If store traffic declines, why not take the store to the consumers
What is rapidly changing the face of retail is the changing behavior of YOU the consumer. Shopping is no longer a single event defined by a location or channel. You now have the choice and convenience of shopping anytime, everywhere. This has created financial pressure on retailers with large stores carrying large inventories. What if the store could be stripped down to just the walls? Actually, Tesco pioneered the first "shopping walls" in the subways of Korea. Will electronics retailers respond in a similar way with just walls?
Tesco was a pioneer in deploying Home Plus shopping walls in Korea
The old adage in retailing has been "location, location, location". Traditionally that concept of finding the right location was in regard to finding the best real estate for a store. This has proven to be a challenge in dense urban areas where real estate is both scarce and expensive. Long term store leases have also posed a problem when population and traffic dynamics change so that the best physical stores are no longer in a prime location.
Tesco is a well-known European retailer, which has historically been primarily focused on being a hypermarket stocking many items. However, Tesco is also a master of executing many different kinds of retail formats. When they entered South Korea, real estate for stores was very expensive and impossible to find. Marketing under the brand Home Plus, Tesco literally photographed their store and took these "shopping walls" to subways and bus stops. Using mobile phones to scan QR codes, consumers can purchase items on their way to work and have their food and other essentials delivered to their apartment.
Home Plus was able to grow quickly from zero to number 3 in South Korea, primarily through the use of their "shopping wall" strategy. Home Plus is certainly been proven in dense urban areas with time starved shoppers looking for convenience in purchasing commodities. Will shopping walls work in other areas?
Surprised it took so long – Media Markt now testing walls for electronics
I have been telling the Home Plus shopping walls story in Retail University Workshops for past several years. I have often been asked, "why not other categories?" I have often wondered the same thing. In the case of consumer electronics, many of the big box stores are struggling with large inventories of expensive products, with rapid product cycles. Since more consumers are increasingly shopping online, why not replicate the Home Plus shopping walls for electronics and eliminate both inventory and store operating expense?
NFCWorld has just reported that Media Markt is in fact piloting a shopping wall test for electronics products in a Moscow subway. Media Markt is a well-known consumer electronics retailer in Europe. Like Best Buy in the US, they are also known for large stores with large assortments. But, as the case with many consumer electronics stores, Media Markt has been exploring new concepts for today's omnichannel consumer. In Moscow, they have literally papered the columns of the subway station with posters that look like shelves of electronics products.
If you can't beat showrooming, take the showroom to the consumer
There is no question that today's omnichannel consumer is mobile. With increasing numbers of smartphones, consumers are using them to check products, pricing, and offers. The term showrooming in fact refers to shoppers who literally stand in the aisle of a retailer's store, and then use their phone to research information and check out products elsewhere.
If consumers are using their smartphones to scan QR codes and product tags in the store aisles as part of their purchase journey … then why not just bring those "shopping walls" to the consumer and leave all the inventory and store operating expense behind? That's exactly what Media Markt is testing.
Keys to success – Keep it simple, convenient and optimize choice
One of the interesting aspects of the Media Markt test is that they are using both QR codes and NFC tags. Unlike QR codes which require an app and scanning, NFC (Near Field Communication) can be activated within the settings of most smartphones. Whether the consumer uses NFC or QR tags, the key is the ability to connect to the Media Markt site to make the purchase. This pilot includes the critical component of free WiFi at the station.
The keys to omnichannel success are all about the consumer. Today's consumer wants both choice and convenience. Literally, having access to the product information as they walk through the subway offers both convenience, and awareness of what is available. Media Markt is offering consumers a choice to have the products delivered to home for free, or they can pick them up at the nearest Media Markt store. At home, consumers currently pay cash on delivery; at the store you can pay cash or credit card. There are future plans for PayPal.
Shopping walls have worked for Tesco … Offer potential for Media Markt
There are an amazing number of tests being rolled out in retail. It's very easy to get caught up in the novelty and the technology of what is possible. The Media Markt test of shopping walls in the subway and other locations would seem to have great potential:
- No physical store to build or lease (space for wall posters is a minor expense)
- No physical inventory to stock or manage in store
- No staff or operating costs for a store
- Relatively low cost existing technology
- Traffic for Media Markt … both their web site, and physical store
- Media Markt brand awareness and presence
- Opportunity for rapid scale and testing in many environments & countries
Results Count … The key to a TEST is measuring how consumers vote
The one thing to be said for shopping walls is that the Home Plus execution in South Korea has been running for a number of years. In fact, Tesco grabbed major market share in a tough environment, without major investments in store real estate. In very dense urban environments like Seoul, consumers definitely purchase known products via smartphones from shopping walls.
Will it work for electronics? Don't know yet. Electronics are a high value, considered purchase that consumers like to touch and try. They do have the option to do see and touch products when they pick up in store. But on the other hand, the big posters plastered just with products is kind of like huge, printed web pages … why not simply go online to research and purchase anyway? The most critical component may be the consumer experience, not the products offered, or the technology.
The bottom line is … measurable results count. And, the best part of the shopping walls execution is that it is highly measurable. A retailer can literally track if you are passing through the wall area, do you stop and check codes, whether the sale is converted, are additional accessories sold, and whether you prefer delivery or pickup.
The key to any new omnichannel execution is to measure what works where.
To receive more information and sound bites from IMS follow IMS Results Count on Twitter, Facebook, Pinterest and Google+.
Sources:
- NFCWorld: Electronics retailer opens NFC and QR shopping walls in Russian subway, Rian Boden; September 3, 2013
- Amusing Planet: World's First Virtual Store Opens in Korea, Kaushik, September 2, 2011
Comments