Retailers that Connect Hearts and Minds Win Business from Showroomers

1. Retailers that
Retailers that
Connect Hearts
Connect Hearts
and Minds Win
and Minds Win
Business from
Business from
Showroomers
Showroomers
In-store, at home,and on the go
In-store, at home,and on the go
Valeria Maltoni
Valeria Maltoni
Senior Director ofof Strategy
Senior Director Strategy
EPAM Empathy Lab
EPAM Empathy Lab
The path to purchase is no longer linear,
The path to purchase is no longer linear,
nor is itit one-dimensional. Multi device
nor is
one-dimensional. Multi device
ownership is aareality1.1.Smartphones and
ownership is reality Smartphones and
tablets are changing our behaviors by
tablets are changing our behaviors by
putting an ever-increasing abundance of
putting an ever-increasing abundance of
options at our fingertips, including when
options at our fingertips, including when
and how to make aapurchase.
and how to make purchase.
101 East 8th Ave, Suite 201, Conshohocken, PA 19428
101 East 8th Ave, Suite 201, Conshohocken, PA 19428
©2013, AllAll Rights Reserved. EPAM Empathy Lab
©2013, Rights Reserved. EPAM Empathy Lab

2. 59
96
%
%
%
%
TOP
FOUR
FOUR
ONLINE
ONLINE
Most sought features online:
Most sought features online:
low prices, product variety
low prices, product variety
Beauty and personal care is the fourth largest category purchased online
Beauty and personal care is the fourth largest category purchased online
in North America at 59%
in North America at 59%
Finding the specific product is the most important attribute when shopping
Finding the specific product is the most important attribute when shopping
online–96%
online–96%
Top four channels: Amazon, 28%; Sephora, 18%; major drug stores/mass
Top four channels: Amazon, 28%; Sephora, 18%; major drug stores/mass
retailers, 11%; brand direct (17 brands), 10%
retailers, 11%; brand direct (17 brands), 10%
&
While we do most of our research at home on desktops
While we do most of our research at home on desktops
or tablets, mobile devices continue to drive purchase
or tablets, mobile devices continue to drive purchase
decisions in the store. This isn’t just for large ticket items,
decisions in the store. This isn’t just for large ticket items,
but for everyday products, too. The beauty industry
but for everyday products, too. The beauty industry
offers a good example of this trend.
offers a good example of this trend.
According to a March 2012 survey of online buyers
According to a March 2012 survey of online buyers
in North America conducted by A.T. Kearney, people
in North America conducted by A.T. Kearney, people
spent 33% to 45% of their monthly beauty and personal
spent 33% to 45% of their monthly beauty and personal
care budgets online. Shoppers are using both etailers
care budgets online. Shoppers are using both etailers
and brick-and-mortar stores to purchase these types of
and brick-and-mortar stores to purchase these types of
products.
products.
Brands need to step up their multichannel marketing
Brands need to step up their multichannel marketing
efforts to reach customers wherever they are buying.
efforts to reach customers wherever they are buying.
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EPAM Empathy Lab
EPAM Empathy Lab
Most sought features in store:
Most sought features in store:
tactile experiencew/products,
tactile experiencew/products,
interaction w/staff
interaction w/staff
However, for retailers, unlocking new opportunities to
However, for retailers, unlocking new opportunities to
influence and persuade customers to buy is not just about
influence and persuade customers to buy is not just about
integrating new tools. It is about understanding people.
integrating new tools. It is about understanding people.
While retailers have always specialized in getting to
While retailers have always specialized in getting to
know their customers, the increased availability of
know their customers, the increased availability of
communication and transaction channels is posing some
communication and transaction channels is posing some
unique challenges.
unique challenges.
Where do customers go to find out about products?
Where do customers go to find out about products?
What roles do search, content, reviews and recommenWhat roles do search, content, reviews and recommendations, and access/speed play in the customer journey?
dations, and access/speed play in the customer journey?
How does a retailer create a single view into customer
How does a retailer create a single view into customer
interactions across different touch points?
interactions across different touch points?
comScore, April 2012 ––Nearly 1 in 4 U.S. Smartphone users also has a tablet
comScore, April 2012 Nearly 1 in 4 U.S. Smartphone users also has a tablet
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2
IN-STORE
IN-STORE

3. Why attention alone
is not enough
Attention may be the currency of the Web. However,
it alone does not translate into action. People spend
more time online, visit more Web pages, and click on
more links than ever before, yet all this isn’t necessarily
leading to more transactions.
Today, a Web or in store visit from a mobile user is
almost certainly less likely to convert into a purchase
just from a click. Brand tweets are seen by ten times
as many people, yet they are only half as likely to
get clicked on as they used to be.
While attention online seems to go up fast, the
amount of interaction it leads to is not increasing
at the same rate. Browsing doesn’t equate action,
and action doesn’t scale as quickly as browsing.
This is why designing experiences that support
what your customers are trying to do is more
important than ever. Starting with an understanding of
who buys from you and tailoring your approach
to their needs.
User-centric view
Start by assessing consumer needs – how are people
researching your products? Where and from which devices
does your site get the most traffic?
Develop and utilize personas – who are your customers? What
are they trying to do?
Create experience themes that tie to your customers’ desire
for self-expression and their sense of identity.
Help them take center stage by encouraging frictionless and
easy actions through design and content.
Bridging online, in-store, and on-the-go experiences
also requires a shift in mindset. Retailers with a traditional website with a mobile version need to shift to
develop a product that is responsive across screens,
speaks to the market in real time, and is adaptive.
The solution needs to learn from the people who
use it.
Sample : Mobile commerce strategy and tactics for fashion/apparel
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EPAM Empathy Lab

4. Translating your brand
Translating your brand
messaging and user
messaging and user
experience across screens
experience across screens
An increasing number of people are
An increasing number of people are
using up to five different devices and
using up to five different devices and
can spend up to one week researching
can spend up to one week researching
and price-comparing before making a
and price-comparing before making a
purchase in many product categories –
purchase in many product categories –
beauty and fashion being one of them.
beauty and fashion being one of them.
Pre-purchase research is conducted on
Pre-purchase research is conducted on
brand and retailers’ Web sites in about
brand and retailers’ Web sites in about
equal percentages, followed by
equal percentages, followed by
recommendations and reviews on social
recommendations and reviews on social
sites to glean information on product
sites to glean information on product
performance.
performance.
With more options available, buyers are
With more options available, buyers are
more open to choices and (potentially)
more open to choices and (potentially)
less loyal to brands than they used to be.
less loyal to brands than they used to be.
The phenomenon known as showrooming
The phenomenon known as showrooming
has stirred a major disruption in retail
has stirred a major disruption in retail
as mobile enters the brick-and-mortar experience.
as mobile enters the brick-and-mortar experience.
[
]
With more options available,
With more options available,
buyers are more open to
buyers are more open to
choices and (potentially)
choices and (potentially)
less loyal to brands than
less loyal to brands than
they used to be.
they used to be.
Many U.S. consumers have come to rely on their
Many U.S. consumers have come to rely on their
smartphones to assist with their in-store shopping,
smartphones to assist with their in-store shopping,
looking to make sure they are purchasing the right
looking to make sure they are purchasing the right
product at the best available price. Mobile is, in fact,
product at the best available price. Mobile is, in fact,
the new store end cap.
the new store end cap.
This behavior is putting significant economic pressure
This behavior is putting significant economic pressure
on retailers with physical operations. According to
on retailers with physical operations. According to
a recent comScore report22, ,the retail industry is being
a recent comScore report the retail industry is being
disrupted as eCommerce grows at a 4x rate faster than
disrupted as eCommerce grows at a 4x rate faster than
traditional retail, while accounting for 1 out of 10
traditional retail, while accounting for 1 out of 10
retail dollars.
retail dollars.
The best vantage point to uncover opportunities
The best vantage point to uncover opportunities
to translate your brand message into a compelling
to translate your brand message into a compelling
experience in an omni-channel environment is by
experience in an omni-channel environment is by
placing the customer at the center. As high-speed
placing the customer at the center. As high-speed
mobile connectivity becomes the norm, long-term
mobile connectivity becomes the norm, long-term
22
survival for retailers is dependent upon a strong a
survival for retailers is dependent upon a strong a
combination of content and data.
combination of content and data.
Whether she’s researching, shopping, buying, picking
Whether she’s researching, shopping, buying, picking
up or returning an item, or seeking service, a single view
up or returning an item, or seeking service, a single view
of the customer will help personalize her experience
of the customer will help personalize her experience
in store, on the desktop, or on the go based upon her
in store, on the desktop, or on the go based upon her
preferences and purchase history.
preferences and purchase history.
Customer profiles and loyalty accounts allow retailers to
Customer profiles and loyalty accounts allow retailers to
gain insights into what delights her, the make or break
gain insights into what delights her, the make or break
moments, as well as how data can help deliver better
moments, as well as how data can help deliver better
experiences tailored to her needs as she researches,
experiences tailored to her needs as she researches,
evaluates products, and shops.
evaluates products, and shops.
Bridging online and physical locations creates a very
Bridging online and physical locations creates a very
powerful value proposition for shoppers who are used to
powerful value proposition for shoppers who are used to
viewing and sharing information across devices, at home,
viewing and sharing information across devices, at home,
and on the go. Successful execution is not limited to
and on the go. Successful execution is not limited to
providing digital tools like iPads, kiosks, and intelligent
providing digital tools like iPads, kiosks, and intelligent
product bar codes or social mirrors to customers.
product bar codes or social mirrors to customers.
To be the most effective, digital displays still need to be
To be the most effective, digital displays still need to be
integrated in the in-store experience and be right for
integrated in the in-store experience and be right for
the customer, not just the store. Are installations well
the customer, not just the store. Are installations well
maintained and visible in-store? Is the content available
maintained and visible in-store? Is the content available
through tablets and kiosks useful, unique, and simple
through tablets and kiosks useful, unique, and simple
to access?
to access?
Additionally, to make the experience lean and effective,
Additionally, to make the experience lean and effective,
point of sale (PoS) solutions and order management
point of sale (PoS) solutions and order management
systems (OMS) need to be integrated to CRM tools to
systems (OMS) need to be integrated to CRM tools to
empower sales associates as they service customers.
empower sales associates as they service customers.
comScore, February 2013 ––smartphones driving showrooming, tablets driving purchase
comScore, February 2013 smartphones driving showrooming, tablets driving purchase
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EPAM Empathy Lab
EPAM Empathy Lab

5. Omni channel customer behavior
STEP
2
VE
ACTI
E VA LU AT I O N
LOYA LT
Y LO O P
STEP
STEP
1
3
$
$
Initial
Consideration
Set
Moment of
Purchase
STEP
POS
T P URC
4
N
HASE EXPERIE
CE
1
2
3
4
RESEARCH
SHOP
BUY
SERVICE
Browse Catalog
Visit Retail Store, Kiosk
Buy Online
Buy Online
Web Search
Product Info
Chat, Place Order
Call to Research Accessories
Comparison Site
Read Reviews
Comparison Site
Troubleshoot On Community
Fan Sites
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EPAM Empathy Lab
Online Chat Rooms

6. Cross-platform services and transactions speak to market
Along with segmentation by customer type, smart
retailers test scenarios in a multichannel environment.
Are customers able to return or exchange items, pay
in-store for an existing order, or pick up a paid for order
in-store instead of having it mailed to their homes?
In a recent interview, Julie Bornstein, SVP Sephora
Direct, said the company has been testing iPads with
customized apps in-store. Customers can use the tablets
to watch instructional videos, read online reviews, and
sign up for the loyalty program.
Sephora’s newsletters lead with exclusive offers and
discounts, online and in-store, encouraging repeat
purchases while collecting unique customer data to
store in the company’s CRM system. Sephora’s Loyalty
Program, VIB, creates multiple opportunities for the
retailer to upsell and encourage customers to try new
products through free samples.
A personalization engine drives both product page
recommendations as well as after-purchase product
reviews requests, which the beauty retailer then
integrates on the company Web site. A passionate
customer community has gathered around product use
and contributes regular recommendations and reviews.
Customers get what they want, while the company learns
what converts.
Case Study: Leading Global Beauty Retailer Cross Integration
Case Study: Sephora’s s Cross Channel Channel Integration
Key Mobile Statistics:
$300 million in annual eCommerce sales
300% increase over the past year
in mobile shopping
70% of its mobile traffic comes from
iOS devices
3 million in iOS App downloads
1.5 million annual visitors per month
ONLINE
ON THE GO
Sephora.com through
The digital experience carries from the retailers website
A next generation iOS app gives customers the most percustomers the most per-
to mobile mobile and social media initiatives, including
through toand social media initiatives, including an active
sonalized experience ever seen in the beauty industry, and
the beauty industry,
Facebook page, a thriving online community, Beauty Talk,
an active Facebook page, a thriving online community,
connects customers with the clients beautyin ways thatways
Sephora experts experts in are
a mobile site, mobile site, and an
Beauty Talk, a and an iPhone App. iPhone App.
mostare most relevant to them.
that relevant to them.
IN STORE
The app allows shoppers to tap or scan products while in
Scentsa and Skincare IQ touchscreen
In-store responsive touchscreen kiosks offer customers an
kiosks offer customers products, email research products,
entry point to research an entry point toit or scan the QR
email it or scan the QR code with their phone. available
code with their phone. Beauty Studio iPads areBeauty
Studio iPads are available along vanity mirrors to tips,
along vanity mirrors to view how-to videos, accessview as
how-to videos, access tips, as well as a menu of in-store
well as a menu of in-store services and social content.
services and social content.
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EPAM Empathy Lab
store and run price and item comparisons, access product
ratings and reviews, save products to a wish list, receive
sales and discounts notifications, check in when near a store,
order, and pay.

7. Omni channel means
responsive, social, and
data-driven
available everywhere, responsive design enables reach
in the form of broader adoption.
The rapid changes in customer adoption of mobile
and social are strong reasons to re-evaluate ecommerce
strategies. Customers are used to starting a task on
one device and completing it on another, and there
is a renewed focus on retailers’ supporting user tasks
and fulfilling orders across channels. Retailers need to
provide a compelling experience across multiple devices
and screen sizes.
Designing for individual experiences without taking
into account the power and scale of the connected
customer relegates an in-store or app experience to
novelty, without it ever tipping over into necessity.
To move up the ladder of social behaviors retailers
need to support in-store digital experiences. How is
this achieved? By building an experience that goes
responding to specific need inputs at the very bottom of
the scale, to giving sales associates the data necessary
to make personalized recommendations and helping
customers make informed decisions
tailored to their specifications.
Responsive Design in Brief
CSS
ME DIA QUE RIE S
Fluid grid
Flexible media
CSS Media Queries
Benefits
Challenges
One codebase to manage
Limited access to device features
Speed to Market on new devices
An interim solution are the iPad
displays at Kate Spade Saturday’s
micro-store in Japan. They serve the
dual purpose of stimulating deeper
product discovery and connection to
the brand, and help the retailer make
frequent changes and updates as
they are available without incurring
additional costs.
Slower performance than naitive
Another example of novelty interactive experience in store is the Adidas
Mobile search visibility
Mobile browser fragmentation
social mirror. It engages customers
Updates pushed via browser
New Design process
through content and the connected
Unified user experience
world. The social mirror and the new
storefront window the company rolled
out as part of a six-week pilot test at
the Adidas NEO Label store in Nürnberg both elevate
Tips for retailers to stay ahead
customer engagement to the next level.
Enhance and personalize the in-store experience to inspire
conversion – can customers access additional product
information and tailored recommendations using their
phones while in store?
Bring social to shopping– are ratings and reviews integrated
with your mobile site? Can shoppers check social media buzz
about your products?
Unlock the power of digital in-store– are kiosks and tablets
used to create real-time, localized experiences that save
customers time and money? Can shoppers access deals while
in-store?
Be omni-present– are your digital assets optimized to work
across platforms? Is data empowering your sales associates
to assist customers?
Designing for devices is a zero-sum game – it’s
unsupportable, too expensive, and takes too long to
complete. Given that digital products need to be
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EPAM Empathy Lab
Allowing customers to customize products, share
fitting sessions with their social circles, and providing
easy access to product information via kiosks or
iPads while in store enhances the experience and
encourages conversion.
More sophisticated, high touch digital experiences
tailor merchandizing based on interests and preferences.
beauty retailer case study demonstrates the view
The Sephora case study demonstrates the single single view
of the customer within a connected ecosystem.
Because social conversation has become a primary driver
of content engagement, responsive design is part of the
answer. Extending the view of the funnel into the social
channels to allow this conversation will be vital to
understanding the customer at this step of the process.

8. Measure what matters
Over time, your shoppers are interacting with you via
more devices and touchpoints, whether at home,
on the go, and in-store. Their engagement with the
brand will be direct (engaging with your products and
experiences) and indirect (e.g., interacting with other
shoppers through social channels, purchasing through
other marketplaces).
The lines between these experiences will continue to
blur as shopping continues to shift from in-store and
standard ecommerce in coming years. This is driven by
the increase in people with the ability to shop, compare
prices, and transact over smartphones and tablets.
goals, but provide the most relevant and correct feedback, will allow you to measure what matters.
Developing the business competency that enables your
team to measure what matters accurately (not precisely)
nurtures team members who can nimbly convert data
[
into insight, and focusing on taking action
based on data will position you to interact with
your customer more effectively.
Insight from data drives innovation
NOSE
ITERATIVE
IMP RO VE ME NT
D E P LO Y
As more channels and experiences produce more data
for your organization, it is becoming more difficult,
not easier, to focus on the critical few metrics that
define success and to constructively act on your data.
Organizations that master the skill of efficiently using
data properly to make decisions will compete
at a higher level than those who don’t.
Selecting key performance indicators and identifying
benchmarks that are not just aligned with business
8
EPAM Empathy Lab
This competency is about more than buying the
right tools – this is about acquiring experience,
knowledge, and facility with analysis that will
help accelerate the development of insights
that will drive business growth.
TEST
MEASURE
D I AG
]
Organizations that master the
skill of efficiently using data
properly to make decisions will
compete at a higher level than
those who don’t.
In addition, a cultural shift is required; there is
no right answer, no best answer that is not supported by the right data. Retailers have always
lived by data – but many multichannel retailers
have struggled to apply their understanding of
the data that informs the store merchandising
experience to the digital realm, especially as
digital channels continue to evolve.

9. Reinventing the buying experience with digital at the center
Customers are the driving force behind the increasing
need for retailers to integrate digital tools and technologies. The good news for brands with physical stores is
that while online has surpassed offline when it comes
to researching products, the traditional store still retains
primacy for completing the purchase.
According to a recent survey by Forrester3, the modern
shopper uses multiple channels to research products
and cares more than ever about value and savings.
While the store’s physical location and Web site were
ranked equally helpful to fill this need, the store is still
king when it comes to closing the sale. Retailers should
use digital to drive customers to the store and improve
the in-store experience.
While customers use smartphones when on the go to
access location-based and coupon applications, as well
as document and share what they see and experience,
these platforms still play a minor role in product research
and conversion.
3
9
The traditional store still retains a strong appeal for
shopping, particularly for beauty products, and categories like apparel and footwear. Digital displays, sales
associates with iPads, and kiosks to check inventory
and access coupons and rewards have proven to
generate a positive impact on customers while in brickand-mortar locations.
In addition to leveraging customer demographics for
segmentation, marketers must combine customer
lifecycle behavior with point-of-sale data to create buyer
personas and then optimize messaging by persona.
Gathering and using richer cross-channel data allows
retailers to identify the most loyal customers and target
specific rewards and content to those groups online,
in-store, and on the go.
North America Technographics Consumer Deep Dive: Investigating the Customer Life Cycle (Buy Phase) Survey, Q1 2012, Forrester
EPAM Empathy Lab

10. About the Author
Valeria Maltoni,
Senior Director of Strategy,
EPAM Empathy Lab
Valeria has been helping organizations develop strategies to connect brands and customers
through content, community, and commerce in digital and social for more than 20 years. She
has worked with Fortune 500 clients and fast growth organizations in five industries, including
Target, Allstate, GE Appliances, Anheuser-Busch InBev, SunGard, Willis International, and the
Project Management Institute (PMI).
more
For More information visit:
epam.com/empathylab
epam.com/empathylab
EPAM Empathy Lab is a digital strategy and experience design firm with a
global user experience development team. We build products. Our work is based
on: Meeting the needs of end users by understanding what they are trying to do
through behavioral research; Achieving business objectives by supporting client
Contact us
michelle_pack@epam.com
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programs through strategic consulting. Plus, translating data into insights that
inform measurement and tactics through experience planning and optimization;
Delivering world-class software engineering by shaping products in code through
experience development.
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