Reversing the 'retail funk' with in-store engagement

By Bill Davis

JULY 22, 2014

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For much of the last year or so, traditional brick & mortar retailers have been mired in a slump. Not only was last holiday season the toughest in several years, the consumer discretionary sector, which includes retail, was the only one of the 10 macro S&P sectors to be in the red for the first half of 2014

As a result, retail is widely perceived to be in a funk.

To change their fortunes, retailers are being encouraged to embrace omni-channel. Why? I believe it is because the majority aren't viewed as being able to compete against the pure play e-tailers as:

1. E-commerce is not in their DNA like it is for Amazon, eBay and others;
2. The technical skillsets required to excel in e-commerce are not readily available and there is already fierce competition for those resources amongst the digital leaders, and;
3. With more than $260 billion in online sales in the U.S. alone in 2013, it's too late to put the lid back on Pandora's Box.

As such, retailers need to find ways to leverage their historical strength, the store, which is now often viewed as a weight around their neck.

Over 90 percent of retail sales still occur in-store. If retailers can push back against their e-commerce counterparts, it should help them stop the bleeding. And leveraging an emerging channel like mobile, or m-commerce, also factors here. The ability to identify that a customer has entered the store and to be able to engage them via their mobile device helps retailers get moving on an omni-channel initiative whose focus is to enrich and improve store performance.

The challenge most retailers face is determining which in-store location technology to use as there are several emerging and each has its pros/cons.

Here's an incomplete list:

• Bluetooth Low Energy (BLE) Beacons
• Wireless Fidelity (WiFi)
• Global Positioning System (GPS)
• Indoor Mapping
• Mobile Wallets (e.g., Google Wallet, Passbook, etc.)
• RFID/Near Field Communication (NFC)
• Magnetic Field Variations
• Visible Light Communication (VLC)

Given the variety of technologies available, it would appear there won't be a single solution that dominates, although BLE Beacons are off to an early lead. That being said, I would suspect that in a few years there will be a shake-out, no doubt influenced by retail technology solution providers like Apple, Google, IBM and Oracle.

The ability to engage consumers in-store via smartphones (with their permission, of course) so they are no longer invisible has a tremendous upside. But for customers to participate, there has to be something in it for them. Retailers have to give something to get something. But knowing a loyalty customer has crossed the threshold without having to wait for them to approach a register seems like a great place to start. Making suggestions to consumers based on their location and past purchase history as well as giving them incentives seems like the logical evolution.

Brick & mortar retail needs to reinvent itself to compete with the e-commerce threat, and while the initial stage of price matching and consistent prices across sales channels is in process, it's not enough. Traditional retailers need to go on the offensive where they have the advantage — and that means in their stores. Without this, it's my opinion brick & mortar retailers are going to continue to lose market share.