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January 06 2014

The return of local retail?

About a month ago, IBM published its five tech predictions for the next few years. They’re mostly the sort of unexceptional things one predicts in this sort of article — except for one: the return of local retail.

This is a fascinating idea, both in the ways I agree and the ways I disagree. First, I don’t think local retail is quite as dead as many people thought. Now that Borders is no longer with us and Barnes and Noble is on the ropes, I see more activity in local bookstores. And the shopping district in the center of my town is full; granted, we’re talking reasonably prosperous suburbia, not Detroit, but not too many years ago there was no shortage of empty storefronts.

What surprised me was the reason IBM thought local retail would return. They observed that many of the same techniques that Amazon and other online retailers use can be applied locally. You walk into a store; you’re identified by your cell phone (or some other device); the store can look up your purchase history, online history, etc.; it can then generate purchase recommendations based on inventory; and send over a salesperson — with an informed view of who you are, what you’re likely to buy, and so on — to “help” you.

Well.

I like walking through local stores to see what’s there, and I even buy stuff in local stores (though, no doubt, not as frequently as they’d like). And I almost never want sales staff coming over to “help” me. I’ll ask if I need help. And I’d certainly find it more than creepy if salespeople came over and already knew what I was looking for, and made helpful suggestions about what I’d like to buy. I’d be more likely to leave than to give in to the upsell.

Some years ago (when Amazon was only a gleam in Jeff Bezos’ eye), I observed that local retail was dying in part because local retailers had given up. Stores didn’t sell what you needed, and customer service was awful. I remember setting up my home office and having trouble finding a business supply store that would sell me a desk or a chair — or, for that matter, a 3-hole punch or a case of copy paper. They had plenty of stuff on the shelves, but it was mostly greeting cards. (Why greeting cards in office supply stores? Don’t ask me…) And yes, “awful customer service” includes the obnoxious salesperson who won’t leave, even when it’s clear the store doesn’t have what you want. No wonder Staples ate their lunch. Staples will even carry the case of copy paper out to the car for you.

If there’s going to be a revival in local retail (and I believe there is), it won’t be by becoming more intrusive and obnoxious. It will be by getting back to basics: well-stocked stores that have merchandise that meets customers’ needs, and good service to help customers find what they want without being intrusive, to handle issues like returns efficiently and politely, and even to haul your stuff out to the car.

Unfortunately for IBM, the retailers won’t need Watson to do that.

January 24 2013

Commerce Weekly: Analytics for people, the next big thing in retail

Here are a few stories that caught my attention in the commerce space this week.

New trend in retail customer tracking: Smartphone Wi-Fi

my wifi hotspot is cooler than yours, on Flickrmy wifi hotspot is cooler than yours, on FlickrDan Tynan posted a two-part series (here and here) on IT World this week looking at growing trend of retail Wi-Fi tracking — retailers keeping track of you via your smartphone as you shop, much like online retailers keep track of your movements across the Internet. Tynan explains how they’ll do it:

“When you come within range of a properly configured Wi-Fi access point, it can record the wireless MAC address of your phone — a unique 12-digit number. Every time you pass by, that AP can log that number. … Think of it as Google Analytics for people; instead of measuring Web traffic, they’re measuring foot traffic.”

Tynan takes a look at Euclid Analytics’ software, which works with tracking device systems to help stores gather data on customers, from which aisles they spend time in to how many times they’ve visited the store to which locations they frequent. “[T]hey can even track people who walk by the store every day but never go in,” Tynan writes, “or [know] if more people enter after a window display is changed.” He notes that Euclid gathers data anonymously and in aggregate, storing the MAC address “in a one-way hash, so nobody can go backwards and figure out your actual MAC address,” but that the minute a shopper swipes a credit card, all anonymity is lost, at least as far as connecting a particular phone to a particular purchase.

Once an identity is linked to a MAC address, “all kinds of fun things can happen,” Tynan reports — retailers could text you as you walk by their stores in the mall and offer discounts or coupons to lure you inside, connect your in-store data to your online data for even deeper analysis, or even sell your data to someone else. He explores some of the privacy concerns and scenarios in his first piece and talks with Euclid Analytics director of marketing John Fu for some context in his second piece. Fu says their technology is — purposefully — not as Big Brother as it sounds:

“There are some powerful and potentially scary things you could do with this data if you wanted to, but I want to clarify that we are not doing any of those things. We anticipated these scenarios and came up with ways to prevent them from happening.”

In addition to creating a one-way hash for a customer’s MAC address, Euclid requires retailers to contractually agree “to not combine the behavioral data they collect with information they have about an individual’s identity,” and the company also “salts its data with a ‘statistically insignificant’ number of fictional customers” to further prevent customer identification, Tynan reports. He takes an in-depth look at some real world examples of Euclid’s use in retail locations and their efforts to protect consumer privacy, but also notes that “Euclid is only one of a half dozen companies using different techniques to help retailers track shoppers, most of which don’t bother to tell you.” You can read his complete report at IT World — part one, part two.

Payleven gets investment boost in pursuit of Square-like success

Europe’s Square-like mobile payments platform Payleven announced a new funding round — and a new mystery investor — this week. Ingrid Lunden reports at TechCrunch that “neither the exact funding figure, nor the investor, have been disclosed — except to note that the value is in the ‘high single-digit millions’ of dollars, and that it is ‘largely’ from the new backer.” Along with the funding round announcement, Lunden reports, Payleven also confirmed reports of a group of backers who invested “double-digit millions” last year: New Enterprise Associates, Holtzbrinck Ventures, ru-Net and Rocket Internet.

Lunden says Payleven, which has launched in Germany, the Netherlands, Italy, the UK, Poland and Brazil, still hasn’t disclosed its number of users, but a company spokesperson told her the new funding will be used to build out current markets and to continue Payleven’s international push.

Back stateside, Fast Company’s Austin Carr took a look at what’s making Square successful in the U.S. — and now Canada. Carr writes that part of Square’s success stems from an atmosphere of collaboration geared toward problem solving and a blurring of the lines between engineering and design teams. Square CTO Bob Lee told Carr:

“We’re not just a design company; we’re not just an engineering company. We’re strong in both areas — we need to be. … From an engineering perspective, design is not just about how something looks, but about how something works. We look at reliability, robustness, and performance as features of the design.”

Carr takes an in-depth look at how the company’s teams foster a high level of collaboration through weekly town square meetings, “where everyone from engineers to PR workers can show off their latest projects;” through the design team’s weekly creative reviews, where all work is pinned up and presented gallery-style for all designers to peruse and comment; and through internal education. He also looks at Jack Dorsey’s leadership style and how he manages to make credit card processing, receipts and point-of-sale systems “whimsical and interesting.” You can read Carr’s full report at Fast Company.

NFC’s real role in mobile commerce: Consumer engagement

Mark Bonchek argued this week at Harvard Business Review that the potential for NFC technology in mobile phones goes way beyond payments. “It has the potential to, as no technology before, bridge the gap between virtual and real,” he writes. Bonchek offered up the example of Kraft Foods’ pilot program, which tested consumer responses to an NFC marketing campaign:

“In select grocery stores, small signs were placed on shelves in front of Kraft cheese and Nabisco cookie brands. The signs invited consumers to get recipes, download a mobile app, or share with friends. Consumers could either tap with an NFC-enabled device or snap a QR code — up to now the main technology for linking mobile devices to physical displays. The results were quite remarkable. People were 12 times more likely to tap than snap. Considering that the ratio of QR to NFC-enabled phones is currently about 10 to 1, this means tapping was 120 times more engaging than snapping.”

The level of engagement wasn’t simply the result of novelty, Boncheck reports. Data from the pilot showed that 36% of the people who tapped the sign “converted it into action, whether saving a recipe, downloading the Kraft app or sharing with friends, etc.” Boncheck also notes that consumers who tapped the sign spent 48 seconds engaged in the experience, as opposed to the standard five to 10 seconds of normal brand engagement at the shelf.

Boncheck looks at several advantages NFC wields over current technology and notes that though it won’t happen overnight, “the ability to make the real world clickable holds great promise. … Taps are the new clicks.” You can read his full report at Harvard Business Review.

Photo: my wifi hotspot is cooler than yours by woodleywonderworks, on Flickr

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November 29 2012

Commerce Weekly: Holiday cyber spending breaks records

Here are a few stories that caught my attention in the commerce space this week.

Holiday weekend sees huge increases in online and mobile spending

The big news this week is the cyber spending that happened over the holiday weekend. Starting with Thanksgiving Day, online shoppers found time between football downs, turkey, stuffing, and pie to spend $633 million at online retailers, according to Internet analytics company comScore — a 32% increase over 2011. Black Friday, too, saw a sizeable increase in cyber shopping with $1.042 billion in online sales — 26% over 2011 and the heaviest online spending day for 2012, at that point. Cyber Monday stole the show, though, with consumer online spending ringing in at $1.46 billion, making it the biggest online spending day in U.S. history, according to comScore.

IBM Cyber Monday ReportIBM Cyber Monday Report
From IBM’s Cyber Monday Report — click here for the full report (PDF).

More holiday spending than ever occurred via mobile devices as well. Sarah Perez reports at TechCrunch that a report from mobile commerce startup Branding Brand showed a 221% increase year-over-year in smartphone spending (not including sales via tablets) on Thanksgiving and a year-over-year increase of 128% on Black Friday. According to IBM’s Holiday Benchmark data, mobile purchases as a whole exceeded 16% on Black Friday, up from 9.8% in 2011. And according to IBM’s Cyber Monday Report (PDF), more than 18% of consumers visited retail sites via mobile devices on Cyber Monday, a more than 70% increase over 2011, and mobile sales approached 13% — a year-over-year increase of more than 96%. Of these mobile shoppers, 58.1% used smartphones, compared to 41.9% who shopped via tablet, according to the report.

Luke Wroblewski has additional holiday mobile shopping highlights from Thanksgiving Day and Black Friday in his Data Monday blog. A few tidbits include:

  • PayPal saw a 164% increase in the number of its mobile global customers on Thanksgiving Day — 2.5 times the mobile payment volume it booked on Thanksgiving Day 2011.
  • Mobile traffic on Black Friday has grown from less than 1% in 2009 to 24% in 2012.
  • Black Friday online shopping via mobile devices was led by the iPad at 10%, the iPhone at 8.7%, and Android devices at 5.5%

Put away that wallet — pay with your fingertip

Forget pulling out your wallet for a credit card or your mobile wallet to pay with an app — Discover wants to simplify the entire payment process and enable you to pay with your fingerprint. Becky Yerak reports at the Chicago Tribune that the credit card company plans to begin a pilot program to allow 300 to 350 of its employees to pay for lunch in the headquarters’ cafeteria via fingerprint payment. The system isn’t completely equipment-free for the consumer, however. Yerak reports:

“Each [participating] employee will also receive a key fob with a chip that includes information about their individual credit-card account as well as their fingerprint. To complete a purchase, the user will place his or her finger on a fingerprint reader near checkout, with the key fob kept nearby, such as in a pocket or purse, for the transaction to go through.”

James F. Thompson notes at PRNewser that the public may be wary of connecting such a personal part of themselves to payments, but he says the public eventually will come around if Discover drives home the superior level of purchasing security the new technology will provide — after all, the actual human purchaser, not just a credit card, must be present to complete the transaction. This could spiral into a whole new dimension of crime beyond purse snatching and pickpocketing, but the potential is there to revolutionize payments beyond anything mobile wallets have been able to achieve thus far.

The store mannequins really are looking at you

One could argue that mannequins are inherently creepy, but Italian manufacturer Almax has taken the creepy factor to a whole new level. Liat Clark reports at Wired UK that the company is fitting mannequins with facial recognition software, allowing merchants to track their customers’ ages, sex and race. CEO Max Catanese explained to Clark how the EyeSee mannequin works:

“It’s a system that’s able to give demographics about the person passing in front of it. It’s based on an algorithm. The algorithm analysed three million faces before going to production and now the number, as well as the accuracy, is rising. Once [companies] read the data, they can implement strategies inside the stores to boost sales.”

According to Clark’s report, the mannequins already are in place in the stores of five global brands in Europe, the U.S. and Canada. Though merchants are finding the additional shopper data useful in arranging and staffing their stores, the technology raises the obvious question of privacy. Data protection and privacy law specialist Stewart Room told Clark “[t]he capturing and processing of images of people is right in the middle of the Data Protection Act” and that, at least in Europe, this type of marketing profiling will need to be consent-based.

Catanese argues that there are no real privacy concerns, noting that the stores have security cameras recording customers anyway and explaining that the mannequins don’t record or store images. Still, it will be interesting to see how this sort of data gathering and profiling will play out with consumers and lawmakers. After all, as Clark points out, the Irish Data Protection Commission forced Facebook to remove its facial recognition tagging system in European markets after an Austrian law student complained.

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