National Retail Federation Show, New York City: This week the old Javits Center in the New York hosted retail folk from across the U.S. and shed some light on a technology play that may define a new industry I call Retail 2.0.
Indeed, the reality of a connected shopping experience with smartphones at the center may not be far off. However, this show was proof to me that we have to get past our focus on technology (and B2B) and walk in the shoes of our customers (understanding that it’s B2C that is really at the core). And, since it is about the shopper experience, it’s clear that winning Retail 2.0 strategies will be the ones that bring CIOs and CMOs to the table.
Thankfully, technology is not an issue. In fact, judging from the number of vendors who used the event to show off an ‘old’ technology with a new twist, you could say that we are going to see a comeback of sorts.
Yes, RFID is back on the agenda — along with technology solutions to help retailers track the product life-cycle from factory to sale using near-field communications (NFC) and RFID chips, “smart” tags that track every item to gain real-time visibility into its key business processes.
Exhibitors such as SAP, Oracle and JDA Software showed how serialized data from RFID tags, which are embedded into product tags, can be integrated with business information from back-end systems along the supply chain. Track a sweater from factory to show room to purchase and possibly customer return? It’s coming. Allow retailer micro-visibility into order status and inventory. It’s work in progress.
However, many vendors are still missing the full story (and the strategy to make it all happen). To me, it was as if they ended the story in mid-pitch. Yes, it is about the efficiencies that RFID and other wireless, smart technology bring to retail overall. And yes, that is generally a matter that involves technology and the CIOs who engineer retail to deliver results.
But what about the new frontier — which I call Retail 2.0 — and harnessing mobile to understand and improve how people shop? And what about the potential to use this technology to involve people in the process, making them an informed and important part of the supply chain? This is where I miss the interest and input of CMOs.
Technology already impacts consumers’ daily routines. NFC-enabled phones are entering the market this year, enabling shoppers to do much more than just buy stuff on the move. People are becoming empowered to participate in the retail business ecosystem.
Put another way, the advance of smartphone scanners and apps that allow shoppers to navigate stores, find items, compare prices and get more product information are all capabilities that allow people to participate in and define their shopping experience from research to purchase. Retail 2.0 is about opening up retailers’ business information to the consumer to ultimately close the cross-channel disconnect.
Retail 2.0 is about the shopper
This last holiday season we saw the Amazon cloud abruptly enter the shopping mall and rudely disrupt retail sales. The outcome: Shoppers increasingly reach to their phones to compare prices and investigate product information and options. The race is on for all retailers to respond. Book, electronic, apparel, shoe stores and chains like Target are all working on strategies to become more relevant to this digital consumer.
Gone are the days when the consumer relied on the sales clerk for information and advice. That’s value their personal and connected devices can also deliver. What’s more, in most stores the “blue shirt” clerk has less access to technology than their customer, a sophisticated, swaggering smartphone shopper.
What to do? How can we connect with the shopper before they are poached by Amazon through its PriceCheck App? And how do retailers prepare for the skirmishes sure to happen once the soon-to-come Kindle Fire 4G devices hit the market with their array of in-store mobile commerce tools? (What Amazon has cleverly chosen to call “pro-consumer” solutions…)
RFID pushes the boundaries
This is where (and why) RFID “smart” tags offer a solution. Often described as “bar codes on steroids,” RFID tags are equipped with a tiny antenna and a microprocessor, which stores a special number for every product – the so-called electronic product code (EPC). In connection with the retailer’s data warehouse it communicates data such as description, price, origin, shelf life and storage location.
Proponents of the technology say RFID technology will progressively replace existing bar codes. Unlike bar code labels these “smart” tags do not require a line of sight reader or scanner, and can therefore communicate directly with other objects – and without human intervention.
Ironically, retailers have traditionally been the drivers of this technology with mega-chains such as Wal-Mart in the U.S. and Metro in Europe implementing the technology to increase visibility into the supply chain, tracking everything from jeans to jelly.
Asset control, asset tracking, and the need to increase supply chain clearly propelled the RFID market in the last decade, enabling retailers to “see” the movement of products from the pallet in the distribution center, to the shelves in the store, to the shoppers’ baskets.
Each step of the way “smart tags” have allowed for better replenishment decisions, enabling retailers visibility into their inventories and sales.
But the RFID smart tag solution is not just a solution for retailers. Other industry sectors — including the public sector — are moving ahead on approaches that reinforce the growing importance of RFID in all things wireless.
More retailers (not just the major chains) are exploring RFID solutions to track and trace products. Law enforcement authorities are implementing RFID schemes to detect and prevent counterfeiting. The financial services industry is exploring ways to harness RFID (coupled with NFC) to design digital wallets.
Take a closer look at the use cases and scenarios and you’ll see that they all share one common interface: people using an NFC-enabled phones can participate in these experiences.
With it they can:
- Explore information on the product (track and trace)
- Verify that a Prada bag is authentic (counterfeiting)
- Receive an offer on the product (wallet)
If retailers design their back room inventory systems to allow for shopper-side access, then every product with a serialized RFID tag would also pave the way for a smart(er) shopping experience. By simply tapping the RFID tag with their phone, shoppers could open a browser window to access product information, product authenticity validation and jumpstart the all-important brand engagement that is the end-game of any interaction. Thus, we move from efficiency to lasting customer engagement in the form CRM,
All this is without downloading a mobile app, QR code reader or even texting.
It’s not rocket science
In a world where the retailer needs to count clicks to commerce, using existing merchandising solutions such as RFID and NFC can pay dividends. They allow retailers to provide for simple shopper engagement and accelerate the path-to-purchase.
But first CIOs and CMOs need to sit at the same table (and be on the same page).
Once they work out a strategy to hand off product information and data from the enterprise to the shopper, then they can move beyond track and trace within their premises to engagement far beyond the boundaries of the enterprise.
The technology is mature and the CIO is already developing a data repository to store events associated with uniquely identified products and associated business information. Let the shopper into this repository and watch the results when shoppers have access to explore product information at the tap of their phone and participate in the commerce they drive.