32 | www.retailenvironments.org RETAIL ENVIRONMENTS january.february.2016
the IT purchased through retail CMO
budgets for 2015 will amount to $7.5
billion in North America, estimates
IHL Group, a global research and advisory firm specializing in technologies
for retail and hospitality. And a recent
report by McKinsey found that data
initiatives could increase operating
margins by as much as 60% in retail—
more than any other industry.
“The really big, significant play in
this is the difference in budgets,” says
Lee Holman, analyst for IHL Group.
The typical IT budget for a retailer is
between 1% and 2% of annual sales,
while marketing can range anywhere
from 15% to 25% of sales—a difference
that is forcing these departments to collaborate in new ways to accommodate
emerging technology, he says.
“Years ago, prior to the PC, the lines
of delineation between the two groups
was clear. This stuff over here is technical, your stuff over there is marketing,
and the two never met,” Holman recalls.
“But as technology advances and more
user-friendly applications are available
now—especially mobile apps in social
media, the lines of demarcation between
the two groups is blurring. So the col-
laboration that needs to happen between
the CMO and the CIO is key.”
Case in point: If a retailer guaran-
tees delivery within 24 hours online, the
company must deliver on that promise
because “one thing that digital doesn’t
respect are the traditional silos,” says
Dalziel & Pow’s Kean. “So there are no
boundaries anymore between depart-
ments and, unfortunately, budgets are
still—perhaps in some businesses—
drawn up that way. But if you want
more digital and engagement in stores,
you need to plan for it and you need to
budget for it.”
Complicating matters is the fact that
customers’ purchasing decisions and
behaviors often flow seamlessly between
online and in-store platforms, according
to Donnelly. For example, a consumer
might see an ad online and make a pur-
chase in-store, or they may come in and
try something on in a store and purchase
a product in a different color online.
“You can’t separate your investments
because the return on an investment in
digital is manifesting itself in the store,”
says Donnelly. “Some of the more
forward-looking retailers understand
that at kind of an emotional or gut level,
but really capturing it is a challenge for
Donnelly suggests that to be a suc-
cessful omnichannel provider, retail-
ers need to consider all platforms
from the customer’s viewpoint and
ensure that the experiences are similar
and reinforce each other. “It’s not an
either-or—it’s how they support one
another,” he adds.
WithMe introduces turnkey smart stores
WithMe opened a 3,000-sq.-ft. mobile Shop WithMe popup on Chicago’s
Michigan Avenue in November. Inside, smart shelves physically move toward
shoppers as they pass by. Interactive mirrors in fitting rooms allow customers
to make purchases or request alternate products. And app-toting shoppers can
check out simply by walking out the door with a product. Brand and product
lines can be changed quickly.
“We change the files, not the fixtures, to create a new experience. Today the
store can be TOMS Shoes and next week it can be an entirely new brand without
us having to rebuild the store,” says Danielle Jenkins, co-founder of WithMe.
The store structure
units of tensile
architectural systems for easy assembly, disassembly, and transport. With stores
already in the works for New York, Dallas, Los Angeles, San Francisco, Houston, and
Miami, the company envisions a global network of turnkey smart stores for brands
to activate and deactivate within days to meet market needs.
“Think of Shop WithMe retail stores like you do Amazon servers. We set up the
infrastructure and all the brands have to do is flip a switch to scale up or down very
quickly without the large upfront investment,” says Jonathan Jenkins, founder and
CEO of WithMe.
Kroger is experimenting with smart shelves
developed in-house. Digital displays on the shelves
in a Cold Spring, Ky., store can display prices
and ads. Displayed data can be changed with
a few keystrokes in an office, saving labor time.
Pricing can be in shopper-friendly larger font.