In this video we’re going to look at the various ways that retailers can understand more about the customer to help anticipate needs and desires, discover the points of engagement and friction in the shopping process, and improve the real experience and measure how shoppers respond.
Retail Labs
The first retail research method—and the one many large retailers have the resources to invest in—is retail labs. Retailers typically try to re-create the authentic shopping experience for the shopper, so they will act naturally and provide valuable insights. In retail labs, retailers can do a variety of things including simulating different retail formats (for example, small vs larger stores), they can test store layouts, various atmospheric decisions and different packaging planograms.
This can be accomplished through the use of eye tracking technologies which result is heat maps or gaze plots and through virtual reality stores. Here’s an image of Walmart’s Intelligent Retail Lab that features technology such as artificial intelligence-enabled cameras, interactive displays, and a massive data center.
Ethnographic Research
Retailers also engage in ethnographic research, or the study of individuals in their natural environment. So if you’re studying shoppers, you would study them as they go about shopping. If Starbucks wanted to engage in research to understand how customer from a specific neighborhood are using a new store location, they could place researchers in the store to observe usage patterns and typical activities.
Here’s some video of some ethnographic shopper research I did with Staples where I interviewed shoppers as they used in-store technologies.
Pop-Up Experiments
One of Amazon’s more puzzling retail experiments in Seattle is the Treasure Truck, a roaming delivery truck retrofitted with carnival-style lights and signs, from which customers can pick up items offered during flash sales through the Amazon mobile app. The truck, which seems like the offspring of a billboard and an ice cream truck, has sold wild mahi-mahi steaks, paddle boards and Nintendo game consoles. It’s through experiments like this that retailers can learn about new ways that shoppers want to engage with retailers and products that might sell better outside the retail environment.
While we’re on the subject of retail experiments. Here’s an example that a retailer did that was both an experiment and a PR stunt, or excuse me, what they call a “social experiment.”
Unfortunately, while their experiment was interesting and provide was valuable insight, it didn’t save them from poor management.
Scanner Data
Scanner data is all of the data that is generated by shoppers at checkout. Retailers can use this data to understand aggregate behaviors like products that are commonly purchased during specific holidays, or to understand individual buying patterns and preferences so product coupons can be tailored. Kroger works with the data research firm Dunnhumby to sell insights to manufacturers to help them improve product and create more effective promotions.
Let’s take a quick detour for a research insight from the book Why We Buy by Paco Underhill. One of his observations that has helped numerous retailers involves what he calls short-, medium- and long-term parking. He is, of course, referring to seating within the retail environment. Seating to extremely important to shoppers, yet most retailers neglect it. Think about how you shop and how you socialize when you shop. If having seating would make your shopping easier, then that means that you’ll shop longer. Retailer’s would be silly not to take advantage of this. Yet many still do.
Computer Vision & Sensor Fusion
Computer Vision and sensor fusion technologies have taken many retail locations by storm. With these technologies, the shopper and everything the shopper does, can be tracked within the store. This can provide valuable insights for retailers much as scanner data does, but we can also learn about what motivates shoppers to put items back on the shelf and the purchases they didn’t make. You can’t do that with scanner data! Amazon is using this technology to great effect in its AmazonGo stores. After you install their app on your phone and register, you just walk into the store, grab what you want and then leave. There is no checkout. The data from the camera systems are fused with shelf sensors to create a holistic picture of the shopper’s visit. The store knows everything the shopper is doing. As soon as you leave the store, you receive a receipt for your purchases on your phone. A lot of people think this is the future of convenience retail.
Surveys & Focus Groups
Finally, we have surveys and focus groups. They are considered the meat-and-potatoes of traditional marketing research methods. They are still used extensively and have a lot of value. Surveys are very inexpensive to do and give insights relatively quickly. Most large retailers have a panel of customers that they can quickly send surveys to to get the customer’s perspective should they have a question. Focus groups are also used quick a bit. Most look very similar to the picture you see here. There’s a moderator, participants, and typically a one-way mirror at the head of the room, where researchers from the retailer would watch as their questions are being answered or as the customers are sharing their thoughts.
Before we wrap-up, there’s one more thing I want to mention. And that’s what can happen if a retailer doesn’t do adequate research. Ron Johnson, the former retail chief of Apple and new CEO of JCPenney learned this lesson the hard way when he changed the fundamental pricing model of JCPenney from high-lo pricing to everyday low prices. This decision did not resonate with customers, and the retailer quickly had to backpedal and revert back to the old pricing model. The CEO lost his job as a consequence.
To recap, research methods are the means by which we accomplish retail research and this research is critical to understanding consumer needs and desires, discover points of engagement and friction, and improve the customer’s experience. The vast variety of retail research methods that retailers can tap into include retail labs using various measurement technologies, ethnographic research to understand consumer’s in their natural environment, pop-up experiments to get real-time feedback from consumers and quickly try out ideas, scanner data to see the purchase patterns of groups and individuals, computer vision & sensor fusion to gather insights in-store and power new checkout technologies, and finally, surveys and focus groups to connect directly with consumers and get their perspectives. We also saw that ignoring retail research when making changes to your strategy can have huge negative effects.