2013, how was it for you? Scott Thompson takes a look at the year's most important retail technology-related developments
I last wrote an end of year review feature for Retail Systems three years ago. Back then, retailers were trying to solve the multi-channel puzzle, with varying degrees of success. There was cynicism about social media (it's a fad, budgets are tight and our money would be better spent elsewhere etc etc) and NFC was the next big thing. The ultimate aim for the more forward thinking companies out there? A joined up customer experience at every touchpoint (be it online, mobile, call centre, social media or branch), driven by innovative use of technology.
Fast forward to the present day and has much changed? Visit the Marks and Spencer media centre and you're greeted with the mission statement: Our plan is to transform M&S from a traditional British retailer into an international multi-channel retailer. So, the plan's in place but what about the actual journey? Across the retail sector, companies are moving away from the model that has steered them through the last few decades towards one with a focus on speaking to the customer in the way they want to be spoken to. But how successful have they been? Customer centric, seamless, omnichannel retailing (RIP multi-channel, unless you're M&S, of course), fuelled by mobile and online; it sounds good on paper, but we've all had bad and inconsistent customer service both on the High Street and online and wondered what the hell happened to the omnichannel bibles we hear so much about. The delivery side of things, for instance, continues to underwhelm. Nearly three quarters of retailers struggle with omnichannel fulfilment, according to recent research issued by Hitachi Consulting.
That being said, progress has undoubtedly been made in certain areas, although not necessarily the sort of progress envisaged by shiny, happy management consultants a few years back. Clicks haven't replaced bricks as many were predicting and, while buying into new technologies, lots of customers still like to be served by, wait for it, an actual person. Ninety five per cent of shoppers have used self-service tills, but supermarkets shouldn't get rid of their checkout staff just yet, according to a recent study by Market Force Information. The research, involving 2,500 respondents across the UK, found nearly two thirds appreciate the technology as they feel it speeds up the checkout process. However, 57 per cent would rather use staffed checkouts, the main reason being that they like to have some interaction when paying (41 per cent). Twenty three per cent feel that staffed checkouts are better when they buy age restricted products as it takes too long to get authorisation with self-service. "While technology can sometimes enhance the in-store experience, courteous and well-informed staff are still essential in delivering a great experience," says Simon Boydell, global marketing manager at Market Force. Waitrose is a prime example of this with 71 per cent of shoppers declaring that courteous staff is one of the key reasons they shop there.
Taking this to the next level, Dražena Ivicic, senior manager global product marketing, Intershop notes that combining stores and online services has become an important part of many retailers' gameplans. "Store branches have turned into showrooms, while online stores are transformed into web rooms. Augmented reality is used more and more: depending on the customer's taste, products are either looked at in the store and then bought (for the best price) on the internet or a sofa is placed in a virtual living room, while glasses are put on virtually and then the order is placed. Customers are becoming even more flexible and independent. Through the introduction of new touchpoints, customers are taking many different paths to find products. Whether it is using a smartphone, smart TV, Google glasses or scanning a QR code with the smartphone, dealers are faced with the challenge of integrating all of these channels. Especially in the food industry, smaller countries will follow suit and begin to offer products online that were formerly sold exclusively offline, for instance fresh food or furnishings. Closely related are further special offers such as faster delivery times (same day delivery) and new payment methods (e.g. mobile, Facebook and Twitter payment)."
At the same time, however, it seems that major issues and challenges remain and that no retailer has succeeded in cracking the omnichannel nut. There has been movement on social media. Next is the bricks and mortar retailer currently providing the best overall customer service and engagement across four key social media channels. according to new research commissioned by IMGROUP, examining the social footprint of ten top retailers operating in the UK.
Next is the best performer on Facebook and the second best on Twitter, the two most used channels. Argos was the second highest scoring retailer in the study, followed by Marks and Spencer in third place. All those included in the report have a presence on Facebook which is used to provide customer service, complaint handling or engaging with their audience in some way. All pages appear to be open and allow people to ask questions, other than Ikea's UK page. Six out of the ten retailers have an above average response rate compared to the worldwide industry average response rate of 67 per cent, while eight out of ten have an above average response time when compared to the worldwide average of 25 hours and 15 minutes. Next is providing the best online customer service on Facebook with an average response rate of 92 per cent and an average response time of just 28 minutes. Argos and Boots came second and third respectively.
All of the retailers have a Twitter presence. Seven out of the ten (Argos, Next, Homebase, John Lewis, Currys PC World and B&Q) have a specific account dedicated solely to online customer service. Both Marks and Spencer and IKEA use their corporate handle for customer service and engagement. But Superdrug and Boots do not use the site for customer service or complaint handling. Argos is currently providing the best overall online customer service on Twitter and achieved an average response rate of 76 per cent and a response time of 55 minutes. Next received the second highest overall score, followed by Marks
Pinterest is a relatively new social media channel and is being used by retailers to create boards and pin content. However, only four retailers (Marks and Spencer, Next, John Lewis, IKEA) are currently using it to engage in conversations and provide customer service to their followers. As a result, engagement on this channel is mostly measured by the number of pins, boards and likes, and secondly by the number of followers. Based on this Marks and Spencer achieved the highest overall score on the platform, followed by Next and John Lewis respectively.
Seven out of ten retailers have a relevant Google+ presence; however, Currys PC World is the only retailer that uses the channel to actively engage with its audience and handle questions and complaints. Other retailers including Marks and Spencer, John Lewis, Next, Argos, Homebase, Boots UK post publicly and on a regular basis, but they do not publically engage in customer service or respond to queries on Google +.
Elsewhere, though, other technologies remain swamped in hype but have still yet to deliver the goods. For Huw Thomas, managing director, PMC, 2013 has been another year of lots of potential but not much delivery in terms of volume deployment of new technology in the retail space. "There has been lots of hype about NFC but in reality I don't think that will ever achieve mass deployment. This technology has some great applications but is not for commerce as long as the spend limits for tap and pay are well below the expected basket size of many retailers," he says. "Payments is an area that continues to drive change and there are some really exciting developments that have driven too much choice for retailers and the prospect of growing complexity of adoption. This is a market that needs some serious consolidation in order to really get traction for consumers and retailers alike. Mobile is the winner in terms of adoption and usage. Nothing really new from a technology point of view but a technology that is being adopted vigorously by consumers and is destined for even greater growth in 2014."
Richard Dorf, managing director, PXtech, agrees: "It's been a year of rapid change and gradual adoption. We have seen some interesting emerging technologies, but the year has been more about existing technologies, that had previously only been viable for big corporates, becoming increasingly available to the middle and smaller enterprises."
Professor Merlin Stone, head of research at The Customer Framework, observes that recent retail statistics have confirmed the appeal of both quality and value for money, and the risks of being caught in the middle, while the surge of online continues not only in the sectors which economically are the most suited to it (high value/bulk ratios), but across the board. He adds that the recovering economy provides new opportunities, "but the gap between the well off and the poor (which partly accounts for the risks of being caught in the middle and has got quite a strong regional bias) shows little sign of narrowing, implying that retailers may need to be very alert to divergences in trends between regions and cities, using advanced data analysis to understand this and make the right provisioning decisions. Promotional systems, particularly at the point of sale, are providing good returns for many companies and their use will continue to broaden. Inventory tracking systems will continue to improve, as will ways of identifying inventory on the move and rapidly analysing the consequent data to identify problems and opportunities."
What were the key retail technology-related trends during 2013? PXtech's Dorf says that payment solutions have remained high on the agenda for many organisations, with affordability and reliability being the core issues. "There have been some key innovative solutions hitting the market this year, but they need to prove that they are reliable. Another key is creating effective and timely management information for the small and medium enterprises. Too often operators are running blind and missing out on major opportunities to drive increased profitability. Labour costs and fraud are two areas where smart but uncomplicated solutions are now available to help make a difference."
The Customer Framework's Stone flags up the fact that, "the use of the mobile as a device for viewing, comparing, checking availability, ordering and tracking continues to grow, and its use for receiving and responding to promotions, often locationally based, is beginning to get serious, backed by the giants of the mobile, credit card and media world. Big Data continues to be a topic of great interest, but using it and monetising it is going to take some time. None of these developments are surprising, but the mobile and online trends continue to surprise by their strength."
PMC's Thomas also sees reasons to be cheerful. 2013 has seen an improvement in the economic landscape and a slow return to retailers planning for growth and assessing how improvements in their core retail systems can assist, he observes. "We have been engaged in more system selection activities in the last two quarters than the previous two years and I am aware of many more similar activities in the market. This is a trend that I hope will continue and increase into 2014. In terms of how these investments relate to technology there are a number of retailers who simply need to refresh aging legacy hardware and software systems. Most of these will use the opportunity to capitalise on this and start resolving the multiple-channel architecture and drive to actually put the customer in the centre of everything they do"
He adds: "The key to this is in the management and simplification of data and system integration. One of the major challenges for most retailers has been how to enable their IT systems to support activities such as assisted selling, click and collect, cross channel promotions, cross channel sales and returns, loyalty, queue-busting and secure payment. The retailers who address these challenges hold the key to really improving the retail customer experience and stealing a march on their competitors."
All in all, a decent albeit unspectacular 12 months. But whilst it won't go down in the history books as a remarkable year, 2013 did produce some significant developments in a variety of pockets of the sector, many of which provide an intriguing lead into 2014.
2013, how was it for you? Scott Thompson takes a look at the year's most important retail technology-related developments