Real innovation: less on the web, more on the high street

Real innovation: less on the web, more on the high street

As pure play e-commerce declines, bricks and mortar is seeing an upsurge in clever innovation that combines retail and internet expertise.

A customer walks into a store and sees a product that she is interested in buying. Quick as a flash, she pulls out her iPhone to view the very same product online.

The retailer groans. He is a victim of showrooming, which Wikipedia describes as “the practice of visiting a shop or shops in order to examine a product before buying it online at a lower price”.

Except here’s the thing. Showrooming is a myth. In actual fact, the best thing that can happen from the retailer’s point of view when a customer walks into their store is that he or she reaches for a smartphone.

Pure play digital e-commerce may be disappearing – muscled out by Amazon and the punishing costs of last-mile fulfilment – but that doesn’t mean digital can’t work. Smart marketers are realising that, used in conjunction with stores, digital is nothing but good news.

The reason is simple – the majority of sales are now touched by digital before the customer is in the store:

  • If you can get someone to touch digital before they go into your store, conversion rises 20%, according to a US study.
  • If you can get someone to touch digital before they come into the store and pull out their smartphone once they are there, sales rise 40%.
  • When the customer glances at their smartphone and realises they are getting the product at a decent price, and read user reviews or view video tutorials, they start buying more.
  • Sephora, Clarins and Estee Lauder all have good content and higher-than-market conversion rates.

So how do you get there? In terms of digital, the real trick is to link your brand’s content with its commerce.

In 1997, Levi’s was the largest clothing manufacturer in the world, doing US$7bn worth of sales.  Four years later, it was down to US$4bn in sales. Every four weeks they were firing between 800 and 1,200 people. That is a lot of pain.

Levi’s made plenty of mistakes, but one of the most serious was separating content and commerce. They had amazing, memorable commercials but then stacked their jeans eight feet high in budget Army and Navy stores, killing the effect all that brand building had worked so hard to achieve.

Soon enough, another clothing company came along that ate their lunch – going from $2bn to $8bn annual sales in the same time period.

The Gap had fantastic broadcast campaigns that they repurposed in-store. They built content into their commerce, with smart stores, in-store fragrances and well-trained staff.

In terms of retail, The Gap’s heir is Apple. Between their stores, mobile and – their secret weapon – details of 850 million credit cards, Apple has removed all the friction from buying its stuff. No wonder its beautiful flagship store in New York City alone generates half a billion dollars in sales every year

I know, I know, Apple is perfect in every way. But other brands can do it too. Beauty brand NYX allows customers to play around with iPads in its stores, where they can scan items to see user-generated reviews. They have realised stores are great vehicles for online marketing, and user-generated content and other online marketing tools can be great for use in-store.

Home Depot’s mobile site lets customers search inventory in store, search for a product by simply taking a picture of it on their smartphone, and even lets shoppers replace a measuring tape with their shoe size. Content and commerce, hand-in-hand.

A few years ago, clothing company American Eagle was in the doldrums. But, in 2013, it hired a chief digital officer and opened a tech centre in San Francisco. In 2014, they introduced ship-from-store, opened a state-of-the-art fulfilment centre, then rolled up e-commerce and retail reporting, breaking down silos so everyone worked together. In the first half of 2015, American Eagle reported sales growth of 11%.

It can be done.

Andy Pemberton Director Furthr Ltd
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