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The Showrooming Scramble: Why Retailers Must Embrace Customer-Centered Service Innovation

BY CSA STAFF

By Craig LaRosa, clarosa@continuuminnovation.com

A consumer walks into a store, tries on a pair of running shoes, and then hops online to buy them from someone else—10% to 15% cheaper. It’s called “showrooming” and it has a lot of businesses scrambling.

Shoppers today are carrying around a multitude of competitors in their pocket. If they find something they like, they scan the barcode with their Smartphone and see who’s offering it for less. And with Amazon prices sitting 9% to 14% lower than most traditional retailers, brick-and-mortar shops are losing market share. For now, online retailers have the added advantage of no sales tax in states where they don’t have a physical presence (though a current bill in Congress may reverse the policy).

Consumers shop differently today and traditional retailers must adapt to stave off online competition or suffer further losses in revenue. It’s not just specialty shops that fall prey to showrooming. Big-box retailers like Best Buy, Target and Wal-Mart are also feeling the pinch. Best Buy’s first-quarter 2012 earnings are down 26%. In a call with investors, Best Buy’s interim CEO Mike Mikan admitted that their customer experience “is no longer unique as it once was.” Many speculate that showrooming was behind Target’s decision to remove Amazon’s Kindle product line from store shelves.

The solution for all retailers lies in bridging the value gap between online and in-store. It’s not all about pricing, rather the solution requires boosting the value of the brick-and-mortar shopping experience. And it’s not going to happen by making small tweaks. Delivering an in-store experience that will keep customers coming back for more requires all-out, customer-centered service innovation. Here’s how some retailers are innovating their services and winning back customer loyalty in-store.

Cater to your best customers. Nordstrom targeted moms with comfortable nursing rooms and shoe-tying lessons for kids. At yoga gear store Lululemon, local stores hand-select brand ambassadors who represent the Lululemon lifestyle, creating a community of consumer partners who are constantly spreading the word. Retailers that laser in on their most influential demographic resonate with consumers.

Turn the store into an experience. Jordan’s Furniture in Natick, MA isn’t just about shopping, but about entertainment, with an animatronics show, food, and an IMAX Theater. It upped the ante for in-store shopping and closed the value gap of buying online.

Make shopping “smaller.” Shoppers of massive big box retailer Wal-Mart are forced to navigate such cavernous stores—108,000 sq. ft. on average—that finding specific products can be difficult. This frustrating in-store experience can drive customers online to make purchases, finding exactly what they need and much faster than roaming through store aisles. To combat this, Wal-Mart added an in-store mode to its smartphone app which helps customers locate aisles for the items on their shopping list. They’ve also debuted Wal-Mart Express stores, which are significantly smaller at just 12,000 to 15,000 square feet.

Consider employees your biggest asset. Employees and the help they offer are the backbone of brick-and-mortar stores. Knowledgeable and friendly staff members create customer loyalty and keep shoppers coming back for the experience they can’t receive online by clicking a button and adding an item to their virtual shopping cart. Wegmans, a supermarket chain with a loyal, cult-like following, counts on a high-quality workforce to extend its brand to customers. Wegmans invests heavily in its employees, even sending hundreds of staffers on trips around the world to become experts in their products. With dry goods becoming more readily available online, grocery stores can stave off showrooming by taking a page out of the Wegmans playbook.

Live in beta: test, be nimble. Before building a complex system, you need to build a prototype first. At Continuum, we call this “failing fast.” If you design a 10,000-sq.-ft. mock-up of a hotel lobby, you make the intangible tangible, saving time and money before you build the real thing. Continuum regularly does this with Sprint, dropping life-size prototypes into a test store so consumers can “kick the tires” of an idea.

Execute as an organization. It takes an entire organization to truly innovate a service, not just the folks sitting in the c-suite. Involve representatives from every group, particularly those who interact directly with customers. With the international bank BBVA, Continuum brought branch managers together with executives and IT to create a seamless user-centered banking experience.

Specialty and big-box stores alike should take a cue from mom and pop shops by creating in-store experiences that add value and keep consumers coming back in for more. Online retailers can compete on price but they can’t compete on a human-centered level. Stores that innovate around the customer experience will win out in the long run.

Craig LaRosa is a principal at Continuum, a global design and innovation consultancy. He can be reached at clarosa@continuuminnovation.com.


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Apr-10-2013 07:01 pm

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Apr-10-2013 07:01 pm

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Walgreens hosts Mobile Photo Hack Day

BY CSA STAFF

CHICAGO — Walgreens on Saturday will be hosting its first Mobile Photo Hack Day — a contest between mobile photo application developers in creating a "groundbreaking" application using Walgreens’ QuickPrints SDK.

All entries will be reviewed by a panel of notable judges:

  • Kobie Hatcher, solutions director at AIM Consulting, a technology solutions and services company providing resources in flexible configurations;

  • Scott Regan, head of marketing at Apigee, which makes application programming interface products and tools for enterprises and developers;

  • Ari Fuchs, lead API engineer and developer evangelist for Aviary, a company that developed a photo editing platform that allows any developer to instantly inject a photo editor inside their product;

  • Brett Goldstein, commissioner of the Chicago Department of Innovation & Technology. Goldstein, was appointed to the position by Mayor Rahm Emanuel in June 2012 to accelerate Chicago’s growth as a global hub of innovation and technology. He was previously the city’s chief data officer;

  • Kevin McGinnis, VP product platforms at Sprint. McGinnis leads a group responsible for developing platforms and product lines that support customer choice and service enablement;

  • Terry Howerton, founder of TechNexus, a Chicago-based collaboration center that’s home to hundreds of entrepreneurs, startups and growing companies. Howerton also recently co-founded and now chairs the Chicago Tech Academy, a public charter high school teaching entrepreneurship and tech skills to more than 600 inner-city children;

  • Matt Moog, Viewpoints.com CEO, a provider of consumer product reviews. Moog also is the founder of the FireStarter Fund, an early stage investment fund; and

  • Jasbir Patel, Walgreens senior director and general merchandise manager for photo. Patel is part of the senior leadership team at Walgreens.com.

"Hackers" who participate in the all-day event will be competing for $5,000 in cash prizes and complimentary mentoring and residency within TechNexus incubator and collaboration center for six months.

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NRF launches new mobile initiative

BY Allison Cerra

Washington — The National Retail Federation, in partnership with its member companies, has launched a new initiative to address the challenges and opportunities of mobile retailing.

The Integrated Mobile Initiative is being led by NRF senionr VP communities and executive director of Shop.org Vicki Cantrell, with cooperative support and involvement from an external task force of retail companies and solution providers. Additionally, the IMI aims to further strengthen NRF’s message that policies which hinder innovation will inhibit retail companies from catering to consumers all over the world.

"Retailers are inherently driven to stay ahead of the curve when it comes to their customers’ demands, and today nothing is more important than mobile technologies that provide seamless cross-platform shopping experiences," Cantrell said. "As mobile rapidly changes both consumers’ expectations and the overall shopping experience, the IMI will serve as the go-to source for information for retailers, their business partners, the media and interested parties across the world on the practical aspects of implementation and resources for mobile retailing."

A centerpiece of the IMI is NRFMobile.com, a website that offers users the opportunity to view original NRF research, infographics, policy information and more.

Key elements of the IMI’s work include:

  • Thought leadership: IMI will bring together retailers and other experts in the field to discuss and advance the future of mobile retailing and serve as the central hub of information on the topic;
  • Educational content and events: Through its website, policy initiatives and nationwide events, the IMI will educate retailers and their communities on mobile trends and challenges; and
  • Original research: The IMI will produce and release research related to mobile retail trends, including consumer habits, mobile marketing and industry best practices.
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