INSIGHTS AND PERSPECTIVES TO DRIVE COMMERCE

FROM CASHIER TO CONCIERGEPREVENTING THE STORE ASSOCIATE FROM BECOMING IRRELEVANT TO TODAY’S CONNECTED CONSUMER

AuGuST 2013

By David GeisingerRetail Business Strategy for eBay Inc.

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Contents

The Situation ..................................................................................................................................................................4

The hyper-connected consumer is in complete control ......................................................................................4

The little black book is gone. .................................................................................................................................5

Store associates are rapidly being relegated to grocery store-like cashiers. ....................................................5

Retailers and brands are suffering because of secondary commitment to customer service. ........................6

The Opportunity .............................................................................................................................................................7

Is it worth enabling and empowering associates? Absolutely! ..........................................................................7

Turning cashiers into personal concierges. .........................................................................................................7

Overcoming Obstacles to Empowerment ...................................................................................................................8

The Empowerment Solution .........................................................................................................................................9

The Seamless Retail Associate Platform....................................................................................................................15

Replacing the little black book into an all-in-one solution. ...............................................................................15

About the Author .........................................................................................................................................................16

References ...................................................................................................................................................................17

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THE SITUATION

The hyper-connected consumer is in complete control.

THIS ALWAYS-ON, ALWAYS-CONNECTED LIFESTYLE IS CREATING THE MOST KNOWLEDGEABLE AND EDUCATED CONSUMERS IN HISTORY.

If retailers do not act now to change the in-store experience to meet today’s consumer demands, they will, quite simply, not survive. Smartphone penetration in the U.S. will cross 50 percent in 2013 and is expected to grow to 70 percent by 2016,1 so today’s consumers have access to more information at the touch of a button than ever before. They can shop, compare products and prices, and pull information as they walk around the store. The truth is that 73 percent of customers believe they are more informed than associates,2 and only 10 percent feel they need to talk to associates about products at all.3 This always-on, always-connected lifestyle is creating the most knowledgeable and educated consumers in history, greatly raising expectations related to shopping choices, product availability and what constitutes an “acceptable” level of customer experience in stores. According to Deloitte’s

assessment of retailers current preparedness and vision for the future, 65 percent of retailers are barely meeting or are below the expectation for the in-store experience.4 These numbers are frightening and continue to get worse forcing retailers to address a very real challenge of how to enable their front-line ambassadors (the sales associates) with enough valuable information and tools to engage with today’s connected digital consumer.

Consumers believe they are more informed

than associates.2

Consumers feel they need to talk to associates about

products.3

Retailers are barely meeting or are below the expectation for the in-store experience.4

73% 10% 65%

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The little black book is gone.

Store associates are rapidly being relegated to grocery store-like cashiers.

ASSOCIATES ARE ON AN ISLAND WITH LIMITED ACCESS TO INFORMATION ABOUT THEIR CUSTOMERS, THEIR PRODUCTS AND THEIR OVERALL BRAND.

Back in the day when I was a sales associate, product selection was limited to the four walls of that retail store and associates were the go-to experts on a finite selection of merchandise. The consumer relied on the knowledge of store associates for guidance and education. And the successful associates used their great product knowledge to keep a “little black book” of their clients’ preferences in order to provide them paramount service, focused on delivering a unique personalized experience to their customers. This “clienteling-like” service was the lifeblood of the associate and was what separated the run-of-the-mill sales associates from the great ones.

Store associates are completely outgunned by today’s connected consumer. Associates are on an island with limited access to information about their customers, their products and their overall brand. How is an associate expected to engage and inform consumers when those consumers have more information at their fingertips than the associate? The answer is they can’t. Thus they engage only at the very end of the buying process like a grocery store cashier, enabling the transaction, swiping the credit card and sending the customer on their way. And with the way technology is evolving, even that role will become obsolete, rendering store associates extinct within the next decade at most.

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Retailers and brands are suffering because of secondary commitment to customer service.

Regardless of the type of retailer or brand, good customer service is now the exception as opposed to the rule according to consumers. Nine out of ten consumers (93 percent) surveyed say that companies fail to exceed their service expectations.5

Consumers are actually surprised when they receive good customer service. Even brands and retailers known for excellent customer service struggle to deliver it consistently.

The majority of retailers have fallen dramatically short on consumers’ higher expectations, and poor customer service can damage a company. Eighty-nine percent of consumers quit doing business with a company because of a poor customer experience.6

They don’t hesitate to tell others about it. In fact, 79 percent of consumers who had a negative experience with a company told others about it.6

Today’s shoppers who receive poor service can (and do!) share their experiences on social networks and review sites, irreparably damaging the brand. Social customers will tell an average of 53 people about a bad customer experience.5 Nearly a third research what others say on social networks and review sites.6 And with social communication being real-time, the global impact on a retailer can be swift and painful.

THE MAJORITY OF RETAILERS HAVE FALLEN DRAMATICALLY SHORT ON CONSUMERS’ HIGHER EXPECTATIONS, AND POOR CUSTOMER SERVICE CAN DAMAGE A COMPANY.

86 PERCENT OF CONSUMERS WILL PAY MORE FOR A BETTER EXPERIENCE.6

Once a hallmark of the retail business, excellent customer service is something that consumers are still looking for, expect and will even spend more for! The majority of consumers (86 percent) will pay more for a better experience.6 Retail customers are missing that level of personalized service and the interaction and engagement they used to get from store associates. Instead, they are finding apathetic, unknowledgeable cashiers. According to the 2,100 consumers surveyed for the 2012 RIS Shopper Experience Study, “store associates not easily accessible” scored four (on a scale of one to five) among things customers dislike about the store shopping experience.7 In a Deloitte Consumer Pulse study, more than half of consumers believe that the amount of sales help they receive in stores today has declined.8

Executives and managers must understand that it is on their shoulders to change the status quo. This isn’t going to magically solve itself. Retail executives and store managers need to provide their store associates with the right tools to help educate, inform and sell the right products to their customers. This has to be more than just clienteling, which simply focuses on the crème de la crème of customers. It must also focus on the brick-and-mortar shopping experience for all consumers and understand that this is still the only channel where consumers can get this one-to-one, personalized kind of service. The time to act is now!

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THE OPPORTUNITY

Is it worth enabling and empowering associates? Absolutely!

Retailers must strive to reinvent the traditional in-store experience, beginning with changing the way they think about store associates. That’s where it all starts. Associates are out there on the front lines interacting with the customers face-to-face and representing the brand. Retailers must enable and empower associates and teach them how to impact the sale. These store associates are not just cashiers, but are a retailer’s best brand advocates. Consumers in the store are a captive audience, attentive and engaged, and retailers aren’t seizing the opportunity to convert them into loyal advocates. It is essential that sales associates have the power to be great

brand ambassadors in order to keep up with the new hyper-connected consumer. Not capitalizing on this critical opportunity and failing to empower your associates to deliver the ultimate personalized experience will hurt your brand, your sales and push your customers to your competitors.

THESE STORE ASSOCIATES ARE NOT JUST CASHIERS, BUT ARE A RETAILER’S BEST BRAND ADVOCATES.

Turning cashiers into personal concierges.

Store associates must take on the role of personal concierges: well informed on your customer needs, products and market trends and able to make recommendations based on specific requirements of their shoppers. They require information at their fingertips in this modern retail environment, creating today’s little black book. There’s a breadth of information both offline and online that retailers and brands must make available to associates. This will have a direct impact on the consumer experience and impact sales.

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OVERCOMING OBSTACLES TO EMPOWERMENT

Legacy in-store technologies were not intended to provide elegant, intuitive and simple interfaces that enable associates to access tools while also engaging consumers. They may work to complete a transaction but they are absolutely ineffective in engaging a customer. Aggregate and deliver this information in a timely and easy-to-use mobile format so the associate can interactively leverage information in the dialog with the consumer on the floor versus behind the register.

Define and acquire the necessary information to make your associates well informed across the brand and consumers. This is not a simple task given the disparate databases across multiple channels and retail systems within the typical retailer’s enterprise.

Focus on training and goal alignment. Technology driven products always underperform when organizations fail to gain executive alignment and in-store training. This will all come down to training of the associates and the day-to-day leadership of the store manager. Constantly provid-ing assistance in leveraging these toolsets and providing a clear process and workflow will make adoption of such a solution significantly faster and more successful.

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THE EMPOWERMENT SOLUTION

While there are point-of-sale solutions in the market that define themselves in simply the clienteling genre, eBay Inc. takes a holistic view, identifying six sections that make up the chapters of the future generation of the little black book, allowing associates to provide an engaging, personal one-on-one experience for the connected consumer in the store and moves the associate from behind the register to in front of the customer.

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Consumer

Store associates require access to customer data across all channels--a 360-degree view of the customer--to provide a tailored experience that matches customer shopping and marketing expectations while satisfying their chosen privacy preferences. In doing so, they can make more relevant recommendations to the customer based on purchase history, preferences and demographics. They need to know what the consumer likes and dislikes, what they purchased before, and be able to make recommendations from past purchases, as well as cross-/up-sells based on what’s being purchased today. Currently, 85 percent of retailers cannot customize a store visit9 due to lack of information about the customer. Retailers must be able to recognize when frequent shoppers enter their store. Among retailers surveyed, 76 percent did not know when a specific customer was in their store.9 With increasing adoption of mobile check-in process and geo-location based services, this will dramatically improve on in-store customer identification within the next 18 months.

Currently, associates have very limited information about their customers, if they have any at all. They might remember them based on their past visits, but the recollections are typically limited to the last sale. At best, the retailer may have a traditional clienteling solution. Forrester Research defines clienteling as “Using data about an individual customer’s buying habits and preferences during interactions in the store, typically applied in high-end or luxury retail stores.” Customers are demanding more than just

85 PERCENT OF RETAILERS CANNOT CUSTOMIZE A STORE VISIT.9

CUSTOMERS ARE DEMANDING MORE THAN JUST CLIENTELING, THEY WANT RELEVANT DIALOG AND A PERSONALIZED STORE EXPERIENCE.

clienteling, they want relevant dialog and a person-alized store experience. Two-thirds of consumers surveyed by Accenture are receptive to having their favorite brands and retailers track their data in return for a more personalized shopping experience.10

The sooner retailers recognize the need for personalized store experiences, the sooner a retail renaissance will occur in-store! And this must extend beyond the stores. About half (46 percent) of shoppers reportedly would buy more from retailers that personalized the shopping experience across channels.11 Associates and retailers must continue the dialog and send personal emails when there is a new product or invite them to an exclusive event. They should dynamically update an individual’s web experience with in-store data and take a proactive communication approach via mobile technology.

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Product

Supply

Consumers want more product information than they can find in store aisles, and they are coming armed with research. Surprisingly, shoppers who use smartphones in the store are more likely to look for product information than compare prices.12 In fact, 46 percent of shoppers have used their smartphone to get product information while in the store.13

Unfortunately, store associates have to rely on their own expertise, and the packaging and tag information to find answers to consumers’ questions. It is impossible for them to know their products inside and out off the top of their heads.

Store associates must have rich product information at their fingertips. Retailers must provide associates the access to full product data including ratings and reviews, product details, comparison charts, lifestyle imagery and size charts in order to provide consumers with fast, in-depth knowledge of their products.

SURPRISINGLY, SHOPPERS WHO USE SMARTPHONES IN THE STORE ARE MORE LIKELY TO LOOK FOR PRODUCT INFORMATION THAN COMPARE PRICES.12

Consumers go to store associates to find the product

they want and will go to a competitor if they do not

get it. Gartner states that on average, across all

types of stores, almost two-thirds of customers

indicated that they believed that having products in

stock was the factor that was most important in

defining a good shopping experience.14 Currently,

store associates only know the products in their own

retail store location, which typically is just a fraction

of what is available and more importantly what the

consumer has access to.

The current process for locating merchandise and

assisting customers in this effort is cumbersome,

time consuming, and simply put, frustrating. Store

associates require access to an endless aisle of

products, including all inventory beyond what is

available in the store, in real-time (whether it be ship

from store, store transfers, online, etc.) In addition,

store associates need to provide quick

recommendations if product is no longer available

or discontinued.

Breaking down the four walls of an individual store

inventory helps store associates immediately

address customer needs by leveraging the

combined stock of the entire company, as well as

potentially driving millions of dollars in lost revenue.

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55 percent would have made their purchase if a store associate could find another location with that item in stock.955%

68 percent of lost sales could have been recaptured if a store associate were able to order the item and have it delivered to the shopper’s home.9 68%

While these ship-from-store programs provide the necessary access to inventory, associate ordering is the critical link that allows store associates to capture an otherwise lost sale. Associates must be able to order from the online store or from another retail location, and have it ship for in-store pickup or directly to the customer’s home. Approximately 68 percent of lost sales could have been recaptured if a store associate were able to order the item and have it delivered to the shopper’s home. Another 55 percent would have made their purchase if a store associate could find another location with that item in stock.9

Omnichannel store integration solutions should be deployed to promote and enable in store associates to immediately address out of stocks and quickly deliver the product to the customer. Leveraging store assets is a powerful competitive weapon in today’s retail environment.

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Commerce

The Broader Retail Enterprise

With time being the ultimate commodity in today’s world, retailers would be doing themselves a great service to find a way to cut down on the wait time that consumers experience and deliver a more real-time checkout process that isn’t constrained by cemented point of sale systems.

Currently, checkout is inefficient. Customers don’t want to wait in lines at the register. Sales associates need to close the sale on the floor, a move toward frictionless commerce. They must be able to seamlessly process the transaction, via any tender

type, while engaging the consumer and be free to roam the stores and check out from the aisle. This gives consumers a fast, convenient, hassle-free experience.

SALES ASSOCIATES NEED TO CLOSE THE SALE ON THE FLOOR, A MOVE TOWARD FRICTIONLESS COMMERCE.

How are the individual stores and other retail

locations performing in the region?

Currently, data is being pushed down in a batch

process from corporate. These reports typically are

hard to read and very rarely do they provide the

associates with information that will allow them to

offer better service and sell more.

Store associates and managers should be

generating reports based on store performance,

product sales performance, store associate

performance, etc. In order to know what to promote,

they need to be able to know about which products

are trending, which are new products and which are

inventory closeouts.

In addition to elevating store cashiers to concierges, it is also important to empower store managers to become the store CEOs where they are armed with performance data and metrics so they can more efficiently run the business.

With the store CEO and store concierges in place, the store is now a staff of brand ambassadors that can bring value to the consumer. Eighty-two percent of store associates agreed that improving in-store communication between staff and managers would positively impact the consumer shopping experience.12 This number is huge. Why are retailers ignoring it? Listen to your associates!

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Buzz

What is the buzz on your brand in the social world? What are shoppers saying about your products and services in real-time? Shopping is a social experience. Technology is allowing an explosion of social behavior and the result is a huge impact on the shopping experience.

Studies show that 77 percent of consumers use ratings and reviews, 65 percent have shared a product with a friend on a social network and 26 percent have done so five or more times.15 Social networking sites do impact purchase decisions, for example, 69 percent of Pinterest users have found a product they purchased or intended to purchase.16 Significantly more consumers agree that Pinterest is a place to “get inspiration on what to buy” and “to keep up with the latest trends on things that I like” implying that curation is important, and comparing ideas with friends, or people with similar interests, is an engaging experience.16 Consumers trust the opinions of their peers and believe people who have used the products or have similar interests. Online consumer recommendations (70 percent) are the second most trusted source of brand advertising, second only to recommendations from people they know (90 percent).17

Currently, associates get this social information only if they read it on their own by going to the retailer’s Facebook, Twitter and Pinterest pages, and by reading some ratings and reviews on their products. They may also receive bits and pieces from store managers or rely on their own personal preferences, rather than what others are saying.

Social media lets store associates know what products are hot and should be recommended and what products are trending. For example, associates can inform customers that a certain product was just

featured on The Today Show, the number of times a product was pinned on Pinterest, the number of product image likes on Instagram, etc. Also, they can inform customers on what is happening with the brand in their local market (e.g., hot hiking destinations, new health diets), and events and sales in their local store.

Associates need access to all social information in real-time and have it summarized so they can be knowledgeable about the latest buzz on their products and brand to provide consumers with relevant recommendations and suggestions.

For deeper discussion on this topic, refer to eBay Enterprise’s point of view, The Social Experience: More Than Just a Marketing Channel.

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THE SEAMLESS RETAIL ASSOCIATE PLATFORM Replacing the little black book into an all-in-one solution.

The power of the eBay Inc. portfolio of technology solutions have brought back the concept of the little black book in modern terms. This solution is delivered in a mobile device with an easy-to-use, elegant, intuitive interface allowing associates to show their expertise to engage customers and close sales. Almost half (47 percent) of shoppers agreed they have a better experience when associates use technology to assist them, and almost 60 percent think associates could help them more if they carried tablets.9

There are many point solutions in the market, such as in-aisle checkout or clienteling, and many offered by legacy point-of-sale providers. They are complex, disparate systems that require big seven-figure investments that do not get used and do not empower associates. In addition, these technology driven products always underperform when not accompanied by executive alignment and training.

But that’s all changed as eBay Inc. has one elegant solution for store associates that provide a platform to access everything from training to commerce and clienteling to catalog. Our philosophy includes a strong integration of executive, technology and store teams working together to implement these strategies. eBay Inc., a global leader in mobile commerce, delivers these innovative technologies and expertise to retailers and brands in order to meet the demands of consumers today and into the future.

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About the Author

David Geisinger has a passion for driving value from the complex data generated by the omnichannel retail ecosystem. As head of Retail Business Strategy for eBay Inc., David is responsible for developing innovative solutions that drive customer acquisition, conversion and loyalty across established channels and emerging digital media utilizing the breadth of technologies and experience that eBay Inc. and its subsidiary companies have developed. David is currently leading the effort on an innovative Retail Associate Platform that addresses the opportunity for retailers and brands in this paper. If you wish to learn more, please contact David at storeofthefuture@ebay.com.

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References

1 “Worldwide Mobile Handset Installed Base 2012-2016,” Portio Research, November 2012. http://www.researchandmarkets.com/research/724qcc/worldwide_mobile

2 “Shoppers would rather use smartphones than consult store associates,” Accenture, Reported by Internet Retailer, December 2010. http://www.internetretailer.com/2010/12/06/shoppers-would-rather-use-smartphones-store-associates

3 “The Digitization of the In-Store Experience,” Forrester Research, February 2012.

4 “Transforming Retail: How to Improve Performance with Mobile and Digital Innovations,” Deloitte, 2012.

5 “Social Media Raises the Stakes for Customer Service,” American Express, May 2012. http://about.americanexpress.com/news/pr/2012/gcsb.aspx

6 “2011 Customer Experience Impact Report,” Oracle, 2012.

7 “2012 Shopper Experience Study,” RIS, June 2012.

8 “2012 Spring Consumer Pulse Survey,” Deloitte, March 2012.

9 “What’s Driving Tomorrow’s Retail Experience,” Motorola Solutions, July 2012.

10 “Today’s Shopper Preferences: Channels, Social Media, Privacy, and the Personalized Shopping Experience,” Accenture Interactive, November 2012.

11 “The Challenges of Cross-Channel Data Integration,” eMarketer, February 2012.

12 “How Smart Phones are Helping Create a New Generation of “Smart Shoppers,” Leo J. Shapiro and Associates, March 2012. http://www.ljs.com/insights/28-white-papers-a-articles/44-smart-phones-smart-shoppers

13 Briabe Mobile, 2011.

14 “Multichannel Retailers will Fail in their Multichannel Strategy if they Do Not Execute Strongly on In-store Customer Basics,” Gartner, July 2012.

15 “Social Commerce IQ™: Retail,” 8thBridge, December 2012.

16 “Pinterest vs. Facebook: Which Social Sharing Site Wins at Shopping Engagement?,” Bizrate Insights, October 2012. http://bizrateinsights.com/blog/2012/10/15/online-consumer-pulse-pinterest-vs-facebook-which-social-sharing-site-wins-at-shopping-engagement/

17 “Global Trust in Advertising and Marketing Messages,” Nielsen, April 2012. http://www.nielsen.com/us/en/reports/2012/global-trust-in-advertising-and-brand-messages.html

www.ebayinc.com | storeofthefuture@ebay.com

About eBay Inc.

eBay Inc. (NASDAQ: EBAY) is a global commerce and payments leader, providing a robust platform where merchants of all sizes can compete and win. Founded in 1995 in San Jose, Calif., eBay Inc. connects millions of buyers and sellers and enabled $175 billion of commerce volume in 2012. We do so through eBay, the world’s largest online marketplace, which allows users to buy and sell in nearly every country on earth; through PayPal, which enables individuals and businesses to securely, easily and quickly send and receive digital payments; and through eBay Enterprise, which enables omnichannel commerce, multichannel retailing and digital marketing for global enterprises in the U.S. and internationally. We also reach millions through specialized marketplaces such as StubHub, the world’s largest ticket marketplace, and eBay classifieds sites, which together have a presence in more than 1,000 cities around the world. For more information about the company and its global portfolio of online brands, visit www.ebayinc.com.