The five traditionally recognised methods of human perception are taste, sight, touch, smell, and hearing. Collectively referred to as the Five Senses, they have underpinned marketing, and advertising strategies for consumer goods for as long as one can recall. How are they now being optimised to steer the millennial shopper?
Define it as a reaction to challenges emanating from online commerce or as a recognition of the need to evolve, many retailers are acknowledging the need to offer hands-on, authentic, differentiated experiences to shoppers into their stores, and are now adapting their store formats in order to do so. But is their understanding truly intuitive?
Well before launching into the micro strategies of delivering experiences, retailers need to clearly understand who their customer are, and what their needs and aspirations are about, Co-founder, Next Practice Retail, R Sriram, asserts. “Based on those insights, retailers should ideally edit or customise their merchandise mix to create optimum relevance,” he says.
“But this six-sigma predictability – 90 per cent fill rates – is not possible unless retailers have visibility across the value chain,” Sriram says. “Average fill rates in the Indian retail industry are 60-65 per cent. So how do you make that jump?” he asks.
99 Shades of White
“In order to Millennial-ise this, we had to figure out how to arrive at the perfect balance between digital and physical experiences in our stores. Because, while we did want to modernise and be in sync with the young shopper, we also did not want to alienate or intimidate the more traditional, older buyer,” he says.
In Rao’s opinion, adding too much digital content to physical stores has the potential to create too much ‘white noise’, and distracting buyers from the decision-making process. “So, in many of the new Raymond stores, we have no PoS counters; we run the selection and transaction processes completely on iPads. There is smart tech, but it is unobtrusive.”
But are all customers comfortable with this new way of doing things? “No,” Rao admits. “For customers who are instinctively intimidated by tech, we personalise the experience manually.”
Another innovation that Raymond has rolled out at its flagship stores is the experience of robotic scanning for measurements. “There are customers who prefer talking to a human while being measured for a shirt or a suit,” Rao explains. “Then there are some – typically the Millennials – who like the exciting novelty of a robotic experience. Our stores deliver personalised shopping experiences for both sets. That is how we create a balance between the physical and digital.”
Yet another in-store experiential innovation that Raymond has created is via merchandising – by sacrificing depth for merchandise breadth. Referring to the brand’s ‘99 Shades of White’ campaign, Rao says, “At the front-end, we display more styles than sizes in white shirts, for instance. We display a vast range of white shirts for every conceivable occasion and use. Upon request, appropriate sizes can be called in from the back-of-store inventory. Store shelves are therefore, freed up to create a much richer merchandising experience.”
That being said, Rao does agree that a similar experience would be difficult to replicate on an online platform.
“The millennial shopper is more comfortable with technology than with humans,” Head IT Strategy & Governance, Arvind Limited, Abel Correa, says. “The classical guy is just the opposite.”
Invoking the ongoing debate about the experiences delivered by online versus offline retail, Correa notes that is no longer about one or either. “The retail landscape today is saying brick-and-mortar plus online, not one or either. However, if the customer journey is not complete from one point to the other, especially in an Omnichannel scenario, the experience elements are damaged,” he points out.
“It’s one thing to make smart online strategies in the boardroom, but if a retailer’s front end does not deliver, outstanding customer experience – across channels – is simply not happening. As retailers, we have to think through all possible touchpoints. In fact, if your store is in a mall, you have to start experiential retail execution from the parking itself!” he further adds.
Correa also lays stress on value propositions that retailers and brands stand for in the context of experiences. “For instance, right on Diwali day, do you really need to offer 75 per cent off?” he asks, pointing out that the entire festival is about buying new things. “Why lower your value proposition for a high-traffic shopping period such as Diwali?”
“If you haven’t got your value proposition right, you cannot do digital execution, because digital operations cost a pretty penny,” he adds. “It would be wiser to finance the digital expansion by respecting margins and making sure that healthy bottomlines from physical retail fund experiential innovations.”
“There is a cost to sustaining and running technology,” Correa asserts, adding, “There used to be something called value chain; now we have what is called a value network. This means that through your mediums, a fashion customer needs to be able to potentially touch even your design team to understand what a specific product or style means!”
“We need to stop designating channels as retail formats. These are just channels. We need to embed a holistic approach to retail in our operations,” Sriram seconds. “We need to be relevant across all touchpoints. We also need to focus on value propositions, rather than just pricing.”
Quoting from a study by IDC, Sriram points out that Omnichannel shoppers have a 30 per cent higher lifetime value than those who shop using only one channel. “Clearly, we need to encourage people to use multiple channels to access us,” he says.
Create Experience, Create ROI
“Physical experiences will never be overpowered by the convenience or discounting of online retail, in my opinion,” he says. “Despite prices for movie tickets having surged by over 10 times in value in the past 20 years, the movie industry has grown by close to 100 times. Multiplex operators have actually been able to charge a premium for the real-life experience that a movie theatre offers.”
In all the rush to comply with new digital protocols, is it possible that many retailers could be losing sight of the basics – the aforementioned Five Senses?
Examining this question, National Head, Specification Sales, Philips Lighting India, Bhaskar Nayak, observes, “Experience is primarily driven by the five senses. As retailers, you need to figure out this: Depending on who the customer is and what he or she wants to buy, which sense needs to be stimulated? And how do you trigger than sense – do you do it online, do you do it offline, do you do it in a combination of both or more channels?”
Amazon’s recent extension into the physical retail space with the launch of Amazon Go underscores the fact that real-life experiences cannot be replicated offline, Nayak notes.
“Retailers such as Chumbak and consumer brands such as Paper Boat are great examples of the power of experience; they don’t sell just products, they sell memories, and experiences,” he adds.
Referring to the Colour with Asian Paints concept store in Mumbai, Nayak reiterates the importance of creating stunning, differentiated experiences. “There is no retail activity at this 7,500 sq. ft. store; it functions only as a unique ‘experiential lab’ to fi re customers’ imaginations and aspirations.”
Lighting as a tool of in-store experience is coming of age, and Philips is at the leading edge of this evolution. “LEDification is a big trend so far because all retailers worldwide have been gunning for efficiencies. But, now, LED has moved far and beyond being just a cost-efficient product display tool,” he says.
“Retail is no longer restricted by time or geography as we enter the shop. This multi-disciplinary influence is integrated by lighting into the retail environment.
Retailers need to be comfortable with the idea of embracing technology and working with it,” he goes on to add.
MAKING LIGHT TALK
“As a feature or service, lighting is the most interspaced component of a store; there is no other feature that is as widely distributed as lighting. As a next-generation fixture, it can now become a point of in-context intelligence; it can become a source of data,” Nayak says.
And that is precisely what Philips has implemented at the Lille, France store of hypermarket chain Carrefour. “This is the genesis of LiFi – light fixtures becoming a source of information; light itself becoming a source of transmitting and receiving data,” Nayak informs.
“Online shopping has become very popular, so retailers have to rethink the role of their physical store – creating experiences and touchpoints with the customers. It’s important for them to build exactly what the client wants,” he points out.
In a revolutionary technological innovation, Philips has created the concept of Indoor Positioning, much like GPS. Through this technology, data-enabled LED lighting systems connect to customers’ smartphones (via the Carrefour app called Promo C’Ou), and collect and send relevant information using wireless communications and iCloud services.
With visible light communications (VLC) from Philips, a unique code can be transmitted through the beam of LED light. This code can be detected by a smartphone’s camera, creating a real-time link between the shopper and the lighting system. As a result, it’s possible for the shopper’s smartphone to know exactly where it is and show relevant maps, product information, and promotional coupons.
The technology requires shoppers to opt in to accept information via an app. Since the data stream is one way, users’ private information is safe.
The Tech of It
- Unique code from the LED light beam can be detected by any smart device with a camera.
- System acts like an indoor GPS – each light point transmits a one-way location code. Once connected, customers can orient themselves in the store and receive targeted discounts via Promo C’ou.
- Philips indoor positioning software is fully integrated into Carrefour’s mobile app and supported by a cloud-based location database operated by Philips.