Creativity

Automation in Retail – The Next Competitive Advantage?

Did you know Amazon currently has a workforce of over 350,000 robots in their warehouses? I was recently reading an article by McKinsey on the challenges that traditional retail is currently facing with declining profitability, evolving consumer preferences, and the accelerating growth of e-commerce. Currently in the face of this, most retailers have taken a softly softly approach, underinvesting in future focused capabilities such as IT, digital, and tech talent.

The research found that a surprising 52 percent of retail activities could be automated, at least partially (exhibit below). The fact that over half of retail activities could be automated really hit home to me about the size of the prize in this space as a competitive advantage to not only become more operationally efficient but at the same time deliver a better customer experience.

The below visual from the report shows a cross section of industries, the types of tasks and % of automation potential. Whilst it shows retail still has a significant human element required in the “interface with others” (read my post on a consideration of charm), it shows there are a large number of data processing and predictable tasks that have automation potential – think customer order processing, product & promo pricing, inventory order forecast & management.

So how can Automation be put into practice for retailers? The report indicated three main areas of focus.

Step 1, review and simplify core business processes. Taking a customer first approach is key here, if you approach organising the business around what the customer wants you will always be led in the right direction. They found that process-redesign efforts here can see efficiency improvements in reducing steps by 20% to 30%. As an example, complex processes such as promotion management often involved more than eight steps and more than four teams, with opportunity to streamline with workflow tools. Workflow management tools can help to also smooth decision processes and simplify validation steps – with opportunity for 50% to 70% percent reduction in steps whilst maintaining nearly 100% accuracy

Step 2, automation. Once processes are simplified, retailers can look to build automation into them, at a basic level I’ve seen this done with robotic process automation (RPA) for manual tasks such as data entry and reporting. For example exporting orders and inputting them into a daily report format for the accounts team or re ordering low stock inventory. If you take it to the extreme you have Amazon’s example of automating the order pick process in their warehouses with 350,000 robots!

Lastly, add smarts with AI. This step can particularly improve the customer experience by allowing retailers to a scalable solution to deliver a more personalised experience. Beyond automating processes, this step requires “teaching” processes to learn and derive insights. AI can be applied in areas such as dynamic product selection, promotion, and pricing, where advanced analytics algorithms are increasingly used to analyse large sets of data – think Netflix or Spotify’s recommendation algorithm or Amazon’s dynamic pricing on site adjusted to market conditions.

With over half of retail tasks an opportunity for automation, there is significant opportunity for retailers to harness it not only to be more operationally efficient but deliver a better customer experience and in my experience, thinking customer first will always lead to down the right business strategy.

Alex Leece

Hyper Local, Hyper Annoying?

Imagine a future where we are constantly bombarded by notifications as we wander down the road  using our mobiles, innocently passing by shops. Now imagine just how frustrating that could be if not managed carefully. To quote a recent tweet from R/GA, if this is the future of location-relevant advertising, I’ll stick with my trusty Sunday circular, thank you very much.

If not done carefully, these types of things appear more like an attempt to ride the wave of social media than an opportunity to deliver a truly charming customer experience that returns any real long term sales.

At first these ideas seem logical, target people who are already instore with an offer as they are already there in a shopping mindset. However unless executed with care, I feel it will do more to irritate people then actually sell to them.

Advertising is a blunt instrument, we focus on such a granular segmentation at our peril.

There is a fine line between spam & information, we must take take to intelligently use the growing quantity of data we have available on our customers and deliver messages that are relevant and on brand or up comes the spam filter!

Mobile & The Automotive Industry

I recently spoke at an IAB NZ Mobile Marketing seminar on our learnings around mobile in the automotive industry and thought I’d write a post on the points I talked to.

Vehicles are a high value purchase and as such the research phase of the purchase is quite drawn out, with people consulting many different sources. Online platforms are becoming a large part of this, whether it’s Google, manufacturers websites or various auction sites, people do their research before stepping onto the dealers lot. These platforms are great as they allow us to serve up a depth of information on the cars in a visual and engaging way and deliver experiences that can’t be had anywhere else.

Now there is no doubt that people are adapting to living in a more connected and mobile world and changing their behaviours as such. The old context of someone leaning forward in front of a computer is changing as the new context sees mobile connectivity and a wide variety of devices allowing people to delve in and out of content when and where they want. This is especially prevelant in the automotive industry, as our brands are omnipresent. People are constantly exposed to vehicles driving by, billboards and our above the line advertising, so for people with a keen interest such as influencers and early adopters, any brand exposure could cause them to want to search for information. The mobile is the only device that will always be with them when this occurs. In short, it’s that theory of always on retail – we want people to have a positive experience of the brand when & where they want it.

As expected we have been seeing a marked increase in traffic to our website via mobile over the last 12 months and it’s important to deliver these people the key information they want in an easy to use way that is optimised for the device they are experiencing it on. Whilst mobile is still a fractured market both in terms of hardware and software, there are clearly two stars at this point in iOS and Android, followed by the rest. In terms of development this means you can narrow your focus for crucial platform support. It will be interesting to see how the market evolves and consolidates over time. Much like when the internet was in it’s infancy, once a few players gain scale it will be easier to manage delivering content.

So once we’d identified we needed to be in the mobile space, we began by looking at what were the most important functions for a potential vehicle buyer whilst on the go and identified:

-model information

-booking a test drive

-finding a dealer

-roadside assist

-special deals

We wanted to ensure we were delivering the most important features whilst maintaining a rich experience & depth of information in a mobile optimised format.

To help with conversion even further we can use them to connect people with Mazda and our dealer networks to drive enquiries and test drives.

The recession has caused an increased trend in price competitiveness through incentivised pricing, which has bred a new value conscious shopper who is careful to compare prices to make sure they are getting the best deal. This has meant that people are increasingly comparing prices at the pointing end of the path to purchase and the mobile is the most convenient and ever present device to do this with. This extends to instore comparisons at a dealer level, people may be checking out a car and want to compare another or simply find out further information on the car they are looking at.

Finally, it’s become clear that using digital and mobile platforms we can extend the content available to people across all our other media for qualified leads.

Alex

Big Data & In Memory Computing

BT Tower - London - A Monument To The Broadcast Era

Big Data is a term coined to describe the data deluge we are currently experiencing. It’s no secret that we are living in a technology driven society that generates an ever increasing amount of data as we go about our daily lives. “Always on” is a term that is often heard and more often then not, when we are “on” we are creating data about ourselves, our likes and our dislikes, our network of friends both professional and social, and even our travel habits. At the same time, businesses must also retain more and more information to manage themselves more efficiently across the board. In tough economic times there is an ever increasing recognition that organisations must use every single resource at their disposal to get ahead. This results in information and data that once might have been given little attention is now seen as worth its weight in gold if any perceived value can be derived from it.

Looking at the sources of this data, to start with there is of course the sales, operational and customer data that the business collects. On top of this there’s social media data from the likes of Facebook and Twitter including information around friend groups, likes/dislikes and sentiment analysis. There’s web search data, with transactional information or online customer reviews. There’s also data generated by location-based services and data from sensors, moniters and GPS embedded in a growing array of products from vehicles to appliances. I believe if we as advertisors can offer solutions to our clients of how we can process and utilise the growing amount of data available to help inform creative business solutions we could offer real value. To quote a recent Financial Times article

“The challenges are two-fold: First, to recognize the value of big data in mining customer needs and desires, and second, to devise a data management strategy that integrates big data into the front end of the innovation pipeline.” 

So how do businesses harness all the data that is being created and use it to inform their strategy and decision making? The challenge here is being able to process large amounts of data at speeds that make it useful. It’s very difficult to really make use of data in business decisions on an ongoing basis when it takes weeks to gather and process. Large software powerhouses such as SAP & Oracle have been bringing new tools to market for businesses to help solve this problem. In memory computing software is designed so organisations can analyse vast quantities of data in near real time across many sources. Essentially in-memory computing takes advantage of a better understanding of how data is formed and housed and the ever decreasing price of memory (discussed in my Technology vs Advertising post). Instead of housing data on a hard drive, data is stored in a computers memory. Therefore, when it needs to be analysed it is available in near real time. This increased power and speed also means that the computers can handle more unstructured data, important when data can come from so many different sources. On the back of this there would need to be a process for managing and delivering the data in an efficient manner and most importantly, in a way that is easy to understand and glean insights from.

Whilst I think caution must be taken not to let our ability to measure granular details bog down the creative process, at the end of the day, the more you know about your customers and can integrate those insights into your business strategies the more likely they are to improve revenue, margins and market share. Who wouldn’t want that leg up over the competition?

Alex

The Continuous Channel – The New Retail Frontier?

I recently watched a presentation by Steve Nave, former SVP & General Manager of Walmart.com and in it he raised the concept of the continuous channel as a new frontier for retailers. He talked about rather than seeing retail as a multi channel process, we should be taking a step back to look at the entire brand, letting customers shop the way they want to shop and bringing it all together into one continuous channel. Essentially instead of serving customers through individual channels, we serve them at touch points across channels by optimising the organisations processes and technologies. The picture on the left is a trial advertising program by Tesco in South Korea. In a “virtual store” concept, people could shop with their mobile phones whilst waiting for a train directly from an ambient installation set up to look like a store and have their groceries delivered to their home hours later. This is a great example of allowing shoppers to purchase in new ways, on their terms and across channels.

Traditionally there were only three channels which organisations could utilise to actively generate sales, the stores themselves, direct sales (phone/direct marketing) and printed catalogues. These channels essentially each only had a single touch point within them. This has now all changed with the advent of the internet and the establishment of ecommerce as a legitimate channel. The internet differs from the three traditional channels in that it doesn’t simply create one touch point but a vast array of new ones. It feeds emerging technologies as it expands into mobile, tablet, TVs, instore, cars and not to mention social media. The key thing to note here is that when you think about it, none of these new touch points are actually a new channel in themselves, they are all being fed by the existing internet channel. The opportunity here for retailers is that increasingly everything is becoming a touchpoint with which consumers can transact with your organisation. Whilst this may sound similar to the concept of multi-channel retailing, the difference is in the thinking of how the channels and touch points intersect together and how the organization responds to the customer across them to drive sales.

For this to work, information, and data must flow freely between channels on the customer end and within the business units of the organisation, no silos. Customers more and more expect to be able to shop across channels, for example purchasing an item via mobile and collecting it instore. They need to be able to shop when and how they want to, customers shop with your company as a whole, not with an individual channel. With this in mind we can look at new ways to intersect them. I think whilst it may be very hard to truly get to a point where this is fully achieved but it is a good journey to be on and will help drive retailing into the future.

The Walmart example that Steve discussed is a good one to look at in terms of a big retailer testing out initiatives which cross the channel boundaries. Walmart has implemented the below strategies with their ecommerce platform that go some way to letting the customer shop their way and intersects both instore and internet enabled channels:

Site to Store – customers could purchase products online and have them sent to their local store for collection.

Pick Up Today – customers can view a stores stock online, purchase and put it on hold knowing it’s ready for them when they arrive in store to collect it.

Scheduled Delivery From Store – customers can order something online from a store and schedule the delivery for when they want it to arrive at their home.

These strategies are interesting in not only do they cross the typical “channel” boundaries, but really add utility for the customer.

Looking forward, Steve identified the below future milestones he thought to be criticial to driving the continuous channel strategy going for Walmart:

–Social – not just in a setting up a Facebook page way but really looking at what the intersection is between business and social. They started an initiative called “Walmart Labs” to explore new technology around understanding what people are talking about in social media. With that insight, then as brands we can come to people and be relevant to them and the local community TODAY in new ways. For example we could use the information to influence what store staff talk to customers about when they enter the store, the POS instore, or what new initiatives stores can do for people. It’s about more then just sending emails of a relevant sale to people who have indicated they like blenders on Facebook.

-Mobile – This will help drive the continuous channel as a future for ecommerce. Customers are turning to mobile devices more and more for information when they want it quickly. To help keep pace in this area, Walmart are going so far as acquiring tech company start ups to remain agile and take advantage of the latest advances in technology.

-New Store Models – Can ecommerce begin to help influence store layout? Walmart are now siting the online division at the table when discussing how stores are designed to help bring online into the bricks and mortar channel. For example we don’t necessarily need the store floor space to show all products if we can back it up with online channels. For example you could show just 3 digital cameras in each price point, knowing 300 more are online which we can get to store for someone today, or to their home.

Whilst we won’t see the end of bricks and mortar stores, customers will always have something to do instore, (a point I touched on in my post Why Bricks and Mortar Stores Will Always Have a Role to Play) retailers will need to rethink their operational strategy to keep up with how consumers expect to be able to shop, on their terms, across channels.

Alex

The Value Of Proximity

Technology is allowing people to become more and more connected via social and mobile networks. These connections span from people in their locality right through to people on the other side of the world. This growing number of connections can create alot of noise and we do start to see marginal disutility within the social network as the connections become less valuable to the person. Traditionally, we were only able to foster connections with those in close physical proximity but what role does proximity now play as the world becomes increasingly open.

As a lens of looking at this issue, I came across the principles of Gestalt psychology. This theory is based around the concept that the brain is holistic, parallel, and analogue, with self-organizing tendencies which affect how we perceive things around us. Proximity is one of the grouping principles that this theory is based on and it occurred to me that it may relate to how we subconsciously self-organise our networks. The principle states that, all other things being equal, we perceive stimuli that are close together as part of the same object, and stimuli that are far apart as two separate objects. This simplifies things in our mind and reduces the number of small stimuli we need to process. Whilst this theory does most typcially apply to visual perception, focusing on the idea of our brain having a tendency towards self-organizing, it may not be too much of a stretch to consider physical proximity to be a grouping factor we use in organising networks to reduce noise.

Therefore as a way of coping with the growing amount of connection noise we experience, we may start to see people subconsiously group those people that are in close physical proximity together. They then may devote more attention to this group, allowing them to cope with the excess of less valuable connections within the network. We would of course be more likely to interact with these people on a regular basis and the effect may be exacerbated by the fact that content is becoming more and more tailored to what we are more likely to engage with (take Facebooks top stories timeline for instance). This would mean that proximity plays a role in the value of a connection as the closer you are to the other person, the more likely this connection will be on your radar. I know I spend alot more time interacting with my friends that I see on a regular basis than any others. So what does this mean for the reality of how much more utility we gain as the world becomes more connected, do we get as much value from the long distance connections as we do the local ones?

It’s not a new concept that proximity fosters valuable relationships among people, especially when considered in the work environment. A recent research paper gave some credence to just how much of an impact it can actually have (see reference link below). An analysis of a decade of Harvard biomedical research collaborations, found that the closer the proximity of the offices of key research partners, the more influential their joint papers were likely to be. It mattered whether collaborators were walking down the same corridors through the office, or eating at the same cafes. It seemed to be that the presence of physical collaboration through closer proximity produced better work from the team, despite on the surface being able to communicate just as efficiently over long distance via technology. The continued importance of location may seem unnecessary with the advent of Skype, smart phones, and other technologies that make it effortless and inexpensive to collaborate with people around the world, but location still seems to matter. Being able to communicate across distances means we can do alot of different things more efficiently but face to face contact and proximity is still important as the noise from our connections increase and it simply can’t replace personal interaction.

Whilst technology is allowing us to become more connected and break down geographic barriers, I believe that proximity may still play a role in how we organise our networks (even if only subconsciously) and can be an indicator of the value that a connection provides.

Alex

Reference

Lee K, Brownstein JS, Mills RG, Kohane IS (2010) Does Collocation Inform the Impact of Collaboration? PLoS ONE 5(12): e14279. doi:10.1371/journal.pone.0014279

http://www.plosone.org/article/info:doi/10.1371/journal.pone.0014279

Technologies Impact on Creativity

New York by Frank Gehry

The building pictured to the left is a recently opened skyscraper called New York by Frank Gehry. I think it is the perfect real world example of technology meeting creativity, plus I just think it’s beautiful.

I think the definition of what we consider creativity is changing, morphing to include functional aspects. In terms of advertising, how users will interact with a campaign, on which devices, at what time are all just as valid creative aspects as what colour the typeface will be. Many people may see technology as negatively impacting creativity in advertising as the proliferation of people becoming “connected” through PCs, tablets, mobile and social networks drive campaigns that have just as much to do with functionality as they do the big beautiful idea. However, I think it’s actually creating an environment that not only encourages creativity but actually means that it’s more effective.

I believe creative work now more than ever equals effective work. Previously a creative campaign would run it’s course through the paid broadcast media channels and fade away, only leaving word of mouth behind. Now, if people watch something they enjoy on one of their connected devices or with one present, they can then share the experience with their friend network and create discussions around it. Not only that but it lives on as a permanently available record on the internet.

Technology (being connected) & social networks amplify the message of creative campaigns, if people are interested in the content enough to spread it throughout their networks.

Moreover, technology has created an environment which empowers people as content seekers, distributors and creators. We’ll search out and only engage with what we wan’t to, whereas previously we obediantly consumed content that was broadcast to us (because we didn’t have a choice). In this new environment if what we create as advertisors isn’t creative and engaging, more and more we will just get ignored and passed by as people get used to accessing only the content they are after. Television broadcasters are dealing with this issue currently with time shifted viewing, newspapers are being replaced by daily updates on news websites and people are using iPods in the car to listen to music rather than radio. So what do we need to do as advertisors to continue to be relevant to people:

Be Interesting: Lets deliver information and content that is revelant to the person who is experiencing it at the time, whether it’s a price on a product they are seeking out or an amusing video to kill a couple of minutes at the office. Let’s deliver content that is easy and enjoyable to experience for everyone no matter where they want to access it, whether it’s from their mobile, tablet, PC or letterbox.

Do Stuff Rather Than Say Stuff: Look to create things as well as ads. Create utility. Allow people to access the interesting content on their terms.

Experiment: Maybe good enough is good enough. Lets be agile and iterate, operating more like a tech start up than a typical agency. Work together in cross disciplinary teams. Gareth Kay also made the suggestion of putting a percentage of the marketing budget directly towards R&D.

Why can’t the next Facebook/Twitter/Instagram be started within an agency?

Alex