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The Future of Technology in Retail

BY Jill Puleri

The past century has seen retailers at the forefront of adopting many powerful new technologies, which were instrumental in increasing both sales and customer satisfaction. As significant as these past innovations were, recent developments suggest that we are at the beginning of a retailing renaissance that will see a big leap forward in merchants’ ability to understand consumers’ needs. 


The innovations of the past century usually involved automating tasks as well as connecting people, businesses and institutions to each other, while also connecting data and information in much faster and more efficient ways.


For example, early adopters at the turn of the last century used tabulating machines to count faster, manage employees and serve customers better and generally understand information in new ways. Then came the bar code in the ’70s that revolutionized not only the checkout process, but also order tracking. 


Fast-forward to the age of the Internet, which changed how consumers shop and the way retailers understand, sell to and service those customers. Today consumers are armed with smartphones and now have — in the palm of their hands — the ability to research any product and make purchases wherever and whenever they want.


These changes are profound because humans innovate, learn and grow through connection, and automation frees us up for higher-order tasks. But we’re approaching the limits of what automation and connection can deliver. While they will remain critical to the advancement of retailing, a new era of analytics and understanding has already begun. 


The real power of analytics lies in better predicting what is likely to occur, and in helping decide what to do next. For example, a consumer electronics site can provide a discount for a particular brand of Blu-ray player for a customer who is purchasing an HDTV, based on the customer’s profile, past purchases, preferences and other information.


But we can do much more. Analytics can translate mountains of data into a real understanding of individual needs, the kind that is usually derived from the social interactions we have with those who know us. As we share with retailers our likes and dislikes, our hobbies and so forth, they will be able to provide a much better shopping experience. 


One glimpse into this future is Watson, the computer that defeated the two most celebrated “Jeopardy!” champions earlier this year. To win at Jeopardy! one must be able to think like a human using natural language. This is a new kind of technology, one that can analyze and discern human meaning, creating a better understanding of the customer and delivering a better shopping experience by helping sales associates answer the most difficult customer questions in real time. For example, “What is the next contact we should make with this customer? When should we reach out to him? What should we say? And through what medium?” 


And for the consumer, imagine a day when you could ask — in natural language — “What gift should I buy a techno-savvy 9-year-old boy?” And the response comes back with the top suggestions and what stores have them in stock. Gift giving just got smarter, thanks to customer analytics and a bit of technology wizardry. 


The profound changes underway now will affect the way we make personal decisions and how companies make strategic and tactical ones. In retailing, the combination of analysis with understanding — and with connection and automation — will provide merchants with the best opportunity in many decades to forge deep and lasting bonds with their consumers. 


Jill Puleri is VP and Global Retail Industry Leader, IBM Global Business Services. IBM is celebrating its Centennial Anniversary this year.

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Driving Efficiency 
Survey shows retailers are setting goals, taking actions to improve energy efficiency, lower costs

BY Bill Schaphorst

Energy cost savings, government incentives, and customer attraction and retention are driving energy efficiency in the retail sector, according to the results of the fifth annual global “Energy Efficiency Indicator” survey. The survey of nearly 4,000 building owners and operators representing 24 industry segments worldwide was led by Johnson Controls’ Institute for Building Efficiency, the International Facility Management Association and the Urban Land Institute.


According to the report, energy management is important to every industry the survey represents. For members of the retail sector, 28% agreed that energy management was important to their organization, and 35% reported that their organization will pursue green building certification in the next 12 months. 


Other questions elicited responses that indicate a growing interest on the part of retail professionals in energy management, with 50% reporting that their organizations have an energy-reduction goal. In addition, 72% said they are paying more attention to energy than they did one year ago.


Even more encouraging, the survey showed that as many as 80% of respondents in the retail sector have invested in energy projects, and 91% have taken actions to reduce energy use in the past year. 


The top two reasons for these actions align with those of global respondents — energy cost savings and government and utility incentives and rebates. However, the third reason — customer attraction and retention — ranks much higher for the retail sector than other survey respondents. This suggests that retailers are responding to customer interest in energy efficiency with energy-saving goals and projects in an effort to retain and attract business.


But even as retailers take steps to improve energy efficiency, they report barriers to their success. Agreeing with global respondents, 30% of retailers cited a lack of funding to pay for improvements as the leading barrier, followed closely (25%) by an insufficient payback or return on investment. Another 14% regarded uncertainty about savings/performance as a barrier, while only 8% pointed to a lack of technical expertise to evaluate or execute projects.


Tools to overcome these barriers exist, and the survey suggested retailers are using them with increasing frequency.


As technology develops and becomes less costly to integrate, more retailers are inquiring about energy monitoring devices and control systems. And retailers that operate smaller facilities are taking advantage of economies of scale, grouping facilities together as they pursue energy-efficient strategies.


The survey showed that less expensive lighting technologies (energy-efficient bulbs, lamps, ballasts and fixtures) are popular with retailers, with 73% making lighting improvements in the last 12 months. Another 63% reported making improvements to their heating, ventilation and air-conditioning systems and/or controls during this same period.


In addition to technology changes, organizational changes are challenging barriers to energy efficiency. An analysis of the nearly 4,000 responses revealed four factors that correlate with more energy efficiency, clean energy and smart building actions. Of the four, adding internal or external resources and using external financing are helping global respondents in general (54% and 58%) and retail respondents in particular (44% and 48%) overcome financing and payback barriers. 


The remaining two factors, ranked one and two globally and for the retail sector, include setting a reduction goal and analyzing energy data frequently.


The survey makes it clear that retailers face significant barriers to energy management. However, survey results also indicate that despite these barriers, retailers are setting goals and taking actions to improve energy efficiency, reducing energy costs and attracting customers in the process. 


Bill Schaphorst, director of retail, Johnson Controls, a global diversified technology and industrial leader, offering quality products, services and solutions to optimize energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles (johnsoncontrols.com).

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Exclusive survey reveals that social media has growing importance for retailers

BY Katherine Boccaccio

Twitter and Facebook aren’t just for consumer networking anymore. 


With more and more retailers and shopping centers jumping on the social media bandwagon, Chain Store Age and Cleveland-based shopping center developer Forest City Enterprises surveyed CSA’s readership to find out where retailers are trending in terms of social media engagement and communication tools.


The results were telling. In the “How Retailers are Embracing Digital Technologies: Which Ones and How Fast” survey, conducted by Forest City and Chain Store Age with consumer research firm Alexander Babbage, Atlanta, respondents revealed that opted-in proprietary database communications are of paramount importance, both now and in the future. But, during the next 12 months, Facebook and Twitter, along with Web and mobile advertising, will jump considerably in importance — though not eclipsing proprietary databases and customer affinity programs.


More than half of the surveyed retailers (53.3%) said that opted-in proprietary databases are very important in communicating with their shoppers currently, and 57% said these databases would be very important a year from now. More than half said that frequent-shopper programs, opted-in databases, Web advertising and Facebook will be the most important forms of communication 12 months from now. 


Among the newer forms of communication, retailers felt that Twitter and mobile advertising would see the greatest surge in deployment within the next year.


“While retailers’ direct relationships with their customers remain their preferred link for communications, mall and shopping center owners clearly have a growing opportunity to complement those efforts through the use of social media, as well as more traditional tools,” said Jane Lisy, VP marketing commercial management, Forest City.


The survey suggested that category of retail clearly influences social tool selection. Specialty retailers were more likely than all other retail category respondents to say that Web advertising, Facebook, Twitter, organic online searches and magazines will be very important forms of communication in the future. Department store retailers, on the other hand, have a strong direct-mail bent, as 74% said direct mail is very important currently and 62.9% said it will continue to be very important in a year.


Quick-serve restaurants had the least amount of interest in opted-in proprietary databases, as just 36% would rank the medium as “very important” 12 months from now. However, the category is much higher on Facebook; half of the quick-serve operators surveyed said Facebook programs would be very important in a year. Interestingly, the biggest Facebook fan category was home improvement, as 60% of home-improvement big-box stores said the medium would become very important. Least interested in Facebook? Sit-down restaurants (33%).


It was no surprise to find that the overwhelming majority of retailers have online sales. Eighty-three percent do at least a portion of their sales online, but again the degree varied widely by retail category. 


Among retailer types, discount department stores attributed the highest percentage of their sales to online, with 14.3% saying that more than half of their total sales are conducted online. Among specialty retailers, just 8.3% said that more than half of their sales are currently online sales, but this number more than doubles when > 
looking ahead — 19.6% forecast online sales will represent more than half of total sales in five years.


No matter the tenant category, the research revealed that mall owners have huge opportunities when it comes to social media programs. When asked what landlord-provided programs were most desirable to tenants, more retailers (33.4%) ranked customer affinity/frequent shopper programs at the top of the list. 


Web advertising, free mall Wi-Fi and opted-in property e-mail database closely followed frequent shopper programs. Facebook, mobile advertising and Twitter rounded out the list of landlord programs that could sway a tenant to select one mall owner’s property over another.


“Since customers use smartphones to hunt for deals when they’re on-site, Wi-Fi access will continue to grow in importance as a customer amenity for shopping center properties,” Lisy said. “In addition, retailers are recognizing the benefits of leveraging shopping center customer databases to connect with customers.”


Retail respondents were quick to point out that the onus is on themselves, not on landlords, to push social media programs forward. Compared with the 47.8% who said customer affinity programs are currently very important internally and the 58.8% who said these programs will be important internally 12 months from now, it appears that retailers are less likely to look to landlords for this type of program and more likely to put a priority on their internal affinity programs.


But, that shouldn’t make the programs any less of a priority for landlords, according to Lisy.


“Although we’ll always be fundamentally brick-and-mortar, we’re working hard to use the power of digital communication to maximize value for our retail tenants,” she said. “Web and mobile advertising, free Wi-Fi, active Facebook and Twitter connections and innovative programs like the Shoptopia Network (Forest City’s customer affinity/frequent shopper program) are becoming almost as common expectations among potential tenants as property maintenance, marketing, security and frequent shopper programs.”


As retailers continue to add social media such as Twitter and Facebook and mobile advertising to their communications arsenals in order to more effectively engage their customers, mall owners will at the very least need to follow suit — if not lead the social media pack — in order to form landlord-tenant synergies designed to positively impact the bottom lines of each.


For a copy of the complete survey, visit alexanderbabbage.com/ChainStoreAge/Study.htm.


[email protected]

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S.Anderson says:
Mar-21-2013 11:55 pm

Actually I don't think one
Actually I don't think one needs a survey for that. We can all see on our social media profiles how fast things change. I had people asking me what is the cloud, I guess part of the answer is explained by social media as well.

S.Anderson says:
Mar-21-2013 11:55 pm

Actually I don't think one needs a survey for that. We can all see on our social media profiles how fast things change. I had people asking me what is the cloud, I guess part of the answer is explained by social media as well.

N.Spotcheckbilly says:
Jan-31-2013 06:48 pm

Good article. This will help
Good article. This will help to use it to learn and continue to maintain such a good job, of course, and I'm looking forward to see more of your articles. perruques pas cher Perucken

N.Spotcheckbilly says:
Jan-31-2013 06:48 pm

Good article. This will help to use it to learn and continue to maintain such a good job, of course, and I'm looking forward to see more of your articles. perruques pas cher Perucken

C.Floz says:
Nov-30-2012 12:01 pm

Yes, the opportunity is
Yes, the opportunity is there. It is up to us how to take advantage of that opportunity. - Arthur van der Vant

C.Floz says:
Nov-30-2012 12:01 pm

Yes, the opportunity is there. It is up to us how to take advantage of that opportunity. - Arthur van der Vant

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