Vaughan Reed: Why physical retailers still have the upper hand

Vaughan Reed, managing director of web design company Labyrinth Solutions on how technology can make traditional retailers better than online rivals.

What many traditional retailers fail to see is that the only thing standing between them and getting the upper hand on their virtual online counterparts is technology, and embracing what it can add to a customer's total retail experience.

The battle between traditional brick and mortar stores vs. the growing number of virtual online retailers (e-tailers) has been raging on through the media for several months now. First there was the push to charge GST on items purchased from offshore websites in an effort to level the playing field between offshore e-tailers and our local retailers who immediately have to add 15 per cent to their baseline cost.

Then we were hit with news of a potential merger between the David Jones and Myers department stores due to their inability to effectively tackle the dotcom era of online retailing. Should the merger go ahead it will likely cut operating costs by effectively halving the number of stores. It will no doubt also improve their collective buying power, but unless they adapt and compete head on with e-tailers they are only delaying the inevitable.

The point is that what many physical retailers fail to see is that the only thing standing between them and getting the upper hand on their online counterparts is technology and embracing what it can add to the total retail experience.

"76 per cent of shopping decisions are made in- store"

Simply adding an online sales channel to an existing physical outlet store(s) is not going to cut-it, as this is now a given. Adapting is really about integrating the virtual and in-store channels to deliver a consistently unbeatable customer experience; one that only retailers with physical stores can deliver.

It's marketing 101, but most consumer purchasing decisions are driven by emotion (the experience) more so than by logical reasoning (the price). Not convinced? According to the Point of Purchase Advertising International (POPAI), 76 per cent of shopping decisions are made in- store. Meaning that physical retailers are in a better position to tap into these emotional triggers. The question is how?

In-store touch screen kiosks have been touted as the next big thing to hit retail for some time now, but until recently they were big ticket items, out of reach to most retailers. The original models were also self-contained standalone devices that were unable to connect to a website or point of sale system. Technology has finally caught-up with the hype and touch screen kiosks are now viable solutions for retailers, which facilitate a merge between the virtual and physical retail channels.

Some of the ways touch screen kiosks are enhancing the in-store customer experience are:

1. Online purchases can be made in-store. Store space isn't cheap, so it's not uncommon for retail outlets to carry only a limited amount of their range or to run out of stock for a particular item. Kiosks eliminate these types of situations, by giving customers access to the retailer's e-commerce website which holds their full range.

Customers are therefore not robbed of the experience of making their purchase then and there. They also have the benefit of being able to choose whether they want the item delivered to their home or to the store for pickup. Kiosks also solve a common problem experienced by multi-chain retailers in that an online order can be linked to a specific store.

2. Customer are informed and educated. A good E-commerce website is not only a convenient platform for ordering products, they also provide helpful resources and information about their available products. Kiosks provide an opportunity to make these same resources available in-store, allowing customers access to valuable 'how to' videos, product reviews, images, instructional manuals and more.

3.Products are easily found. For retailers that have extensive product ranges, kiosks become the equivalent of interactive in-store maps that help customers navigate the store and find the shelf location of the product they are looking for. As a result merchandise becomes more accessible and the overall customer experience improved.

4. Stock availability across branches. For customers who don't have the luxury of waiting for delivery, kiosks remove the unnecessary hurdle of having to ask store personnel to check the Point of Sale system to locate the nearest branch with stock on hand. Customers can look up this information themselves at the touch of a button.

5. Enhanced customer loyalty and reward programmes. Kiosks give customers convenient access to their loyalty reward programme, allowing them to setup, activate and edit their account, as well as check their rewards balance.

Improved convenience is just the beginning. Imagine this; you walk into one of your favourite stores and the sales person behind the counter greets you by name and then enquires about the new Smart TV, which was the last item you purchased either online or in-store. After making sure you are happy with your previous purchase, they then go on to ask if they can be of further assistance. In this situation the sales person isn't focused on their next sale, they are more concerned with making sure that your last purchase has met all your expectations.

Delivering this type of experience is what builds customer loyalty and will ensure that your customers keep coming back.

6. Gift registries are easier to manage. Stores offering a gift registry service typically spend a lot of time, energy and overhead manually managing multiple registries. Kiosks put the customer in control, allowing them to set-up a register and then easily add products while browsing the store. Gifts can also be purchased off the register direct from the Kiosk just as easily.

Some of what I've mentioned may sound like science fiction, but this technology is ready and waiting for retailers to adopt now. According to the IHL Group, transactions via touch screen kiosks in the US are already expected to exceed $1.0 Trillion per year by the end of 2014. There is no avoiding it.

Going forward retailers will have to integrate and establish consistency across their different messaging channels, of which touch screen kiosks are just one. Only by doing this will retailers be able deliver a seamless in-store experience and create a foundation from which they can build, grow and nurture their customers' total retail experience.

Vaughan Reed is managing director of web design company Labyrinth Solutions which specialises in website and kiosk solutions.