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Retail Convergence: Three Trends to Watch for in 2014
Dwight D. Hill, The Retail Advisory LLC

1. Online = Brick & Mortar = Online. We are social beings and while we enjoy the convenience of shopping online, there are still times when we want to experience the product before we buy it. The store is here to stay, but it is evolving into an entity that is part product showroom and part social gathering spot. Traffic declines due to the convergence of e-commerce and stores, competition, and escalating real estate expenses have forced retailers to rethink the store footprint. Thus a mash-up is beginning to occur in the retail industry and retailers are incorporating elements of e-commerce within their stores. In Burberry's new London flagship store, video screens are positioned throughout the store that provide customers with brand messaging. In addition, each item is RFID tagged and, if approaching the screen, it comes to life and provides in depth product information. Other retailers are using augmented reality screens (allowing you to "virtually" try on items), that allow a customer to make purchases at that moment via the website. As if that weren't enough, now some pure play e-commerce retailers are opening brick-and-mortar retail locations! A great example is Bonobos, an online men's apparel retailer that is now opening stores. Retailers are now realizing that BOTH an online and brick-and-mortar presence is necessary to build the brand.

Store and E-commerce Leaders: What does your store of the future look like, and how do you plan to capitalize on the convergence of the channels?


2. The "Smart" Store. Technologies at the store level will increasingly allow retailers to collect data on customer preferences and shopping patterns in a similar fashion to data collected via e-commerce. Gone are the days of the traffic counter that simply counts customers and provides a conversion rate. Retailers will increasingly deploy technology that records traffic patterns, dwell time at key locations in the store, even facial patterns to determine emotional responses to displays! This data will and is opening up new possibilities for retailers to plan and deploy labor more accurately, measure impact of displays, and gain real time representations of traffic flow through stores. Geo-fencing technology will increasingly be adopted, enabling retailers to know when their customers are present and instantly have access to all of their preset preferences and purchase history. Retailers will use this to target promotions, alert sales associates (think luxury or high service models), and to help drive labor scheduling decisions. Nicole Miller is currently testing a solution that puts customer data from social and mobile channels into the hands of the sales associates. Once a customer checks in to the store on Facebook, the sales associate is notified and the customer receives offers or recommendations based on past purchases.

Store, E-commerce and Marketing Leaders: How do you intend to make your stores "smarter" and capitalize upon your customer's shopping patterns and behaviors?

3. "Omni-channel" Disappears, "Customer Experience" Returns. The term "omni-channel" exploded onto the scene about 3 years ago, becoming a part of the retail lexicon almost as rapidly as "e-commerce" did in the late 1990's. However, it also has come to be a mind-numbing term to many executives in the retail industry. Just what it means to each retailer can be very different. For Nordstrom it means complete visibility to all inventory - in store and online – including in store pick-up and stores operating as mini-distribution hubs. For Hointer, the Seattle-based denim retailer, it means stores that operate as product showcases, allowing customers to interact with the brand by the single device that unites us all - the smartphone. The customer does not think of the website or stores as different channels and retailers must reset their thinking in this area. To the customer, it's simply shopping! She doesn't care about omni-channel, she simply wants a world-class experience. We are witnessing a complete shift in the dynamic of shopping as traffic declines in one channel (stores) and shifts to another (e-commerce). The foundation on which to focus is the customer experience. Understanding, measuring, and continuously improving the customer experience will become the source of differentiation for the innovative retailer as well as a requirement for survival.

Retail C-suite Executives: What element of the customer experience will you choose to improve in 2014?

Dwight D. Hill, whose background includes leadership roles with Neiman Marcus and Deloitte LLP, is Founder and Retailer Strategist, The Retail Advisory LLC. Dwight can be reached at