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The Real Measure of the Digitized Store: Human Interaction, Community and Connection

BY CSA STAFF

By John Bajorek, wdpartners.com

It’s easy to get sidetracked by tactics when rethinking retail design and conceptualizing the store of the future. It’s easier still to grow enamored of the potential of technology and consumer data to transform every aspect of the in-store experience.

Undoubtedly, online retailers have an outsized advantage in their ability to aggregate consumer data and present tailored, personalized offers and merchandise. Online shopping has also radically altered consumer expectations, especially among Millennials, who value the “unlimited options” of the online model above all other features of the shopping experience.

So, yes, store brands must adapt to these two converging trends. But every decision about integrating digital technologies into the store experience shouldn’t be based on what’s technically possible, but what’s desirable among consumers.

Before allocating massive resources rolling out digital technologies inside the store of the future, retailers should first ask themselves these three questions:

1. Does this technology enable human interaction or diminish it?
Mobile life means never having to actually talk to a human being, but mobile life is also isolating. Yes, social media is social, but it’s often not satisfying emotionally. How can retailers tap into this latent dissatisfaction, the lonely malaise of the Millennial-mobile generation and appeal to the human need for authentic connection?

For starters, digital technologies should complement or enhance human interactions, not replace them. If a digital technology is intended as a way to cut payroll or limit the role of store associates, it should be heavily scrutinized. In-store digital technologies should mediate human interactions and make purchase and selection more fluid. Think associates armed with iPads to close online orders, or handheld scanning devices to look up other color or size options. The store experience should always offer a space for authentic, human interactions.

2. Does this technology create community or disrupt it?
The pervasiveness of social media in our culture reflects the fundamental human need for connection, a sense of place; a way to navigate one’s place in the world and relationship with peers, family and society at large. For Millennials, this need has been supercharged, with almost every social interaction, purchase and entertainment experience mediated through digital platforms.

Internet technologies are altering the way people define and seek out community. Yet, for the most part, retailers have failed to bring this powerful emotional lever into the store environment. Among Millennials, peer influence impacts purchase behavior more than among other generations. Unlike Boomers and Generation X shoppers, they rank “customer reviews” as the second most appealing feature of online shopping, more influential over purchase behavior than “see and touch” and “instant ownership.”

3. Does this technology creep people out?
The wired store should exploit the power of big data, but tread carefully when integrating it into the personal interactions customers have with associates.

The era of a faceless store environment in which customers were neglected and no one knew anyone’s name is waning, but integrated customer recognition should never veer into Minority-Report creepy.

Amazon has perfected granular customer knowledge about past purchases for driving future purchase, but “you might also like” is far subtler than a store associate bringing up an underwear purchase from six months ago. Brands have learned to respect consumer privacy or face the consequences within the online shopping model. It’s expected today that online shoppers are in control and can easily opt-in, unsubscribe and opt-out. When it comes to utilizing customer data inside the store, the same standard of consumer control applies. Consumers should determine to what degree past shopping behavior influences a present-day shopping experience.

John Bajorek is VP digital services at WD Partners, a global design firm.


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News

Dollar Tree continues growth initiative following Q2 results

BY CSA STAFF

Dollar Tree customers are responding to the value retailer’s offerings in discretionary and consumable merchandise categories. As a result, its consolidated net sales for the second quarter ended Aug. 3 were $1.85 billion, up 8.8% from $1.7 billion for the prior-year quarter.

Comparable-store sales increased 3.7%, on top of a 4.5% increase for the second quarter 2012.

Earnings per diluted share for the second quarter were $0.56, up 9.8% from $0.51 earnings per diluted share reported for the prior-year quarter. Operating margin increased 10 basis points for the quarter to 10.9%.

“I am pleased with our second quarter performance,” said CEO Bob Sasser. “Sales, customer traffic, average ticket, earnings and operating margin all continue to grow. Our stores are well-stocked with a terrific merchandise presentation for back-to-school and the fall selling season.”

During the second quarter, Dollar Tree opened 81 stores, expanded or relocated 32 stores and closed 2 stores. Retail selling square footage increased 7% compared to a year ago, to 41.9 million sq. ft.

Year-to-date through August 3, 2013, the company’s consolidated net sales were $3.72 billion, up 8.5% from the first half of 2012. Comparable-store sales increased 2.8%, on top of a 5.1% comparable store sales increase in the first half last year.

First half 2013 earnings per share were $1.15, up 13.9% from earnings per share of $1.01 in the first half 2012.

Operating margin in the first half 2013 was 11.2%, an increase of 30 basis points from operating margin of 10.9% in the first half 2012.

Dollar Tree operates 4,842 stores in 48 states and five Canadian provinces.

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REAL ESTATE

Noble Roman’s signs eight more franchise locations

BY Michael Fickes

New York — Noble Roman’s, the franchisor of Nobel Roman’s Pizza and Tuscano’s Italian Style Subs, has announced signed agreements for eight more stand-alone locations, brining the total of signed locations to 29.

To date, eight locations are open and 21 are under development.

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