Is technology the only way for department stores to bring back foot traffic?
As department stores globally are closing bricks-and-mortar stores in the face of the huge growth of e-commerce, some department stores in China are thriving with the help of technology. The Drum looks at why this is happening and what a legacy department store like Robinsons is doing.
It is one-day before Singles’ Day and the Intime department store in Hangzhou, China is a hive of activity, where shoppers are rubbing elbows with elbow with one another while their hands are full with shopping bags.
While their counterparts around the world are struggling to find ways to improve foot traffic, Intime, which was bought by e-commerce giant Alibaba, has no such problem.
From the moment The Drum steps into the store, it is evident the department store relies heavily on technology to improve the customer experience and removing friction. For example, Intime uses a cloud POS, which means consumers in the store, can find a staff to pay for their purchases anytime and anywhere, without the need to queue.
Through its mobile app, consumers can scan the things they want to buy to get the information they need while touching, feeling and using the products. The experience does not end when the sale is completed as the app continues to keep consumers updated about new products and upcoming sales.
Intime also has a complete view of the customer journey, linking its membership programme with the Alibaba’s Tmall/Taobao membership system, meaning it knows what its customers are shopping for online and offline.
Andrew Au, the executive director of Eight Inc, tells The Drum that Intime has adopted this approach because “retail is not dead and only bad retail is.”
Pointing to a new algorithm of value defined by New York University professor Scott Galloway, he says the frequency of interactions and its themes impact the traditional retail footprint.
“Today a brand is experienced. Formerly a broadcast, now part of a live and continuous conversation. The brand relationship is one of dialogue, not a monologue. The audience taps in and taps out,” he explains.
“A function of the number of receptors or touchpoints that a brand has and the intelligence is derived from those interactions is where the competitive advantage lies.”
Ritesh Gandhi, director of customer success at Capillary Technologies, explains that as the global retail scene is changing, and now more so than ever do departmental stores and brands need technology. Whether it is for marketing, inventory control, targeting consumers or even payments.
He explains the focus is around improving customer experiences at every touchpoint. For some, this could involve more personalization and having more face-to-face interaction with staff, while for others, it could be around minimizing friction like checking out with WeChat.
Beyond improving the consumer experience, Gandhi says click-and-collect, online cashback, and consumer surveys are all proven O2O engagement solutions to enhance the shopping experience as they provide a direct link from the online space to the physical store.
“Experiential retail is the answer to the challenges posed by the rise of e-commerce and the decline in foot traffic at stores. Capitalising a physical and impressionable presence has become a central focus of many retailers,” explains Gandhi.
“Departmental stores have to get creative and target segments in which e-commerce cannot go. From pop-up stores, in-store events like exhibitions and concerts, F&B options, to high-tech displays that incorporate virtual or augmented reality. It’s about bringing the offline-to-online.”
He adds: “By focusing on the human-based and social aspects of shopping, retailers can turn what was once a disadvantage against e-commerce into a unique and curated experience.”
However, Au cautions that technology has been and always be but a mere tool in a retailers’ toolkit.
He says as the world lives in an age whereby technology allows for new experiences, department stores should be aware of them and use them in a manner that makes strategic sense but at the same time, but should not place all their eggs in the digital basket.
“We need to take a step back to basics to consider the human outcome we hope to achieve and if you can bring about a positive human outcome, then I guarantee you a good business outcome,” he adds.
Enter the monochannel
His advice to department stores? A physical store has now become embedded into the primary touchpoint, where the mobile conversation is the core. That means omnichannel retail has moved to monochannel.
Au explains Eight Inc defines the term monochannel as a reflection of a new relationship between customers and brands. He says it’s a recognition that brands relationship with technology has changed, which means there is a need to reflect a change to a customer perspective versus an internal operator one.
“The fundamental difference is the focus on human experience versus a channel tactic. Omnichannel, which has been the industry norm now for many years, grew out of the history and progression of technology – of a bricks and mortar world and an additional e-commerce brand channel,” he adds.
To ensure their customers’ experience does not end when the sale is completed, Au says department stores need to accept that customers have choice and control.
He notes that with the emerging Gen Z audience, omnichannel retail is no longer relevant to a new generation. This means it is longer seen as an additional slice of bread to the retail channel offer as digital natives become more prominent, Gen Z, with four times the spending power of millennials, represents a new perspective.
“They do not come from a pre to post iPhone world but have only known a world where a digital presence and interaction simply exists. It has not transformed their lives in the way mobile technology has in older generations. They see it as oxygen. They only care if they don’t have it. Interactions today happen simultaneously in digital and physical single space. Connected and controllable,” explains Au.
“This change creates opportunities to move from a static transaction posture. To communicate with more than a share of mind as the objective. Marshall McLuhan writes, “Everybody experiences far more than he understands. Yet it is experience, rather than understanding, that influences behaviour.” “
Au adds: “Great brands now connect across emotional realms to unlock the deeper connections that drive behavior. No longer a single idea but to experience a brand and its values across modes of dialogue, function, performance, beauty, and wit as keys to emotional connectivity.”
How a legacy department store like Robinsons innovates
Singapore-based Robinsons department store, which has been around for 161 years, has been on a digital transformation drive since it was acquired by Al Futtaim Group in 2008.
Operating over 271,000 sq. ft. in retail space in two locations in Singapore, Robinsons launched its first e-commerce store in 2016. It is now working with Capillary Technologies to integrate its retail experience and loyalty engagement strategies into a mobile app to bring the Robinsons experience to consumers simply through the touch of their smartphone.
The two parties have also been working to utilise consumer data gathered online to improve a customer’s offline shopping experience through actionable and personalised insights about their shopping habits and preferences.
The Robinsons mobile app’s omnichannel journey consists of two main focus areas, consumer acquisition and retention. The features of the app include user registration and integration through social media channels, full product information catalogue, visibility on loyalty points amount with an expiry date, a fully comprehensive rewards catalogue and voucher redemption on the app.
Danny Lim, the senior general manager at Robinsons explains to The Drum the department store is doing this because retail in South East Asia is at a crossroads as a result of wide-scale technological adoption, and the rise of various new technologies.
That has seen department stores take the most significant hit when it comes to the adoption of new technology and e-commerce with the emergence of the new digital-savvy millennial shopper.
He also notes omnichannel retail is no longer just about making a purchase; it is about the experience.
“With an estimated purchasing power of over $170bin per year, millennials are the most influential demographic in today’s global retail industry. They are more brand-conscious, influenceable and trend-driven; they are more likely to rely on research, reviews and personal recommendations before making a purchasing decision,” he explains.
“A key challenge for departmental stores such as Robinsons revolves around connecting seamlessly and more in-depth with our millennial consumers and conveying the message that we know and understand them.”
He continues: “Growing up in the digital age, they have also grown accustomed to the speed and convenience brought forth by the advent of the internet and mobile technologies. Creating a shopping experience that is seamless, interactive and personalised is vital for engaging millennials and securing their loyalty.”
Lim claims that after using Capillary’s omnichannel retailing tools, Robinsons has managed to achieve increased sales revenue as Robinsons’ personalised campaigns that have generated multi-million dollar income and generated an increased 35% YOY sales.
He says Robinsons has also managed to delight and acquire new consumers through personalised campaigns that are exclusively targeted to specific segments and verticals. The app has recorded more than 50,000 downloads in Singapore for over 12 months.
In addition, the mobile app brought about new features for consumers such as product information, the full catalogue of products and loyalty programmes like points and rewards.
Explaining these results, Gandhi says the Robinsons app is transforming the way our consumers communicate and consume as it presents a unique way for digital millennials to participate in exclusive call-to-action initiatives like deals, promotions and in-store activities.
“Every smartphone can be empowered with omnichannel technology and every consumer, a touchpoint in a unified consumer journey experience,” he explains.
“Capillary is working with Robinsons to acquire more consumers by designing campaigns exclusively aimed at new users. Additionally, we are working with Robinsons for retention efforts by developing personalised campaigns, by referencing past purchase behaviour and touchpoints such as birthdays/anniversaries to encourage retention and return purchases.”
To ensure its customers’ experience does not end when the sale is completed, Gandhi says the Robinsons team can view and measure the full range of statistics via a CMS dashboard.
It displays real-time consumer interaction with offline assets (SKUs and transactional breakdown) and the channel they choose to engage in.
“The app connects both the offline and online aspects of retail. It enables speed and convenience that helps connect Robinsons’ retailers in the physical space with the wealth and accessibility of information available online,” explains Lim.
“A common concern around data use is the issue of privacy. With regards to privacy issues, we have a set of PDPA & GDPA privacy policies to inform consumers about the collecting of information.”
The Drum previously looked at how a shopping mall like Funan is embracing “phygital” which embraces omnichannel through click-and-collect services, relies heavily on technology and even operates an urban farm.