NEXT GENERATION IN-STORE TECHNOLOGY:
NEXT GENERATION IN-STORE TECHNOLOGY:
WHERE DO SHOPPERS
AND RETAILERS STAND?
Retailers are turning to some of the latest technologies to give their in-store shoppers the best possible personalised experience.
Some shoppers welcome this. But for others it might make them feel uncomfortable and turn them off in-store. And for those shoppers who welcome it, how do retailers produce, capture, manage and analyse all customer data?
To find out more, CSC commissioned a survey to discover where in-store shoppers and retailers stand on these issues.
ABOUT THE SURVEY
The survey was conducted in Summer 2015 with the independent market research company, Opinion Matters. 2,049 UK consumers (both in-store and online shoppers) were surveyed as well as 150 senior IT, marketing or digital retail executives. Retailers surveyed
included department stores, fashion and apparels, electronics, supermarkets and convenience stores.
The results clearly showed that a line exists at a point where consumers perceive that in-store technology actually makes them feel uncomfortable rather than at ease.
But what was reassuring is that many of the younger respondents clearly felt comfortable with in-store technologies and could see the benefits they offered when shopping. Age demographics did play a part in where the line was drawn, and the 55+ age group were decidedly uncomfortable.
Overall the results from all consumers surveyed showed that shoppers were quite comfortable with in-store technology, such as technology that helps consumers decide what to buy, technology that identifies and recommends products in-store, and self-service kiosks. Shoppers were also very familiar with loyalty cards, self-service checkouts, and touchscreen and interactive devices.
What the survey also showed was that technology adoption speeds up every time new technology is introduced. So, where consumers felt comfortable with technology such as touchscreen and interactive devices and so on, had this survey been undertaken five years ago this might not have been the case. Therefore these types of in-store behavioural technologies will be embraced as consumers become more comfortable with them. For example, facial recognition technology is actually far less intrusive than technologies like CCTV.
However the survey clearly shows that there is a need to educate consumers around how the customer data is being used. Retailers therefore should be talking about the benefits that customer analytics using facial recognition offers to customers.
Use of real-time customer data is seen by both consumers and retailers as key to service improvement but there were dissenting voices in the survey about the collection of data. Clearly more needs to be understood around data ownership and its governance, for example what the opt-in and opt-out rules are.
Finally, the survey demonstrates that although retailers think they know their customers’ buying preferences, clearly this is not the case. All too often retailers gather a myriad of data which is not specific or personalised to the real needs of the customer.
Retailers clearly need to gain better insight around what happens in-store versus what happens online so that they can intensify their focus on the customer. Today retailing is a multi-channel experience underpinned by all manner of data driven technologies. Therefore, in order to anticipate buying patterns and offer a ‘connected in-store’ experience, retailers need to bring the online experience into the store and rethink their omni-channel strategies to drive up sales both in the physical stores and online.
The key question is how retailers will continue to grow their in-store sales and deliver a seamless online to physical shopping experience. Clearly having the right technology and infrastructure in place such as big data and customer analytics will help retailers to better understand their customers, but it needs to be laser focused as they look to adapt to changing consumer buying habits in this rapidly evolving environment.
All too often big data projects can be too complex, take too long to deploy and often yield less than expected. Therefore retailers need to adopt technologies that allow them to quickly develop, test and deploy applications that can accommodate ad hoc, batch and real-time analytics. Adopting solutions designed to capitalise on big data allows retailers to navigate the shifting retail landscape and ultimately deliver a smarter shopping experience.
KEY SURVEY POINTS
How do consumers feel about the shift in technology and does their age make a difference?
KEY SURVEY POINTS
In 2014 the UK’s Online Retail Association, the IMRG, reported that annual online retail sales had exceeded the £100bn barrier for the first time and that it expects a further 12% growth, with total e-retail sales estimated to be worth £116 bn by the end of 2015.
In today’s digital ‘always-on’ world, the research looked at how consumer shopping habits are evolving and how retailers are responding. E-retail sales are on an upward trend and in the next few years it has been predicted by industry experts that they will surpass traditional in-store sales. With this in mind, one must question how retailers will distinguish between e-retail sales and in-store sales, particularly as retailers begin to develop in-store digital experiences for the customer.
By utilising technology such as self-service kiosks, tablets, facial recognition technology, touchscreens, mobile apps, texts and much more, retailers are able to personalise their offerings in ways they were never able to before. But how does the consumer really feel about this?
Do you think your customers are comfortable with in-store technology?
THE GENERATION GAP
Nearly half (49%) of 16-24 year olds feel either quite comfortable or very comfortable with technology that helps the retailer understand more about their buying habits. 49% and 56% feel comfortable or very comfortable with technology that records information such as their gender, age and the time they spend in-store, and technology that recognises how many times they have been in-store.
That said, the line is drawn differently depending on age demographics, as looking at the 55+ category, it was clear that this age group was decidedly uncomfortable with these types of technologies. 72% of 55+ respondents stated that they felt either quite or very uncomfortable with technology in-store that helps the retailer understand more about their behaviour. 80% felt either quite uncomfortable or very uncomfortable with technology that records information such as gender, age and the time they spend in store and likewise 72% reported that they felt either very or quite uncomfortable with technology that recognises how many time they have been in-store.
"49% of 16-24 year olds are comfortable with habit tracking technology"
WHERE DO SHOPPERS STAND WITH IN-STORE TECH?
Almost three quarters (74%) of retailers are using all kinds of technology to track consumers in-store. 31% are using big data, 27% facial recognition technology, and 65% track customers for security purposes.
Where do shoppers stand with in-store technology?
The survey found that shoppers were either very comfortable or quite comfortable with in-store technology such as technology that helps consumers decide what to buy (38%), technology that identifies and recommends products in-store (42%), and self-service kiosks (56%). Shoppers were also very familiar with loyalty cards (83%), self-service checkouts (62%), and touchscreen and interactive devices (47%).
Do you think your customers are comfortable with technology that tracks what they do in-store?
However the line when technology starts to be viewed as intrusive, revolves around in-store technology that tracks consumer behaviour. This was seen as a distinct turn-off:
- 73% were either not comfortable at all, or not particularly comfortable with in-store technology that tracks their behaviour.
- 71% were not comfortable at all or not particularly comfortable with technology that records information such as your gender, age and the time consumers spent in-store.
- 65% were not comfortable at all or not particularly comfortable with technology that recognises how many times they have been in-store.
"65% of retailers track customers for security purposes"
Are you comfortable with technology that makes product recommendations?
IN-STORE VS ONLINE
When asked how much of your shopping is online versus in-store, given this digital always-on world, it was surprising that 94% of consumers still rely on the high street, with only 6% of those consumers surveyed stating that they do all their shopping online. In fact, one third (33%) stated that they prefer to do all their shopping in-store. Nearly another third (32%) stated that their shopping is split 75% in-store and 25% online.
IN-STORE VS ONLINE
Interestingly, more men are shopping in-store versus women (37% versus 29%), with more women (21%) versus men (15%) admitting to doing equal amounts of shopping online versus in-store.
Even the younger respondents (16-24 year olds) surveyed still do only 7.5% of all their shopping online with nearly a quarter (23%) admitting that they do all their shopping in-store, while well over one third (37%) of the 55+ age group still do all their shopping in-store. 36% of the 16-24 year olds claimed to do equal amounts of their shopping in-store versus online.
By contrast, retailers stated that nearly half (47%) of their sales were in-store versus (53%) online. However when retailers were asked whether in-store sales would always outperform online sales, nearly two thirds (63%) were completely unsure, which demonstrates there is still a lot of uncertainty about the future buying habits of consumers.
WHAT IS MORE IMPORTANT TO RETAILERS IN-STORE OR ONLINE?
Do you think in-store will always out-perform online?
INTERNET SHOPPING GROWS
- Interestingly, 91% of consumers still prefer to buy their groceries in-store. Again this changes when you look at the age demographics with 77% of 16-24 year olds going in-store while 23% of 16-24 year olds buy their groceries online via a PC, tablet or mobile.
- Over half of consumer respondents (54%) go in-store on a weekly basis for groceries and over one quarter (26%) go in-store to shop for clothes at least once a month.
- On average the younger generation, 16-24 year olds and 25-34 year olds, are spending between £17 and £18 online each week, whereas the 55+ are only spending £11.
- Retailers are finding that consumers are buying higher priced items online rather than in-store. Purchases of items costing between £61 and £80, and £81 and £100 equated to 33% of online purchases versus less than 12% in-store.
"72% of the younger generation can be influenced in-store"
CHANGES IN THE PAST 12 MONTHS
- When asked how have the in-store/online percentages changed over the past 12 months, nearly half of retailer respondents (49%) said that sales have changed between 11 and 15% in favour of online purchases, with an additional 22% stating that between 16 and 20% of their sales were now in favour of online purchases.
- Department stores were highest among all the retailers surveyed in the ‘between 11 and 15%’ category in favour of online purchases, whereas supermarkets rated highest in the ‘between 16 and 20%’ category. Indeed, supermarkets reported the highest change in favour of online purchases, with 26% stating that sales had moved in favour of online over the last 12 months.
LEAVE CONSUMERS ALONE
- Once in-store, consumers want to be left alone rather than be helped with their purchase decision.
- Over two thirds (69%) felt that being given the freedom to browse (37%) or being left alone (32%) would entice them to spend more. 41% felt that no in-store incentive would actually get them to spend more money.
- Women in particular want to be left alone with 75% of those surveyed stating that freedom to browse and being left alone would encourage them to buy more. This compared to 59% of men.
- The younger generation (16-24 year olds) are more likely to be influenced to buy more when in-store by personalised or unique services, with 72% admitting that they can be influenced when in-store. The 55+ generation however are much less likely to be swayed, with nearly half (47%) claiming that none of these more personalised or unique services would have any effect on them.
- 74% of retailers admit that they are tracking customers the moment they enter the store.
"On average the younger generation, 16-24 year olds and 25-34 year olds, are spending between £17 and £18 online each week, whereas the 55+ are only spending £11."
FACIAL RECOGNITION TECHNOLOGY. TURN ON OR TURN OFF?
One third (33%) of consumers are familiar with and think that facial recognition technology is intrusive. Over half (56%) admit to not knowing what facial recognition technology is, and only 11% are familiar with it and find it helpful.
FACIAL RECOGNITION TECHNOLOGY – TURN ON OR TURN OFF?
This statistic changes when you look at 16-24 year olds. In fact, one fifth (20.5%) of 16-24 year olds were not only familiar with but found this technology useful. This is in comparison with nearly two thirds (61%) of the 55+ group who were completely unfamiliar with facial recognition technology.
WHEN SHOPPING, HOW FAMILIAR ARE CONSUMERS WITH TECHNOLOGY USED IN-STORE?
27% of retailers are using facial recognition technology in-store. 25% of those are using facial recognition technology in-store to get existing customers back. This rose to 59% for fashion and apparel retailers. The larger retailers (101-250 stores) use facial recognition most frequently (43%).
Nearly half (49%) of all retailers are in favour of facial recognition technology. As little as 7% felt that it was intrusive for customers. Interestingly, one quarter (25%) of retailers are using facial recognition technology to get customers back in store, which was nearly as high as engaging window displays (28%).
"27% of retailers are using facial recognition technology in-store"
THE CONSUMER VIEW ON COLLECTING DATA
Over one third of respondents surveyed (34%) object to stores collecting data on them, whereas 24% believe that it is useful for their shopping experience. Interestingly, nearly one sixth (14%) were completely unaware that stores collect any data on them, while 6% admitted to having benefitted from the collection of data stating that it had improved their shopping experience.
The consumer view on collecting data
Males tend to object to data being collected more than females (37% versus 32%) and slightly more women appear to be unaware that data is being collected on them than men (15% versus 12%).
16-24 year olds are less unhappy about data being collected in contrast to the 55+ age group (20% versus 40%). Indeed, 28% of 16 – 24 year olds felt that it was useful and would improve their shopping experience
THE FINAL WORD – EDUCATION IS CLEARLY NEEDED
83% of retailers think that customers would respond positively to behavioural technology, either stating that it has improved their shopping experience or that they have benefitted from data-improved shopping experiences. Only 9% of retailers felt that customers would object, and again only 7% felt that customers would not be aware of this type of technology used in-store. Clearly retailers will need to focus on education initiatives to help promote the benefits of such technology to their customers.
WHAT TECHNOLOGY ARE RETAILERS USING IN-STORE?
HARNESSING THE POWER OF CUSTOMER ANALYTICS AND BIG DATA
CSC has a strong presence in the retail market and our services help retailers to create the new retail value paradigm, where the physical store is just one of the channels through which goods, services and experiences are sold.
HARNESSING THE POWER OF CUSTOMER ANALYTICS AND BIG DATA
We understand the pressure on retailing to be an omni-channel digital customer experience, however in order for retailers to capitalise on these industry changes, they need capabilities to collect, manage and analyse the tremendous volume and variety of data which is now being generated. If retailers succeed in addressing the challenges of “big data,” they can use this data to generate valuable insights for personalising marketing and improving the effectiveness of both the in-store and online shopping experience. However, we also understand that big data projects can be too complex, take too long to deploy and often yield less than expected. That’s why CSC offers a fully integrated and managed big data platform in an ‘as a service’ model that utilises advanced web-scale technologies to enable application developers to quickly develop, test and deploy applications that require any combination of ad hoc, batch and real-time analytics.
CSC Big Data Platform as a Service allows retailers to:
- Have a fully managed, analytic development environment ready to use in under 30 days, not months, and scale to address the most complex hybrid environments
- Support batch, ad hoc and in-memory analytics
- Provide application developers a platform designed to ingest, integrate and manage data from any source and in any format
- Benefit from the technologies and operating principles that underpin Facebook, Twitter, Yahoo and other businesses relying on big data to improve customer experience, generate revenue, improve operations, manage risk more effectively and transform business processes
- Ensure that your environment is always available, performs at scale and grows as needed
For more information please visit www.csc.com/big_data or contact email@example.com