Web Developments Retailers Should Watch

TechCrunch released its agenda last week for the TechCrunch50, which starts today. They have helpfully grouped the companies into categories, which they will run through over the next couple of days. The companies are all fascinating, and I encourage you to check them all out. But what was really interesting to me was the categories themselves:

• Youth and Culture - basically a bunch of social networking sites that are targeted at the younger crowd. If they succeed, they will bring together a juicy group of targets for retailers and marketers. But brands will have to be careful how they approach these sites - if you think there was an uproar over Beacon, think about the privacy implications of advertising or diving in to sites that cater to tweens. That's going to be laden with a lot more landmines.
• Memes and News - the theme here is filtering or aggregating content in some way or another so that it's easier for people to wade through - either by creating a niche of some kind ("news about your friends instead of news by your friends"), or using the crowd to surface the most popular stories from within a world of "TMI". Product reviews kind of do the same thing, but ultimately I can see this kind of functionality melding in with another category - "Vertical Social Networks" - one of which creates a social network around shopping and fashion.
• Finance and Statistics - a bunch of sites that put analytics around either information on the web that relates to people or topics, or information specifically about a person or topic. For retailers, this could be turned inward to employees (especially frontline employees where it's hard to really do a thorough check on the person before you hire them), or turned outward as a service to customers. Safeway's FoodFlex program is a good example based on "closed" data (Safeway's clubcard purchases - Safeway offers to analyze the nutritional value of your past purchases and recommend ways to create a healthier diet), but as more of people's lives end up captured online, someone's going to think of a way to take advantage of it - including purchase or shopping/browsing history.
  

Also interesting to me was that the list of commerce-based topics and companies weren't really that interesting. The session on Advertising & Commerce Monetization had companies that create new ways of targeting (or ways to avoid getting targeted). The most interesting of that lot was Adgregate Markets, which promises to "turn banner ads into shop ads", basically by turning a banner ad into a widget that gets you closer to purchase from the first click.

Retailers have never been keen to be on the cutting edge of technology adoption. It's one of RSR's fundamental "Paradoxes of Retail" that retailers must manage a heavy load of legacy technology infrastructure at the center of their business while consumers are adopting technology at an unprecedented rate - and forcing retailers to speed up or be left behind. The TechCrunch50, to me, shows that the pace of change isn't letting up at all.

How Will Consumers Respond to Suddenly Targeted Ads?

This week, RetailWire posted a story on Infosys' new "ShopperTrip360" for comment, and got back a lot of negative comments (myself included, I guess). You can read the description on RetailWire for what it is and what it does (registration is required). But the topic got me thinking, because a lot of the negative reaction came from people worried about privacy and consumer reaction to an invasion of privacy. Someone commented to me that if people only knew how much data is collected about them already, they would probably freak out about it - let alone the degree of tracking that the ShopperTrip360 proposes.

But the thing is, no one really does anything with the data - so no one REALLY notices how much data is collected. So what would happen if retailers really started earnestly using the masses of information they collect about consumers? For example, I get coupons in the mail from Target. For a long time, I just tossed them. 90% of what was in there didn't appeal to me. Then all of a sudden I got a coupon book that I thought was just great - about 2/3 of the offers were for things I buy. I was pleased - "They're paying attention to me!" I thought. But I also realized that it probably meant that Target was actually mining my purchase history to determine what offers to send me.

That's not too disturbing. Anyone who doesn't realize that this is what that loyalty card is really for is only fooling themselves. But if retailers started acting on data that customers didn't really realize they were collecting. If, for example, Target suddenly started sending me offers based on my online browsing history, the suddenness of that relevance might come off as creepy.

Am I really going anywhere with this? Only to say that despite an overwhelming desire to get more relevant with consumers, it probably doesn't hurt that we seem to be moving at incremental speed. Moving from mass to 1:1 overnight would probably just scare everyone away.

Cart Observations

A Canadian newspaper ran an article on smart shopping carts titled "High Tech Shopping: Smart carts assist in purchases but raise surveillance concerns". I hate these kinds of articles, where they trot out Krazy Katherine Albrecht to spout some paranoia about all the insidious ways that retailers and technology companies are conspiring to tag you and track you. It's almost irresponsible reporting.

This is a stronger stance than I usually take on the topic, but I just completed a new survey on customer data and loyalty programs, and when I compare reality to Albrecht's fantasies, the gap is planetary (as in, she must be living on a different planet). The standout statistic from the CRM report? Barely 20% of retailers who took our survey (out of a total of 90 respondents) strongly agree that they know who their best shoppers are - let alone any of them at all. And retailers are less concerned about collecting more microscopic details about their consumers than they are with getting any kind of insights from the data they already have. (By the way, the study results will be available on RSR's homepage Wednesday morning.)

But I take issue with several other fundamental concepts that came up in the article. First of all, retailers don't have to offer shopping carts. A shopping cart is not one of our "inalienable rights" as consumers. Retailers offer them as a service, and believe me, after looking at what putting a small computer on top of a shopping cart can do to a cart (like knock them over in the wind, bending the frame), or all the ways that companies have come up with to try to corral carts, or all the door dings on my car from carts - they are pretty close to being more trouble than they're worth. If a retailer uses a tracking device of any sort on a shopping cart, they should absolutely disclose it, but if you don't like it, then don't use the cart.

Second of all, retail stores are only semi-public spaces. They're not like the park down the street. They are owned and operated by a company. Again, the retailer should disclose how and where they track consumers in stores (if you're sniffing cell phones and using triangulation to track location and you're not being up front about it, you deserve all the wrath that people like Albrecht can bring on you).

But if consumers don't like what the retailer is doing, they can take their purchases elsewhere. If the market for anonymous shopping gets big enough, then there will be some kind of entreprenuerial retailer who steps up to fill the need. Because for the most part, consumers seem more than willing to trade some personal information if it gets them better deals and relevant offers. I'm sure there's a study out there somewhere that supports it, but even if there isn't, the continued persistance of club cards and loyalty programs is evidence enough. If consumers didn't like them on at least some level, they wouldn't sign up for them.

Shopping by TV - TiVo and Amazon Team Up

The New York Times reported that TiVo and Amazon are teaming up to enable consumers to shop from their TV's. Some of the first shows to try it out will be The Oprah Winfrey Show, and The Late Show with David Letterman. They'll offer the books, CD's, and DVD's that guests will be promoting when on the shows.

On the one hand, this is producer nirvana. I've spoken with a couple of producers for cable channels, and they consider this the holy grail - to be able to quantify their audiences not in terms of reach, but in terms of immediate market potential. In terms of sales.

Books, movies, and music are an easy way to go. I'm curious how this might ever possibly work for fashion or home decor, because it seems like the potential will only ever apply to first-run shows. But maybe that's how to make them TiVo-proof, with a certain degree of irony there - imagine, "Tonight's episode of Gossip Girls will feature limited availability of Serena's and Nate's outfits, provided by [insert brand name here]. Don't miss your chance at getting the look!"

There's one other implication to consider about this kind of matchup. Our whole world of advertising and retail is built on the assumption that there is a gap between when a consumer may decide they want a product, and when they actually purchase it. In the case of something seen on TV, once you decided you wanted, say, Serena's shoes from Gossip Girl, you had to figure out who made them, find out who sells them, make sure they fit at some point (though this could be after you've purchased them), and then actually buy them. This link between a set-top box that enables interactive and internet access, and a retail store that enables commerce short-circuits that whole process. And it's not the only technology doing that: mobile phones, even consumers with wireless laptops sitting in front of the TV change this dynamic.

Do retailers need to become producers? Some CPG brands have already gotten into the mix. But it's a lot harder to enable the commerce than it is to feature the product.

The Dangers of User-Generated Content for Retail

So McDonald's has been holding a contest to update the iconic Big Mac jingle, and they announced the finalists - including one guy who was previously arrested for holding up a McDonald's at gunpoint - and served 12 years for it. While content aggregators like YouTube have been fairly vigilant (some would say overly so) about making sure that the content users post is legal to use, there is also the question about whether the user themselves could be damaging to a brand. Something to think about before you highlight a user product review...

How Much Info is Too Much at the Shelf?

I've posted plenty of times on RetailWire as a supporter of NYC's initiative to get calorie counts on the menus at chain restaurants. I think it's very misleading to consumers to use terms like "low fat" when hidden behind that sign is something that slugs 1,000 calories or more. So, sure, some restaurants post calorie counts online or in little brochures that sometimes are easy to find or available in the store (and sometimes not), and their argument has been that because they do make the information available, they should not have to put it on menu boards.

The problem with online information is that it's not accessible for when you're making a product selection decision. A lot of online calorie calculators that I've seen restaurant chains put out are not mobile phone friendly at all - they require you to "build a meal" and then tell you, once you've configured multiple options through multiple screens - you get a result. Taco Bell's is a good example.

Here's where it gets interesting. Contrast that with efforts by companies like Staples, who has debated publishing consumer-generated product reviews at the shelf - and the huge number of questions doing something like that generates. Which review do you pick? Is it misleading if you publish a highly favorable review when overall the reviews tended toward the negative? What do you do with a product that received mostly negative reviews? And on and on.

Mobile phones do change the game a bit - providing price and sometimes availability through a mobile phone search is rapidly becoming ante. Reviews (or at least summarizations of reviews) will likely be next, if not additional spec or detailed information - like nutrition info, in the case of restaurants. There are calorie-counting sites out there that will help - like My Calorie Counter - but it's still interface-intensive to compare multiple products against one another.

The ultimate challenge is balancing what you can provide to consumers against what different customers want as part of the experience. MSNBC calls reaction to the calorie information "sticker shock" of a sort, and quotes a NYC health official who is perfectly happy with that result, while meanwhile a restaurant patron wants to switch menus with her friend who received an old one that doesn't have the calorie counts - because she wants to be kept in the dark. It all just makes me think that dynamic displays are an inevitability (granted, once the cost to implement reaches something that retailers can afford to invest in) - so that consumers can taylor what they see, not just online, but even when they're looking at the shelf.

And, for the record, given that California is looking into even stricter standards, and that retailers already have to accomodate New York's specific rules, I believe it will be a short amount of time before we see calorie labeling spread nationwide.

The Re-convergence of Media Brands and Retail

In May, Disney quietly reacquired the Disney stores from Children's Place - the company it had sold them to in the first place. This was after a wild ride in the '90's for media brands - who rushed into the world of retail amidst the emergence of trends like "retailtainment" and "experiential retailing". You couldn't go to a mall without hitting a Warner Brothers store or a Disney Store, and there were several other media companies that tried - Paramount and Nickelodeon come to mind.

The idea was to build a local place where consumers could experience some of their favorite characters, build a closer affinity to the media properties, and in turn spend a lot of money on merchandise. I happened to see this evolution first-hand while I was a consultant at PwC - I was working on an IT Strategy for the Nickelodeon stores when they made their attempt at retailing in the late 1990's. The sad truth, at the time, was that the 20-30% in licensing fees that the studio could get were a heck of a lot more - and with a heck of a lot less capital invested - than the 3-6% the retail stores would return. The stores team argued in vain that there was a lot more at stake than just the return - there was an untold return when you looked at it from a marketing and brand engagement perspective. The problem was that at the time they weren't sophisticated enough to get a lot of customer data or market basket analysis out of their customer purchase history - so they couldn't prove it.

Times have changed, and I think Disney's reacquisition of the retail arm of the brand demonstrates that. With the combination of online and in-store, you can get an enormous wealth of customer information, and the analytics tools are strong enough (they almost always have been, actually) and user-friendly enough (something they haven't always been) that you can get a lot of insights about your customers these days. Disney has shown signs of understanding that it's about more than just sales - I read somewhere about their strategy in the UK, and how they are much more willing to deal on content distribution because they know it helps drive the merchandise, and all the derivative forms of content that go with it - like live shows and special events.

However, I will say that I think the stint that the Disney Stores did with Children's Place was good for the stores. Children's Place ran those stores not as a brand extension of a media property, but as a place to get great clothes and fun toys, which all happen to be coated with the characters that your kids love. And that's the challenge for all of these media companies as they rethink their retail strategies - how to balance the function with the brand, while ensuring that they are measuring the primary strategy behind stores: increase brand engagement.

As a famous media property once said, "We have the technology." The time is ripe for these stores and this strategy to pay off.

Weird results from a study on consumer tech adoption

Last month, TNS Global put out the results of a consumer study on 12 retail "innovations" to gauge consumers' receptivity to them. The study surveyed about 4,600 consumers across 8 countries: US, Canada, UK, France, Germany, Spain, China, and Japan. You can download the report here, and I first learned about it from this article.

The results are kind of weird. The article says research's authors found that Japanese consumers were among the least likely to be excited about new technologies as part of the shopping experience - which, if you've ever been to Japan, just doesn't make sense. The survey asks about mobile phone shopping, interactive dressing rooms, and virtual assistants (in the survey, they specify holographic for some reason), among others - all "innovations" that are actually more than just a dream in the Japanese market. They're not well-established, sure, but they are there. When you look at Japanese respondents' ratings of the "newness" of these technologies, they do give these innovations some of the lowest ratings for newness, which may have impacted how they responded to the appeal of each. I just feel, in looking at those results, that a "why" behind the answers is missing, somehow.

Just in general I would be interested in seeing the results against specific internal-to-a-country geographies where some of these innovations are already established. For example, with the work that Stop & Shop has been doing around "smart carts", one of the innovations covered among the 12, it would be interesting to see how survey respondents in the Northeastern part of the US feel about the technology - since they have had a better shot at actually seeing it and/or using it - than their US counterparts elsewhere.

Another weird result: biometric payments topped the list as the most interesting technology for consumers overall. I contrast that with my experience in Nisswa, Minnesota over the 4th of July weekend - where the Cub Food store, once a Pay By Touch customer, still had the signature capture devices bearing the Pay By Touch logo, but with the biometric scanners all yanked out, since the company is now defunct. Was Pay By Touch before its time? Very probably. But is its time due in 2015? Hmmm. I'm thinking no.

And one more that twigged my interest: the resurrection of the "smart appliance" concept in this survey. I just don't see, as apparently consumers do, the arrival of a self-replenishing refrigerator by 2015. More likely, to me, is the integration of a barcode scanner into mobile phones' cameras, so that you can scan a barcode and add it to your shopping list, rather than a refrigerator that is somehow going to be able to tell me how much milk is left in the carton.

It's a very interesting topic, and I'm glad they did a broader market survey, but I thought the selection of technologies to include was kind of strange - smart refrigerators and holographic sales assistants representing one extreme, vs. social shopping networks (which even survey respondents didn't find so innovative) on the other end of the spectrum.

I think the only thing that can be firmly concluded from this survey is that the Sony Walkman Axiom is true: you can't get consumers to tell you much that is useful about things they haven't imagined yet. That is the biggest challenge about being customer centric - you have to take leaps of faith-type risks and see how consumers respond, rather than following a well-analyzed shopping innovation idea. That kind of faith is not often found in retail, but if you wait for consumers to tell you what they want from the shopping experience, you'll never invent the Sony Walkman of Retail.

Retail's Killer App is Now Free For the iPhone

When I say "killer", I mean in the sense that this is the application that retailers have been worried about (or at least should be) making it onto consumers' phones. What is it? A free, innocuous little app called "Save Benjis", available for download to the iPhone via Apple's new app store. According to the company that developed it, Sol Robots, you can even use the iPhone's camera to snap a picture of the barcode in order to look up prices. It also provides access to product information and reviews, and enables consumers to buy it if they find it cheaper online.

The app is based off of the FindersCheapers website, which also does product search and price comparison. It is functionality similar to Google's product search, or MySimon, though for my part I had not heard of it before today. What makes Save Benjis different - besides being built specifically for the iPhone - is that it is designed for mobile use, for example with preferences to let users specify default settings for data entry fields (in order to minimize typing on the iPhone's touch screen, probably the most awkward part of the iPhone user experience).

I've said it before, but I mean it this time: if retailers have not figured out how they are going to deal with consumers who have access to online pricing - and product reviews - while standing in the store, they better figure something out quick - real quick.

Alas, I am not iPhone-enabled - having just finally gotten my Blackberry to sync with Entourage, I am hesistant to disrupt what works - but my husband is. We'll check it out this weekend.

TechCrunch's coverage of Save Benjis (among other iPhone apps)
LifeHacker's coverage of Save Benjis

The Retail Customer-Centric Dilemma: Local vs. Unique

I love this post on PSFK, crying foul somewhat over a Trader Joe's sign promoting how they search the world for exciting and unique things for their customers. The post calls out that this sign kind of flies in the face of Trader Joe's efforts to be "local". Which raises an interesting question: how do retailers balance the drive to present their customers with "new and unique", while respecting the more "green" drive to be local?

Don't confuse this with localized assortments - this isn't about how you customize assortments by store based on the customers who shop there. This is more about how you reconcile to big consumer trends - green/local/sustainable vs. unique/experiential/adventurous. I don't think they're unreconcilable, but it goes back to my post from yesterday - if you're going to put your brand out there as tapping into anything green or sustainable, you better be totally transparent about it. So if you do source from, say, Malaysia for that unique root you can't get anywhere else, you better be willing to explain to your consumers how you're not a. exploiting poor Malaysian farmers to get that root, and b. creating a huge carbon footprint to get that poor little root onto your shelves.

Why you need to be GENUINELY green

There has been a lot of discussion lately about retailers being more "green". RSR's Paula Rosenblum and Steve Rowen did some research on the topic and found that a lot of retailers are pretty enthusiastic about the idea, and not just because they want to save some bucks. Retailers are up on green initiatives because they see the consumer trend towards valuing more responsible corporate citizens, and they want to position themselves to be seen as such "corporate citizens" when the trend hits its tipping point (are we there already? I don't know...).

The challenge is, when you decide to go green, you better go all the way. Especially in today's world of consumer access to information - and to soapboxes. Witness "This Store Blows", a blog set up specifically for consumers to report retailers that have their front doors open while running their air conditioning in the summer. The blog is NYC-oriented, but as the idea gets picked up, I'll bet you that it won't stay that local.

I don't remember where I read it, but if I find it, I'll update this to reflect it, but I read somewhere that the best green strategy is total transparency. If you decide to go green, chances are you aren't going to be 100% perfect right out of the gate - and that's OK, as long as you disclose where the skeletons are and what you plan to do about it. For example, Marks & Spencer has made a big deal about its green initiatives, but they had to take a step back on some of their plans to reduce the carbon emissions of their delivery fleet - they had planned to switch over to biofuels, but given the debate about the true net impact of ethanol, particularly corn-based ethanol, they decided to wait on that front, but were moving ahead with plans to redesign the trucks to lower the wind profile.

If you're not up-front and transparent about your green progress, you'll become an easy target for quite possibly millions of citizen green-watchers (and more aggressive organizations), who are just itching for a chance to call you on your green hypocrisy.

You know, given all of the raging discussion over on the marketing front about "giving up control of the brand" and letting consumers have more influence and say, it seems like green initiatives would be a great place to practice "letting go" - you're not going to have much choice in the matter anyway.

My Theory on the Impact of Product Reviews on Toy Shopping

I have 2 young children – ages 6 and 3. Toy shopping is an interesting experience, because as much as parents complain that they spend a fortune on toys, if you look you’ll see that most toys are relatively cheap. Barbie bliss or Hot Wheel heaven can be achieved for less than $15 – cheaper than a movie or the zoo, when it comes down to it, and it lasts longer (usually). And when you have several out of state relatives that all send gift cards, it actually can be challenging to spend it all in one go. I realize this will change as electronics get added to the wish list, but for now, the toy budget goes a long way for us.

The trade-off against the cheapness comes with the quality of the toy. I’m not talking about breakage or even lead paint. I’m talking about the difference between a toy that sticks and a toy the kids play with once and then get more fun out of just playing with the box. As a parent, you buy a lot of cheap toys and hope for a success rate – where a toy is truly loved and played with all the time – of say, 2 out of every 5 toys purchased.

Product reviews, however, change the game. When I’m shopping for birthday or Christmas presents, I ALWAYS read the reviews (assuming they’re available). When shopping for toys, product reviews help me sort through which toys are going to stick and which ones probably won’t. And I have to say, so far that’s worked out really well. In fact, it’s probably raised my hit rate on toys that stick from 2/5 to more like 4/5. And when you get that kind of improvement in success rate, you don’t need to buy so many toys.

Does that mean we’ll see a decline in toy sales as more and more parents catch on to this money-saving tip? I doubt it – a significant portion of our toy budget still goes to buying other kids’ birthday presents, and other than a glance to see what my kids really like, I don’t honestly spend that much time researching those toys – and my kids get a lot of say in picking out birthday presents for their friends, and they’re not exactly savvy online shoppers just yet. But it does mean an interesting thing for toy manufacturers. If parents hash your toy, you better think about how to change it to address the complaints. Because Hot Wheels isn’t competing against Matchbox for my toy money – it’s competing with every toy ever made, and thanks to my fellow parents, I have enough information to make sure that I only pick the best.

The Role of Social Media in Retail Part 1

Will Beresford of Beyond Analysis wrote an article on Wise Marketer about key trends in advertising that will be driven by social media. I don’t disagree with a lot of them, but there are two that I take particular exception to: first, that social sites like MySpace and Facebook are fads, and second, that many agents or middle-men will find it more difficult to do business because people will rely more and more on their networks. I’m writing about this only because I think social media will play a hugely important role in retail – a topic I’ll probably take some time to explore more fully in the future.

So let’s tackle the first one: social networking sites are fads. Disclaimer on my part: while I have vowed to set up profiles on both MySpace and Facebook, I somehow have managed to avoid doing so so far. Yes, it’s true. You won’t find me on MySpace. But you will find me on LinkedIn, and Plaxo really does provide a critical service for me, because I’m horrible about keeping my address book up to date. And I’m probably responsible for getting a lot of the word out on Spock simply because I was a tad indiscriminate in sending invites out for that one when I signed up to try it out myself (sorry about that, for those of you who are still wondering what the heck Spock actually is. I’m still wondering that myself). While I have found utility in using these sites for business connections, I see no need for something like MySpace to manage my personal connections – I use other tools to do that, like IM and the old-fashioned but ever-useful phone. However, there are a few trends developing around sites like these that makes me think they are here to stay:

Openness. A funny thing happened to my Plaxo account the other day. It got eaten up by a “Comcast Universal Address Book”, and Plaxo now offers ways to tap into address books stored across a wide variety of sites – truly becoming a universal address book. And news pops up every day about how IM services are integrating into Facebook, or other social media-type sites are using API’s provided by MySpace and Facebook to automatically update profiles there. So if I post a blog, it automatically updates my MySpace page, or if I digg something, same thing happens. The more a user hooks things back into a profile space, the more valuable that space becomes. These high-profile companies are very much aware of the network effect – and are creating these API’s for that exact reason – to keep their relevance to users very high. There might be something that comes along that is “way cooler” than Facebook, but only because it takes the concept to another level, not because the concept loses its cachet.
Evolution. Part of the reason Beresford thinks these sites will lose favor is because people will realize that it’s not actually such a good thing to bare all to the world. But I see evolution happening with both Plaxo and LinkedIn, and I have to think it won’t be long before other social networking sites figure this out too: we all have many faces. In Plaxo, it’s overly simplified, but I have two spheres I can use to manage my contacts – personal, and business (and both). I can restrict business contacts from seeing my personal info, and I can restrict personal contacts from seeing my business info, if I really want to. In LinkedIn, you can designate the type of relationship you have with a person in your network – a colleague, a business partner, etc. Sampa, a personal website builder, lets you build a site that is available to everyone, or just to people you invite. So if you don’t want recruiters to see pictures of you getting trashed at a bar, you can restrict access to those pics so that only your closest friends see them (and then, of course, they will send them around to everyone they know in order to embarrass you).

Now, on to the second point: agents will become disintermediated thanks to the power of personal networks. While I agree that the travel agent is pretty much going the way of the dodo, it’s wrong to think that forums aren’t serving an agent role. Even MySpace serves something of that role – there is too much information out there, and we all need filters to help us sort through it all. MySpace becomes the moderated, filtered, value-added collection of stuff about “me”. TripAdvisor is the portal to all things vacation-related. We’re not getting rid of agents and middle-men, we’re in an age where new sites are cropping up in order to take on that role by providing context and moderated, filtered content based on that context – thus increasing the value of information that honestly is already out there – if you can find it.

I’m not sure that Facebook, with Beacon, will become any kind of advertising powerhouse that has the ability to bring life or death to brands. But I do know that retailers should definitely pay attention to how this space evolves. As I’ve said before, as soon as consumers adopt a new technology, one of the first places they take it is shopping. How will social media impact shopping behavior? What a juicy topic! You’ll definitely hear more from me on that one.

Advertising is Dead

Ok, I finally know what “they” mean when they say that advertising is dead. It isn’t, of course – there will always be a need to inform and generate awareness, and to do it to a broad, rather than narrow, audience. But the idea of advertising as the dominant form of communication to customers is certainly dead. Those for whom it is their living may not know it yet, but it is.

I’m late to the game because I don’t really focus on consumer marketing or advertising – talk to me about retail, and retail technology. But I keep finding myself sucked into this realm, despite efforts to stay out of it – for two reasons.

First, as online commerce evolved, we saw that technology capabilities in the hands of consumers changed the way they shopped. It’s still changing the way they shop. And we’re only at the very smallest beginning of the learning curve. Ubiquitous WiFi, persistent mobile connections, home servers and networked homes, smaller and more powerful computers that you can carry around in your pocket, and more intuitive user interfaces to help you make the most of all this stuff show that technology penetration in daily life still has a long way to go.

We’re social creatures, and at least in the US, consummate consumers. Which means that as soon as a technology penetrates our lives, we’re going to go shopping with it. I really appreciate the irony of this. In 1994, I was still convincing my boss that we needed barcode scanners at our POS. She was convinced that it would ruin the “hands-on” experience that our staff provided – that it would equate our “boutique” image to a grocery store. Oh yeah, and it would require shelling out capital that was pretty hard to come by. Retailers are technology laggards, so it is the height of irony that they now find themselves on the forefront of consumer technology adoption.

So even though my focus is primarily on retail operations, these pesky consumers keep bringing technology into the equation – and I find myself at places like the Consumer Electronics Show, trying to stay enough ahead of the curve to see what consumers will be bringing to their shopping trip next year, so that I can figure out what this will mean to retailers trying to create a great customer experience.

Second, as part of my coverage of in-store technology, I started writing about digital signage – what I now call Retail Media Networks, thanks to Laura Davis-Taylor’s definition. In its first incarnation, it was all about bringing advertising into the store – dynamic advertising that could change by time of day or even depending on where the screen is in the store. This dumped me – all unwilling, believe me – into the world of advertising. Media buyers, advertising agencies, producers, content creators of all kinds… A world I don’t understand and don’t really want to. I like retail – I like writing about shopping. Heck, I like shopping! When I first started writing about CPM’s, I had to look up what it meant.

But when I started going to advertising-heavy conferences that focused on in-store, I got scared, because they were talking about in-store advertising for the first time ever, but they didn’t get it – many still don’t. The store is different. It’s not a home, it’s not a billboard, it’s not the internet, and it’s not even like a mobile phone. It’s different and you have to treat it differently. I remember, I was at a conference last year where a guy from an advertising agency asked plaintively, “How do we get retailers to standardize on a rate card [for in-store advertising]?” Uh, I hate to tell you this, but… Never! Are you kidding me? Retailers don’t even want to share the kind of information that goes into a rate card, like demographics, like dwell time, with their suppliers – people who they are ultimately dependent on to sell stuff – let alone to media-types, and most especially NOT to other retailers.

But I digress. The point is, like it or not, in order to stay on top of the impact of technology on retail, I have to keep a finger on the pulse of both the future of consumer electronics, and the future of advertising. From what I’ve seen at CES, here’s what my humble little take is – from an outsider, late to the game, but nonetheless.

It used to be that advertising was the king of the hill. And for a lot of people it still is. But I think we will see – possibly even before the end of this decade – a switch. When advertising was on top, there was beneath it a little exotic bunch who specialized in “immersion” – building holistic experiences around brand messages. They were the weirdoes who staged guerilla marketing campaigns, who built up campaigns slowly over time, building to a crescendo of hype and awareness – and most importantly, ENGAGEMENT. But they were stepchildren in advertising. Kinda cool, but not sexy, like TV advertising.

Those Immersive people are going to have their day. Out of necessity, they will have to become the king of the hill, with advertising only playing a role in an immersive experience. Why do I say this? Look at the role of marketing in the store. It used to be at best, shelf talkers and maybe in-store demos. At worst, it was basically coupons that you hoped consumers brought into the store. You priced those coupons with the understanding that the redemption rate of those coupons would be low. So you could afford to plaster newspapers with 50-cent off offers, knowing that say, 2% of the people who got them would actually go to the trouble of cutting them out and bringing them into the store. But technology has changed this paradigm. Instead of plastering the world with coupons, you offer a select few people – the ones you know who actually want the offer – a select few offers, and you get 75%+ redemption rates, along with some tidbits of information about who these people actually are, so that you can keep providing them with relevant offers and learn from them in ways that will help your brand.

Because technology enables consumer access to so many new avenues of information, and because of the fragmentation of audience that this creates, you have to get more targeted. And if you’re more targeted, you have to be very consistent in your communication to that audience because these are your most valuable customers – if you screw it up, it will hurt you a LOT more than if you screw up a coupon offer that only 2% of the audience redeems. How do you avoid screwing up? You build immersive experiences. You might use a TV ad to find the people that you want, but between web, phone, store, print, you build an experience that draws people deeper into a relationship with you, providing a conversation that yields so much more than just a bump in sales.

And when advertising people, who barely understand what the store experience is about as it is, are speaking with enthusiasm about the coming “integration” that will be created when we add mobile phones to the in-store mix, then I know that advertising’s reign is over. And at a panel session I attended at CES on in-store advertising, that is EXACTLY what they did. Advertising is dead, long live immersion!

A Mobile Shopping Scenario

I attended two sessions on Mobility on Sunday at CES. They were both geared more towards content providers and the future of that medium on phones – not really oriented on shopping. But one of the speakers – Shane Lennon of Gypsii, a mobile-based social networking service – gave an example of how someone might use their service, and it has a lot of serious implications for retail. He spoke of how someone could upload a video of a drunk friend, potentially straight to something like MySpace or YouTube and alert other friends to the revelry, complete with directions. Andrew Perlman of Vringo picked up on the story and noted that with his service you could then set that video as your video ring tone – on other people’s phones. So if you call your buddy, he or she is greeted with the video evidence of their drunken revelry. I must lack the social networking gene, because I fail to see how that’s cool, but that’s another story.

What I started thinking about was what that means in the store. The sleeping Comcast guy is already beyond infamous, but what happens when a customer records a video of employees behaving badly in a store on their cell phone, and zaps it straight to YouTube? How long before we see the nightmare Home Depot help, or the Best Buy employee blithely getting the technology explanation completely wrong? According to Douglas Craig from Discovery Communications, we’re only 1-2 phone iterations away from turning every consumer into a broadcaster (at least in the US).

How do you combat this? With our most recent research on workforce management and loss prevention, Paula and I have been circling this issue, trying to find a way to break what really becomes a vicious cycle – employees are not engaged, so customers get mad, so corporate cracks down, and employees, caught between corporate and customers, disengage further. And everybody loses.

We're still working on that, but a place to start would be Jack Mitchell, of Hug Your Customers fame - he's got a new book coming out, called Hug Your People. If the retail industry could pull that off, what a wonderful world it would be.