Who is the connected consumer?

With a constant connection to the web and social media via a smart mobile device, the connected consumer is an informed shopper actively seeking the best value for a desired good.

With their own personal audience via the web and social media, they are an empowered group with a desire to feel appreciated by a retailer and in control.

What does this mean for retailers?

The connected consumer is a new challenge for retailers as power has shifted from the company to the consumer. With demands for a relevant, efficient and consistent experience for his/her own personal interests, and control over the conversation, retailers must provide the connected consumer a great shopping experience while merging both digital and in-store channels.

The consumer is engaged through digital technology before ever stepping foot in a store or looking at a catalog. It is possible that the first engagement isn’t facilitated by a retailer at all, but by a friend on social media. For this reason, marketers must have a strong digital strategy that enables consumer engagement across multiple channels and allows for a personalized interaction. Retailers should connect with consumers through various tactics such as emails, social media and in-store engagement while maintaining consistent brand identity and messaging.

To do this, retailers must understand the change in 1) how a customer shops, 2) how a customer makes in-store decisions, and 3) what the expectations of their customers are. The retailers must then develop a customized and distinct response to these questions as their digital strategy, and as a platform for merchandising.  

How does this relate to brick-and-mortar stores?

Merchandising for the connected consumerThe in-store experience is still a powerful aspect of the buyers’ journey even though the digital entity of retail has become fundamental to the entire consumer experience. To best serve the connected consumer while creating store traffic and greater brand loyalty, the in-store experience should act in unison with the retailers’ digital strategy.  

Knowing that the connected consumer utilizes technology to efficiently gain information and make a purchase decision, a sales associate no longer convinces a customer of a purchase. In fact, research shows that customers would rather use their own device followed by an unmanned device like a kiosk or tablet, before speaking to a sales associate to gather information in-stores¹. Thus, retailers should incorporate digital entities with the brick-and-mortar, or rather create an in-store shopping experience that utilizes technology and enables the consumer to stay connected.

The following are a few possible ways retailers can merchandize to the connected consumer in-stores:

Offer free in-store wifi

The consumer can stay connected while shopping.

A retailer has the opportunity to direct the consumer to the store website and current sales or product information after log in.

Utilize interactive kiosks and tablets

The consumer has access to a greater variety of products with expanded online inventory, and vast product information and reviews.

A retailer has greater advertising space with interchangeable digital displays specified to a department and the time of day while providing easy access to store information, online ordering, product information, and faster more efficient checkouts.  

Incorporate beacon technology, a low-cost device utilizing a Bluetooth signal to directly communicate with a customer’s smartphone.

The consumer can receive personalized and targeted notifications for specified products and departments based on their current store location.

A retailer can communicate loyalty programs, payments and current advertisements in real time to a customer.

¹ “The New Digital Divide” by Deloitte Digital (2014).
 

Millennials controlling 70% of the spending power in the U.S. creates vast uncertainty amongst retailers; but with the strongest economy in years, optimism prevails as we begin 2015.

For many retailers, the Millennial consumer is an enigma: they are more suspicious of who to trust and yet, more likely to be influenced by apps and social media than any other generation. Only 19% of Millennials (versus 40% of Baby Boomers) say that, “generally speaking, most people can be trusted” (PewResearch). However, in order to make buying decisions, consumers look to a retailer’s online presence and social influence before considering a purchase.

This generation’s spending habits are moved by its self-paradox. Millennials are self-focused and at the center of their own global communications. It is vital for them to have a positive self-image while finding a sense of belonging when purchasing consumer goods. They desire self-preservation and a personal connection to a product or service.

So, what does this mean for retailers?

The heightened competition amongst store fronts and e-commerce will increase. Currently, roughly ¾ of consumers claim to showroom (Retail Future Trends 2015) or rather compare brands in order to receive the lowest price, best quality and/or widest selection of merchandise when shopping—many times without ever stepping foot in a store. This creates less in-store traffic and increased wavering among dominant brands. So, retailers must draw their target markets in through a strong online presence while providing feelings of exclusivity and individuality for a reasonable price.

To draw consumers into their store fronts, many retailers have begun incorporating various electronic capabilities; this includes the use of tablets, interactive kiosks and beacon technology. Tablets and interactive kiosks extend inventory past what can be offered in stores. The use of tablets has expanded into the retail environment to replace paper signage with digital advertising while providing sales associates quick and easy access to inventory, online ordering, product information and faster checkouts. Interactive Kiosks act in a similar way – allowing for added promotions through electronic ads specified to a department and the time of day. They also enable retailers to connect with consumers by blending in-store merchandising and virtual product displays. Beacon technology, on the other hand, provides the retailer with direct communication to the consumer and has the potential to completely change the in-store shopping experience by creating personalized and targeted marketing in real time. A beacon uses a Bluetooth signal to send special offers to nearby smartphones equipped with the store’s app. App users will receive targeted messages and deals while moving throughout the store.

Let’s say you’re shopping at a retailer equipped with these devices and have previously downloaded the store’s app. As you walk through the doors, your phone buzzes with an exclusive storewide discount. You wander into the home goods department and begin looking for a new blender when your phone alerts you of a sale on KitchenAid products. You can’t pass up the sale price and find the specified blender but are not happy with the color selections available in store. Scanning the product’s barcode at a nearby kiosk, you find additional product specifications, customer reviews and available colors. The color you’d like is available only online. No need to worry. Once your shopping is complete, you bring all of your selections to the nearby associate. They ring you up on their iPad and include the desired blender and ship it directly to your home.

As many stores have already begun implementing this technology, this experience won’t be a thing of the future for long. In fact, Macy’s has added 4,000 iBeacon devices nation-wide and provides coupons via this technology to customers who have downloaded ShopKick. They have also begun testing smart dressing rooms and an image search app. The smart dressing rooms have a wall-mounted tablet that allows customers to view various sizes and colors of a product while the image search app allows customers to snap a photo of an outfit or clothing item to find similar items on sale.

With these exciting advancements in technology, 2015 will be a year to watch how the in-store experience changes to accommodate the self-regarding Millennial. While it is clear that tech-enhanced stores offer an enriched shopper experience with benefits like improved productivity, inventory counts and use of store square footage, we have yet to determine exactly how to incorporate this technology so that it is most useful to each individual without overwhelming them.

If the buzz coming out of NRF 2014 is any indication, the timeline is advancing for the Internet of Things (IoT), and society is poised to reap the benefits of visionary technology.  As Bill Wasik, editor for Wired Magazine puts it, “In our houses, cars, and factories, we’re surrounded by tiny, intelligent devices that capture data about how we live and what we do. Now they are beginning to talk to one another. Soon we’ll be able to choreograph them to respond to our needs, solve our problems, even save our lives.”

When considering the list of places where devices will talk to each other for the betterment of our experience, we must include retail. Through our involvement with the Internet of Things product displays for some early entrants we know that retailers will play a key role in making the possibilities of the IoT evident to consumers. Retail product displays will educate us about the hubs and apps available to control devices like thermostats, locks and, light bulbs with our phones – and of course the smart devices we can purchase and control. They will also sell us biofeedback devices that help us track our fitness and other kinds of wearables.                                                                                             

Estimates on tracking the explosion of the Internet of Things vary widely. ABI Research projects more than 30 billion devices worldwide will be wirelessly connected to the Internet by 2020, while analysts for Morgan Stanley predict the number will be 75 billion.

Initially consumers may be focused in on what it means to control devices in their homes or on their bodies. Increasingly they will reap the value that the IoT can bring to shopping where devices communicating with each other will make operations more efficient and in-store communications personally relevant. Some of the more noticeable benefits will accrue to:

Inventory Visibility

The tracking and more effective deployment of inventory has value that is highly visible to consumers since item location and availability have a direct impact on the ability to complete a purchase.  A study by WD Partners presented at NRF revealed that 79 percent of respondents felt “instant ownership” was the most appealing attribute of any retailer. Retailers will increasingly be able to provide up to the minute inventory availability for customers as they more effectively connect the digital to the physical and employ insights to improve their operations.

Shelf Replenishment

The connection of devices, processes and people makes possible innovations like smart shelves which can signal when they are getting empty, trigger restocking at the store level and communicate back through the supply chain.  Fewer out-of-stocks mean more satisfied customers.

Customer Engagement

Beacons that recognize the presence of mobile operating systems will usher in more finely targeted proximity marketing inside stores. Some retailers who have customer data tied to mobile apps are already doing this at the store level. In the Internet of Things, newer Apple and Android devices using Bluetooth Low Energy can intercept messages from beacons at the aisle or shelf level. Retailers must experiment and learn as they go from generalized to customized messaging, but when married with customer data and the requisite permission, they can deliver highly relevant messages and offers that may help forge closer relationships with customers. Indeed about half of online consumers say they are comfortable revealing personal information, if they get customized offers and rewards in return.

There were some technical conversations at NRF by people who have built their careers in the era of connectivity that went something like this: We are evolving from a time where the phone serves as the storehouse for myriad apps to one where the phone becomes, as mobile CEO Gary Schwartz phrased it, “an intelligent server interacting with the world of wireless signals” based on consumer preference.

The Internet of Things is poised to touch society on many levels from personal satisfaction and efficiencies to revenue improvements for businesses to real wealth creation.

This post originally appeared on Frank Mayer's blog.