Retail 3.0
Green Hills' in-store technology is driving the next wave of retail: individualized marketing.
Many retailers have a lab tucked away at their headquarters where they test new technologies and merchandising initiatives to judge their effectiveness before deploying them. In some cases, grocers will even bring shoppers into these labs to get their opinions on which programs work best for them.
In the case of Syracuse, N.Y.-based Green Hills, however, the live store is the learning center, and technology solutions are understood in an environment where shoppers are making real buying decisions, while at the same time experiencing the normal daily stresses of wondering if their kids have been picked up on time and if they're going to make it home on time to watch American Idol.
The Center for Advancing Retail & Technology, or CART, represents the culmination of Green Hills CEO Gary Hawkins' work over the past two decades of examining how to best leverage the data and knowledge within the business to deliver value to the customer. The center's mission: to enhance industry learning through hands-on, behind-the-scenes views into new and forthcoming technologies and discussion focused on changing business practices.
“This work includes what we've done at our retail operation — where we have large amounts of customer data that we have really studied and analyzed over the years, but also our work across the industry with other retailers both here in the U.S. and internationally, and our work with some of the large-brand companies,” says Hawkins. “CART brings together a lot of these pieces, layering in technology, which has become so important as an enabler in making use of all this data, in a live store to showcase new technologies and new solutions available to help deliver that value to the customer.”
CART aims to serve the industry in several ways — for starters, as a showcase for vendor partners to test-drive and deploy their technologies, solutions and services in a live retail environment. It's also an educational center for sharing the knowledge gained from this environment with other members of the industry. But more than anything, it's about bringing to life what Hawkins refers to as “Retail 3.0,” which brings together all of these technologies and solutions throughout the supply chain — from the point of sale, to procurement, to marketing and operations — in the context of maximizing the value and benefit delivered to customers.
Many of these technology solutions are manifested in CART's vendor partners, of which it has more than a dozen, representing a variety of functional areas ranging from basic operational technology like POS systems, databases and pricing systems, to customer-facing technology like kiosks and surveying capabilities, with a strong emphasis on collecting information and data, and being able to sift through and understand that data.
“Many of these technologies are being deployed by retailers today,” says Hawkins. “Where this gets exciting is being able to literally connect some of these technologies in real time so that the store becomes a real-time marketing environment where the focus is on the customer.” Providing an example, he continues: “Many stores have systems in place where they can do traffic counts. They know how many customers are coming in the door, and in some cases how many customers are going down certain aisles. But there may be an opportunity to provide value to that customer by steering her to a specific promotion or product of interest in a certain aisle by communicating in real time to her mobile phone while she's in the store. The key is connecting all of these disparate pieces in real time and leveraging this back against individualized marketing.”
CART also has relationships with a number of universities that are interested in researching specific areas of the business. For example, Stanford University published a case study on a marketing initiative that was executed at Green Hills. Other universities are studying other elements of the business, such as checkout wait times, and survey responses.
Harnessing Customer Data
While retailers may be deploying the latest and greatest tech, Hawkins feels that many are still overlooking the critical factor of relevance to the individual customer, a topic he has heavily researched (he has written two books on the topic of leveraging data to drive such relevance.).
“What the industry is still missing is a real understanding of customers, factoring that into marketing and merchandising initiatives,” says Hawkins. “When we launched our loyalty program 18 years ago, and first began to collect and study customer data, we began to see that our most valuable customers were effectively subsidizing the cherry pickers — shoppers who were just here for the low-cost specials. That started to bother me,” he explains. “Many retailers today believe they have to go to market with the same deals for everybody and use these mass promotions. What they are not realizing is it's not working out.”
In a sense, Hawkins is talking about returning to those one-on-one relationships grocers had with their customers before we had all of this technology, when they knew every shopper's name and tastes from simply walking around the store and talking to them — something he still loves to do. Retail 3.0 is essentially about leveraging technology to develop those individual relationships.
This is what research at CART focuses on, and it leverages the qualitative and quantitative data measurement tools of its vendor partners to provide analysis that encompasses product data, shopper feedback, live store responses, all of which can be segmented and evaluated by hour, by date or by week, and by product or shopper group.
Some of the areas CART researches include:
■ Shopper traffic flow throughout the store and dwell time
■ Signage or display concept and location effectiveness
■ New packaging concepts
■ Shopper-focused pricing and promotion strategy and activity
■ Collaborative brand loyalty marketing initiatives
CART regularly publishes results of its research on its website, and also offers customized research for retailers, wholesalers and brand manufacturers. In addition, the center hosts regular in-store visits for industry members interested in seeing how these technologies and solutions are deployed at Green Hills.
“We've opened up the store to other retailers, wholesalers and manufacturers, and have visitors on a regular basis,” says Hawkins. “A typical visit would start in the conference room, where we'd share some information and history about Green Hills as a store, some of the facts and figures around the store, the market area, and the environment and competition. We would then proceed downstairs to the sales floor, do a walk-around, calling out different information I think would be of interest to the visitors, helping them understand our merchandising philosophy, how we go to market and things like our product assortment. During the walk-around, we'll point out specific technologies or solutions that are being implemented on the sales floor. Then we'll go back up to the conference room and look behind the curtain at what are these different pieces, discuss the implications of some of these solutions, how they benefit the retailer and how they ultimately benefit the customer.”
CART will also soon offer online training courses through one of its vendor partners as a complement to its in-store educational sessions. The center's in-store visitors are typically retail executives, and the videos are being developed as a convenient way to educate other levels within the retail organization. The initial online courses will cover checkout operations and the importance of loyalty.
A Family Affair
As well as having Gary Hawkins at its helm, CART benefits from the contributions of each of his three sons.
Sterling, Gary's oldest son, primarily serves in the role of business development, and takes the lead on a number of partner relationships, particularly on the technology side, since he's based on the West Coast.
Berkeley, the middle son, focuses his talents primarily on CART's critical marketing communications and public relations functions.
Youngest son Schuyler serves in more of an operations role, overseeing the execution of various CART initiatives. A recent college graduate, he also heads up the partnerships CART has with schools and universities
Challenges
While the benefits of running a technology lab in a live-store environment are many, there's still the fact that it's a live environment where the occasional conflict arises between running a test and operating the store.
“There can sometimes be challenges between wanting to do something to learn and what needs to be done for sales or business or whatever,” says Hawkins. “But I think on the whole, CART has had a neutral to a positive influence in terms of Green Hills sales, business and customer experience. If there is a conflict, there is no set rule as to who wins. It depends on the situation in terms of what the impact might be on either side. We try to do as much as we can to be as flexible as we can, but obviously, at the end of the day, Green Hills is a live, operating supermarket, and is a pretty significant business that must remain successful by serving our customers.”
Indeed, some of Green Hills' customers like the fact that the store performs such research, as they feel they'll benefit in the long run. “I would say that a number of our regular customers understand some of the stuff that is going on, although it is certainly in many cases not obvious or being talked about a great deal,” notes Hawkins. “Many of our regular customers enjoy seeing some of these new technologies or new marketing initiatives, whatever they may be, and they are not shy about giving us feedback. In fact, sometimes we involve our customers in CART initiatives.”
Recently, Hawkins has seen an increased interest in CART from brand manufacturers looking to test the effectiveness of various marketing and merchandising initiatives, such as display effectiveness, signage, promotions and packaging, in Green Hills' live-store environment. While this wasn't the original intent of CART, Hawkins found that the research and learning from such tests are strong complements to its existing initiatives. “The interest has come from our relationships with the brands as a retailer,” he explains. “After seeing some of the research we've done for others, manufacturers were interested in conducting their own research, particularly in a live store. It might be something as simple as looking at purchase data and the change in that data, from a test signage or promotion to actually surveying customers. At the end of the day, it is all ultimately about the customer, and how can we improve the value proposition to the customer.”
CART Research: Display Effectiveness
CART and its technology partners recently worked with Northfield, Ill.-based General Mills to answer one of the retail industry's top in-store merchandising questions — “Is this display working?” — by quantifying the impact of in-aisle fixtures and displays on shopper behaviors such as engagement, conversion and purchase choices.
The study, “Measuring Display Impact, Brand Messaging and Shopper Behavior,” was completed by CART using ShopperGauge technology, which incorporates RetailNEXT, an in-store shopper monitoring platform from BVI Networks and best-in-class display and fixture products from RockTenn Merchandising Displays — both CART vendor-partners. The goal of the study was to understand the impact of fixtures on sales of products in the aisle and for retailers wanting to understand the effect of fixtures on shopper behavior, aisle traffic, conversion and purchase decisions.
Conducted in late 2010, the study tested the impact of introducing an in-aisle cereal display for General Mills cereal products and featured dominant messaging around “Whole Grain Goodness.” The 8-foot “Smart Showcase” display was visible from both ends of the aisle and prominently framed the General Mills cereal set, visually separating it from other products in the cereal category. The study sought to validate that shoppers do indeed care about choosing healthy cereals, and that messaging and displaying the products within this context could impact purchase decisions and convert more shoppers to buyers. The expectation was increased conversion and sales for the entire category, and that shoppers would increase purchases of the featured brand even more significantly because of the appeal of the “Whole Grain Goodness” message.
Cereal aisle shopper traffic (21 percent of total store traffic) averaged a duration of 23 seconds. Fifteen percent of the aisle traffic stopped at the display, and 47 percent of those shoppers purchased a General Mills brand product. During the test period, Green Hills' shoppers spent 17 percent more on General Mills products than before. The number of shoppers who stopped and engaged with the General Mills brands increased by 200 percent, and overall shopper conversion increased 8 percent.
The CART study summarizes key findings for manufacturers in areas including shopper purchase intention, conversion of brand-loyal shoppers, conversion of uncertain shoppers, and the impact of targeted messaging on transactions.
The full study is available for download on CART's website, www.advancingretail.org.
Smokin' Mobile Tech
For Hawkins, this is an exciting time to be in the retail technology space, particularly given the rapid pace of technology innovations. “Because of our work, we often get early insights into new technologies that are coming into our market and how they can fit into this whole Retail 3.0 ecosystem,” he says. “Mobile technology is particularly hot — there is so much happening there today. We're talking to several mobile solutions vendors, but one we are particularly excited about offers both location-and time-based marketing opportunities to participating customers both outside the store and inside the store.”
Still, while all of this technology is exciting, if it doesn't provide real value to the customer, Hawkins wants nothing to do with it. “All of this comes back to benefiting the customer by maximizing value creation for and improving the shopping experience,” he says. “Technology is evolving at such a rapid pace, it's all you can do to keep up with it. But you can never lose your focus on the customer. After all, that's ultimately what this is all about.”