Startups and the Retail Opportunity

Designing Experiences That Work

Rich Bowen | Terry Logan

Denver Startup Week | September 18, 2013

Retail is Dead: Long Live Retail

Retail is Dead: Long Live Retail

• Overall US retail sales in August 2013: $381B USD• e-Commerce sales in August 2103: $22B USD

$360B spent in retail stores

Source: US Dept of Commerce April Trade Report (http://www.census.gov/retail/)

Influence Beyond Retail

Online to Online

Traditional Channels to Store

$5.0T $6.2T CAGR

-3%

8%

Online to Store

12% (11-19%)

Transactions by Channel of Influence – Total Retail

Sources: Forrester, Morgan Stanley, US Census

It is too difficult to measure ROI in a traditional sense against digital and eCommerce investment vs. a specific line of transaction data.

Omni-channel is not complicated, its Commerce.

Retail is Dead: Long Live Retail

• The essential dynamic is the interplay between retailers, CPG brands, and the consumer

• Knowing how these three constituencies effect one another will give you a competitive advantage when bringing solutions to market

Actionable Insight (Lean in here)

• Retailers rely on CPG brands (and the agencies that support them) to bring consumer-driven solutions to market

Who’s In Play?

The Playing Field: The Basics

• Retail decisions are influenced before store trips, at the shelf, and then reinforced post-purchase

• We define this as Pre-Tail, Retail, and Post-Tail

So Where’s the Opportunity?

• It’s all in providing value• Does value = $$$ ?

Personalization used to be inversely dependent upon the size of retailer - now in an unprecedented time they actually work in correlation.

Personalization is the Future of Retailing

Increasing choice

Increasing efficiency

Size of retailers

Personalization

• Small grocers• Neighborhood drugstores

• Supermarkets• Super Centers• Chain drugstores

• Localization• Personalization• Customization

Transactions become de-coupled from the retail experience1.0

2.0

3.0 4.0

• Specialty shops• General store

1880’s 2014+

Retail is Evolving

Language Consumer Behavior Retailer Enablement

Multi-channel Consumer shop across different channels which function independently of one another

In-store, e-commerce, call-center channels function in technology and operational silos

Cross-channelSame consumers shop across channels and perceive these channels as part of the same

brand

In-store, e-commerce, call-center and mobile channels are connected through integration of

varying sophistication and reliability

Omni-channel Consumer does not perceive channels at all, simply a brand

All channels served by common set of technology services, single set of data, and

visibility beyond the individual retailer

Shoppers Depend on Different Tools to Meet Different Needs

Locate a Store72%

Look up/Compare pricing66%

Look up product information58%

Check out72%

Look up product information66%

Look for coupon/promotions65%

Look up product information66%

Look up/Compare pricing61%

Check user ratings/Reviews57%

How?

• Provide the right experience at the right time• It’s not enough to focus on features. Why not?

“If I had asked people what they wanted, they’d have said faster

horses.”

-Henry Ford

“It’s really hard to design by focus groups. A lot of times, people don’t know what they

want until you show it to them.”

Retail? Think Mobile First

• Do we need to talk about mobile device penetration rates?• (We hope not)

What Today’s Shoppers Rely On:SHOPPERS RELY ON MULTIPLE APPS TO MEET THEIR NEEDS

28NEXT-GEN RETAIL: MOBILE AND BEYONDº 28

Mass online retailers

Barcode scanners

Coupon or deal services

P2P marketplaces

Specific store brands

Price comparisons

Consumer reviews

Which types of shopping apps have you downloaded?

61%

48%

48%

42%

38%

37%

22%

Shoppers Expect Mobile to Improve Their In-Store Experience

SHOPPERS EXPECT MOBILETO IMPROVE THEIR IN-STORERETAIL EXPERIENCES

NEXT-GEN RETAIL: MOBILE AND BEYONDº 20

O!er Expertise, Not Just InformationShoppers are already using their mobile devices to look up product infor-mation, run price comparisons, and even make online purchases while shopping in a store. Retailers have an opportunity to leverage these behav-iors by providing the information themselves that people are already look-ing for—or don’t even know they want yet. With mobile, retailers can o!er people the expertise that traditional, face-to-face customer service pro-vides, but in a more personalized, real-time way. "is might include an app that recommends other items in a store that would pair well with a speci#c piece, or one that already knows your personal preferences and provides a list of products (available in-store) based on that. Seventy-nine percent of shoppers are interested in the possibility of having digital content—product recommendations, demo videos, virtual “try on” simulations, and so on—delivered to their mobile phones while shopping in a store. In fact, 77% of dual owners have already used or would be interested to use their tablets while shopping in a store.

33%Yes

44%No, but I might be interested to

23%No, and I probably

wouldn’t be interested to

HAVE YOU EVER USED YOUR TABLETWHILE SHOPPING IN A STORE?

*Data displayed for tablet owners only.

77% of shoppers are interested in the possibility of having digital content (e.g., product recommendations, videos, simulations and so on) delivered to their mobile phones while in-store.

People Feel:

How Do We Get From...This To This

Focus on Outcomes

designing around human-focused outcomes uncovers empathetic cues

Outcomes, Looking Backward, Tell Stories

the happy user gives substantial guidance to successful digital product design

The User-centered Design Process in Eight Easy Steps

-Build user personas from demographic and psychographic data-Write stories that begin with pre-conditions and move to post-conditions-Identify key points in the story (ask yourself this question: Were I to illustrate my story, which moments would make the most sense?-Sketch those interactions (screens, human interactions, etc)-Iterate on the screen interactions-Prototype the sketches-Iterate on the prototypes-Build, test, rebuild

Design ResourcesThese three books provide a quick read for designing, and building, great digital products:

Mobile First, Luke WroblewskiTapworthy, Josh ClarkDesigning for Emotion, Aaron Walter

What Comes Next?

• Lean in to trends, consumer insights, and technologies• Apply a user-centered design process• Iterate, and iterate some more

Mobile “Future Requests” For Physical Retail

*Data represents the percentage of people who would be interested in each o!ering (n=909).

94% Compare products

79% Watch demo videos

87%

79% Virtually “try on” clothes

72% See if items’ colors match

86% Be alerted when near a store with sought-after items

92% Tap “smart” posters for coupons

95% Self-scan items for check-out

Access store maps to locate products

82% View similar products bought by others

79% Receive a list of a store’s most popular items

The Big Win?

• Payment & e-Wallets: Earning a place inside the consumer’s wallet dominates the conversation among huge players in the space (Visa, AmEx, Walmart, Walgreen’s, Google, and the list goes on)