The Retail Battle Has Moved In-Store

<font face="Arial" size="3">Larry Danna, Infosys<

6/30/2010

As retail channels converge and social retail emerges as the next hot trend, the battle to acquire and engage consumers is moving into stores. Consumer packaged goods (CPG) companies are now jostling with each other to restore the fun and surprise of shopping, increase customer loyalty, and maximize consumer wallet share at the point of purchase.

Why, you might ask, is the action moving to stores? Here are some answers:

Shrinking wallet size: The recent economic meltdown has forced consumers to hold back on spends and turn to private labels. CPG companies want to win back customers through compelling brand interactions at the point of purchase.
Disintegrating mass consumer groups: With consumers organizing themselves into highly splintered special interest groups, CPG companies want to use technology to offer customers goodies like mobile discount coupons, product info, and comparative pricing, all at the shelf.
Growing number of touch points: The number of consumer touch points has grown exponentially with all of them influencing in-store purchases. According to IDC, in-store purchases influenced by online research are three to five times more than online sales. That's why CPG companies are leveraging social media to influence buying decisions in the store.
Evolving mobile technology: Smart phones and 3G have maximized the potential of the mobile phone. CPG companies want to utilize capabilities like location-based services to make more targeted and relevant communication with consumers at the point of purchase.

You might have inferred by now that technology is going to play a pivotal role in helping CPG companies garner greater consumer wallet share. Whether it is social media, location-based services, or in-store technology, there is little doubt about the impact technology will have in the retail space.

Some of the in-store technology available out there includes store heat maps that tell store managers where shoppers are concentrated by tracking shopping carts; smart shelf pads with wireless sensors that track inventories to minimize stock-outs; mobile concierge services that can manage shopping lists and give consumers access to the best deals in real-time as they shop in-store; and perpetual checkout services that continuously ring in purchases as consumers buy items instead of having them stand in long queues at checkout counters.

When you synchronize all these technologies together, you get a solution that not only changes the way CPG companies interact with consumers, but also one that revolutionizes the consumer's shopping experience. Imagine getting a great deal on your favorite flavor of Haagen-Dazs on your mobile phone when you're walking down the frozen foods aisle. Serendipity, some might say, but it's something CPG companies can certainly aim for -- serendipitous sale.

However, there are some challenges that retailers will have to tackle if they are to make serendipitous sale come alive.

For starters, they will need to optimize analytics systems so that they function consistently across the enterprise and capture accurate and complete data. CPG companies will also need the right tools to measure ROI on in-store initiatives. In addition, in-store systems will need to be well-integrated to maximize benefits. Finally, and most importantly, the organizational structure will need to adapt to requirements of the technology. Not solely for technology's sake, but more to ensure that technology translates into competitive advantage.

For an industry that thrives on consumer impulse, technology equips CPG companies with the tools to shape and guide this impulse by providing the right information, at the right time, and at the right place -- in the store.