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February 21, 2014
The Techno War, Coming to a Store Near You
 
The stealth cyberwar between the U.S., Israel, and Iran is child’s play compared to the techno-war brewing in virtually every major retail store. Since the physical act of shopping will never disappear, the savvy players are investing in technology to better engage audiences and steadily increase market share.
 
Big chains are marrying up with technology providers to attract store traffic, serve up personalized offers or recommendations, and reward repeat customers. Consumers’ embrace of mobile technology is driving a complete re-engineering of the retail experience.
 
In re-thinking the store experience, retailers are zeroing in on loyal customers and those with a high probability to become repeat buyers and vocal brand advocates. Initiatives have begun to reduce buying friction, enable personal cadences, make shopping a richer, more fun experience, and reward repeat behavior.  
 
Driving Traffic
Getting consumers into the store frequently has always been job number one. Technology investments seek to increase the frequency of planned visits and to motivate spur-of-the-moment activity.
 
Email, text, and social media, segmented based on individual consumer behavior, have been principal drivers of regular visits and vital coupon delivery vehicles. Localized search, keyed by geo-fencing, is beginning to be widely deployed to prompt in-the-moment traffic. And Instagram is becoming a potent platform for Target, Nordstrom, Victoria’s Secret, and Michael Kors to show their wares and stimulate customer desire.
 
NAPA and retailers in many categories, including grocery, are testing reserve online/pick-up in store programs. This guarantees a store visit, sets a positive customer expectation, and holds out the hope that the experience will spark impulse purchases.
 
Experiments are being conducted that time outbound, personalized text messages and offers by day-part or by previous purchases. These can be extended to out-of-home media and digital LED displays, in-car screens, and other devices, like in the movie Artificial Intelligence. 
 
In-Store Engagement
Once customers arrive in the store, an array of technologies is being tested to meet and greet them, direct them to merchandise, keep them there longer, and sell them stuff. Since 83 percent of smartphone users use their phones in stores, accessing these devices as a shopping companion is mandatory, not only to blunt showrooming but also to mirror consumer behavior.
 
Foursquare and Facedeals distribute offers in real time, as do QR codes on products, on signage, or on LED displays. Video kiosks and triggered shelf-talkers engage the senses while RFID tags, Wi-Fi, and Bluetooth signals can be used to zero in on and trigger messaging aimed at active shoppers.
 
Apple installed iBeacon in its iOS7 software to track movement through the aisles of all its U.S. stores. The software will also enable triggered messages in scan-able or video formats to iPad and iPhone users. Two start-ups, Nomi and Swirl, track Wi-Fi signals, offering the ability to map in-store traffic patterns and push messages to a customer’s phone while they’re seeing and touching merchandise or deciding what to buy. Comparative pricing tools and reviews from experts or users can be served up in real time. Using branded apps, offers and incentives can be linked to products under consideration.
 
Best Buy, Macy’s, American Eagle, JC Penney, Crate & Barrel, and Sports Authority have deployed Shopkick, an app with 6 million users, to track and communicate with shoppers in the moment. It’s being used both to drive store visits and to engage active shoppers when they’re in stores. Kohl’s, in a five-store experiment, was able to serve up offers on mobile phones based on products viewed, but not bought, on Kohls.com.
 
Online kiosks or salespeople with tablets, who can access customer records and personalized recommendations or make highly targeted offers in real time, have shown promise in increasing sales and customer satisfaction.
 
The technology can find and deliver messages to customers, but it won’t eliminate the burden of creating short, relevant, compelling, and useful content. People on mobile devices are short on time and patience. If the message doesn’t hit the target, you risk alienating a strong prospective customer.
 
Payment & Loyalty
Sophisticated retailers are already proactively loading offers, coupon values, and special rewards directly onto loyalty cards or apps. Starbucks, Dunkin’ Donuts, and Chipotle are leaders in this effort, using a brand app supported by multiple marketing channels to stimulate visits and purchases or to bake in instant rewards and freebies.
 
Whole Foods is deploying Square at deli counters to expedite smaller payments and get customers in and out faster. As mobile payments become the norm, the sophistication of these tools will improve significantly. Purchase history data linked to scanner data using NFC chips will trigger immediate rewards and drive larger purchase volumes.
 
Don’t be surprised if Amazon springs forward with a universal payment/loyalty platform that retailers of all sizes can afford and embrace. Leveraging a massive partner network, the best retail site search tool, and an installed base of Amazon Prime users, such a move will eliminate the big chains’ financial advantage and, assuming widespread adoption, effectively create a near-universal customer tool.
 
The battle for retail traffic, purchases, and loyalty has never been more competitive. Retail and technology alliances are still being forged. But the battle to automate, optimize, and anticipate customer needs is in full swing. 

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Danny Flamberg, EVP Managing Director of Digital Strategy and CRM at Publicis based in New York, has been building brands and building businesses for more than 30 years.Prior to joining Publicis, he led a successful global consulting group called Booster Rocket, as Managing Partner. Before becoming a consultant, he was Vice President of Global Marketing at SAP, SVP and Managing Director at Digitas in New York and Europe and President of Relationship Marketing at Amiratti Puris Lintas and Lowe Worldwide.
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