A new medium brings new rules. For retailers, social media brings new rules, evolution of core merchandising principles, and some surprising twists in the competitive landscape. In our socially networked world, the most successful retailers will be those who creatively apply age-old principles of merchandising to the new real-time world. A world that doesn’t clock in and out for 9 to 6 store hours, but is always present; a sessionless merchandising model to drive customer experience and sales.
Much has been written about, and retailers are aggressively pursuing, all kinds of online commerce, online promotion, and product education for their stores and sites. Product reviews, coupons, discounts, information, and the like. All in response to the Internet and social media empowerment of the customer. All contributing to the growth of new and traditional retailers and the extinction of those who can’t adapt. All quite dynamic for the industry but only just the beginning.
The Internet and social media have enabled a fundamental shift in customer behavior patterns, with far deeper implications than just a new channel for sales and ads — more complex than customers being able to real-time check competitor prices. Customers are empowered, but so are savvy retailers who leverage this new context and those changed customer behaviors to create new forms of merchandising.
Traditional Dynamics Changing the Shape of Access
Historically the first thing a retailer would think about is where to locate the store, followed by price, and selection. These factors can be grouped under the type of access the merchant provides the customer. With the Internet everywhere, and Google empowering customers to find any site, any product, indeed any price—with a quick search and competitors just one click away—the access game changes. Each element has new dimensions.
Location
Location has always counted most because customers have to get to your store; they must have access. In today’s world an ecommerce website is the first stop on the access road. But it’s not as simple as that; the site has to be well done, easy to navigate, and easy to find in search engines. Physical location can still be important; increasingly customers want to order online and pick up at a local physical store. Retailers are struggling with potential conflicts between their online product mix and pricing vs. physical stores.
But from the consumer’s perspective, it’s all the same company, so why shouldn’t the price and product availability be the same? Innovative retailers are offering same-day pick up at stores for online purchases, with price matching not just with local competitors, but also with their own websites. In today’s world, customers increasingly make where to shop decisions based on what their friends tell them. The best practice is to empower customers to share their shopping experiences in real time while in the store, as well as afterwards. This means having mobile apps that include sharing via Facebook, Twitter, FourSquare, and other social networks.
Selection
Even for the most price-oriented retailers, selection has always been a key driver. Customer pressure is up; if people don’t see what they want in a store or on the website, a few clicks on the mobile phone shows them where they can find it. On the other hand, a retailer can better track customers’ interest by watching what they browse on the site and what they talk about on Facebook and Twitter. Retail buyers who operate in the social media fast lane will not only watch the customer conversations in social media, but also participate in them, and even crowd-source ideas for product mix.
Price
Most people want a good price and most people love a great deal. The Internet empowers them to find both. Price pressure has never been higher and a new “show rooming” customer behavior has emerged — going to a physical store to see the product in a showroom and then ordering it online for the best price. Eventually technology will make all pricing transparent. Aggressive retailers will get ahead of this trend with price matching offers, or even better, using the Internet to set best prices before the customer asks. The most aggressive retailers will accept price as being commoditized and offer superior in-store and on-site merchandising experiences to drive more traffic and lessen the importance of price.
New Dynamics Shaping the Customer Experience
Along with location, price, and selection, the fourth foundation of merchandising is the emotional and personal customer shopping experience.
Visual experiences
Great stores and great merchandising have always stimulated the customers’ eyes with visuals, whether product displays, demonstrations, or signage. The same visual thinking should apply to retail web sites — at the most basic level, because people like pictures and can appreciate merchandise better via photos. But this is just the starting point in social media. A fundamental driver of the rise of social media is photo sharing. Over 250 Million photos per day are uploaded to Facebook alone. One of the most rapid growth social media sites this past year has been Pinterest, which is essentially a social media based scrapbooking site for sharing photos.
Smart retailers will empower customers to share photos of products, building product interest among their friends. The smarter retailers will create photo opportunities within stores, so shoppers can share the in-store experience with friends. The smartest retailers will create opportunities for customers to share photos and stories of their everyday lives. Such photos can be then be shared in-store (think local bulletin board) as well as online (think local bulletin board at customers’ mobile fingertips). Why? Because customers love to share the stories of their lives through photos. The retailer that helps them do so will find those customers integrating the store with their daily lives — wanting to be there and shop there more.
Special tip: What kinds of photos get the most consumer attention? Children, puppies, and ice cream. So if your customer uploads a photo with a kid holding an ice cream cone next to puppy, put that at the top of your site, your Facebook Page, and right inside the door of your store. Does it have a product for sale in it? Certainly not one in a box. What it sells is that your store has the heart and emotions of your customers. It sells your customers on liking you and wanting to shop with you.
A great example of photo sharing integrated with retail is a program we created for TJ Maxx several years ago. The brand discovered that customers were sharing photos of their in-store deals on assorted social networks. They loved showing what they bought, talking about the great deal, and getting friend comments on their choices. To amplify this customer dynamic we created a TJ Maxx online community focused on the customer’s shopping adventure. The most popular feature was the ability to upload photos of 5 purchases, including the price and discount information, to share with friends. Customers loved recreating their shopping and deal find experience and sharing it with friends. Friends loved to see it and were inspired to head to the stores to find their own deals.
Applications leverage
With over 1 billion apps downloaded from just the Apple iTunes store, customers are working, playing, and shopping through mobile apps. Many retailers have created dedicated shopping applications for their stores. The most creative are building applications that change the customer shopping experience — those that provide reviews, or help customers build shopping lists, understand what’s available, find it in-store, and learn what other people, especially friends, have bought and liked. The most interesting apps help people socialize while they shop, bringing us to the social shopping dynamic of social media.
Social experiences
For over 2,000 years, shopping has been a social experience. Whether the Roman Forum, medieval marketplaces, or 19th-20th century general stores with chairs for the customers to sit around and talk together. Why? Because people like to shop in groups, advise each other, help each other, and enjoy entertainment, food, and the latest news along the way. Some will say this social dynamic is the last defense of brick and mortar stores against the Internet.
We will see more and more retailers creating richer customer social media experiences that support both website and physical stores
Perhaps the real opportunity is utilizing social media to make in-store and online experiences that are much more social and to use the group dynamic to drive deeper customer experiences. Simple use of social media in shopping includes product and store reviews, product tips, and location check-ins. All of these support both online and physical stores. The next step up is the visual photo sharing experience discussed earlier; it’s just as applicable to a retail store as a website — with the local store having the advantage of putting customer photos on the walls.
Amplifying customer support and service by using Twitter and Facebook for personal outreach for customers with issues and needs, Best Buy has empowered thousands of their employees to be come a helpful force on Twitter known as Twelpforce. These employees provide wider and deeper customer support, mostly for the physical stores, at a much greater scale than could be done before social media. So much so, that a customer in the store can raise an issue or ask a question via Twitter. Best Buy will connect that customer to a Best Buy employee in that store in real time.
Walmart has taken customer service and support even further creating a team of Walmart Elves who work through Twitter to help customers with the challenges of the Christmas holiday shopping experience. Here the largest retailer in the world uses social media to create a personal outreach customer experience. In addition to solving customer problems, the program has further positioned the Walmart brand as customer centric, personal, and relevant. (Disclosure: Walmart is a LiveWorld client, including for the Walmart Elves program.)
The ultimate social media retail strategy will be to integrate customers with the entire shopping experience so that they can dialogue and build relationships with other customers and the store brand. Empower customers to tell stories of how they use the products in their daily lives, their shopping stories, their stories of shopping with friends, and their stories of experiences with friends.
The Future of Retail Merchandising in a Socially Networked World
Looking forward, we will see more and more retailers creating richer customer social media experiences that support both website and physical stores, often integrating the on- and off-line venues. Manufacturers and retailers will proactively advertise and communicate to customers during the shopping experience, primarily through mobile phones and tablets — and not just in their own stores, but also as customers shop at competitor stores. Effective communications will move beyond broadcast messages and more to personal outreach utilizing social media techniques to dialogue and build relationships among and with customers. The most successful retailers will be customer driven, building group experiences for customers in which the customer’s story becomes the retailer’s story. In turn, the customers’ daily lives will become integrated in the shopping experience the retailer provides.
Leveled playing field for retailers small and big
The most significant implication of social media for retailers is that it levels the playing field for both small and big players. Smaller retailers can go far beyond the limits of their neighborhood to reach more customers and source more suppliers. They can create a presence on Facebook or Twitter as easily as the large guys. It’s more a function of commitment and focus than it is of money and size.
At the same time, social media gives national firms the opportunity to be more personal, more local, and more relevant. It’s less about where you are located, and more about how you behave locally. Physical advantages of size, money, and local location will give way to those who are the most committed to and focused on social media engagement.
Creating great customer experiences, blending 1) location (meaning being locally present and personable rather physical location), 2) pricing that is competitive but also transparent, 3) selection that adapts to customer real-time feedback, and 4) emotional resonance and satisfaction through visuals and people to people experiences. New forms of location, price, selection, and personal/social customer experiences. That’s sessionless merchandising in a socially networked world.
