Digital disruption

5. Digital disruption Digital disruption refers to changes enabled by digital technologies that occur at a pace and magnitude that disrupt established ways of value creation, social interactions, doing business and more generally our thinking.

9. Disruption Past, Present, Future Stimulus Evaluation Experience Purchase Advocacy Yesterday Radio Print TV Billboards Inserts & Reviews Trial & Error Sampling Big Box Bricks & Mortar Card Cash Register Printed Coupon In Store Service Word of Mouth Media Reviews Call Centre Today Social Media Blogs Digital Marketing Shopper Marketing Social Media Targeted Promotions Online Comparison Social Media Experiential Stores Ecommerce Click & Collect Pure Play Wireless Card EFT Digital Coupon eWallet Phone Transfer Barcodes NFD RFID Social Collaboration Augmented Reality Digital Assistant Tomorrow Small Format Stores Integrated Retail Channels Specialty 3D Printing Mobile POS Integrated POS Cashless NFD Biometrics Integrated Channels Muliti Return Points Personalised Service

10. The Three Types of Digital Disruption EconomicsAccess Performance

11. The Three Types of Digital Disruption Access Direct engagement and purchase between shoppers and suppliers

12. The Three Types of Digital Disruption Economics Ability to make many more transactions at lower unit values

13. The Three Types of Digital Disruption Performance Delivering better value through expanding physical, informational & digital properties

14. Access Responses to Digital Disruption

15. Responses to Digital Disruption Economics

16. Responses to Digital Disruption Performance

17. Traditional Path to Purchase Stimulus Purchase Experience

18. Traditional Path to Purchase Stimulus Purchase (First Moment of Truth) Experience (Second Moment of Truth)

19. Disrupted Path to Purchase Stimulus Purchase (First Moment of Truth) Experience (Second Moment of Truth) (Zero Moment of Truth)

20. Disrupted Path to Purchase Stimulus Purchase (First Moment of Truth) Experience (Second Moment of Truth) Next Shopper’s ZMOT (Zero Moment of Truth)

21. Consumer Expectations on the Path to Purchase Stimulus Evaluation Experience Purchase Advocacy In-store theatre, but with similar content and information as that available online Personal, guided shopping experience Browsing and selection not limited to store itself. Ability to order anytime, anywhere Use payment types in all channels: simple, secure, quick and flexible payment process High levels of convenience, delivery anywhere, anytime

22. The Evolving Role of the Store • Right product and stock • Visual merchandising to increase basket value • Grow loyalty through customer service Drive sales • Create a lifestyle experience • Store theatre • Personalised experiences • Customer service Be a brand & product showcase • Store is a destination to augment the brand experience • Limitless range • Empowered store assistants • Technology as an enabler • Connected stores for connected consumers What does this mean within the store?

23. The store as a Destination Use of radio-frequency identification technology (RFID), which triggers related catwalk footage when some products are taken into a fitting room, or near a video screen.

24. Stores use touch screens and kiosks to allow customers to order for delivery to shop or home, access to a wide product range with less need for floor space Limitless Range

25.

26. Shoppers can see what other people like providing them with cues. Store as an enabler

27. Nordstrom uses mobile POS devices in its stores to enable staff to check out customers anywhere in its stores, and cut the queues down. Empowered Store Assistants

28. Connected stores for connected consumers

29. What’s Next? • Continued change is inevitable • Need to think about the shopper experience holistically • Digital is as much a part of the experiences we design as furniture, pillars or packaging

30. Any Questions?

Notas do Editor

So today, you might think that I’m going to talk about every little minutiae of how digital is changing the world around us, and probably some really exciting stuff like the differences between NFD and RFID. Well not really, because digital and how we can use digital for our clients is a whole lot more exciting than that.
What I’m actually going to talk about is digital disruption. And I’m going to explain what it means, for both our clients and for us, and what we should be thinking about in the work that we do. That being said, I think this picture here represents to me what Digital disruption means
Some of you may be surprised to know that I’m a Catholic, and my faith is pretty important to me. So, this is a picture from just about ten years ago. Here you see people in St Mark’s square in Italy, waiting to hear the announcement that Cardinal Ratzinger has been elected pope. It seems to be a pretty quiet and typical crowd. Just a few digital cameras, but people are respectfully waiting to hear the announcement
This picture was taken 8 years later, when Pope Francis was elected. It’s a sea of mobile devices, with everyone wanting to upload the first picture of the new pope to social media, for scoops and to share with their friends, family and their social network. This is what we mean about digital disruption. We’ve gone from a world of spectators to a world of active participants in the world around us. Digital has disrupted even the way that we hear and experience major world events. It impacts pretty much everything, and you can’t get away from it, almost anywhere in the world these days
Here’s a more formal definition of digital disruption. So it’s not just the change, but it’s the pace of that change. This is scary right. We go from the established way that things used to happen, but not only that at a pace that can seem breathtaking at the best of times. So how do we keep pace with these changes? For ourselves, for our clients?
Well, disruption has always been part of our world. Another thing that you might not know about me is that I’m very interested in Geneology. My family back home in Leeds were Irish immigrants, and owned a grocery store in the town centre that probably looked pretty much like this one. When you went into the shop, you likely had a written list of what you wanted, and you might have given it to the grocer or asked for what you wanted. The grocer would get what you wanted off the shelf, from a limited selection and you’d pay cash, or if you were lucky the grocer might let you run a tab til payday on Friday.
Fast forward 50 years to the 60s. Supermarkets caused my family to leave the grocery business, as they weren’t able to react to how Supermarkets had disrupted their model, by offering greater choice at lower prices, to some degree as a result of self serve. Here we see our classic 60’s housewife choosing a product from a wide variety of different brands and options. The in-store experience has been disrupted by the phenomenon of self serve amongst other things
And this is the cutting edge of in-store experience today. This is Tesco’s new Hypermarket in Coventry, and part of a new concept they’ve developed to counteract current disruption of their grocery business. This was redeveloped on an existing site, because Tesco are losing traffic in their hypermarket format as shoppers increasingly are no longer one stop shopping, but choosing to shop different places based on different store needs. With the way that digital has changed shopping, you can now know where the cheapest price can be found for your favourite produce, centre store or meat items. Have you ever shopped for produce at one store, national brands at another and meat at a third? In designing this store Tesco have focused on some pretty interesting things Offering sub-brands within the store (In this case in terms of restaurant and homewares options Making the store visit more of an event – encouraging lingering, browsing and enjoying the experience, rather than the austere design of the 60’s Using visual merchandising to build Tesco’s natural and healthy chops – this looks a bit more like a stall at a Farmers market than a market leading hypermarket And of course even though this merchandising solution harkens back to the good old days of the grocer, we still see the ubiquitous fifth screen – the digital screen above this somewhat nostalgic merchandising
So arguably, disruption has always been a thing. This is a typical product’s path to purchase. CLICK In the past , so the story goes, the stimulus for your purchase might be looking at your empty fridge, or seeing an ad somewhere. As time progressed, shopper marketing grew more important and ads online You then decided what to buy based on trial and error or maybe from FSIs or print reviews for things like cars. You might sample a new brand in a store. Your retail experience was based in bricks and mortar stores which grew bigger and bigger as we’ve seen You’d then pay cash for what you bought, later use a credit or later debit card, and couponing became widespread Once you’d bought your item and used it, you might have called your Mum and told her about it, or recommended it to a friend over your backyard fence. CLICK Today, we still pretty much go through the same process, but digital has disrupted each part of the process, through social media, the ability to compare things online, the growth of click and collect, where you pay for something online and then collect it from a store Payment is also becoming increasingly digital. From tap and pay, through to the emergence of phone payment through things like Google wallet or the starbucks app that you can use to load money to your phone to pay for coffee And social media plays a huge role in the post purchase phase, not only from the point of instagramming your restaurant meal or tweeting a picture of those platforms that you bought that were ridiculously too high heeled for you, but reviewing your experiences online…. More about that later…. [CLICK] But the world is not going to stay there. The retail world of tomorrow is really going to be dominated by smart phones, RFID (Chips on things that can broadcast messages to your phone) NFD Nearfield technologies that push notifications to your device and the ability of your device to be your digital assistant and know you better than you know yourself and to provide you with more information through Augmented reality But also, a lot of forecasters are suggesting that small format stores will increasingly grow and retail will become increasingly specialsied and customised. Rather than carrying inventories, some stores may print your shoes while you wait. And increasingly the experience will be a streamlined ominchannel integration between the virtual and the real world. You may end up paying by biometrics, but it seems likely that your smartphone will be as or more important than your wallet is today. When we think about digital disruption, it’s less about what technology when, and if, at all, its about thinking about this path to purchase and how our store designs, strategies, communication choices and packaging help our clients shoppers on their path to purchase, and understanding what the triggers are and how to integrate experiences both in and out of the store. It’s really about thinking about a shoppers whole experience and the role that the physical store will always play into that in one way or another.
So we’ve seen how the store experience has always been disrupted by changes in consumer behaviour, technology and other forces. Digital disruption really works in three different ways – Shopper Access, Retail Economics and Performance
The way that digital disruption has changed access is really about the fact that now it’s possible for a shopper to directly engage with the products they buy. Thinking back to my great grandparents, they stocked their shop by buying the products they would sell from a wholesaler. Today it’s possible through digital to interact with a manufacturer directly, no matter where in the world they are, or how specialised they are. Etsy focuses on businesses that sell pretty specialist vintage and handcrafted products. A friend of mine from Peterborough makes felted bags and hats that she sells to customers all over the world from Etsy. Before Etsy, it wouldn’t have been possible for her to work full time on such a niche product. Interestingly, her business model has been so successful, that she’s now opened her own physical store that sells not just her products, but products from other artisans – so she now sells through a third party (Etsy) her own website, and a phyiscal store. – True Omnichannel, if even in a very small way…
Digital disruption has changed the economics of retail quite significantly. First of all, as a pure play ecommerce business like Amazon, it’s now possible to stock literally thousands of products in your online store. No physical store can carry that same level of inventory. Secondly, it’s also disrupted the economics of retail. I’m a child of the 80’s, and the only way I could get hold of music as a child was to visit a record store and buy a single or an album. I had no choice about what I bought. Singles had a defined a and b side determined by the record company or I could buy a whole album, not sure if I would like all the tracks or not. Or I could record the top 40 on a cassette tape off the radio. Now through itunes I can buy pretty much any song ever recorded anywhere individually and make my own virtual album, or playlist. Through genius I can find out what of my music works well together, and Apple will even recommend me new purchases based on what I already have uploaded to my itunes account. No wonder record stores and cassette tapes don’t exist any more
Finally, the third way that digital has disrupted retailing is in the way that retailers and brands can serve you better than they ever could in the past. If you went into my Great Grandfather’s store and bought apples, flour, sugar and butter, he might or might be able to recommend a great apple pie recipe, but he’d probably assume that you had a written recipe at home. Nowadays, Nike doesn’t just sell you sneakers, it will both advise you about the best workouts for you, and give you the ability to track your health better – just like the up band I wear, or the way that the google watch will be able to track your health. Imagine, Apple already knows through Itunes how you like to entertain yourself, but soon Apple will also know how healthy you are. Read your terms and conditions folks. This performance aspect of disruption is really all about how understanding you, specifically. Not your segment but you.
Disruption can work in more than one direction though. This is the UK chocolate brand Cadbury, who actually have a number of physical permanent stores selling their products, and allowing you a retail experience of their products. There are many and increasing examples of this – like the Nesspresso café in Yorkville or even arguably, the Haagen Daaz stores that we work on that bring the brand to life in the physical world
P & G are trialling this in a different way and experimenting with their own disruptions of retail economics. CPG manufacturers typically have depended on retailers to get their products to end consumers. It was not financially viable for P & G to mail you a new bottle of tide liquid, and so a whole distribution channel came into being to get their products to you. At each stage in the delivery process someone would take a share of P & G’s revenue. Now you can visit their website and buy direct. And if you buy enough stuff they’ll even send it to you for free – because the delivery cost can now be taken out of the retailers share of profits from the sale. This also allows P & G greater control on how their products are merchandised than they would ever have in a retail store or on Amazon. I think this is a really interesting idea, but I’d question how many different brand site’s we’d want to buy from.
Finally, in a similar vein to Nike, All Saints, a clothing brand really boosts its performance as a retailer. They have ecommerce on their website, but you can also order online from their stores – for example if that neat pair of jeans you wanted isn’t available in your size in store. They’ve converted you, and doing this helps them close that sale. Store assistants can also recommend something from the wider online store that might go with that shirt you’re buying. Allsaints also offer you more. You can attend free in-store music performances from hipster brands, but also on their website watch new and cutting edge music from both Europe and North America. So you’re buying the lifestyle of the brand, as well as the brand itself.
Here is Google’s take on how Digital is disrupting the path to purchase. This is the simplest form of that path. You recognise a need, buy something to satisfy it and then experience it.
P & G first coined the phrase moment of truth in around 2005. They described purchase and experience as the first and second moments of truth – so buying is clearly important, but a great post purchase experience is what causes us to buy again
Google believe that how digital has disrupted this experience is really that that moment before you buy is now the most important. Have you? Been in a store and searched for reviews of a product you’re about to buy? Researched online to find out which supermarket has the best offer on Pork Tenderloin before you do your grocery shopping? Used yelp to find restaurant reviews to find out where to eat out at home or in a new city?
All that online content that we’re creating, my tweet of my new platform shoes, your experience at the hair salon, your check in at longos – they’re all creating content that other people use to help them decide what to do or buy. That’s why the most important moment of truth is no longer at the shelf. How can we create in store experiences that encourage our client’s shoppers to share them with others?
So these are the expectations of today’s shoppers. A personalised theatrical performance, with turbo charged convenience.
So really how digital is disrupting the store is all about the fact that retail locations now should have two roles. Firstly to drive sales. But secondly hand in hand with that comes the focus on brand experience, which is great for us, because that’s at the heart of everything we do. We just have to think more about how we can deliver on these two roles, and think about the role that digital has to play out. But here are some great examples of some retailers who are applying these today.
Casino shows how your smartphone can be a key part of the shopping experience… here’s a video that illustrates some of the concepts they’re working with.

Digital disruption

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