Focus on: Innovation

The physical and virtual retail worlds continue to converge thanks to innovative technology, especially as consumers rapidly adopt digital solutions and apply them to their retailing experiences.

“Consumer-driven solutions are what keep customers at the epicenter of the shopping experience, and that’s what retail is all about,” said Sahir Anand, VP and research group director for Aberdeen Group, Boston.

As retailers competitively position themselves for 2012 and beyond, they are integrating digital innovations such as mobile POS, social media analytics and mobile payments. Here is a review of these hot-button trends and why they are gaining traction within the retail industry:

Mobile POS

Digitally driven consumers are entering stores armed with much more knowledge than the average store associate — a crucial point forcing retailers to embrace the power of mobility at store-level.

By putting mobile solutions in the hands of associates, retailers are cultivating more informed sales associates who can help the shopper through the decision-making process — beginning in the store aisles up through the checkout experience. Half of U.S. consumers prefer to receive assistance from associates with tablets and smartphones, according to research conducted by The NPD Group for NCR.

Cupertino, Calif.-based Apple single-handedly showed the retail industry that a multifunctional untethered POS was a possibility. Comprised of nothing more than its signature consumer iPod touch devices and a local area network, associates access inventory availability, schedule Genius Bar appointments, and tender credit, debit and cash transactions. (Cash is held in dedicated cash drawers hidden under displays.)

Jumping on the mobile POS bandwagon, Home Depot, Atlanta, got creative and deployed customized smartphone-walkie-talkie mobile POS devices. With 30,000 units available across 2,000 stores, pundits describe the program as the industry’s largest mobile POS retail rollout.

Many chains, however, are opting for the simplicity of iPod touch technology. Nordstrom, Seattle, for example, added approximately 6,000 iPod touch mobile checkout devices enterprise-wide last July. Similarly, Urban Outfitters expanded its iPod touch -based mobile POS across its Urban Outfitters, Anthropologie and Free People brands last year.

Small retailers are also getting in on the act. Little Artika, a Phoenix-based specialty multichannel retailer of baby and toddler merchandise, uses iPod touch technology. The company, which also operates an e-commerce site, integrated an iPod touch into its small footprint cash wrap, which also has a fixed PC-based register system.

To further expand the breadth of the technology, associates who are iPod and iPhone users are encouraged to download a proprietary app that allows them to use their personal smartphones as a mobile POS during their shift.

Meanwhile, Ron Barry, the company’s managing principal, uses his iPad on the sales floor, accessing inventory files to answer shoppers’ specific merchandise questions, which further augments the shopping experience.

“Besides being a selling tool, my iPad acts as a virtual display for our POS server,” he said. “There is no need to have a [fixed] monitor, keyboard and mouse sitting around gathering dust next to our POS server. We just connect from the iPad and display the server’s screen remotely.”

The device is also POS of choice for the company’s sample sale-style events held at its warehouse.

“Since we don’t have tills in our warehouse, the iPods, a portable cash drawer and a Web connection are all we need to serve shoppers — and we can do this without making a large capital investment in permanent hardware,” Barry explained.

Social Media Analytics

In the past, if a shopper had a good retail experience, she told five friends. If she had a bad one, she told 10. Thanks to social media, those experiences are going viral to hundreds of her friends in a single post.

Savvy companies are embracing social media as their newest marketing weapon, and they are using all comments — good and bad — to better manage their shopper relationships. However, too many chains fail to capture redemption rates of social media campaigns, which jeopardizes their ability to nurture long-term consumer relationships and drive sales. By integrating social media monitoring analytics, retailers can assess the value of their social communications.

Los Angeles-based Guess? uses analytics to gather information from social media sites.

“Social media analytics allows us to improve our level of understanding and ensure we are targeting communications with shoppers,” said Ben Yen, director of business intelligence for Guess. “We are able to quantify our fan base, understand the lifestyle traits of our social media fans and discover who our brand ambassadors are.”

Guess is among the 41% of chains that have successfully deployed social media monitoring within > their e-commerce domains, according to Aberdeen. Meanwhile, 21% use analytics to define specific key performance indicators, such as customer satisfaction, retention and customer frequency rates.

Mobile Payments

Consumers are increasingly eager to use their mobile devices to actually pay for their purchases. While m-payments are still in their infancy, Seattle-based Starbucks is proving this is a viable means of tendering transactions — and driving loyalty. The chain’s program, called Starbucks Card Mobile, encourages shoppers to download a free app on their BlackBerry or iPhone. The app enables users to input pre-paid gift card account numbers that act as a virtual wallet and pay for purchases.

Starbucks accepts m-payments at approximately 6,800 locations, and more than 1,000 Starbucks in U.S.-based Target locations. To date, 26 million transactions have been conducted via a mobile device, according to Adam Brotman, the company’s senior VP and general manager.

Predictive Analytics

As the number of retailing channels and customer touch points continue to increase, so do the volumes of collected data.

“The amount of data that a retailer collects doubles every 18 months,” said Anthony Paoni, professor, Kellogg School of Management, Northwestern University, Evanston, Ill. “Momentum continues to grow as more consumer data flows to retailer databases, not only through business software, but through personal consumer devices they use to interact with their favorite chains.”

Data are used to understand shopper preferences, market more targeted campaigns and make better assortment decisions. But focusing solely on historic data is not going to help companies make forward-thinking decisions.

“Just like a car, you need a rearview mirror to see what’s behind you, but more importantly, you need a good windshield,” Paoni said. “Retailers need to ensure they can look ahead at how key performance indicators will shape future business decisions.”