The New Target.com….oops?

DISCUSSION TOPIC

New Target.com – 09-13-2011

September 13, 2011

Through a special arrangement, presented here for discussion is a summary of a current article from StorefrontBacktalk, a site tracking retail technology, e-commerce and mobile commerce.

When Target’s development team launched the new Target.com on August 23 after two years of development, it must have felt like a dream come true. But it wasn’t — at least not for customers who discovered that big chunks of the new site didn’t work at all, and almost nothing worked as well as the site they’d seen a day or two before.

Why? What went wrong? Actually, not much, from the point of view of experienced developers. Naturally the site had glitches — that’s to be expected.

Target decided to end its arrangement with Amazon two years ago — and that meant it had a completely blank slate to start from in creating a new site. Most e-commerce execs would love that opportunity to shed all the legacy code, the decade or so of kludges, workarounds and hacks that make it so difficult to do anything really innovative. All that old junk makes new approaches next to impossible.

But the downside is that there was also no legacy code that worked. If a new feature was too buggy, there was no old version to fall back on.

Target’s developers figured that was OK. The site would go live, they’d work the kinks out as quickly as possible, soon there would be all sorts of great new stuff built on the wonderful infrastructure that was still invisible on opening day, and everyone would understand — right?

No. Customers neither knew nor cared that the new website was the product of two years of loving development and was bound to have a few hiccups at first. It didn’t matter to them that Target had to build from scratch or that all sorts of wonderful new features would be coming once the site was stable.

All that customers saw was that their passwords, which worked fine on Monday, didn’t work on Tuesday. They couldn’t edit their wedding registry lists. They could no longer track orders they had paid for a day or two before. The weekly newspaper ad wasn’t showing up; neither were coupons. A large digital countdown clock on the homepage (an extremely long homepage) warned that today’s Daily Deals would end in so many hours, minutes and seconds — but the link went nowhere.

In fact, lots of the links were dead ends, delivering customers to very pretty error pages featuring Target’s mascot dog. (There’s a downside to using pictures of a dog mascot all over your site, including error pages: at a certain point, customers are likely to start really hating the sight of that little dog.)

No doubt all of that will soon be fixed. Much of the site was working far better the following day. But it will take a lot longer before customers feel like the new site is as good as the old one — which, of course, means better than the old one.

Discussion questions:  Do you think Target bungled its new website launch? What’s the best way to prepare and reassure customers for likely problems encountered as part of such overhauls?

My post:

Well it is now 11:30pm East Coast time and the site appears to be mostly working.  It was down when I first tried and then came up 10 minutes later with everything functioning except the “daily ad” link.

The comments above are accurate:

1.  “Glitches” are certainly failures, and

2.  The customer will not hold this against Target.

It is, however, a significant embarrassment to the IT team and should be a cause for concern for senior leadership.

Overall I like the design of the new site and think the situation will be forgotten by tomorrow – as long as it continues to function!

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at Retailwire.com:  New Target.Com

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Planet of the Apps

DISCUSSION TOPIC

The Rise of the Planet of the Apps – 09-06-2011

Through a special arrangement, presented here for discussion is an excerpt from a current article from the Joel Rubinson on Marketing Research blog.

Four years from now, it is likely that globally there will be close to two billion (yes, billion) smart mobile devices, outselling computers, according to Yankee Group estimates.

Nielsen reports that over half of mobile phones being activated now in the U.S. are smartphones. IDC estimates 182 billion (yes, billion) annual app downloads by 2015.

Flurry estimates that smartphone owners spend more time on apps than PC owners spend on the internet from their computers.

Smartphones, tablets and the iPod Touch will create the mobile, app-enabled lifestyle. Why? Because mobile is not like a computer with a small screen; it is transformational. Apps provide needed simplicity for mobile web access by extracting the essence of a service and putting it right in front of the user in a way that fits perfectly within the screen limitations while adding a localized dimension.

If there is any life activity that is crying out to become appified, simplified, localized and mobilized on your smartphone, it is shopping. Furthermore, marketers want it too. Imagine you will be able to deliver messages and offers to a shopper as they stand right in front of your brand and its competitors that are customized from prior purchase activity. This is behavioral targeting and “recency,” two principles of media placement on steroids.

Look at this distribution of time spent on apps by category from Flurry; it appears that shopping aids have not yet taken off.

• Games: 47 percent
• Social: 32 percent
• News: Nine percent
• Entertainment: Seven percent
• Other: Five percent

However, app developers are starting to work on this:

• Modiv has been testing a mobile shopping solution called Scan It with Stop & Shop that is now about to be tested on iPhones. It links offers to your frequent shopper history and knows where you are in the store.
• Ad Age reports Finish Line unveiled a new app that gives shoppers access to real-time inventory at the store nearest them. Users can check to see if an item is available in the style, size and color they’re looking for before coming to the store.
• Amazon offers a price checking app so you can be in a Best Buy or Walmart, check the price of the same item at Amazon and decide if you want to order it from within the app.

Truly it is the “Rise of the Planet of the Apps.” As an increasing majority obtains smart mobility, as smartphones replace PCs as the number one way of accessing the internet, as life becomes app-enabled, people will insist, “Yeah, we want an app for that” — and they’ll get it.

Discussion questions:  How will the growing appeal of apps change the way brands and retailers connect with consumers? How will it change the way consumers interact with brands and retailers?

My post:

The biggest concern I have with app-driven shopping is the reliance on price to drive consumer behavior.  It is as though no one can learn the obvious:  using price as the single differentiator allows only one or two low-cost providers to survive the ensuing carnage.  In this model, Amazon and Wal-Mart will clearly prevail.  Anyone else?  Doubtful.  My hope is for the brands to drive unique app offerings that focus on experience over price.  However, except in the rarified world of luxury products and consumers, it is increasingly difficult to capture the consumer’s attention with anything other than price, and perhaps celebrity.

A reason for hope?  With the increase in influential bloggers, I can foresee a success formula that utilizes targeted ‘endorsements’ to drive consumers to shop at regular price for their favorite influencer’s recommendations.  This works particularly well in the beauty industry.  Let’s see who makes this move vs. the damaging price-only model.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at Retailwire.com:  The Rise of the Planet of the Apps

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The rise of “virtual mirrors” creates a new way for brands and retailers to engage with consumers

DISCUSSION TOPIC

Looking and Buying Without Touching – 08-08-2011

By Bernice Hurst, Contributing Editor, RetailWire

August 8, 2011

At first glance, a story about John Lewis introducing virtual mirrors devised by Cisco so customers don’t have to strip off to see how a new outfit looks seemed like new news. But a quick Google search revealed others have been following a similar path since 2007.

John Lewis believes customers trying multiple fashion lines along with accessories will facilitate cross-selling and mutual retailer and customer satisfaction.

When Adidas introduced similar technology to their Paris store in 2007, Louis Ramirez pointed out a fallacy on gizmodo.com. “I think the concept is cool,” he wrote, “but I’d be more concerned over the fit than how they look.”

Cisco’s mirror uses sensors to measure customers and then find suitable outfits. Their spokesman told Retail Gazette, “The technology takes the drudgery out of searching for items and exposes people to a wider range of clothing. It will be more efficient and provide the retailer with the chance to cross-sell brands and accessories, while at the same time improving levels of service.”

Ways to incorporate social media are also being studied so customers can share their images with friends once privacy issues are resolved.

Meanwhile, webcams are the mirror of choice for glasses. La Boutique Peugeot uses customers’ webcams like a mirror before purchasing in-store. Ray-Ban boasts its virtual mirror is “the definitive augmented reality experience, which permits you to virtually try-on the latest Ray-Ban styles.” Sunglass Hut uses digital photo booths in some stores so customers can immediately send pictures to friends or social networking sites for other opinions on their choice. UK-based glasses2you, promises a wider range of glasses at a lower price than specialist opticians.

Various approaches to virtually applying cosmetics have also been tested by the likes of Walmart, Carrefour and Superdrug amongst others. IBM and Israel’s Ezface use an “augmented reality system” to combine video images with virtual/digital elements on the same screen, according to singularityhub.com, but the complexities of accommodating individual skin tones, lighting, hair color, etc. may explain why neither kiosks or sales have yet made headlines.

Discussion questions:  How appealing will virtual mirrors be for customers trying on clothes? Are virtual mirrors rendered impractical by the inability to test the way products fit and feel?

My post:

The point here is not about efficiency, it is about fun.  Retailers and brands who choose to use the technology should do so as a carefully considered addition to their consumer touchpoints.  If done well, the technology allows the consumer to play with the product, share their experience with friends and ultimately engage them with the product in a (hopefully) positive way.

The technology does not replace the physical shopping experience.  Rather, it provides a further pull for the customer who wants to play with the product in real terms to come into the store.  For those who are shopping online with no intent to go into the store, it can make that experience more engaging as well and produce higher conversion and spending rates.

1. Do your research with your targeted consumer groups to ensure playful engagement is a desired experience.
2. Test the technology and roll out if the desired metrics are achieved:  conversion, spend, or simply higher client engagement.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at Retailwire.com:  Looking and Buying Without Touching

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Retailers seek to keep up with consumers on mobile devices

DISCUSSION TOPIC

Mobility Survey from RSR Research – 07-26-2011

Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research’s weekly analysis on emerging issues facing retailers.

The other day, on one of the many technology solution briefing calls we had, one of the technologists we were speaking with said something very interesting. His company is aiming to bring a solution to market that enables retailers to get ahead of consumers using mobile devices — a highly relevant goal for the times. To emphasize the need for such technologies, he asked us if we could think of a few case studies where retailers have had mobile “happen to them,” without much control of how mobility is being used in the shopping experience. My partner Paula Rosenblum’s response was perfect: “All of them!”

The retail respondents in our brand new mobile survey agree. Of the 60 qualified retailers who’ve responded so far, only six percent are happy with the results of their mobile offering to date. In fact, 49 percent are currently in the process of selecting the right components for their mobile offering as we speak, and 91 percent say that they “need to be there” right now due to the fact that consumers are using mobility as part of their everyday shopping routine.

But 77 percent agree that the true impact of mobile and its best uses are still not fleshed out. Retailers are hungry for practical, intuitive mobility solutions, and many more are willing to experiment than even we could have predicted. In three years’ time, 50 percent of our early respondents anticipate that slightly more of their total sales will come from the mobile channel — another 42 percent say it will be significantly more. These numbers represent massive and fundamental change in how retailers can and will interact with consumers.

Discussion questions:  What do you think is the most important mobile channel capability from the perspective of retailers? Where do you think most retailers should be focusing their mobile investments now?

My post:

We are still in early days of consumers interacting with retailers via mobile platforms. Most uses seem to be informational (store locations, hours, product availability) or seeking value (sales, coupons, other promotions). The level of usage is much more prevalent in Asia, with millions accessing blogs and other information channels unattached to the retailer or brand. I expect the U.S. to follow.

Retailers are losing direct control over consumer interaction and messaging, with consumers and independent thought leaders taking over. Retailers must learn how to authentically reach the influencers and ensure consistent customer experiences in-store and online to create more positive than negative buzz.

In short, the most important mobile channel capability will be to influence the influencers who are often on their mobile devices blogging, tweeting and more in real time about their experiences with the retailer.

A key mobile investment should be to enable mobile interaction in-store (free Wi-Fi) to make it easier for the consumer to gather information, access promotions, and blog/tweet in real time.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full article at Retailwire.com:  Mobility Survey from RSR Research

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Aha moments – a new twist on luxury shopping

DISCUSSION TOPIC

Luxury Site Sees Opportunities in Aha Moments – 07-11-2011

TOPIC SUMMARY:

Austerity, recession, belt-tightening and bargains have become watchwords for retailers and consumers over the past few years. But have they destroyed the joy of shopping? The flash sale website Ahalife.com doesn’t think so and has opened its doors to shoppers who shop for the love of it, unconcerned about bargains or price, but looking for sheer, unadulterated, luxurious pleasure.

Ahalife’s signature sales point is “curation,” recommendations from trusted advisers for wonderful products customers might otherwise struggle to find. Entrepreneur and founder, Shauna Mei, explained to New York Times reporter, Pamela Rickman, that she “offers niche products suggested by a variety of ‘trendsetters and tastemakers.'”

“Tastemakers” are said to include Diane von Furstenberg, Wendi Murdoch, Tina Brown, Tim Gunn and Lauren Bush.

Explaining why Aha differs from women’s magazines, she added, “I haven’t read print for three years and neither have my friends. … There’s a ton of content online, but it’s not curated. We can’t separate the good from the bad.” Ms. Mei’s “aha!” moment has reportedly attracted investors from banks, management consultancies and luxury retailers.

Determined to avoid targeting anyone who might resemble a “frumpy” housewife, Aha’s products are largely imported, targeting big spenders aiming to be trendsetters. Excitement and inspiration to be tempted and spend are part of the deal, along with the actual products.

Like other flash sale sites, Aha features one offer a day from categories such as fashion, food, beauty, accessories, home décor, tech and travel. Aha’s business model is based on consignment buys rather than stockholding, with potential profits coming from a traditional wholesale/retail relationship.

Discussion questions:  Is the joy of shopping enough incentive for a luxury website without any discounts or special offers? Does the value of ‘curated’ selections work as well online as in high-end retail?

My post:

One more interesting paragraph from the nextweb article:

Mei believes AHAlife has the potential to be ‘the future trusted media company with a buy button.’

“If you think about the various publications and magazines out there, most of them have not really explored e-commerce,” she says. “We believe in content + commerce + curation and I think this trend will continue to last in the next five years. I see AHAlife as the go-to destination for brands to launch the coolest lifestyle products from around the world and where the most discerning consumers go to discover the best the world has to offer.”

I think Ms. Mei has truly hit on something special – combining the joy of the hunt, ‘belonging’ to the cool crowd, and desire to be noticed into one very hot shopping social site.  I do think the way she is handling curated selections is unique and exciting and will allow the site to be a key product launch platform and a place “to see and be seen.”  Kudos to Ms. Mei for coming up with something new to excite fashionistas and retailers to expand the boundaries of shopping.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full article at Retailwire.com:  Opportunities in Aha Moments

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Tesco S Korean Subway Virtual Store

DISCUSSION TOPIC

Tesco Takes Virtual Store to Subway Riders in South Korea – 07/06/2011

TOPIC SUMMARY:

Tesco was looking for answers in South Korea. According to a video from the company (be sure to watch it), its Home Plus chain was second largest in the market and investigating ways to gain share without adding physical stores. Management reasoned that hard working South Koreans needed something that would make their lives easier.

The answer that Home Plus came up with was to take the store, a virtual one at that, to consumers inside a subway station.

The virtual location is laid out exactly the way a typical Home Plus store would be. The company has created photo layouts of products it sells with a unique code for each product. Consumers scan the QR codes for the items they wish to purchase and then check out. Orders are automatically delivered to the consumer by the end of the day.

According to the chain’s video, the virtual store has brought it thousands of new customers and its online sales in South Korea have increased by 130 percent.

Home Plus’ virtual store is just one of many innovations likely to come to retailing with the development of mobile technologies.

Discussion questions:  What do you think of the Home Plus virtual store? Does it have applications in the U.S. market?

My post:

Tesco has often created innovative shopping solutions and this is simply their latest.  They have focused on the specific shopping needs and behaviors of the South Korean consumer and designed a unique method to combine two activities, commuting on the subway and shopping for that day’s grocery needs, into one.  The whole allure of mobile platforms i.e. tablets and smart phones, is the potential for allowing people to shop wherever they are.  The virtual subway store enables people to shop the way they like – either independently on their device at the on-line store, or “roaming the aisles” via the virtual store.  Based on the stated results, the consumer is reacting well.  Over time, this method may lose it’s novelty but it is a brilliant way to entice more consumers to try the online store.

Would it work in the U.S.?  Probably not in the same way.  The subway experience in the U.S. is far different than in Asia.  In addition, home delivered online grocery shopping is not well penetrated in the U.S. as compared to South Korea.  However, the point here is for the retailer to consider placing the virtual store in an area where the consumer would enjoy shopping.  Where might that be in a U.S. metro market?  I am not sure – but I would not dismiss the possibility.  Grand Central Station?  A section of wall in a large office tower?  Interesting to imagine.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full article at Retailwire.com:  Tesco S Korean Subway Virtual Store

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Controlling the Customer Experience

DISCUSSION TOPIC

The A.P.P.L.E. Way – 06/20/11

TOPIC SUMMARY:

The Wall Street Journal just did an interesting deep-dive on the Apple retail stores, interviewing current and past employees and obtaining some of their training manuals. One of the things that stuck out for me was the fact that they aren’t really relying on some technology advantage – it’s about carefully controlling the customer experience. For example, they use the acronym APPLE as follows:

A – Approach customers with a personalized warm welcome.
P – Probe politely to understand all the customer’s needs.
P – Present a solution for the customer to take home today.
L – Listen for and resolve any issues or concerns.
E – End with a fond farewell and an invitation to return.

Nothing high-tech about that at all. Each employee receives at least 40 hours of training to ensure they know the products and understand how to treat customers. They are not on commission and earn a typical $9-$15/hr or around $30/hr at the Genius Bar.

And the results are an impressive $4,406 per square foot. To put that in context, compare it to Tiffany at $3,070, Coach at $1,776, and Best Buy at $880.

Other retailers have tried to emulate the model, but no one has seen success. Apple is Apple, and they did exactly what worked for their business. No one else is Apple, so no one else should copy their stores. But retailers can and should be inspired by Apple’s success and strive to find ways to improve their own customers’ in-store experience. And it doesn’t take a ton of technology.

Discussion question:  What can other stores learn from Apple’s employee training methods and customer service guidelines?

My post:

Apple’s incredible margins and focus around specific and limited product makes the job of creating extraordinary customer experiences the norm. However, the lesson for all retailers is the focus, passion and willing to invest from senior leaders that drives the consistent execution. It is not necessary to emulate everything Apple is doing. The key is to learn from them and apply SOMETHING to your approach that will make a difference in the experiences of your staff and for the customer.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full article at Retailwire.com:  The A.P.P.L.E. Way

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Inventory Control at Nordstrom

DISCUSSION TOPIC

Nordstrom Doing More With Less – 4/3/09

TOPIC SUMMARY:

Nordstrom is all about inventory reduction. Okay, maybe not all, but as a Bloomberg report points out, the company has made a concentrated effort going back to 2000 to reduce its inventory levels. Based on the same report, Nordstrom has been successful in its endeavors, cutting days of supply to 62 days on average versus competitors such as Macy’s (119 days) and Saks (140 days).

“If Nordstrom were a car, it would be a hybrid Cadillac Escalade that gets 20 miles per gallon instead of the normal 12,” Patricia Edwards, founder of the research firm Storehouse Partners, told Bloomberg.

“Nordstrom’s investment to drive sales is lower,” said Liz Dunn, an analyst with Thomas Weisel Partners. “They are doing more with less.”

Nordstrom is also not hanging on to merchandise that won’t sell at department store rates. Instead the company looks to move the items to its Nordstrom Rack discount outlets.

“If we can identify what is not performing and move it out to bring in fresh merchandise, that’s a decision we want to make,” Peter Nordstrom, president of merchandising, told Bloomberg.

Discussion questions:  Is inventory management a greater piece of the success puzzle now than it has been in the past? What is your take on the Nordstrom approach to the challenge? Where do you see further opportunities for Nordstrom and others to get better control over the goods sold in their stores?

My post: 

Particularly in the context of American retail, Nordstrom’s ability to manage down its inventory levels over the years is impressive.  It starts with the Nordstrom senior management’s focus on inventory control as a driver of profit growth via lower inventory carrying costs and avoiding restrictive credit covenants.  With great systems, combined with an unusually talented buying and product sourcing group, Nordstrom continues to increase sales with less inventory.  Most department stores lack the focus and the tools to manage inventory effectively.  Plus, many “bought” gross margin by agreeing to ever-growing buy commitments from suppliers in exchange for season-saving margin checks.  The result is an ever-growing hangover of unsaleable merchandise sitting in stores and clearance outlets.  This is one of the reasons others have succumbed bankruptcies and liquidation.  Nordstrom has the right formula and it can be learned and implemented elsewhere.

Mike Osorio, your Dare to be Contagious! ^TM strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13667

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Outsourcing IT – good or bad for retailers?

DISCUSSION TOPIC

Do retailers know how to manage knowledge workers? – 3/13/09

TOPIC SUMMARY:

By Bill Bittner, President, BWH Consulting

I’ve followed the headlines recently as various retail organizations announced outsourcing or layoffs of information technology (IT) and industrial engineering (IE) workers and I’ve asked myself whether these layoffs make sense or whether companies are being short-sighted.

These knowledge workers (KWs) have several unique characteristics that retail management must appreciate when they make decisions that affect them. First, they often have unique knowledge of company resources that cannot be replaced by another technician or knowledge worker, for example, something as critical as the way a retailer’s critical replenishment application works.

Second, KWs have enormous leverage in their impact on the organization. Changing a replenishment algorithm or improving a forecasting estimate can have a ripple effect on all the various operating units of the company. Spending an extra hour to design a better check stand or to simplify a sign-in procedure can impact thousands of co-workers.

The challenge is that it is often difficult to measure the quality of results coming from knowledge workers. Who’s to say “there are no better ways to do this”? Of course, that is one of the challenges with managing KWs as “paralysis through analysis” can lead to rejecting the good in search for the perfect. But KWs are also the most flexible members of your organization because they can adapt to new roles and learn the requirements of different positions quickly.

Knowledge Workers often have different motivation than their hourly counterparts. They tend to have a strong sense of ownership in the solutions they design, so while salary is necessary, simple praise or recognition for extra work are often enough of a reward. Educational opportunities and attendance to conferences can be as important as salary increases. Knowledge workers need to understand how their efforts impact the rest of the organization. This sense of contribution is often a reward in itself.

Discussion questions:  Do you think the total impact on “corporate knowledge” caused by outsourcing or replacing in-house knowledge workers is understood? Do you believe retailers fully appreciate the contribution of KWs? Do you think most KWs would accept a reduction in salary to preserve theirs or a co-worker’s job?

My post: 

As a long time retail operations executive, I have seen both sides of this:  outsourced and in-sourced IT groups.  My own experience shows that the key individuals to keep in-house are the IT leadership and then just a few technicians.  The IT leaders are among the keepers of institutional knowledge and the partners to operational management to discover opportunities, define the organizational goals, and apply technology to amplify potential and to solve business problems.  The few techs on-site ensure the senior managers don’t go crazy when they can’t figure out how to access their documents.  For the heavy lifting of project management, system design and maintenance, data integration, etc., outsourcing is the effective way to go.

I do not think most retail managers appreciate their IT folks – but only due to lack of knowledge.  That is why it is key to have strong IT leadership sitting at the leaders’ table to match the IT tools to the real business challenges, and report back on the ROI and efficiencies enabled by the technology employed.

Whether or not a KW would accept a reduction in salary to preserve their or a co-worker’s job is irrelevant.  This is always a bad idea.  If a reduction in force is necessary, it is far better to make the cuts quickly, articulate a strong future vision, and move on.  The remaining team will be better equipped to move forward positively than if they are constantly reminded of the RIF by a reduced salary.

Mike Osorio, your Dare to be Contagious! ^TM strategist

www.OsorioGroup.com

What do you think?  Please post your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13603

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Is Taggle the next big thing?

DISCUSSION TOPIC

Retail TouchPoints: Taggle Brings Mobile Bids to Brick & Mortar Stores – 3/11/09

TOPIC SUMMARY:

“Taggle” is a new concept designed to allow consumers in a brick-and-mortar retail store to bid on items in a no-hassle way via the mobile device. While designed to work optimally for the iPhone and iPod touch, Taggle can also work for owners of other phones via SMS messaging. In September 2008, the Consumer Electronic Association selected Taggle as one of 15 finalists worldwide as one of the most innovative applications of 2008.

“Haggling is a reality of the retail environment,” said Michael Brophy, vice president of product strategy for Sysgain Inc., the developer of Taggle. Mr. Brophy introduced an “elastic pricing” concept, which, he said, will ultimately mitigate margin loss. The retailer with Taggle controls the entire promotion, messaging, what SKUs are available, description image, quantity the store is willing to sell and at what price. Mr. Brophy said the Taggle application is not limited to the elastic pricing scheme, and can be extended to support a feature similar to eBay’s “Buy it Now” feature, so consumers can purchase on the spot at a designated price.

Without integrating with a POS system, data warehouse, UPC databases, etc., the core offering for Taggle is the piece that sits in the store. Sysgain brings in a wireless infrastructure, or can override the store’s existing one, depending on the type of existing wireless technology. An installed VPN appliance allows secure connectivity back to the Taggle data center where bids are evaluated and sent back to consumers. A back office workstation within the store is necessary for nightly reporting and to create and maintain marketing messaging. Sysgain provides in store signage consistent with each retailers’ style and guidelines.

In November 2007, Sysgain conducted a consumer survey with input from over 2,100 consumers. Those that did haggle had an average 70 percent success rate at saving $50 or more. Nearly 40 percent felt so uncomfortable about the idea of haggling that they never even tried. Sysgain recently finished taking applications from pilot retailers to develop a user base and generate buzz. “Retailers know people are using their phones in the store for purposes that are working against the retailer’s objectives,” said Mr. Brophy. “A lot of people are price shopping other retailers… let’s try to influence their behavior by giving them a network to join once they’re in the store so you can deliver your messaging.”

Discussion questions:  What do you think of the potential for Taggle or other devices promising to bring eBay-like bidding to the brick & mortar level? In what different ways could the application be utilized? What hurdles do you see in the technology’s adoption?

My post: 

My initial reaction after reading the articles is this is a terrible idea.  I can’t imagine wanting to ‘bid’ in a store environment.  However, I think this technology will appeal to the current teen and twenty-something techno-savvy population which tries every application offered on Facebook and on their iPods.  I would be concerned as a retailer to be an early adopter, but it could be something interesting to pilot in an environment like Best Buy (technology is already assumed in the experience) or Urban Outfitters (concentration of ‘cool’ young shoppers).  Taggle should offer to install the technology with a high-profile retailer in a few doors as a pilot – at no or low cost – and test the waters.

The message:  don’t be too quick to judge a new technology innovation, but be prudent in how it is tested.

Mike Osorio, your Dare to be Contagious! ^TM strategist

www.OsorioGroup.com

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13603