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Insights

In-store optimisation: Treating physical stores as real-life websites

Retailers need to treat stores like websites. Just as developers use technology to evolve the quality of a company's online offering, businesses can use the same approach to gather insights on the high street and deliver a best-in-class brand experience.

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In-store optimisation: Treating physical stores as real-life websites

Retailers should be making their stores work harder. Now, more than ever before, technology can empower businesses to act on the insights they can gather – and the reward is a best-in-class brand experience for the customer.

Stores are closing at an alarming rate. To date in 2019, Debenhams has announced 165 closures, Boots has axed 200 locations and Oddbins has shuttered 100. These are just the tip of the iceberg; in the US, 7,500 stores are set to close in 2019.

There are, of course, plenty of reasons behind these closures: economic difficulties, major shifts in customer behaviour, price-driven marketplaces and online competition to name just four. Yet regardless of what’s to blame, the message is clear: stores must work harder than ever to succeed.

We firmly believe that physical stores are still a huge part of the retail picture, but we also believe the way they work is going to have to change for them to survive – and much of this comes down to how they implement and use data.

Physical stores, like no other corporate asset, provide an opportunity to create a positive brand experience that creates brand ambassadors from customers that feel excited to come back time and time again. Once a customer is in the store, they’re a captive audience. They’ve actively taken the time to see what a business has to offer. It’s a fair assumption that they want to purchase something, and the role of the store is to make it as easy as possible to delight and convert them.

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Stores are living websites

How should modern retailers approach this? As always, the answer lies in the data.

For years, the most successful retail websites have been personalising the customer experience based on previous purchases. Data is used to identify the pain points in a customer journey and remove them. User journeys are recorded, analysed, interrogated and changed based on the findings. All of this is done to make it easier for the customer to buy their goods, time and time again.

However, physical stores need to adopt the same mantra.

As an extreme example, Amazon makes over 140,000 updates every day to refine its customer experience. While this level of change is obviously not achievable in store, the technology now exists to collect the data needed to gather the insights that can shape the in-store experience customers have. The store should be treated as a living website, which you can monitor in real time.

Looking to the future

As we’ve seen over the last few years, especially with the capitulation of former high-street staples, there are countless factors that affect physical store performance that are simply out of retailers’ control; competitor activity and economic conditions are less predictable than ever.

Efforts should be focused on the areas they can influence, with insights only they have. Using the wealth of knowledge and data already gathered from their own store networks, they should combine these with a focus on tuning their physical locations with data-led technology investments. These should not only improve the customer experience, but provide incredible insights into modern browsing and purchasing habits.

If you’re looking into options for collecting and acting upon data to optimise your performance, no list should go without these three concepts being discussed.

In-store product tracking

Technology can be cleverly used to gain insight into when products that are being viewed, picked up and put back. If rails were adapted with RFID or sensor-based technology, using tech similar to Amazon Go, crucial data could be gathered to see which products are hitting the mark with consumers. Stores should see this data in the same way that ecommerce teams respond to product page bounce rates and checkout abandonment.

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From here, it’s all about understanding why these issues exist: is it pricing, packaging, or even the call to action? By collating and analysing this information and testing strategies based on it, bricks-and-mortar retailers can dramatically improve product performance.

This goes hand-in-hand with the use of existing technology at checkouts, which can easily and quickly gather data on a daily basis regarding sales volumes and peak shopping times. This can potentially be used to dictate which product stands go where on a given day, or in response to conditions of the day, such as weather.

Responsive fitting room technologies

Think of the fitting room as the basket page on a website – a consumer has picked the products they’re interested in, and close enough to buying them. As they enter the fitting room, RFID can identify the products, brands, styles and sizes being taken into the space.

This data could be used to make recommendations on in-booth displays to suggest products that could go well with them: a shirt to match those jeans, or a belt to match those shoes. These can be used as an upsell opportunity to a customer at the point of purchase.

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For increased customer ease, products could even be added to the customer’s basket on screen and delivered to their door – or even just to the counter – removing any potential logistical barriers such as buying too much to carry, or simply making the process as hassle-free as possible. Equally, if the upsell product isn’t in stock in that store, that shouldn’t ever be an issue; it can be selected in the fitting room, added to an order and get it sent directly to the customer.

Video analytics

Ecommerce teams have used video analytics to document user journeys for years. In stores, these can be used to truly understand customer navigation paths and patterns. Video can even be used to review the performance of sales assistants, to statistically understand the right and wrong times for them to speak with customers.

This information can be logged to inform future merchandising decisions, to capitalise on what customers truly want. On top of this, it could identify aisles, shelves and tills that perform better and worse than others. There’s a huge opportunity to interrogate customer behaviour in-store, learn from it and optimise shop designs to improve both customer experience and, ultimately, sales.

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Listening to customers in a new way

Customers are telling retailers so much. Every time they interact with a brand in-store, they’re giving them a piece of crucial data which, if collected, can be used to improve their experience. The technology exists to do this, and digital teams have made this discipline of data collection, analysis, testing and optimisation the foundations of their success.

This mindset needs to be rolled out to improve store performance. As ever, the answer lies in the data: use it to identify the problem, propose a test to remedy the problem, analyse the findings, then repeat, repeat, repeat.

Retailers will always face challenges; new competitors will enter the market, customer behaviour will change, the economy will fluctuate. But one thing won’t change: every time your customers interact with a business, they are telling it what they want. Now it’s time to really listen to them, then act upon it.

Insights

M&S Little Shop: Pint-sized prizes that convert on a huge scale

While it’s had its fair share of negative headlines, the Little Shop offered by Marks & Spencer has a keen focus on the bottom line, basic human psychology and the brand itself – and delivers countless benefits at a crucial time.

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M&S Little Shop: Pint-sized prizes that convert on a huge scale

In the UK, it’s estimated that one in three people collects something. The jury’s out as to why so many do it, but theories range from loyalty and personal attachment right through to obsession and existential anxiety.

Whatever the reason collecting exists, it’s something that’s innately and solely human: it’s not limited by age or gender, and it’s driven by the satisfaction of completing a “set”. Seizing on this idea for the summer is Marks & Spencer, which is running a masterclass in simplicity: one that will certainly drive sales at a time when M&S needs them more than ever.

M&S’ “Little Shop” is a collection of 25 miniature plastic versions of its most popular products. These tiny items are given away to shoppers every time they spend £20 or more in store, and they’re blind wrapped, meaning customers don’t know which mini product they’ll get until they tear open the packet.

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Offering collectable freebies with products is far from a new idea. We’ve had our cereal box toys for decades, while Happy Meals are still built around plastic freebies. But in the 90s, British-specific giveaways were at their peak.

Walkers offered Tazos – limited-edition Pog-like discs with notches around the edges – which were all the rage in playgrounds, and capitalised on the popularity of both Looney Tunes and Star Wars with 50-piece sets. Around the same time, Sainsbury’s immortalised the Euro 96 England team in coin form, which were inescapable collector’s items at the time (but are now pretty worthless).

However, in the UK, giveaway items like these have never had anything to do with the companies selling them. M&S’ range is superbly brand centric: the well-made and finely detailed products are predominantly M&S-specific products, such as the iconic Colin the Caterpillar cake and a bag of Percy Pig sweets. These headliners are complemented by basics like milk and pizza, as well as a range of superbly middle-class items, like Cornish Cove mature cheddar, cauliflower popcorn and Peruvian coffee beans.

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M&S isn’t the inventor of this idea; it follows an initiative pioneered by Australian supermarket Coles, which rolled out its own Little Shop in 2018 and followed it up with a “second season” in July. However, it’s probably the best brand in the UK to do it, as its food range is both iconic and highly thought of.

To give the idea the biggest impact possible, M&S has partnered with Instinct to launch the concept “with an integrated communications campaign, spanning celebrity endorsement, influencer partnerships, press office and a VIP, family-friendly launch event to generate hype”. Alongside countless well-loved YouTube and Instagram accounts, Louie Spence has fronted a video for Little Shop. As one viewer noted: “You can’t buy what he’s on at M&S, sadly.”

The benefits of the initiative – which, like Coles, is all but guaranteed to have a second run next year – are vast.

Just a little bit more

M&S’ food venture is famously known by many as a place where people go to shop for “their bits”: a main shop will usually happen at a lower-priced supermarket that offers a much wider selection of products. M&S is still a high-end brand in the eyes of most: somewhere for treats, the £10 meal deal, or fancy extras that can’t be found anywhere else.

Here lies a problem for the company: people often spend regularly, but in small amounts. By luring people into this fun initiative that centres on iconic products, the benefits are threefold.

  • Firstly, the £20 minimum spend will regularly push people to add a few more things to their basket to qualify for the unknown prize;
  • Secondly, it makes the 25-strong range of products even more desirable: Little Shop’s inclusion of strawberries may convince people to get their fruit in store, or even their milk;
  • Finally, M&S is stopping other, similar brands from taking its share of the luxury foods market. Waitrose, which Marksies regularly goes toe-to-toe with, could surely lose some market share this summer, while high-ticket products at regular supermarkets (e.g. the Sainsbury’s Taste the Difference range) could also be affected by Little Shop.

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Driving footfall through in-store exclusivity

Unlike nearly every major supermarket in the UK, M&S is yet to sell its produce online for home delivery – though it’s not far off, having brokered a deal with Ocado. With this initiative, people are given yet another reason to go into store, at a time when M&S has announced the closure of 110 stores during 2019 (85 full stores and 25 Simply Foods). Many M&S food courts reside inside full stores – higher footfall will also be driven through its clothing and accessories business, too.

The company may be behind on the experiential shopping that’s needed to cater to the customer of the future, but it’s a step in the right direction. In fact, the Little Shop initiative has a further experience-led idea built into it.

Building a community

While there’s been a lack of any real change in Simply Food’s decor, layout and approach over the last few years, M&S is adapting its store network to Little Shop, if only for the short term, by building a customer-first, physical store-led community initiative into the giveaway’s launch. Parents and kids alike are being encouraged to take part in its swap shops, taking place in M&S locations around the country throughout August.

It makes an experiential event out of the whole thing, guaranteeing local convenience, as well as near certainty that people can get what they want. And, of course, it’s a perfect opportunity to sell one more time.

Introducing the brand to the customer of tomorrow

The family-friendly element of Little Shop is perhaps the greatest weapon in its arsenal. Not only is it an idea that makes parents excited, but kids are introduced to the M&S brand, and its wares, through toys.

In the same way that Tazos and Euro 96 coins are treasured by their collectors even now, these mini products will undoubtedly be kept hold of by thousands of people who put the time, effort and money (an absolute minimum spend of £500 to get all 25). They’ll also act as the purest form of nostalgia: old products, in old packaging, which may still be in production by M&S 20 or 30 years in the future.

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Little Shop, big impact

M&S’ Little Shop will certainly adapt in time – critics have attacked its egregious use of plastic at a time when recycling and climate change is at the forefront of society’s collective mind – but minor changes, in time, will be all that’s needed to silence these negative voices.

For great ideas, simplicity is key. Little Shop has a simple goal: to get people into stores, at a time M&S can’t compete online and needs the footfall more than ever. With a keen focus on the bottom line, the brand and basic human psychology, the high-street staple has the opportunity to create more Little Shops – whether annual or seasonal – and really bond with its customers.

However, everything must come to an end, and whether it does or doesn’t run the Little Shop again, there’s still so much to gain. If the final results of this campaign prove that offering additional value encourages more regular shoppers and at a higher basket size, M&S can look at new, sustainable ways to provide desired incentives in a way that could potentially stifle, or even reverse, its current fortunes.