all retail segments should be on high alert.

I believe they will rollout this concept across all metro areas. It isn’t a gimmick, but a sustainable concept based on localized assortment. The question is how localized will Amazon make the assortments? Will they add these to their Whole Foods locations?

For a few years, there have been rumors of Amazon expanding into gas stations and they have been focused on expanding their presence in apparel, furniture, pharmacy, which might evolve into physical stores in these categories. With more than 100 million Amazon Prime members, Amazon already has a loyal customer base for virtually any category they enter. That’s 40 percent of the adult population in the U.S.

Nothing is off limits for Amazon and they continue to surprise us with new ventures.

What do you think of Amazon’s new concept store – 4-Star? Please share your opinions on this topic below.

Ken