Digital Disconnect

Consumers want seamless integration, but the industry has been slow to deliver.

Big Data. Technology. Digital. These retail industry buzzwords belie the human element that makes them not only possible, but also noteworthy. Retailers are expected to continually invest in technology and make more of their shopper data. Manufacturers are expected to invest in, and make the most of, the latest technologies throughout the supply and marketing chains. Consumers want a seamless, integrated retail experience. Two new studies reflect this world from the perspective of consumers engaging in retail, and manufacturers and retailers aiming to be competitive.

WD Partners, a Dublin, Ohio-based global design firm specializing in the customer experience for foodservice and retail brands, asked 2,300 consumers about the appeal, awareness and usage of 14 current and emerging technologies related to the retail experience (see sidebar on at left); the results are found in its “Digital Integration: Wiring the Customer Experience” report.

On the retail and manufacturer side, Kantar Retail, a Wilton, Conn.-based consultancy whose goal is helping clients win at retail, unveiled its first-ever digital benchmarking study for the retail industry. The Digital Power Study, “A Revolution in the Making: It’s Not a Matter of ‘If’ or ‘When,’ It’s ‘Now’ and ‘How’ 2013,” reflects feedback from 400 U.S. retailers and manufacturers on the performance of trading partners in terms of strategy, marketing and capabilities in the digital space. Goals of the research were to identify distinguishing characteristics of leaders in digital and multichannel retailing, and gain insight into what makes trading partners “the best” in this space.

Kantar recognizes that the findings are likely to be disappointing to some, because digital and multichannel practices are still “a work in progress,” and there is no best in class. “Digital and multichannel commerce is a revolution in the making, but we’re in the infancy of this revolution,” says Dan Raynak, VP of Kantar Retail Consulting.

While consumers are increasingly aware of new technologies, respondents to the WD Partners survey reported lower-than-expected usage. “Appeal and awareness of the 14 technologies we surveyed against was really high. Usage was significantly lower because there are so few retailers using those technologies,” explains John Bajorek, VP of digital services at WD Partners. “Mobile checkout, for example, is currently limited to two retailers, Starbucks and Apple, but we know other retailers can get there.”

Technology advances daily, says Bajorek, and it’s important for retailers and manufacturers to continue to make strategic investments. “Whole Foods has done a good job with inspiration and recipes, and how consumers create a shopping list. But loyalty and transaction are areas they need to further consider.”

Bajorek says that consumers want to move seamlessly across in-store, online and mobile shopping experiences; Kantar calls this “multichannel engagement.” “Consumers have an interest in multichannel, but the shopper benefit is the consistency across touchpoints as they relate to the brand,” he says. “For the retailer, alignment is internally managed by different areas, and there needs to be coordination internally to meet the expectations externally.”

The top technologies in the WD Partners survey in terms of appeal are buy online/pickup in-store, customer identification, endless-aisle technology, interactive vending machines, and a tie for fifth place between mobile-based coupons and product locator. According to Bajorek, “consumers shared a clear belief that digital tools can help simplify their lives and make shopping easier, but it can’t be technology for technology’s sake.”

The top technologies in terms of awareness were vending machines (93 percent of respondents), buy online/pickup in store, mobile-based coupons, mobile checkout, and customer identification (75 percent of respondents).

Top technologies surveyed for usage include interactive vending machines (57 percent), buy online/pickup in store, mobile-based coupons, mobile checkout, and endless-aisle technology (18 percent). The divide between awareness and usage of technologies illustrates that consumers are anticipating these technologies will become a more relevant part of their lives as retailers adopt them.

The lack of availability correlates with retailers’ and manufacturers’ lack of understanding of “digital,” where it lives in the corporate structure and what resources are needed to support it, the Kantar survey reveals. In short, it’s why there is no “best-in-class” digital in this space. One of the biggest barriers to action, explains Raynak, is that manufacturers might see that only 2 percent of their business is online, and that’s not big enough to focus on; the size of the prize isn’t great enough. Another factor holding retailers and manufacturers back is that they’re not working together, sharing valuable data on consumers’ online behavior.

But it’s not all bad news, and there are some companies that are embracing digital and achieving success in this space. Comments included in the Kantar study show that Walmart and Amazon are considered by their trading partners to be trailblazers. Walmart gets high marks for strategy, marketing and capability. The Bentonville, Ark.-based company does a good job with online representation of in-store elements, including rollbacks. The retailer’s app is considered “to be the most friendly tool to use in-store.” Marketing efforts include gaming, in-store promotions of new products, and QR codes. The company also gets high marks for communicating where products are at any stage in the transaction.

Although Seattle-based Amazon doesn’t have physical stores, the company is lauded for developing a seamless ease-of-use experience that highlights the tenets of selection, price and value at the shopper’s fingertips. Digital marketing is personalized, and takes into consideration historical purchases. Simply put, Amazon makes shopping fun and easy for consumers. According to a trading partner: “When it comes to harnessing the power of digital, Amazon dwarfs them all by integrating multiple sites, cloud technology and a wholly owned media company. Talent is moved in and out of new areas every two to three years to ensure capability seeding.”

It’s up to manufacturers and retailers to work together, share valuable data on consumer behavior, and start strategizing about connecting with consumers through the devices they favor and the touchpoints that are most relevant to them.

“For an industry that builds and controls the brand in the box, digital connections have transformed retailing, yet few have noticed,” says Raynak. “The shopper has gone digital, and the industry must follow.”

“Digital and multichannel commerce is a revolution in the making, but we’re in the infancy of this revolution.”
—Dan Raynak, Kantar Retail Consulting