The Self-Service Shopper of the Future
By Oren Betzaleli, EVP, head of product and marketing, Retalix
As smartphones and tablets continue to infiltrate the market, they are increasingly changing the way people interact with each other, receive information, and expect to be served by retailers and service providers. As a result, more and more retailers are starting to offer self-service mobile applications as a popular means to manage customer interaction and relationships.
Retailer-Owned vs. Consumer-Owned Self-Service
Self-service is not a novel concept – and retail-owned self-service devices have been around long before tablets and smartphones.
- Self-service scales were introduced to the market in the 1980s, and implemented primarily in Europe, allowing consumers to weigh fruits and vegetables on their own.
- Self-service kiosks are widely used for public transportation, flight check-ins, movie theaters and more.
- Self-scan hand held devices are used in many stores, especially in Western Europe where they are used for allowing shoppers to check prices, review running totals of their spending and upload their shopping basket to the point-of-sale for quick checkout.
- Self-checkout or “Do-It-Yourself POS,” provides customers the freedom to check out on their own.
The list goes on, and as time goes by, more self-service devices are introduced into the retail industry. Retailers implementing these self-service devices are driven by the desire to grant shoppers increased satisfaction by significantly speeding up both shopping and checkout cycles, and improving store employees’ efficiency by freeing them from mundane tasks. This enables retailers to demonstrate greater attentiveness towards customers where most needed.
And yet, all of the above self-service devices – each with its own capabilities and benefits – are confined to the store. The emergence of consumer-owned smartphone-based applications such as Mobile Scanning and Mobile Shopping, now blur the boundaries between what consumers can do both in and outside of the store, which opens up a whole new world of customer interaction. Once shoppers become accustomed to using the retailer-branded mobile application outside the store – to create shopping lists, review shopping history and download coupons – it strengthens brand identity and increases shoppers’ likelihood to return to the same chain for their next shopping trip.
Mobile self-service applications can be highly customizable and agile to fit each retailer’s requirement. The same consumer-owned device can be used for mobile scanning, self-checkout, mobile payments as well as viewing rich supplementary product information. This approach helps retailers cater to customers’ specific preferences, leveraging the rapid adoption of smartphones to eliminate the need to invest in costly retail-owned hardware and labor.
The Limitations of Self-Service, and How to Rise Above Them
That being said, self-service – whether on retail-owned devices, or on consumer-owned mobile devices – has its downsides and limitations. Handing over the power to the consumer to some retailers means giving up a certain element of control – which can be a scary notion. Allowing consumers to operate in-store devices themselves opens up all kinds of concerns such as theft (intentional or not) or self-scale abuse by punching in a cheaper type of fruit or vegetable at the scales.
To overcome these security issues, some retailers have implemented security scales at their self-checkout lane, to ensure the item scanned is indeed the item placed in the bag, according to pre-defined weight. In order to reduce the risk in the case of self-scanning, store representatives also pick out random shoppers at checkout for re-scanning of their shopping basket, to ensure it matches their own scanning list and invoice. Still, some retailers choose not to implement any security measure, claiming that a person who wants to conduct fraudulent activity will do so with or without a self-service machine, and that most thefts are not performed by the customers, but by employees.
So what motivates retailers to implement self-service options despite these downsides? The answer is simple: if the customer wants it, then you must provide it. Shoppers want the freedom to choose how, when and where to be served. It is part of an emerging ‘connected’ lifestyle which defines a new spectrum of consumers’ desires and preferences.
Furthermore, in a Harvard Business Review blog post, “Why Your Customers Don’t Want to Talk to You”, the authors Matt Dixon and Lara Ponomareff suggest consumers do not necessarily want human interaction when performing their shopping. Reasons can vary from psychological desire to feel in control, or the enjoyment of using new gadgets and mobile applications, to the fact that consumers perceive self-service as being faster, regardless of the time it actually takes.
Retailers who wish to maintain a competitive advantage must adapt to shopper demand and adopt new applications and service options.
What Does the Future of Retailer and Consumer Owned Self Service Hold?
While we expect both retailer- and consumer-owned self-service devices to be a big part of the future store, these applications will not entirely substitute the need for human assistance and therefore, we do not anticipate traditional point-of-sale operations going away anytime soon. Interpersonal relationships are important when providing any kind of customer service. But it needs to occur when and where the customer wants it. Customers prefer whichever method of interaction that reduces their efforts and time spent – be it retailer or consumer owned self-service devices, traditional point-of-sale, or a combination of their choice.
And that is what it’s all about at the end, choice. In order to be ready for the future, retailers must provide their customers with the option to “Bring their own Point-of-Sale” embedded in their mobile device, or if they prefer – switch while in store to a traditional point-of-sale.
The notion of self-service via a consumer-owned device is gradually becoming more popular in today’s retail industry. It is a trend that is reshaping the retail landscape, and to effectively capitalize on this opportunity, retailers must offer branded mobile applications of their own that provide true value and produce an intimate, two-way shopper engagement. A new breed of shoppers is here – and they are connected, knowledgeable, and demanding. Retailers must cater to this new generation of shoppers’ wants and needs by offering a superior experience via whichever self-service modality they choose. The world is the customer’s oyster and it is a retailer’s job to make sure that both the old and new generation of shoppers have the choice to shop not only when they want, but the exact way they want to interact with the retailer at every touch point.
Oren Betzaleli is EVP, head of product and marketing at Retalix, a leading global provider of software and services serving leading retailers. He can be reached at [email protected].
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Earnings soar at TJX
FRAMINGHAM, Mass. — The TJX companies reported that sales for the 14-week fourth quarter ended Feb. 2 were $7.7 billion, a 15% increase over the prior year. Consolidated comparable-store sales for the quarter on a 13-week basis increased 4% over the prior year’s 7% increase.
Net income for the 14-week fourth quarter was $605 million and diluted earnings per share were 82 cents, a 32% increase over last year’s 62 cents.
Net sales for the 53-week fiscal year were $25.9 billion, a 12% increase over last year. Consolidated comparable-store sales for the year on a 52-week basis increased 7% over the prior year’s 4% increase.
Net income for the 53-week fiscal year was $1.9 billion and diluted earnings per share were $2.55 compared to $1.93 last year.
Carol Meyrowitz, CEO of The TJX Companies Inc., stated, “The year 2012 was another great year for TJX on top of many great years! We achieved adjusted EPS growth of 28% on sales of nearly $26 billion and consolidated comp store sales growth of 7%, marking the fourth consecutive year of very strong sales and double-digit EPS increases. Customer traffic was up across all of our divisions as our off-price shopping experience continued to resonate with customers, even with the growth in online shopping in the retail industry. Marmaxx, our largest division, continues to be very powerful with excellent performance of new T.J. Maxx and Marshalls stores as we expand into more rural markets as well as major cities. HomeGoods has taken hold as a shopping destination for exciting, quality product from around the world. TJX Canada delivered very strong results with Marshalls in Canada outperforming our expectations, and TJX Europe has regained its momentum and opens up enormous growth opportunity. We believe this all speaks to the staying power of our value proposition of extreme values on exciting fashions and brands. As large as we are, we have enormous store growth potential and are excited about the opportunity to leverage the success of our brick-and-mortar business with e-commerce over time. Our management team is focused on our four powerful divisions, and I am as confident as ever in our ability to continue driving profitable sales growth for many years to come. We are well on the road to being a $40 billion-plus company!”
TJX also announced that beginning with the fiscal 2014 second quarter, it will no longer report monthly sales, consistent with the retail industry trend.
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Sales, earnings grow on Dollar Tree
CHESAPEAKE, Va. — Dollar Tree reported that consolidated net sales for the fourth quarter were $2.25 billion, a 15.4% increase compared with $1.95 billion reported for the quarter ended Jan. 28, 2012. Comparable-store sales increased 2.4%, on top of a 7.3% increase for the fourth quarter 2011.
Earnings per diluted share for the fourth quarter were $1.01, an increase of 26.3% compared with the 80 cents earnings per diluted share reported for the fourth quarter 2011.
“I am pleased with the growth of Dollar Tree’s sales and earnings in the fourth quarter and for the year of 2012,” said president and CEO Bob Sasser. “On top of a very strong fourth quarter performance in 2011, average basket size increased and customers responded this year in record numbers. These results were achieved through the efforts of thousands of Dollar Tree associates across North America, working every day to provide a unique assortment of merchandise at great values in stores that are clean, bright, and fun to shop.”
During the fourth quarter, Dollar Tree opened 47 stores, expanded or relocated 6 stores, and closed 6 stores. Retail selling square footage increased 7.7% compared to a year ago, to 40.5 million square feet.
The company estimates sales for the first quarter of 2013 to be in the range of $1.84 billion to $1.89 billion, based on low single-digit positive comparable-store sales and 6.8% square footage growth. Diluted earnings per share are expected to be in the range of 53 cents to 58 cents.
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