Digital Is Driving the Future of Retail Technology
LAS VEGAS — Anyone who has not realized the growing importance of innovation in the retail technology space hasn't been paying attention. The future is here.
The reality is that a massive shift is happening in consumer behavior and because of that shift, retail is undergoing a massive shift, according to Koupon Media's Charlie Lang.
"You can buy anything on Amazon, and Amazon is just the beginning," Lang, executive vice president of product and marketing at Koupon Media, said at "The Future of Digital Promotions in C-store" event, which took place Oct. 7 during the 2018 NACS Show. The event was sponsored by retail technology companies Koupon Media, GSTV, NCR, Paytronix, Skupos, Stuzo and SwiftIQ.
"Is there a future for brick-and-mortar retail?" Lang asked the retailers and suppliers in attendance. "We think brick-and-mortar retail is not going away, it is just changing."
He pointed out that convenience stores are the only physical retail channel expected to grow — a fact not lost on other retail channels, which are trying to compete with their own small-format concepts. Koupon Media believes the convenience store is the future of physical retail.
To succeed amid this massive shift, c-store operators and consumer packaged goods (CPG) companies must work together — on joint promotions, media platforms and data sharing, to name just a few areas.
"Small format is the future. The people in this room and at this conference have an advantage, but we have to work together," Lang urged.
One dynamic in the shift in retail is the changing loyalty game, noted Scott Walters, sales and account management at Paytronix. According to Walters, Thorntons Inc. pulled Paytronix into the convenience channel and "now, we are knee-deep in the c-store space."
Playing today's loyalty game requires knowing 100 percent of your customers, engaging in one-to-one marketing, and having a self-driving customer relationship management platform.
The standard loyalty benchmark has been 20 percent enrollment and 20 percent active, which resulted in a 4-percent lift in spend. "What if you made the standard loyalty benchmark 100 percent?" Walters challenged.
To enhance customer experience and drive revenue, retailers need to be thinking about consumer engagement on the forecourt, added Steve O'Toole, general manager of convenience and fuel retail solutions at NCR.
"Sixty-five percent to 75 percent of fuel customers do not go inside the store," he said. "That is a huge missed opportunity."
Overall, O'Toole explained that retailers have several key objectives on their plates currently, including:
- Convert fuel-only customers;
- Drive profitable sales;
- Deliver consistent experiences; and
- Build a loyal customer base.
Experience & EngagEment
"Customers want a consistent experience no matter how we shop. Digital coupons can be a key part of that," O'Toole said. However, he cautioned that retailers must engage customers with meaningful content, including personalized offers.
Customer engagement, regardless of the form or offer, sounds good, but is it working? Jason Lobel, CEO and co-founder of SwiftIQ, said promotions can be complex — discounts, multi-buy deals, bundles — but companies need to know if the promotions impacted sales or grew the category, and if it was at the expense of something else.
One way to measure this is through receipt-level data. What other items were in the basket? What method of payment did the consumer use? When did the consumer make the purchase?
"You cannot underestimate how important it is to support promotions with marketing," Lobel also stressed.
Looking at virtual consolidation, Dan Trotzer of GSTV explained that this move can capitalize on the economies of scale that come with physical consolidation.
"When you remove yourself from infrastructure dependencies, you can drive growth," said Trotzer, executive vice president of strategy at GSTV.
Part of the new wave of consumer engagement is artificial intelligence (AI), advised Jake Bolling, co-founder and CEO of Skupos. "Artificial intelligence drives 35 percent of Amazon's e-commerce revenue," he said, adding that AI-driven promotions are tailored to individual consumers.
And speaking of Amazon, the retail giant's success is partially driven by its recommendation engine. "We need to bring the same methodologies to convenience," said Aaron McLean, chief operating officer of Stuzo. "It's time for the convenience operator to think of digital as the new storefront."
According to McLean, digital is not "a one-trick pony," explaining that retailers should not deliver a mobile app that has just one feature.
"Mobile is the foundation. Then, you start layering on top of it," he said. "Invest in mobile and technology like you would a new store. Invest in software over hardware."