Retail Trend: Reimagining CRM and loyalty programs with technology

A recent news was about an interesting app rolled out by the up market department store chain; Neiman Marcus. This enables their customer to be linked to a specific sales associate and for a start enables the staff to update the customer about new arrivals, it alerts the store staff when the customer enters the store, etc. Obviously this enables a whole new level of personalized service and customer relationship management (CRM). This video about NM Service would help you understand how this works.

 

With a new year around the corner I have been fielding questions about what does the immediate future hold for shoppers and Retailers. A recent post of mine was about technology changes, namely 3D printing and Google glasses, which might redefine shopping and it might come into our lives even as you read this post. To use Neiman Marcus as a case to point, they have unveiled a range of exclusive gifts for Christmas which can be printed out in their store!

 

This lovely pendant can be printed (!) with the shopper’s initials at the store.

 

Even assuming that printing of products at home will take time as 3D printer penetration in households is a constraint, there are other implications to these development. If we are to combine all these separate technologies, it would lead to a completely new paradigm in shopping, especially in the CRM and loyalty space.

 

Imagine this, which could be a reality very soon. You as a shopper enter the store where the staff have been fitted with Google glasses which is linked to the loyalty database. As soon as the staff sees you, they know your name and can recall your preferences, etc. The staff will be able to wish you in a personalized manner and interact with you. Add on 3D printing and the staff might be able to print out a unique and personalized SKU for you. Your experience will be one of a kind and cannot be duplicated easily by a competitor. In essence the CRM would be at the absolute best.

 

Is it practical? Is it cost effective? Which formats can afford this?

 

Yes, it is practical and depending on the format and cost structure the technology will pay for itself in terms of customer retention and profitability. I have never been a big fan of loyalty programs by mass merchandisers and I don’t think that this is a path they should even consider. A typical CRM program would approximately cost 3% of sales and in the case of mass merchandisers who focus on pricing and volumes this cost would be better spent on lower prices of the KVIs.

 

On the other hand lifestyle and specialty formats should definitely explore this, especially in India. A good CRM program can ensure that loyal customers generate anywhere upwards of 50% of the sales for a retailer. Therefore, incremental marketing costs can be dramatically cut and such a technologically enabled CRM program will give more bang for the buck. The other direct benefit is the increased conversion rates. This means that the staff would be interacting with more of actual buyers instead of potential buyers, thereby making the staff more productive. Lastly, the lifestyle and specialty stores can also work towards rationalizing their assortment and increasing the stock turns, leading to increased profitability.

 

Needless to say, all these would remain as useless gizmos if the Retailer does not leverage the data being generated to customize their offerings. Just having loyalty cards, giving points or outfitting the staff with Google glasses will not make any customer happy unless they get some direct and tangible benefit from these initiatives.

 

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Indian Retail trend – Technology impact on Shoppers and Shopping

The obvious topic related to technology impact on shopping is about E-Tailing and I am not going to talk about that since this is not anything new.

 

At several forums, I have been talking about two specific technological developments which would completely change the paradigm of shopping as we know it today. Retailers better be aware of this and stay ahead of the shopper learning curve. Otherwise, they are going to be left behind. This is especially relevant for Indian shoppers as we tend to have a high learning and adoption curve when it comes to new technology.

 

The first is about 3D printing or 3 Dimensional printing. My attention was drawn to this emerging technology when a few months ago, there was a news item about someone in the US using 3D printing  to make a gun at home and even firing a bullet from it. Since then I have been reading about some amazing stuff that 3D printing is enabling.  Another person has downloaded the entire blue print to print an Aston Martin car, which is the vehicle favored by James Bond. Check out this video about how this is being done.

 

 

My view about 3D printing having a high impact on retail was validated when I read about sweaters you can print or rather knit at home. Appalatch is a woolen and cotton cloth manufacturer. They are now spearheading a campaign to encourage customers to purchase a Stoll knitting machine which is being positioned as a 3D printer of knitted apparel.  While the cost of this machine is prohibitive as of now, it is bound to come down and become affordable soon. If other apparel manufacturers join the bandwagon of enabling you to print or make your own apparel at home, the cost is bound to reduce soon. Click here to read a detailed article about this development. 

 

The second related technology is about Google Glass. It is essentially a computing device plus a camera which is internet enabled and mounted on a pair of spectacles. The wearer can do a multitude of things with this device and the technology. You can look up details, take pictures, post online, etc. See this video about Google Glass to know more about it.

 

 

 

Google glass offers tremendous opportunity areas for Retailers to engage shoppers and even offer some differential services and experiences. However, the interesting development that I foresee is when a shopper pairs the above mentioned two technologies.

 

 

Supposing I am outside and see something I like, the picture can be taken using Google glass, online search for 3D printing can happen with options for customization and personalization, checking of price, etc. Finally I can even complete the transaction and trigger a print to my 3D printer at home.

So, I arrive home to find the product ready for my use. What all can I purchase like this is limited today but has no limit in the years to come. When edible pizzas and burgers have been printed, can other products be far behind!

 

Retailers can no longer just be providing merchandise for sale. If they do not add value to the shopper in several other dimensions, the stores might end up being exhibition halls where shoppers come to check out the products and use the technologies mentioned above to make the actual transaction from elsewhere.

 

If store staff did not like smart phones because it enables immediate price benchmarking, God help them when the scenario I have mentioned becomes a reality!

 

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Think like a Shopkeeper & Operate like a Retailer

In spite of the hue and cry about allowing large Retailers into the country the fact remains that even during the massive slowdown of shopper sentiment during 2008 – 09, chain stores shut down many of their stops where as standalone shops were not affected as much, if at all.

If there is one single guiding principle for success in retail, be it stand alone stores, chain stores or E Tailing; it is the maxim “Think like a Shopkeeper, Operate like a Retailer”

 

 

This is success mantra which I propagate in every possible forum and have written about it in my first column for ET Retail.com

Click HERE to read the details of how to “Think like a Shopkeeper, Operate like a Retailer” and share your comments and views.

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Indian Retail - Point & Counterpoint: Is market place led model sustainable for E Tailing?

E Tailing in India is still in its nascent stages and yet one sees massive advertisement campaigns which seems to be enabled thanks to the funding. Does the business support such spends and can the model be sustained in a viable manner is an obvious question.

 

While the competitive advantage for any Retailer is best derived through sourcing some of these E Tailers seem to be embracing the market place led model in the context of lower costs and quicker roll outs.

 

However, the concern in my mind as a Retailer is that they are not only compromising the sourcing advantage but also not taking into account an important element of the Indian market place. Retail density in India is amongst the highest and when a phone call can connect me to known stores why should a shopper go through the net, even assuming they are doing so through their mobile.

 

The only motivation for such a move would be to access products and categories which are not available nearby or easily. Which in turn means that any site which is based on market place led model might end up being a niche player.

 

Is it a sustainable game plan?

 

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Indian Retail; data goldmine awaits....

12 or 14 million outlets in India is a large number and also largely based on approximation. This same approach also works for generating the secondary or Retail sales data for most product categories in India. Even after so much of advances in mobile devices and technology most of the sales data is based on a representative sample which is indicative at best.

There is a powerful data goldmine waiting to be tapped into and I have recently written an article for Business Line wherein this issue has been discussed including a possible solution. This might end up being a Win:Win for all parties concerned and the Kirana or stand alone shop keeper might be benefited the most.

Yet another idea to support these traditional shop keepers and a governmental agency might be a good starting point to take this forward.

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Indian Retail - Point & Counter Point: Can interesting formats like this be viable?

Soda or carbonated drinks have been around for a long, long time and is often consumed under medical pretext. People tend to drink a carbonated drink to relieve flatulence although the CO2 in the drink does not really do anything to actually help!

During an earlier stint with a leading soft drink brand, I have heard of some weird stories which include patients with fever being prescribed a orange carbonated drink which was very popular in the southern Tamil Nadu markets.

Suffice to say that carbonated drinks have been and will continue to be popular. Although increasingly one does not see the ubiquitous “Goli Soda” which has an interesting looking bottle with a round glass marble inside. This which would seal the bottle’s top due to internal pressure.

During a recent trip to Coimbatore I noticed this interesting outlet named “Planet Soda”. They have this very innovative soda making and dispensing machine as you can see in the picture.

Each cup is sold for Rs. 10,/- and my guess is that the cost of that would be a maximum of Rs. 5/- after including electricity costs. This would give an approximate margin of 50% which is not bad assuming enough volumes are there to convert this into a respectable rupee earning.

So, this is a great idea for an incremental offering for small stand alone shops as also larger stores, with some space to spare.  This might even be a great idea for malls and larger chain stores. Stores can have such machines just outside their billing areas. Any excess or unused space which is customer facing can be used for this and the real estate can be monetized.

When I checked up on the penetration of this idea I found that apart from Planet Soda, which operates in the Coimbatore belt, another company in Ahmedabad - Geleriya Products - is quite active in this space and have a similar offering. As the actual technology involved is relatively simple, it might be just a matter of time before this takes off in a big way, if marketed and promoted well.

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Events can become a game changer in Retail

A few days ago I had shared a post on my Facebook Page about shopper events and how they have a significant impact on customers. This thought and memories of some of the powerful events planned and executed by the teams I have worked with was triggered by a video about an airline which decided to convert a park bench into a memorable experience for those who sat there. Watch this video and remember to notice the range of positive emotions that plays across the faces of those who are experiencing this event.
 

 

In that context I would also like to share another video of a restaurant which had conducted an interesting event where they said that “beautiful women need not pay”, The best part of this story is that the event was so successful that their sales increased by 35% for that day.

 

 

On the topic of events I happened to read a note how Indian Retail is increasingly experiencing the positive sales impact of events and most of the chain stores have indicated increases in the range of 12% or so during events.

But, that is only the tip of the ice berg. The bigger story is about the everlasting emotional impact that good events create in a customer’s mind which results in positive memories and also great word of mouth or rather in today’s world great word of mouse.

My conviction about the emotional impact of events is validated by the memories of those who have experienced the many events conducted by my team. One of my most personal favorite “Cadbury Love Bites” which was conducted in the late 90’s would have even become an internet sensation if only digital camera and YouTube had been present then.

Indian Retail – Point & Counterpoint: Potential of Shop-in-Shop

During one of my regular forays to the various Retail outlets I came across this very well presented Shop-in-Shop (SiS) for a coffee brand. The whole presentation was very impressive, the promoter manning the SiS was helpful and the coffee aroma that was wafting around that place had its own impact.

 

The fundamental idea was quite simple. The customer chooses the preferred roasted coffee beans, which is weighed and then put into the small machine which grinds it into the powder ready for making filter coffee. The customer whom I saw was so involved in the process that the anticipation of going home and drinking the coffee was clearly etched on his face. Definitely, this was one of the best moments of customer engagement seen by me.

 

Such SiS seems to be a good option for brands that are keen to engage customers at a retail level as also have a high level of brand visibility. One can see similar examples for color cosmetics in the counters maintained by leading brands in health and beauty as also department stores. However, the key difference was the degree of customer engagement. While the cosmetic counters definitely are very good for brand visibility, it is yet another purchase point for a shopper. Some initiative to engage the customer might increase the impact of such counters.

 

Lastly, is the all important factor of cost Vs benefit. I think that such SiS score high on this count also as brands are always in a tug of war with regard to visibility with the chain stores. A minimum guarantee for the space being occupied with revenue share would work out well for all concerned. The minimum guarantee can be considered as a marketing expense as it does deliver high brand visibility.

 

All in all a Win-Win-Win opportunity for the brand, retailer and more importantly the customer.

 

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