U.S. Retailers Tackle Online Threat with Technology

As Black Friday begins, brick-and-mortar U.S. retailers embrace mobile technology to monitor customer behavior and get a leg up on online rivals

LondonNov. 29, 2013—With online shoppers predicted to spend $1.6 billion on Black Friday, under fire brick-and-mortar stores are finding innovative ways to fight back and protect their market share. Black Friday was formerly perceived to be the high street retailer’s day of salvation, with Cyber Monday its online counterpart. However, with online purchases predicted to be up 17 percent, retailers are using a new multi-channel approach to track customers through their smartphones in and around stores, and learn more about their preferences from their shopping behavior.

The National Retail Federation stated that a record 139 million people shopped both online and in stores over the Black Friday weekend in 2012, culminating in an estimated spend of $59.1 billion. With consumers still recovering from the recession and employing smarter shopping habits, which include taking advantage of great online deals, Black Friday is no longer consigned to offline retail shopping, as a definite merging with online purchasing is evolving.

As U.S. retailers report a dramatic decline in customers coming though their doors, it really is make or break for many traditional stores. Brands like Abercrombie & Fitch, Macy’s, Nordstrom and even The Gap, which recently posted excellent results, all reported shrinking footfall. The shopping days from Black Friday up to December 24 are the most important of the year for retailers, and with six fewer shopping days between Thanksgiving and Christmas than in 2012, one thing is clear, they need to use every available method at their disposal to increase revenue.

Stores are using mobile tracking technologies to increase their level of consumer engagement and improve the customer shopping experience. The ability to track customers on their smartphones in and around stores could help brick-and-mortar retailers tackle the online threat in other ways, too, says UK-based retail technology and mobile payment specialist Dan Wagner.

“It’s all about offering the consumer something extra. Geo-location is clearly part of that picture and something that a physical retailer can leverage that an online retailer can’t. If a customer transmits their location to a retailer, the retailer could let them know that they have a store 300 yards away, for example. The store could then send a message telling the customer to drop by in half an hour when their goods will be ready to collect. Amazon can't do that.”

Alongside geo-location, techniques like tailoring shopping to the individual preferences of the consumer with bespoke recommendations that mimic the online experience can help to attract and retain customers. Developments in the design and layout of the stores themselves are providing another method to tempt the browsers and buyers back. Forward-thinking retailers like the Apple Store already pioneered a more informal, less linear format that allows for browsing and purchasing to be interlinked. This kind of approach, combined with the use of mobile payment methods, in which payment can be taken anywhere on the retail premises, make the whole process of shopping easier, and ultimately, more pleasurable.

Wagner adds: “It is now up to the stores to seek out and create innovative ways through which they can engage with their customers. Geo-location, mobile payment and tailoring the experience to the consumer represent some of the ways retail is changing for the better. There are 27 million point-of-sale terminals in the U.S. that need to be switched over to a chip-based card system. This is providing an opportunity for retailers to upgrade not only their card readers, but to also add a next-generation platform infrastructure, which supports tablets, mobile phones and enhanced in-store personalization.

“The number of ways that retailers can engage with their customers is increasing and mobile payment is playing a big part in this. Making payment more convenient and taking the transaction to the customer wherever they are really improve customer engagement, and ensures that lines don’t put frustrated customers off shopping in the busy holiday season.”

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