Who knew Pokemon characters would prompt millions of consumers to teach themselves augmented reality? Or that ride sharing would create a new kind of convenience?
For retailers trying to determine what everything from server farms to geofencing means to their business, the temptation to launch into multiple digital projects can be tremendous.
But to what end?
“Everyone’s gotten into the pool of creating a digital strategy,” says Ed Freels, director of information systems for Honey Farms, Worcester, Mass. “We are evaluating too, asking ourselves, ‘Are we putting more feet on our [store] floors?’ ”
The people whose job it is to execute technology solutions often find themselves receiving imaginative, potentially delusional emails from top execs and marketing colleagues, typically stemming from the latest buzz around consumer-leaning technology. That doesn’t negate the importance of visionary ideas, but it poses the problem: How do you stretch your limited resources to new products, upgrades or full-blown reinventions? What makes the cut?
The nuts and bolts of any digital discussion starts with a company’s current IT infrastructure. For most, it’s what’s often called a base platform: the existing servers, office computers, software and point-of-sale (POS), plus the cables and digital pathways that connect and secure all of the above. Retailers in recent years have invested millions to tackle everything from scanning to computer-assisted reordering—costly solutions, but systems that effectively automate real-world tasks.
The next generation of automation seems to encompass what many retailers are calling “digital” projects—potentially customer-facing or involving transactional analysis—which must all sit on that existing base platform. Ed Collupy, executive consultant for W. Capra Consulting Group, Chicago, says extending that platform into the digital world means looking at “POS as a platform, how mobile and social-media platforms can be leveraged and, most importantly, how the customer experience should seamlessly flow throughout their journey and interaction with your total offer.”
With many of today’s digital opportunities springing from consumer-based trends such as the Pokemon Go phenomenon [CSP—Sept. ’16, p. 129] and mobile ordering and payment via third-party systems, creating a thoughtful digital strategy could be about several things:
- Orchestrating a customer’s digital relationship with the store.
- The “plumbing” and flow of data, analytics and relevant digital offers.
- Deciding to build off what exists or swap in new platforms.
- Evaluating digital offers for ROI and relevance going forward.
Freels of Honey Farms is taking a second look at the chain’s mobile app. Last summer, his app provider announced it was pulling out of that business. It created an opportunity, Freels says, to revisit the program and see if what they had really led to incremental sales.
“The question we have to ask is, ‘Are we going to double down with another [mobile-app] vendor, or do a deep dive and see if it has given us a return?’ ” Freels says. “How do you justify the spending and how do you tie the sale back to that mode [of communication]?”
In a time when potentially relevant new technologies seem to emerge two or three times a year, Freels says finding a guiding mantra is important. For him, security is a primary focus.
“We’re really concerned with being able to keep up with the threat profile and reduce risk as best we can,” he says. “But every five years you have to think about replacing registers, firewalls, equipment. As those things come up for replacement, you have to ask, ‘Is there a smarter way to run your business?’ ”
To that end, he’s not sure that anything new in the market will affect his core business: “We could buy a new scanner, register or app, but will that help us sell more gas or more Snickers bars?”
That said, Hubert Williams, vice president of technology and development for Maverik, North Salt Lake, Utah, believes core IT platforms are changing. They’re moving away from “monolithic software solutions and more to platforms where solutions can be developed on them.”
Cloud solutions, he says, are increasingly more affordable and accessible both in terms of solving store-specific needs and creating tangible efficiencies. Companies such as Salesforce, San Francisco; SAP, Walldorf, Germany; Oracle, Redwood City, Calif.; and Microsoft, Redmond, Wash., have customer-relationship management (CRM) software that Williams says “have their own app stores or micro solutions.”
However, Williams cautions people to thoroughly evaluate prospective providers, because some may not have the scalability they promise. “When you want to expand, you want to make sure they’re not just hosting your hardware. Can they spin off capacity or provide capability as needed?” Williams says. “If you go with the likes of (Microsoft’s) Azure or AWS (Amazon Web Services), those are true cloud platforms.”
Making myriad decisions to develop an overall strategy may seem daunting, but Williams says putting a process in place is critical. He calls his company’s go-to plan “governance,” whereby IT staff are connected to a committee of liaisons who represent all departments. The “engagement structure” allows the group to ask questions, voice concerns and make technology requests.
“The paradigm we use is ‘Leverage before you buy, buy before you build and build it to where there’s advantage or because you have no other option,’ ” Williams says. “It’s our strategy amid the torrent. You only have so much energy, so which [project] will get the most bang for the buck?
“Sometimes success is doable but hard to do,” he says. “The cost in labor and opportunities may not be worth it.”
He offers the example of market-basket analysis, which can yield great information.
But creating specific queries for a particular demographic that buys a fountain drink with beef jerky may prove too much to compute.
“It can become a very resource-intensive activity,” Williams says.
A retailer’s digital strategy can include a vast range of projects, both Williams and Freels say, but specific projects—both beneficial and challenging—come to mind for both.
For Williams of Maverik, the idea of data sharing with multiple third parties bubbles up. “The distribution of data in various forms to analytics providers, marketing providers, merchant providers, distributors who want to know data for supply-chain purposes—providing that huge data set to different providers is a problem I’m seeing,” he says.
For Freels of Honey Farms, digital is starting to mean location-based marketing.
“We’re really interested in the Internet of Things and how that ties both into our customer and geotagging,” he says. “If someone has our app and GPS on their phone and they’re [coming to] our store, can they place an order on the app and the order shows up on the register as the customer enters the parking lot?”
Another way to use location data is to find out where people are spending time in the stores and put relevant, basket-tied products in those areas. “We’re able to look at numbers not just post-sales, but how people utilize our facility in terms of their geography,” Freels says. “That paints a whole new way of how we market to customers.”
Where Does Digital End?
The word “digital” can encompass anything electronic or involving the transmission of digital signals. Ed Freels of Honey Farms has narrowed his digital strategy to a specific range of technologies:
Digital definition No. 1: in-store.
When a customer walks into a store, a digital strategy could mean menu items and suggestive selling on digital displays, and monitors at the register that upsell items tied to a loyalty program.
Digital definition No. 2: online and mobile.
The many ways customers can shop or interact with the brand via mobile app or social media.
What digital is not:
To Freels, a loyalty program is not a digital strategy; he sees it as more of a payment transaction tied to a discount.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.