The Technology Paradox in Retail

In December, shopping transactions saw a 187% increase, year-on-year. This sounds like good news for the economy, and surely the high street. Unfortunately, this increase was purely for mobile shopping, as reported by IBM. Brand Republic, which picked up the story, noted “mobile traffic on retailers’ websites rocketed by 169%, meaning 15% of all traffic came from mobile devices during December”. The principal attractions of mobile commerce are easy to identify: it allows you to purchase items from anywhere with a phone signal rather than travelling into a store. It also allows the customer to shop around far more easily than would be possible on a high street for the best deal.

The drift toward mobile commerce, however beneficial and efficient for the customer, is part of myriad factors that are having a pejorative effect on the high street. Another, recently noted in a fantastic editorial in The Financial Times, detailed the onus shoppers must face up to, as a nation obsessed with the material quest for the very best deal possible. “We are all going to hell in a shopping basket”, read the headline.

“Through the internet we can now get relevant information instantaneously, compare deals and move our money at the speed of electronic impulses. Consumers and investors have never been so empowered. Yet these great deals come at the expense of our jobs and wages, and widening inequality.”

183 retailers fell into administration last year. The internet must shoulder a large part of the blame for this, as customers shift to the relaxation of shopping at home. Experian Hitwise reported that Boxing Day 2011 was the biggest ever day for online retail in the UK, an incredible stat (one of many covered by eConsultancy), especially while circumstances for bricks-and-mortar stores seem so dire.

However, while digital technology is keeping people from shopping on the high street, it is also helping it evolve. Recently, CNBC reported from New York on the National Retail Federation’s annual convention. Technology companies like Intel and IBM were front and centre, and willing to engage ever more deeply with brands. 73% of consumers were willing to share their demographic information with retailers in order to improve targeted communications. In the store itself, Macy’s has unveiled Beauty Spot, a digital mirror that lets you try on what you want, what is suggested to you by the mirror, and share your looks with your friends, according to TIME magazine. Also at the conference, Kraft featured a vending machine that featured face-recognition technology, registering your ethnographic details and dispensing samples based on that data.

The possibilities for clothing are significant, too. At the recent Consumer Electronics Show, Microsoft unveiled a prototype digital mirror for retailers. PSFK noted it “relies on the Kinect gaming system and basically allows people to try on clothes before taking their final selection to the dressing room”. Moreover, last month, the e-tailer Gilt Groupe teamed up with GQ magazine to create a men’s high-fashion retail experience in the so-fashionable-it’ll-soon-be-uncool Meatpacking District of New York. The FT has more.

Such movements are part of a burgeoning trend toward blurring the boundaries between digital and bricks-and-mortar retail. But for the latter way of shopping, the problems are immediate. An article in this week’s The Economist referenced a report commissioned by the government in December that claimed “one in three of the nation’s high streets is failing“. Places like Argos, Mothercare and Thorntons plan to close up to one third of their shops. Conversely, the magazine references a survey conducted by Saatchi & Saatchi which detailed 16-29 year olds’ feelings on retail. Apart from enjoying a good shop, “42% said that, if they were to start a small business, it would be on the high street”. This puts a desire to see an epicentre of retail / beating heart of a town against an indolence born of the luxury of being able to shop while in the bathroom. To combat this dilemma of desires, Anne Robinson-lookalike Mary Portas has made several suggestions as shopping czar to the government, including requirements for a “quota of affordable shops”. This idea is pure lunacy. State intervention in market commerce is not a road we want to go down.

While the article offers some hope, detailing the importance of improvements to infrastructure, and making space above retailers into shops again rather than flats, the major threat is from online retailers. Last week, the Financial Times reported solemnly,

“Tesco [will] call a halt on new hypermarkets, believing the internet offers the most profitable future for non-food sales. Retail analysts believe Tesco’s admission marks a watershed moment for high street retail chains. Many have already seen their business models trampled over by the big supermarkets, but now they must follow the leader’s structural shift towards online sales, or face extinction.”

These are dire times for retailers, but things will not improve until they fully embrace the inevitable march of technology, both in their stores, and in people’s homes. With another recession looming, now is not the time to bury one’s head in the sand and hope for the best.

Gatorade’s refreshing approach to Social Media

Social Media is still a topic that many brands are trying to get their heads around.  Some avoid it altogether, others dip their toe in the water, while a few brave pioneers embrace it as a major weapon in their armoury.

One such brand is Gatorade, who have set up a Social Media Mission Control room slap bang in the middle of their marketing department.

Located in Chicago, the impressive-looking room was launched back in April and features six large screens running a number of dashboards and data visualizations which can also be accessed on employee desktops.

The Pepsi-Co owned brand developed the system in conjunction with partners including IBM and Radian6 and has developed a set of proprietary protocols that aggregate and rank opinions in real-time. This ensures that comments by loyal fans, people with a lot of followers, or people whose opinions are picked up, get prioritised.

Consequently whenever someone mentions Gatorade on Twitter, Facebook or in other social media, it pops up on a screen in Mission Control. For example last Saturday, when some someone incorrectly stated on Facebook that Gatorade has a high-fructose corn syrup, staff were able to swiftly jump in to clarify the confusion.

This might seem a trivial example but lengthily-titled Senior Marketing Director, Consumer & Shopper Engagement Carla Hassan says their aim is to “take the largest sports brand in the world and turn it into largest participatory brand in the world.”

To achieve this in a mutually efficient relationship, the brand not only takes information by monitoring its presence across social media, but also uses social media to give its fans increased access to its athletes and scientists.

Gatorade also claim that Mission Control is improving their marketing and business in other ways.

As Mission Control also allows in-depth monitoring of consumer online behaviour, the team can create reports showing how long consumers who click on banner ads stay on Gatorade’s website, how often someone who searches for “protein drink” clicks on a link for Gatorade Recover and how the new products fare with influential groups.

For example, after running a new TV ad, Mission Control picked up a number of conversations commenting favourably about the soundtrack. Within 24 hours they’d worked with rapper David Banner to produce a full length version and distribute it to fans on Twitter and Facebook.

Mission Control also identified a number of complaints regarding drinks being out-of-stock meaning they were able to react quickly and increase production to remedy the problem.

This radical high-tech approach is aimed at turning around a three year sales slump that has seen Gatorade sales fall while rival Powerade, who rely on more traditional techniques like handing out samples at athletics events goes from strength to strength.

As with any bold new move, Gatorade will need to write the rules as they go along and carefully choose which conversations to participate in to avoid a backlash and accusations of being Big Brother.

As we well know, it’s no good having the knowledge if you don’t use it effectively though the two examples cited above show the benefits the system can bring to the business as a whole. Only time will tell quite whether this is just a style over substance gimmick or a truly fantastic way to engage with and respond to consumers when they are still interested in hearing from you.

Zeitgeist will be following this story over the next eighteen months or so to see just how this pioneering strategy affects sales performance and peoples attitudes to the brand.

Pepsi-Co have already said that they’ll consider implementing the approach for their other brands if it does prove successful and no doubt many other brands will be watching with interest keen to launch their own versions.

Perhaps in the near future, if we want to engage with a brand we won’t have to ring a call centre and sit on hold for half an hour, we’ll just need to tweet our question and let them call us.

Visiting Google HQ

On Monday morning, fully half the Zeitgeist team awoke from its slumber, left its abode and walked the 15-minute walk to Mecca. While not a dedicated fanboy, the integral part this company has played in the evolution of the Internet over the past decade, (Zeitgeist first remembers using their search engine in 1999), is undeniable. The morning would be spent in the hallowed halls of Google HQ. Mobile advertising for the Android platform would be the focus.

After munching on a croissant, downing an Earl Grey and meandering past the ice cream delivery bicycle, Zeitgeist was talked at by Ian Carrington, Amanda Rosenberg, Reto Meier, Scott Seaborn from that indefatigable ad agency Ogilvy and from IconMobile; Steve Griffiths.

Given the high volume of iPhones-to-people ratio in the room, it was not best to start off the morning with a non-so-subtle jibe at the aforementioned device. However this was indeed how the morning started; these jibes became the sine qua non of the whole event. Given the current regulatory scrutiny Google’s search empire faces regarding Net Neutrality, any hubris around ‘open source’ might have also have been best kept checked, yet there it was. Those who persevered in their listening heard that 2010 was indeed the year of the mobile. For some it may have seemed like they had been stuck in an echo chamber; every year since at least 2005 has been deemed ‘the year of the mobile’, occasionally with the suffix “but this time it really is!”. Zeitgeist would not care to argue with the statement though, as finally consumer desire and the corporate technology to suit that desire seem to be approaching an optimum. Last Christmas, there was a sale on eBay through a mobile device every two seconds. We were told that “Everything Google do, we have a mobile version of”. Despite this poor syntax, this was an impressive statement; something simple and logical, but surely something that only a very small number of companies could lay claim to.

Google’s director of mobile advertising said that the company’s mantra when developing new products was now “mobile first”, again, an impressive affirmation when you really think about it. Currently there are fifty times as many searches performed on smartphones vs merely WAP-enabled handsets. So the iPhone, Android platform and its myrmidons are clearly providing a better user experience for consumers, that they in turn are utilising – though it will be interesting to see whether the soon-to-be-introduced data tariffs will have any impact on this. This may not be the year of the mobile, but it certainly is the year when futureproofing becomes a sound investment: In 2013, smartphone sales are predicted to overtake PC sales, which will coincide with mobile internet use overtaking desktop computer use. It’s quite plausible by then that such distinctions between types of computers will be even fuzzier than now, (iPhone, iPad, netbook, laptop, desktop) if not moot.

Google is currently in the throes of redesigning its Android application store, currently with 60,000 apps and growing (compared to Apple’s 250,000+). Apps are an interesting phenomenon. With Apple’s initial inception, they are now quite the hot item, the thing your client’s clamour after without knowing exactly why. Yet what service do they provide? According to the meeting yesterday, 95% of Apple’s apps are not used after twenty days. For Windows’ part, half of the ‘Marketplace for Mobile’ apps are made by Microsoft, suggesting they have some way to go before accruing a wide, collaborative audience. The utility of an app, it was suggested to the audience yesterday, could be one of two things; engagement or purchase. Your app is there to either enhance the brand (like Chanel or Dior) or to encourage purchase (Argos). Time, lack thereof and frequency are also a large contributing factor to an app’s use. Simply put, it would not be worth someone’s while to download the Expedia app to their phone in order to book a single flight. It would, however, be of use to a regular traveller.

The audience was later shown a graph showing mobile and desktop search queries throughout an average day, with troughs and peaks mirrored between the two systems. Google stated they were not sure whether mobile search had a cannabilisation effect on desktop search, and that they “don’t care”.

We were then treated to a presentation by Amanda who delved into the world of Android-capable handsets. This included voice search – asking the phone directly “What are the best restaurants for breakfast near Union Square in San Francisco?” led to a satisfying list of responses – and voice text; unfortunately punctuation is something that remains almost impossible to do by voice, currently. There was also an example of Google Goggles, which, as well as being able to identify a building from a picture taken by a user, can also scan hard copy text, translate it and then pronounce it for you. All of which, except for the semantics of context, was most impressive.

Scott Seaborn then stepped up to the plate, going through some interesting case studies of mobile advertising. Two in particular caught Zeitgeist’s eye. The first was the Seer app that IBM updated for this year’s Championships at Wimbledon. This interesting video from the somnambulistic “Click” show on the BBC details the amazing thing that OgilvyOne’s app can achieve. Also quite fun was the new Coke Zero iPhone app called The Cleaner, soon to be released.

Steve from WPP’s Iconmobile brought up some similarly interesting case studies. The first of which was for T-Mobile as it attempted to encourage paperless billing with a great mobile initiative that involved “green” perks. The other highlight was that of a North Face campaign in China, which won a Silver Lion at Cannes. An interesting co-incidence of brand and region, as most Chinese people are currently gravitating to an urban life, and do not traditionally treat hiking or mountain-climbing as a past-time.

We then heard more about the Android platform. 160k devices that support Android are activated daily now. One of the nicer features that Zeitgeist saw was the enablement of cross-app usage. A user could be browsing through nearby restaurants on one app. Upon finding the one they want and clicking on a button in the app to book a table, the user would then be taken straight to the OpenTable app, which would immediately display the available times and tables for the restaurant you were just looking at on a separate application. While convenient and a nice move, this does present a potential hindrance for advertisers if users begin to navigate through the web merely by going from proprietary app to app rather than using a browser where they would be exposed to more advertising.

Conversely, the expandable ads that will begin to appear on Android platforms while surfing looked great, especially for things like films (the example we saw was for Adam Sandler’s Funny People). Lastly, we saw the new ‘Navigation’ app, which is currently only available in the US. Its map system allowed for alerts to the user for nearby amenities on their chosen route, e.g. cinemas, restaurants, etc. Interestingly, it also allowed for sponsored layers, meaning advertisers could put specific flags down on the map for particular promotions, to encourage people to take advantage of en route to their final destination.

As for Google’s final destination? Well, we’ll save that for a future article.

Digital Activation @ SW19

From the July Zeitgeist…

With the London Olympics on the horizon and the World Cup next year, one rather large sporting event has just taken place on our doorstep. The Championships at Wimbledon provided a very interesting case study of digital brand activation.

The sponsors, though subtle, were plentiful. Ralph Lauren served as the wannabe‐Brideshead Revisited outfitter. Their site is serious, serene and sophisticated. Not much fun, however. Aside from some nice flash video and some tips for players, there isn’t much going on. Evian have a more engaging, enjoyable site, though it promises more than it delivers; while the navigation is interesting, the functionality is unsatisfying as it could have been so much more. The Wimbledon site itself does an excellent job of ensuring the brand remains true to its ethos while still keeping it fresh and relatively contemporary. The pop‐up live scoring, VOD, blogs and social networking functionality make it a fantastic site. Ticketmaster have been releasing unallocated tickets for Centre Court throughout the championship, and have linked with the Wimbledon homepage and eCRM campaign.

HSBC has played a larger role this year in its sponsorship of the tournament, hosting a poll for people to vote for who, in their opinion, is the greatest men’s and women’s player of all time. However, the bank’s sponsorship page is somewhat uninspiring, and the link on the Wimbledon website could also be improved. The BBC, never one to miss an opportunity to elevate and aggrandise out of all proportion every generational hope for a British winner, had blanket coverage of the tournament; their online presence with blogs, live online video, text updates and impressive editorial was a great showcase of exciting
but not overwhelming content and functionality.

There is a superb iPhone app as well, which Ogilvy played no small part in developing with IBM. No talk of Wimbledon would be complete without mentioning Roger Federer, who on Sunday won his sixth Wimbledon title and 15th major. Nike created a simple but effective microsite for him, where users can leave a congratulatory message. This is published as a collage on a green lawn; the site prompts the user to re‐publish their message on Facebook, Twitter, etc. As some of these examples are temporary, make sure you check them out ASAP.