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Digital Distruption For Retail Stores

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Digital Distruption For Retail Stores

Digital tools and communications continue to influence instore shopping experiences. Deloitte's latest report Navigating the New Digital Divide indicates that digital interactions influenced 40% of instore retail visits in Australia during 2014.

Whilst the level of influence may not be surprising for many retailers, it highlights how digital is rapidly changing the way customers shop and make purchase decisions. Digital and traditional channels are blending and complementing each other along the whole retail customer journey.

Australian shoppers have a similar level of digital influence to those in the US and Canada and are ahead of most European countries. Deloitte's survey ranked digitally influenced retail sales as follows - US (49%), Canada (41%), Australia (40%), Germany (30%), The Netherlands (30%) and the UK (27%).

Digital tools will continue to be crucial to the future of the store, not simply contributing to its demise as some have predicted. Of Australians that are digitally engaged, 65% use digital tools before heading into store or making a purchase decision, with an additional 31% using digital tools during their shopping trip. The top activities that Australian shoppers complete during their shopping trip are comparing products, accessing product information and checking product availability.

The trend is clear - customers are completing substantial research and have a desire to know significant product details before making their purchase decision. All of this research acts as a significant opportunity to drive customers to the store.

The upside for retailers is clear, customers using digital tools and devices before and during their shopping trip convert at a 25% higher rate and have a higher average order value than those that don't.

My key takeaways to succeed in the digital-physical fusion:

  • Measure digital engagement along all customer journey touchpoints – simply measuring online channel sales misses the bigger picture as digital has a significantly broader influence on retailers' success.
  • Incorporate digital into your instore experience - over thirty percent of customers use digital tools whilst instore to compare products, prices, reviews or participate in experiential activities. How can you leverage this interest to assist in their purchase and after sales experience?
  • Base your strategy on the buying habits within in your retail segment - the level of customer research, interactivity and expected after sales relationship will differ dramatically depending on your category or product.
  • Align organisational incentives - it's imperative that there is no conflict between stores and digital sales or servicing channels. Be guided by how your customers choose to interact with your brand.

Fundamentally, retailers must understand their customers’ path to purchase (across time, devices, channels and technologies) to build a series of digital touch points to meet their needs along the way.

View a summary of findings from Deloitte's research below, or read the full research here.


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Mary Meeker's 2015 Internet Trends Report

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Mary Meeker's 2015 Internet Trends Report

Mary Meeker has just published the 20th version of her influential annual assessment of digital trends and the Internet economy. She has a history of recognising the biggest digital trends and identifying the most important start-ups.

Her Internet Trends 2015 presentation runs to 196 slides and is heavy with detail. Below is my tl;dr version with 17 key slides highlighting the relevant global trends.

You can view the full presentation below or download the PDF.

 

There is still significant upside for mobile advertising spend growth. Print continues to receive significant media spend relative to the number of eyeballs...

 

Mobile video viewing has provided an opportunity for different video orientations... (see snapchat, periscope and meerket)

 

Apparently men use pinterest too...

 

Visual media drives Internet usage for teens...

 

consumers now expect almost anything to be available just in time...

 

Cyber attacks grow in scale and awareness...

 

creative and knowledge based jobs continue to outpace routine and manual occupations...

 

The millennials have arrived as the largest generation in the Workforce - soon to be the generation with the highest purchasing power...

 

It's not all about money for millennials...

 

Opportunity for Incomes to be materially supplimented by additional income streams...

 

Tencent provides insight into the scale of hundreds of millions of chinese internet users...

 

India is rapidly entering the internet mainstream with over 200 Million internet users, growing over 37% last year...

 

The Indian market is already driving growth for global Internet Leaders...

 

Indian Internet use continues to be more mobilised than almost all other countries...

 

Design continues to heavily influence leading customer experiences...


You can view the full presentation below or download the PDF.


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Quantifying Digital ROI

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Quantifying Digital ROI

Measuring return on investment (ROI) for digital projects and programs of work continues to be a challenge for many organisations. What happens when as a digital leader you are convinced of the merits of an investment but you can't create a compelling ROI driven business case?

In a recent paper, Capgemini highlighted the challenges in quantifying the impact of digital transformation. These measurement difficulties have a material impact on funding projects since most CFOs are hardwired to divert organisational funding to initiatives that can clearly be measured. 

The solution may well be using a blend of art and science in creating business cases. This is particularly the case in instances where traditional metrics such a ROI do not capture the full gambit of impacts of digital investments. 

One of the key challenges in measuring the impact of digital activities is the traditional organisational silos that are influenced by digital technologies. Business functions such as marketing, IT, customer service and operations could all be effected, however many organisations don't have an organisational wide methodology to assess these investments. Recent Capgemini research indicated that only 19% of companies have cross functional steering committees at a corporate level that manage and foster digital investments.

Another challenge is the lack of translators between digital teams and CxOs. The nomenclature of digital activities can be bewildering in the boardroom (sentiment analysis, multivariate testing or a private trading desk anyone?). Conversely, CFO Research Services recently found that common finance metrics used to evaluate technology investments are not commonly understood across the organisation. As a result, objectives and outcomes are getting lost in translation with both parties evaluating the same initiative but through different lenses. 

So how can organisations measure digital initiatives?  Capgemini provides a 3 faceted model based on the different investment types:

  • Maintenance/ Business As Usual investments (BAU) - these are a pre- requisite for the business and are needed to keep the business running (eg ongoing maintenance activities for the website). This is ordinarily the largest component of budgets and expected goals for these activities are clear upfront. As such, it makes sense to use a traditional project methodology and metrics of time, cost and quality. 
  • Transformative - transformative investments have an explicit mandate of supporting an organisational wide digital transformation. Examples include investments in core platforms or services to support advancements in digital customer experience. In most cases they are cost intensive with widely distributed benefits. 
  • Emerging investments - emerging investments require iterative assessments and are best managed venture capitalist style. Generally, investments in these areas are where technologies are rapidly evolving and ROI will be speculative. The lack of historical benchmarks requires an incubator approach where small investments are made in a variety of ideas allowing them to rapidly iterate and prove their worth. Those that show value should be nurtured and piloted within the organisation on a limited release basis to build a business case and associated KPIs whilst those that don't show merit should be shut down.   A blend of art and science is needed in creating these business cases since there is a risk in identifying the right time to evaluate ROI - too early will kill a good idea while too late will result in sunk investment costs.


Any of these investment decisions should be made with a consistent methodology and guidelines. Capgemini provide a simple digital investments evaluation toolkit in their full research paper. A critical component of the investment methodology should be the evaluation of the investment decision via a central digital steering committee running across traditional silos and aligned around the company vision. According to the Capgemini research, this is still missing in over 60% of businesses where there is no centralised function to prioritise and fund digital initiatives. 

So in summary, we need translators to bridge the current gap in the digital dialogue in the boardroom, a consistent digital initiative evaluation framework and the faith to act like a venture capital backed start up to incubate and pilot ideas.
 


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Online Buying Intentions

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Online Buying Intentions

Do consumers use the web to research products with the intention of purchasing online or to research online and purchase offline (ROPO)? Unsurprisingly, the answers depends on the type of product that they are purchasing, with online purchase intentions around the world doubling since 2011 for many durable and entertainment related categories such as books, tickets and sporting goods. The good news is that these growth categories still have room to expand digitally.

In early 2014, Nielsen surveyed 30,000 online consumers in 60 countries to identify the most popular product categories for buying online versus browsing online and the areas where purchase propensity is leading and lagging. The report helps to identify barriers to online purchasing and strategies to overcome for online sellers.

Online consumers in categories like clothing, event tickets, books or travel reservations typically have a one-to-one correlation between online searching and shopping - that is, those who browse online also buy online. Consumable products have lower online browse/ buy intention rates than non-consumable products.

The report also quantified the trend towards consumers completing mobile transactions with 52% of respondents in Asia Pacific using mobile devices for online purchases, second only to mobile device usage in the Middle East.

The research highlights opportunities for businesses to cater to shoppers that need to research and need reassurance before completing an online purchase. One of those opportunities is to actively engage consumers using both digital and physical experiences throughout their purchase lifecycle.

View the full report from Nielsen - Global Online Purchase Intentions 


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The Importance Of Brands

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The Importance Of Brands

The latest podcast from Freakonomics asks (and answers) some interesting questions about the importance of brands.

The episode centres on research from the University of Chicago Booth School of Business, which looked at how subject matter experts tend to buy cheaper, store brand items like aspirin or kitchen staples (flour, sugar etc). The hypothesis is that these experts (Doctors or cooks in these instances) know enough to know that the store brand items are just as good as the more expensive name brands.

It raises some interesting questions about what is advertising and branding and why companies expend so much effort on it. Is it about informing consumers to help make good decisions or more nefarious with the intention to confuse and bewilder? Listen to find out… 




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How Retailers Are Transforming the eCommerce Marketplace

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How Retailers Are Transforming the eCommerce Marketplace

A joint initiative of Australia’s digital industry peak body, AIMIA, and the Australian Centre for Retail Studies at Monash University, the research aims to give retailers and digital media professionals an independent benchmark by which to assess their own business priorities and opportunities in the online space. 


Whilst no silver bullet strategy exists the are some pleasingly trends identified that will help to increase transformation of the eCommerce and digital space.

Key trends identified by the report include:

  • Online retailing remains a small part of the overall retail landscape, accounting for 5% of global retail spending in 2013. Online retailing is an increasingly important component of the modern marketing mix. 
  • "It's not omnichannel it's just retail". Omnichannel has passed the tipping point and is just normal retail business practice now.  Customers are driving these expectations and retailers understand that there is no on size fits all approach. 
  • Millennial consumers with their always on connectivity are driving expectations and providing opportunities with real time media and new technologies. 
  • The store should be central to an omnichannel execution. Stores have the ability to engage customers in tactile ways, stimulate senses and stir emotions. 
  • There is a strong sales growth linkage to the personalisation of offers and integrating customer information to a single source.
  • Retailers see management and analysis of available data,  keeping up with the pace of change, and targeting the right potential customers among the key future challenges for the next 12 months. 


Opportuntiies for retailers:

  • Opportunities for non standardised products ( I.e. Games and consumer electronics to increasing ther share of the online retail spend mix as customers continue to expert these retailers to offer comparible services. 
  • Depending on the brand, opportunities exist around new technology and media such a real time targeting and tools to target changing millennial consumer expectations. 
  • Challenges around targeting customers and analysis of available data can be addressed in a staggered methodical approach, presenting opportunity for differentiation and optimisation. 
  • Email is still an under utilised marketing tool with significant improvement opportunities in the area of automated and triggered campaigns as well as customer and lifestyle segmentation. 

You can download the full AIMIA Research Findings now. 



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Luxury Goods Online - How Shoppers Research & Buy

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Luxury Goods Online - How Shoppers Research & Buy

Recently, Google partnered with Ipsos to reveal how affluent consumers research and shop for high-end fashion, accessories and jewellery. 

Unsurprisingly, they found that people shopping for luxury goods are among the most digitally savvy, they use the Internet more than any other avenue for research, they use multiple devices and they still want to experience products and finalise purchases in store.

My six key takeaways from the research:

  • Even though 82% of luxury purchases occur instore, 78% of shoppers research online before they buy.
  • Affluent buyers  are more likely to use multiple connected devices (PC, tablet, smartphone) than the general population and in emerging markets they own twice as many devices.
  • Convenience and access to good deals are the key motivations for purchasing online, whilst the main barrier to purchasing online is the desire to experience the product first hand.
  • Luxury shoppers multi-task by interacting with digital devices whilst consuming offline media (TV and magazines). This is more likely in emerging markets with over 80% multi-screening whilst watching TV.
  • There is a preference for immersive advertising formats such as video and 3D imaging to effectively bring luxury items to life online.
  • This research highlights some key opportunities for luxury omnichannel retailers, particularly with respect to linking offline and online marketing efforts, adopting a digital marketing attribution strategy and offering a good online experience regardless of the device.


Download the full research study.
 

Google Luxury Shopper Research




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