The State Of Retail - Commentary from Nextpoint 2017

Greetings from seat 26G. I'm on my flight back from Miami where the Theatro team spent a few days at the NextPoint retail technology networking event connecting with some of the leading retailers in the US and Canada. For those of you not familiar with Nextpoint, the event connects retailers with solution providers in small, boardroom-type presentations and one-on-one meeting opportunities. The retailers are kept in groups with their peers that often allow them to build relationships that last beyond the event. And the solution providers are offered a significant amount of face time with key retail execs that also facilitate relationship-building in such a tight-knit industry.

Theatro was fortunate to have a completely packed schedule…in fact all of our one on one meetings were double booked! This allowed us to not only discuss the value of Theatro to almost every company that attended, but also to better understand the challenges, opportunities, and the overall state of the retail industry. There was no booth busier than Theatro, and in fact they literally had to kick us out because our meetings were continuing long after the event ended! What we heard was that retailers are:

  • Opening up stores - Its true! Not every retailer is shutting down gobs of their physical stores. Some of the regional brands we talked with are actively growing store count, taking advantage of opportunities in regions that are not typically served by their competitors. While the role of the retail store is significantly changing, this does not mean the death of the store format is imminent.
  • Fighting with legacy technology - Time and time again we’ve heard of stories where legacy hardware and software still exists in the retail environment. This includes scanners from the early ’90’s, green screens to access merchandise systems, and clunky communication systems that were built before the mobile revolution has taken hold. Many note that these antiquated solutions are major barriers to success, however retail executives continue to be cautious in investing into rebuilding their core enterprise systems. While being frugal can add short term value, most retailers are still missing core systems of insight and engagement which will drive long term growth and loyalty.
  • Lacking modern communication tools and mobility solutions - Its shocking to continue to hear about the slow and antiquated methods that retailers employ to communicate with their distributed store teams. It often takes a day or two to create an enterprise communication, and that communication is often only spoken once during the morning huddle (and then relegated to the cork board in the back room). No surprise that workers in the evening shift are receiving only a small portion of the daily message form HQ. And those retailers that are actively pursuing a mobility strategy for their store teams, many are dealing with conflicting priorities between store teams as well as struggling to prove the value of screen-based use cases.

While it was encouraging to hear that some chains were growing stores and most were focusing on the core fundamentals of retail, many still have not progressed fast enough to keep pace with customer expectations. Traditional store-based retailers are continuing to try and fit the new, elevated expectations of customers into their traditional models, and in my opinion continue to miss the mark. Legacy models of buying hardware and software licenses locks retailers into long-term deals, unable to break free to move to flexible SaaS models. Change is not happening fast enough for these legacy retailers to truly keep pace with customer expectations, and significant reform is needed to convert these organizations to agile, customer-led companies.

The good news is that new solutions are being piloted by retailers every day, challenging the technology status quo. Massive opportunities exist for the retail industry to improve, and events such as Nextpoint are helpful at driving change. The question is, will retailers have the discipline to inject agility into their org and rethink how they purchase and implement innovative technologies that will allow them to keep up with higher customer expectations.  

 

Adam Silverman

SVP Marketing, Theatro

adam@theatro.com

 

 

Voice Goes To 11 - Walmart and Google Partner On Conversational Commerce

In one of the best scenes in Spinal Tap, lead guitarist Nigel Tufnel emphatically claims his guitar amp is better because it “Goes To 11”. This week Google and Walmart just took the conversational commerce “voice wars” to 11 by announcing a strategic partnership to integrate Walmart with Google Assistant (Google’s intelligent personal assistant) and Google Express (Google’s same day delivery service). Why is this important? Because conversational commerce is the next battleground for retail. Just like the internet and web browser upended traditional retail, conversational commerce will continue to dramatically transform how consumers shop. The Google / Walmart partnership is intended to thwart the growing threat of Amazon’s Alexa and Echo, which industry experts now claim have sold nearly 19 million units. The business benefits of having an Amazon-powered voice assistant the homes of consumers are clear - conversational commerce is about to hit mainstream and Amazon is well positioned to combine voice and digital shopping on one platform. In fact, research firm Walker Sands recent Future of Retail report claims that 19% of consumers have made a voice purchase through a digital home assistant like Echo or Google Home this year, and 33% of consumers expect to do so in the next year.

Walmart needed to make a move. In lieu of creating their own voice appliance and assistant (which I would argue they still need to do), there was really no other choice but to partner with Google. And that’s ok, for now. Walmart gets a foothold into the home on Google Home, and Google gains a major retailer for its local fulfillment service Google Express. To jumpstart the partnership, Google even eliminated its annual fee for the service, which will likely be the go-to service for the half of Americans who are not a Prime member. 

Voice Is Coming To The Store

As consumer behavior changes and conversational commerce becomes expected, consumers will demand the same voice convenience when shopping in stores. This is guaranteed to happen, and proof can be seen with the mobile proliferation in-aisle;  77% of consumers use their mobile phone to shop while in stores. To think a conversational interface won't follow the same patterns as mobile is risky. Retailers need to bring conversational interfaces into the store, supporting both customers as well as associates. Without empowering associates with conversational computing, retailers run the risk of missing customer expectations and further diminishing the role of the store and associate. 

Turn It Up To 11

This is not a time when retailers need to be passive. Those retailers that start early with testing conversational commerce have the advantage of learning how best to bring this new paradigm into their stores. Leading retailers should:

  • Work with Theatro - Perhaps you expected me to say that. Regardless of the source of this blog post, it makes sense. Theatro offers a SaaS platform with zero risk to retailers to test how our Intelligent Personal Assistant can help retail associates and stores perform better. 
  • Rethink associate and customer engagement from a voice perspective - Don’t simply put a voice veneer over your existing processes. Rethink how your stores will operate with a voice interface. And anticipate how customers will use their own voice assistants in-aisle.  Leverage Theatro to help strategically plan for this evolution of in-store engagement.
  • Connect everything - Start now by exposing inventory visibility and other enterprise data across the chain. Build the foundation for an agile store, one that is data rich and driven with analytics rather than just intuition. 
  • Your brand is your voice - The issue with stores is not the merchandise or the format. It’s your brand. The store experience has hardly changed since the advent of the mall. Voice will become the new brand, and that brand will be increasingly portable and conversational. Don’t wait for Amazon to tell you what to do. 

And you should heed the wise words of Spinal Tap’s David St. Hubbins (played by Michael McKean) who states; "I believe virtually everything I read, and I think that is what makes me more of a selective human than someone who doesn't believe anything.” If you believe anything, believe this blog post.

 


Adam Silverman

SVP Marketing, Theatro

adam@theatro.com

 

 

Don’t let this all-too-common customer service mistake happen to you

I was at the mall with my two kids this weekend and I needed help finding a dress for an upcoming wedding. I was in a store that shall remain nameless and tried finding an associate who could help me. I found one after a minute, but she was busy on a tablet either working or on Facebook; who could tell.

The True Impact of Self Service

This week Macy’s announced that it will be bringing its new self-service shoe concept to three Chicago-area stores, allowing customers to bypass the sales associate during their 

shopping session. This self-service concept is part of a broader test to ensure that Macy’s has in-demand brands and stocks the right shoes. So, collectively these initiatives have led to shoe sales increases that are “well above” that of regular stores. That’s awesome! High fives for Macy’s. However, Macy’s seems to be emphasizing the self-service aspects rather than having the right inventory in the store. In fact, in a March conference with investors, CFO Karen Hoguet stated that lots of customers say, “Leave me alone, let me just...get the shoe I want and move on”.

So, what are the drivers that are causing the lift in shoe sales? In the case of Macy’s and improving shoe sales the drivers appear to be:

  • Customers can try on more shoes - Since the shoes are on the floor rather than a back room, the customer can try on more shoes in the same amount of time. Getting product to the customer quickly is not a full service / self-service decision.
  • The right product is in stock - By focusing on having the right stock of in-demand brands and sizes, Macy’s will drive sales. Here's an online product review submitted by a consumer about a pair of shoes a colleague just happened across while shopping that illustrates my point exactly: "Nice shoe and am trying one more size...I wish I could just go to a store and try these on. This is why department stores are going out of business. They're making me shop online." Picking the right product to sell and carry in stores is a vital function of the buying and planning teams. It’s not being driven by the store moving to a self-service model.

Self Service Can Be A Death Spiral

It’s much easier for retailers to make their model a self-service model because it means they don’t have to reinvent store processes to meet the growing expectations of customers. They don’t have to train associates. They don’t have to ask qualifying questions to customers. It’s easy to stack the boxes high, watch sales lift, and then derive that the associate had no value in the shopping experience. This is how the ‘death spiral’ starts. Retailers reduce a level of service, gain a temporary benefit either in higher sales or lower costs, but over the long term diminish the brand and future sales. When you remove the associate from the in-store experience, retailers:

  • Diminish the role of their store - Retail stores cannot just be about stocking product. In a world where any product can be purchased from anywhere, with a few taps on your smartphone, simply having inventory position as a brand strength is not enough to keep the store relevant. This move by Macy’s to make shoes self-service will diminish the role of the store in the eyes of their customers.
  • Weaken the role of the associate - Moving to self-service will weaken the role of the associate, relegating them (in the eyes of the customer) as simple stock keepers. With retail stores on the ropes, brick and mortar retailers must leverage their differentiators and strengths. The associate is a differentiator. It is a strength of the store format. Winning retailers understand this and are empowering their associates to be brand and service ambassadors.
  • Reinforces the online channel - Why should customers go into the store when they can simply purchase online? After all, a store with boxes piled high doesn’t offer any unique value except for immediacy. Models from data scientists have shown that when investment in the store is reduced (and when the store closes), the lift in online sales is just temporary. A key source of acquisition dries up…the store.
  • Reduce revenue - Customers that are assisted buy twice as much as those who are not assisted by associates.

To Survive You Must Reimagine How Your Store Operates

What should retailers do? Assuming the right products are in your stores, retailers should:

  • Increase speed of service - Employ runners with technology like Theatro's voice platform that allows associates to communicate to have shoes pulled exponentially faster.
  • Provide upsell and cross sell opportunities to the associate - Why are we not thinking of the associate when it comes to personalization? I’ve written about this back in 2015 while serving as Principal Analyst at Forrester. By the way, Theatro offers personalization for associates, covertly, via our voice platform.
  • Test & optimize, just like eCommerce -  Macy’s discarded their focus on service in the shoe department because the impact of the associate is not likely known. With Theatro’s voice platform, retailers like Macy’s can A/B test new engagement techniques for associates and continuously optimize. This is harder than turning to self-service, but it creates an upward growth spiral and emphasizes this differentiated aspect of the store.
  • Enable the associate to be “on demand" - Customers who prefer self-service do so up to a point. That point is when they need help. And when they need help, they expect that help to be immediate and contextual. For instance, don’t require the associate to re-qualify the customer. Create mechanisms that allow the customer to identify when they need help, provide the associate tools to better understand what customers want, and train associates (in ear via Theatro’s voice platform) to spot when a customer is in need in order to provide this on-demand service.

I’d love to hear your thoughts on this topic. Please feel free to email me at adam@theatro.com with your ideas and comments.

Best,

Adam Silverman, SVP Marketing

Shoppers Choose Brick and Mortar Stores

We know the challenges in retail stores…and stores continue to close in response. The industry press is constantly reminding us that stores are closing, and it feels like the sky is falling. JCPenney just announced the closing of 140 stores last week.  We are going through a store rationalization due to being ‘overstored’.  While this plays out, customers continue to buy in both online and store channels. RetailDive recently conducted a survey to find out why:

  • 62% - Try out the item. Retail stores will always hold an advantage here, and associates are critical in facilitating these experiences with customers.
  • 49% - Take home items immediately. Theatro’s BOPIS solution speeds up the process of fulfillment in stores, and our request and respond apps drive massive improvements to speed of checkout. Customers want convenience, and we help associates provide that.
  • 20% - Return items more easily. Nobody likes boxing up items to be returned by mail. Often its easier to return to the store. Once in the store the customer is more likely to walk away with something new. With our product recommendation app (powered by CloudTags), we can build attachment and guide the associate who is processing the return to suggest complimentary items based on past purchases or new items based on their product affinity.

It's good to be reminded why stores are important. I'm certain all of us have chosen to go to a store for these reasons. However the survey and analysis show that only 13% of shoppers go into a store to ask the advice of an associate. In fact, the author continues on by stating:

"Accustomed to having information at their fingertips and on their mobile phones, consumers don't seem particularly motivated to seek answers from store employees — or at least, it's not a good enough reason to go to the store. Retailers may need to rethink staffing requirements and how to best utilize people power. Maybe those robots aren’t such a bad idea, after all."

This assessment is flawed because it is making an assessment of the associate based on a use case that is not common. Yes, there have been times where we want to go back to a store to talk specifically to an associate, but for most of the time, as the data points out above, consumers are going into the store to try on products, take items home immediately, and to get service. Connected associates are CRITICAL to ALL of these to top use cases. Getting the help of a connected and knowledgable associate while trying out an item will increase conversion rates. And employing connected associates who know can prepare a BOPIS order faster with Theatro will speed service, enabling customers to take home their items faster and with greater convenience.

What kind of store would you rather visit? A store filled with robots, or a store filled with knowledgable and friendly associates who provide the right service at the right time? OK I agree the robot store would be cool and novel. But as humans we will want to touch and feel product, and will choose to interact with associates who provide a personalized and relevant experience.

 

A New Breed Of Retail Store Emerges

Over the past few years a new breed of retailer has been emerging, one that is data driven and channel agnostic. Last week two traditional online pureplay retailers Warby Parker and Bonobos were featured in The Wall Street Journal highlighting their store growth plans. Although retail stores opened by online pureplays is nothing new (in fact 10 years ago I used to work for one called babystyle), the way they are run and their purpose for existing are drastically different. Future stores must:Theatro - wearable platform for retailers - Busy store

  • Drive sales in all channels, not just the brick and mortar store. Along with selling product, stores influence sales in other channels. Retailers who fail to measure the store’s influence in other channels will likely undervalue, and therefore underinvest, in retail stores.
  • Provide extended services. This includes fulfillment services for omnichannel orders, as well as servicing orders that are placed online or in other channels and stores.  While this can show up as an expense on the store P&L, the improved customer service will drive loyalty and engagement (followed by sales) in the future.
  • Connect associates. Consumers still like to go into the stores and get help from associates. In fact, 87% say they are more likely to buy an item recommended from a sales associate, according to the 2016 Omnichannel Retail Associate Study conducted by retail technology provider Salesfloor. Connected associates are more knowledgeable and can personalize the experience. Consumers will spend more for an item or service that is personalized to their needs.
  • Measure stores, and associates, in new ways. Retailers must stop solely measuring old metrics such as comparison sales and sales per square foot. These antiquated metrics just measure the individual sales performance of the store and is not aligned with how shoppers behave today.  Instead new metrics such as store influence on regional sales, associate influence and forensics, and measuring the customer experience need to be added to the insight mix. Building systems of insight that include these new metrics will enable retailers with a modern view of customer behavior.

Why is this important? A data driven approach is required to meet the needs of these new retailers. Associates represent one of the largest investment areas for retail stores, and to date the measurement and optimization of the employee experience has largely been relegated to observational tactics. Theatro fills a big void for these new breed of retailers who wish to deeply understand the performance of associates. Along with collecting data and providing new insights on associate performance, Theatro also connects every associate, making them more productive and able to provide a better customer experience. To learn more about Theatro or to discuss this posting, please feel free to reach out to me at adam@theatro.com.

 

Adam Silverman, SVP Marketing

adam@theatro.com

Four Benefits to SaaS for Mobile Devices

Given that the average life span of mobile devices, such as Android or iOS based solutions, is approximately 12 months before a new hardware platform is introduced that is faster and more robust, a variety of innovation and financial challenges impact today’s retailers’ mobile device strategy. A great way to keep current with rapidly evolving IT innovations and control costs is to employ a Software As A Service (SaaS) model that incorporates the cost of hardware into the subscription price (sometimes referred to as Hardware As a Service or HaaS). This allows retailers to pay for mobile devices (hardware, security, applications, etc.) as a flat-fee subscription service, thereby eliminating the large up-front costs associated with mobile device deployments.

As the SaaS market continues to evolve, more vendors are bundling the software and mobile device into one simple subscriber fee to provide a variety of significant benefits, including these four:

1. Reduce Technology Risk & Obsolesce – With the short life cycle of mobile devices, customers shouldn't have to take the technology risk to buy hardware equipment that is likely to be obsolete before it fully depreciates. As equipment becomes obsolete due to faster processing power and new form factors, retailers end up managing mobile devices that are no longer the “latest and greatest” and, over time, result in slower app performance and shorter battery life. A SaaS model that incorporates the mobile device eliminates obsolesce and ensures the retail employees have a solution that optimally performs.

2. Accelerate Implementation & Flexibility - By eliminating upfront capital requirements, retailers have the ability to implement mobile device strategies and initiatives when they need the solution, instead of when funding becomes available. Also, bundling the mobile device as part of a software subscription provides retailers greater flexibility to scale to meet the ebb and flow of a seasonal business.

3. Reduce Big Upfront Capital Expense - As with all SaaS models, the financial benefit is trading a large initial investment for small, monthly payments, keeping costs constant from month to month and making it easier to manage the financials.

4. Simplify Management & Maintenance - A good SaaS solution that includes the mobile device has the benefit of not only removing/minimizing the retailer’s responsibility if the devices are lost, broken, or damaged by the retailer’s employees, but also includes timely upgrades to new devices and software maintenance and feature enhancements.

Another cost saving aspect is many of the job functions of expensive IT staff can be performed as part of the SaaS service through remote device management. This reduces the responsibility of a retailer’s IT person to set up and support the mobile device, as well as the costs of down-time when devices stop working and the costs of returning broken equipment to the manufacturer.

As retailers continue to outfit their associates with technology to improve customer service and overall productivity, a SaaS model that incorporates the mobile device not only provides a variety of financial benefits but can also provide peace of mind that the solution will keep pace with today’s ever-faster innovation curve.

Bringing Together Wearable Devices and Speech Technology in the Retail Environment

The world around us is constantly changing: from the weather and the seasons to the hottest new band, change is a constant. This is especially true when it comes to technology. Never before have we seen so many technological advances in so short a time; we are surrounded by devices that are intelligent in some way or another.

As these devices have become increasingly smaller, the market for consumer wearables has likewise steadily grown and is now poised to explode. Meanwhile, another technology – automatic speech recognition (ASR) – has also matured and is gaining more widespread acceptance and adoption, as evidenced by applications like Apple’s Siri and Amazon’s Echo, which have helped us become more comfortable with the role of speech recognition in everyday life. 

As a result of these developments, we are increasingly seeing the convergence of these two trends: wearable devices that are primarily or entirely controlled with one’s voice. However, an important but overlooked application of voice controlled wearable devices is the retail environment and the 38 million hourly retail employees in particular. When it comes to communication – whether with each other, with store management, with headquarters or with HR management software – these employees are limited to antiquated and inefficient methods and equipment. The majority of in-store communication takes place over two-way radios or overhead paging systems, methods which offer no individualization, are not suited to communicating detailed or personalized information, and are obtrusive for shoppers. 

On the other hand, a minority of communications and customer service happens using more modern technology such as VOIP phones, handheld scanners and, more and more, iPods with proprietary apps. While these are decidedly more modern devices, they are not very customer friendly, since they require the employee to use her hands and have her eyes fixed on a screen – and thus disengage from the customer. Whatever the present options for in-store communication, they all share the major challenge of effectively and efficiently delivering relevant, timely information to retail employees and, by extension, their customers.   

A far better approach to both in-store communication and engaging customer service would be to have a voice controlled wearable that allows the user to be heads-up and hands-free. This is just the sort of approach that Theatro has pioneered for the brick-and-mortar retail environment – an elegant communications solution that enables all employees to be connected to one other, to store management, and even to backend software for tasks like checking inventory. The use of ASR allows for targeted, individualized one-on-one communications, drastically reducing the constant in-ear chatter so typical of two-way radios; and it facilitates asynchronous communication, which provides a way of leaving messages for a workforce that does not typically have recourse to email.

And this all takes place via a discreet, lightweight, screen-less wearable that uses human speech as the interface.  The result is a workforce that is better connected, more informed, more efficient and, at the end of the day, better equipped to serve the customer. 

Enterprise Wide Communication: Closing the Execution Gap with Enterprise Wearables

By Patrick Fitzgerald, Executive Vice President, Theatro — November 23, 2015

As a general rule, part-time employees in retail, hospitality and warehousing (enterprise indoor mobile workers) are on the front-line of an enterprise’s engagement with a customer, and are a crucial to the execution of the enterprise strategy.  A critical challenge is that far too often, they are also the last people in the organization to receive vital information or direction.

Why? Well, they are typically remote (thousands of stores, hundreds of hotels and one central headquarters), do not have e-mail or voice-mail, and their core job responsibility is not to sit behind a desk, but to be on the sales floor working with customers and addressing specific tasks. Without e-mail or voice-mail, part-time employees and management must rely on very antiquated methods of communication. These outdated methods include posting memos to bulletin boards, spending a significant amount of local managers’ time trying to fill the communication gap between headquarters and part-time employees, as well as the age old game of  “phone tag/phone chain” as headquarters teams try to provide critical information to remote part time employees in various locations.

A lack of real-time communication and a dependence on outdated communication methods creates a significant amount of inertia within an enterprise organization and complicates orchestration across the enterprise. What mobile technology should enterprises use to address this communication gap? 

How are Enterprises Addressing This Gap Today? 

Product recalls, safety announcements and IT outages are just a few examples of time-sensitive information that headquarters must be able to communicate with a far-flung and distributed team in real-time. To fill this critical gap, many large-scale enterprises rely on solutions such as shared voice mailbox set-up for all part-time employees, ad-hoc conference calls and video conferencing. Of course, each one of the solutions has pros and cons but a significant drawback is each of these solutions requires that the part-time employee leave the sales floor and be away from their primary tasks if they are to participate in real time. 

If they wait to consume the information later, perhaps when it is more convenient, they run the risk that the particular information will be outdated. The default perspective in the industry is “someday everyone will have smart phones,” which will alleviate the problem. But as has been well-documented, there are significant bring-your-own-device (BYOD) challenges (both from IT, as well as labor law standpoints) that remain unaddressed, as well as a variety of concerns with part-time service associates having their eyes on a device screen rather than engaging with the customer to provide customer service.   

Is there a better way? 

What is quickly emerging and being embraced by large-scale enterprises with mobile indoor workers is the importance of enterprise-grade wearable solutions. While the impact of smart phone usage by customers and employees has been revolutionizing how businesses interact, this new wave of enterprise wearables is ushering in new ways to connect and communicate with and among employees. This new ability revolutionizes enterprise communication processes and allows enterprises to close the execution gap caused by inferior and ad-hoc communication solutions.

This is made possible, not only because enterprise wearables are part of the employees uniform (they go where the person goes and are always on). They are also complemented by a robust enterprise-wide software solution that enables headquarters teams to communicate directly to remote part-time employees to keep them abreast of important information, thus creating a truly integrated enterprise and bridging the gap between headquarters teams and remote locations.  

As we look to the future and reimagine the workforce of tomorrow, the intelligent enterprise is driving new levels of operational efficiency, and enterprise wearables will play a critical role in connecting employees all along the enterprise chain while closing the execution gap caused by fragmented communications.

Catch us in action at Retail’s Big Show on January 17-19, 2016 in NYC!

Theatro is making its first ever appearance at Retail’s Big Show this year to introduce the world to retail’s smallest IoT wearable computer, the Theatro Communicator. Retail’s Big show is the only place you can see and experience all things Retail!

Visit us at booth #921 and learn how Theatro is pioneering the “Heads-up and Hands-free” mobile revolution. The Theatro Communicator, coupled with Theatro’s communication, indoor location and productivity apps, specializes in providing real-time assistance for employees to be more productive by giving them in the moment information such as inventory counts, price checks, access to store management, and the ability to communicate across the store.

Current client? Investor? Have absolutely no clue who we are? We want to connect with you at NRF. Stop by our booth to speak with our industry experts and watch our wearable device in action.

Discover Theatro!

Interested in learning more? Activate your free EXPO pass now!

Redeem your free pass at http://bigshow16.nrf.com/register.

Invitation code: 3811

Compliments of: Theatro

If you need more information, please contact: Patrick Fitzgerald, EVP - Operations, Theatro

Email: patrick@theatro.com Phone: 214.435.8090