A comment on twitter caught my attention last week…

Gap won’t honor their Foursquare discount unless you get credit card. No asterisk or anything on special. Won’t see me there for a while.

I’ve seen other complaints about location based marketing promotions being hard to redeem but what  caught my attention here was that this tweet didn’t come from anyone with a professional interest in location based marketing, it came from a woman that was just trying to get a good deal on a pair of jeans.  I.E.  A real end-user.

Much has already been written about early location based marketing campaigns falling short of an ideal customer experience.  The Ad Age piece “What Marketers Can Learn From Starbucks’ Foursquare Stumble” chronicles the poor customer experience some users faced when trying to redeem one of the largest scale location based marketing promotions tried to date.

So I spent the weekend testing out the offering of another location based marketing pioneer, ShopKick.  What I found was a number of gaps in the customer experience:

• Auto Check-In – The marketing buzz around ShopKick is largely due to the promise of “Auto Check-In” but in this case, “auto” means that while you’re in the parking lot, you need to remember to fire up the ShopKick app and then hustle through the door of your local Best Buy before the AutoLock on your phone engages or you get a phone call.  Even then, you have a 1 in 4 chance of auto checking in as the “pilot” is only in a quarter of Best Buy’s stores.  At this point “Auto Check-in” is a pretty cool proof of concept, but an end-user who expects ShopKick to free them from the Check-In fatigue they are experiencing with FourSquare, will be disappointed.
• Places Database – Unlike FourSquare I can’t create my own venues in ShopKick so I’m dependent on their database of stores being accurate, and it wasn’t.  I was able to check-in to an REI store that had moved to another part of town five years ago.  Accurate “places” based data for these services is going to be a real challenge, especially for those that don’t have a crowd-sourcing feature.
• Product Info – ShopKick lets you scan bar codes in the retail store to earn points and get detailed product info.  But today the info you get is less than what you can already find on the shelf, and in a Best Buy you can’t scan their proprietary 2D SKU code, or the new QR codes that are rolling out.  You can’t get access to product reviews from BestBuy.com, advice from Twelpforce, etc… Again a very cool concept but not yet a compelling execution.
• Promotions – ShopKick offers Coupons on specific products while you are roaming the store trying to collect Kickbucks.  But all the so called “Deals” are the exact same price that is available to every other shopper in the store!  It felt like Best Buy and ShopKick were trying to trick shoppers into thinking these were special prices.  This perceived misdirection is a customer experience FAIL.

I can understand why all these customer experience challenges with FourSquare, ShopKick, and others occur.  Doing ANYTHING with large retail chains is very hard.  Navigating the matrix of approvers, stakeholders, budgets, ect… can be all but impossible.  So before you go to the monumental investment of time and resources necessary to create a well integrated customer experience, it’s temping to cut some corners and get something out there quickly to prove the demand.  There is nothing wrong with this “Pilot” approach.

But, the corners you cut need to be the ones that are transparent to the end user.  Maybe you don’t have the automated back end to customer affinity so you get a weekly data dumps of slightly stale data to use in your app.  Or you can’t get the IT department to let you link to the store level product database, so you link to the publically available Best Buy Remix database instead to display product info and customer reviews.  The point is that it’s OK if the Pilot isn’t perfect, but the customer experience has to be “good enough” to excite the early adopters.

If the early adaptors don’t have a good experience the first time they try FourSquare, they aren’t likely to give it another chance.  Worse, since these location based marketing services cater to social networking early adopters, the cycle of negative PR that results will be greatly amplified.

You see this challenge every time a new technology tries to find a home in retail stores.  When technology companies first started trying to sell touch screen “kiosks” to retailers they were extremely expensive and unreliable (IBM and NCR should have bundled an “Out of Order” sign and wire transfer instructions with every unit they sold ).  It got so bad, that subsequent vendors couldn’t even call their products “kiosks” because the name had such a negative connotation with retailers.  Bloated, expensive, and proprietary “Digital Signage” solutions have that same problem today.

Ironically, FourSquare’s co-founder, Dennis Crowley, seems to understand the problem perfectly when he call’s Facebook’s new Places offering “boring and unexciting”.

I don’t want to see location based marketing deployments for retail hampered by early mistakes.  It’s vital that the early adopter users have a great experience.  And I’m not trying to pick on FourSquare or ShopKick.  I’m thrilled that companies like them are taking chances and moving the industry forward.  I don’t want to see either company end up as a “pioneer with arrows in their backs”, I want to see them both succeed and be well rewarded for being a first mover.  But I do think they need to rethink some of the customer experience corners they are cutting. 

Have the first generation experiences already hurt the publics perception?  Should ShopKick have iterated a bit more before firing up their PR efforts?  What has your experience been?

Wednesday, August 18, 2010 was a remarkable day in the evolution of Location Based Marketing.  The day started with ShopKick, a well-funded start-up, launching an In-Store, Location-Based Marketing service in 257 Best Buy stores. The day ended with Facebook announcing the immediate deployment of a location-based marketing solution for its 500 Million users.

Shopper marketers will be building the next generation of location based marketing services on the shoulders of these initial offerings.  Soon, Location-Based Marketing may become more influential than broadcast television.  So if you haven’t been following this space closely, it’s time to start paying attention.

Here is a recap to help you catch-up as well as my predictions regarding the future of this game-changing marketing channel.

What is Location-Based Retail Marketing?

Definition: Shopping experiences that change dynamically based on the location of the shopper. 

Back in the early nineties at Blockbuster Video, we knew that a majority of our Friday night customers would also be stopping at a take-out restaurant on their way home.  We often thought, “Wouldn’t it be cool if we could predict which restaurants customers will visit on their way home, and use that information to develop a cross promotion?”  At the time, it seemed impossible.  Today, thanks to the GPS enabled mobile phone, it’s a reality.

There are already some impressive examples that have been deployed.

Retail Branded Applications with Local Promotions.

Adidas outlet stores have a common operational challenge…matching their price promotions to inventory that is in constant flux and varies from location to location.  How can I choose between driving Portland’s congested freeways south 30 miles to shop the Woodburn outlet, or 30 miles north to shop the Columbia Gorge outlet? Woodburn may have great deals on surplus soccer balls, but the Columbia Gorge outlet has excess inventory of fleece hoodies. It’s not cost effective for Adidas to run out-of-home advertising for a single store to feature a product that only has a few days of inventory at most. Offering in-store price promotions may influence a few purchase decisions but can’t drive needed incremental traffic to the store.

Like many cutting edge retailers, Adidas has turned to a technology solution.  They developed an IPhone app that tracks your current location and offers highly-localized price promotions for the store nearest you..  Take your phone south of Portland and you’ll be hearing about soccer balls, but start driving east and the same app will promote hoodies and fleece.  Each store’s manager is able to upload promotions to cost effectively drive traffic to their store.  All this is possible due to the advent of the GPS enabled mobile phone.

Location specific promotions are already becoming common place in smart retailers’ apps and mobile websites.

Check-in Applications

If you aren’t already familiar with the offerings of firms like FourSquare, Gowalla, Loopt, Neer, and Placecast,  then you should spend some quality time on your favorite smartphone App Store.  Basically, these apps let you “Check-In” when you visit your favorite locations.  Not only can your peer network see where you are and interact with you, but they have a gaming aspect – you get points each time you visit a venue.  FourSquare, one of the pioneers of check-in services, declares you “mayor” of a location when you check-in more than anyone else, and you earn “badges” for specific accomplishments (for example, visit three Apple stores to earn the coveted “Jobs badge’).  These Top Check-ins Lists are reminiscent of the old high-scores on arcade games. They play into our psychological need to be recognized.  Even with no tangible reward for becoming a “mayor” or earning badges, they provide a powerful draw that inspires already loyal customers to increase their visits.   The competition to make the top lists means that the apps are sticky with a high switching cost.  What user wants to give up the 250 check-in’s they’ve already made at Starbucks with FourSquare to begin using Gowalla?

These check-in apps are a perfect platform for location based promotions.  For example, Starbucks did a promotion offering their “Mayors” $1 off Frappaccino’s. Independent retailers can purchase a Foursquare promotion that offers a discount to anybody that checks in within a one-mile radius of if their store.   CauseWorld (a check-in app offered by ShopKick) awards you” Karma Points” for each retail visit, which can be redeemed for philanthropic donations made in your name.

Automatic Check-in Applications

ShopKick, a startup headed by the former EVP of mobile at CBS, has reportedly raised over $15M in venture capital from Kleiner Perkins and others.  They made their debut on the Apple App Store Wednesday morning.

Shopkick improves on the basic check-in model in two very important ways.

1. Automatic Check-In.  If the Shopkick app is running, it automatically detects that you have entered the store (or department) and relays the check-in points and promotions.  You don’t have to do anything other than have the app running.

2. Micro-Location Services.  The app doesn’t rely exclusively on GPS. it also detects in-store beacons that emit audio signals outside the range of normal hearing. This allows Shopkick to track you location in the store.  I refer to this “micro-location” capability but I’ve also heard it referred to as “hyper-location.”  This capability is what allows ShopKick to offer , for instance, a Samsung promotion only to shoppers standing in-front a competing brand’s product

500M Facebook Users Can’t be Wrong

Also on Wednesday, Facebook announced “Places”.   This is a Location Marketing feature that allows users to use their iPhones to check-in yourself… and your friends. The API allows Facebook’s partners to write apps that use this location data. FourSquare, GoWalla, and Yelp have all been introduced as initial partners.

With the official Facebook stamp of approval, Location Based Marketing is now mainstream, and because it is a “semi” open platform means that all sorts of creative developers and marketers have access to consumers’ location data. All they need now is an irresistible and compelling value proposition for shoppers.

Oh…In case you’re worried about Google falling behind, rest assured the ads they deliver to your mobile phone have been fully location aware for some time now.

So Where is This All Leading?

As important and cool as these initial offerings are, they still have some room for improvement:

Wrong Micro-Location Technology.  ShopKick’s use of Audio is a pretty clever way to quickly get auto check-in deployed on current smart phone technology.  But in the long run, I don’t think these audio based beacons are practical.  First, this technology depends on the shopper keeping the microphone active, which drains the battery at a high rate. For this reason shoppers will be hard-pressed to keep the ShopKick app active all the time.  And, of course, the native phone app on the device takes over the microphone when you receive or place a call, disrupting Shopkicks ability to find you In my opinion,.  a better solution would be to leverage the Wi-Fi signal that most newer SmartPhones already emit detected and located by beacons in the store.  That technology could perpetually run in the background on SmartPhone and not impact battery life. This would enable “true” Automatic Check-in.  Several companies have already perfected this approach, so it’s only a matter of time before we see it deployed.  It would be even better if SmartPhone manufacturers started including NFC technologies in their handsets. This could be used not only to detect very inexpensive location markers in the store but to facilitate promotion redemption and payment at the cash-wrap.

Platforms — not applications.  In the long run, it doesn’t make much sense for Best Buy to encourage shoppers to use the ShopKick application.  Best Buy already has their own Application with a pretty rich feature set (promotions, product info via QR code scanning, customer affinity, Idea Exchange, store locators, etc…).  Best Buy should be using all its marketing efforts to get its own app on the shopper’s home screen.  What’s to stop ShopKick from offering a promotion only redeemable at Walmart to shoppers that check into a Best Buy?  A retailer’s biggest advantage in mobile marketing is that only they can enable micro-location services in their store, and they should only be doing so for their proprietary apps.  Solution providers like Shopkick need to develop platforms that can easily be integrated into a retailers app, not compete with it.

Promotions Aren’t the Killer Feature.  So far, most of these offerings have focused on the ability to deliver coupons and promotions to shoppers based on their location.  But these simple promotions don’t increase the size of the financial pie for the retailer, and it’s the retailer that needs to install the beacons to enable the experience.   To generate real revenue for the retailer, shopping experiences need to improve the conversion ratio of browsers to buyers, increase the size of the shopping basket, upsell to higher margin choices, or drive more frequently visits.   The good news is that well executed location-based-marketing customer experiences on mobile handsets can do all of that… it will just require more marketing strategy than basic coupon dispensing. 

Shoppers do more pre-research than ever before entering a store, , When they are tempted to make an unplanned purchase, how can a retailer provide the final “push” of rich product information to tip the scales in the direction of purchase? Using micro-location data to determine the product the shopper is contemplating  and instantly delivering the features, benefits and promotional information via the handset is a great way to drive incremental purchases.  When you add the ability to integrate with customer affinity programs, determine the path a shopper took to arrive at a particular shelf, plus the ability to deliver peer reviews from the shoppers own social network… you have the in-store shopping experience of the future!

Combining a shopper’s Smart Phone with in-store micro-location beacons is the brick-and-mortar equivalent of the e-commerce “cookie. Stores that embrace this technology will be ahead of the pack in the near future, as the Smart Phone becomes the shopper’s primary internet tool.

Clearly, I’m a retail geek, so nothing excites me more than in-store and shopper marketing. But if you’re involved in multi-channel marketing and you aren’t excited by the amazing possibilities technology is enabling … you may be in the wrong business.

I live in a great urban retail district in Portland, Oregon called the Pearl.  This week I was surprised to notice a new retail shop open in my neighborhood.  Penzeys Spices is a 50 year old company that operates 48 stores and they do it quite well.

Their value proposition is that they provide high quality spices to the home cook, at affordable prices.  The design of their retail stores is very consistent with that promise.

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When you first enter the store you a greeted by an open floor plan with a good lines of sight, clear category signage for easy way-finding, and not too much visual clutter.  The fixtures emulate wooden crates, and distressed wood and brick are used liberally in the design.  The store is well lit, blending  several large sky-lights with halogen fixtures.

Every spice in the store includes a large sampler jar which you are encouraged to smell.  The sample jars are labeled with rich product information.  The “for sale” packaging has simpler labels with clear pricing.   Informational signs are scattered amongst the shelves, educating shoppers about the various spices.

Recipes are placed on each display that prominently feature the adjacent spices.  The recipes include large photo’s of the finished product, and tear cards to enable you to take the recipe home.  Penzeys clearly understands that they are selling the experience of having a fresh baked coconut pie in your home, not a just a jar of vanilla.    A gift area includes a variety of gift packs with pre-selected assortments of spices and accessories (such as pepper-mills) in custom wooden gift crates.

Props are used to add visual interest to the environment (fishing boats, nets, burlap sacks, etc…)

Because the store caters to home cooks, who may be shopping with young children, the isle spacing is stroller friendly, and there is a themed coloring area for kids.

The store is the company’s second location in Portland.  They seemed to have hired a friendly and enthusiastic staff, and sent a retail operations team member from headquarters to help launch the store.

Penzeys in-house team designed the store (I don’t know if a firm was involved with the original concept).  They have there own fixture shop at their Wisconsin headquarters to fabricate the fixtures.

The company started as a mail-order business and expanded into retail, so it’s not surprising that they cater to multi-channel consumers offering catalogs, e-commerce, and retail stores with a consistent shopping experience.

Spice & Tea Exchange

I had never been in a dedicated spice retailer before, but this certainly felt like a well executed concept.  It did make me curious if there was much competition in the category so I popped onto Google Maps and learned that there was a competitor called the Spice & Tea Exchange less than a mile away, so I paid them a visit as well.

Spice & Tea Exchange is a franchise operation, so it’s possible that the locally owned store in Portland is not representative of the overall concept, but unfortunately their Portland store did not fare well in comparison to Penzeys.

The store has been open for five months, but the primary signage was still a vinyl banner covering the previous occupants sign.  There was a sidewalk tent in-front with a handmade promotion taped to it. 

The store had a simplistic layout with product along the walls and no real use of the interior space.  The fixtures, materials, and way-finding signage are all fine.  Unfortunately they need of a new copy-writer, as most of the signage is to tell you want not to do!

Please don’t reach in the jars.

…the most expensive spice in the world

…this is not a hands-on museum.

All the negative signage made me feel like they would prefer shoppers not visit the store at all. 

At the end of the day, I have no idea which store has better quality spices or how they compare on price, but I can tell you which store I’d rather shop… Penzeys won my business through their superior customer experience.  Penzeys understands who their customer is and perfectly executed an experience tailored to that customer.  I love great retail!

Walking my local OfficeMax this week, I noticed a few customer experiences mistakes.  When you see something “not quite right” with a retail customer experience, one question that always comes up is if the mistake was in the design or the execution.  Obviously one element of good design is that it can be easily executed in the store.  If the fundamental flaw is in the design it means it’s going to be a flaw across an entire chain, while flaws in execution can be localized to one of more stores.

Here’s a breakdown of what I encountered:

Clearance Display

They aggregated a bunch of slow moving products under a clearance sign, a classic promotional tactic.   The only problem is that the items aren’t priced.  When I asked a sales associate to price check the product I was interested in, he reported that it was $194 (a mere $5 discount from the full list price, a savings of 2.5%).  That didn’t seem like much of a savings to me, and my subconscious mind just formed the opinion that this retailer is trying to trick me.  I wasn’t going to bother asking for the price of any of the other “clearance” items.

I suspect that this particular mistake was in execution.  The products are probably supposed to be priced (ideally showing the original price and a much lower clearance price).  And I’m guessing the product I checked wasn’t intended to be on clearance.  But at least in this one store, the damage is done.  Did the merchandising manager that added the clearance display to the plan-o-gram include a standard operating procedure for mark-down pricing?  Has he ever worked in the store to see how those instructions reach the employee who will actually execute them?

Ambiguous Product Information

A Hitachi “Lifestudio” brand external hard drive caught my attention.  Unlike most of the other drives in the category, this one seems to have some visual interesting design element.  It has what looks like a blue USB Thumbdrive glued to the drive.  But no real hint what it does.  The display is a “dummy” unit and the feature in question is glued to the drive, but if I buy one what will I get?

• Is it a Bluetooth dongle to let me wirelessly access the hard disc?
• Is it a separate USB memory drive that is bundled with the hard disc?
• Is it just a visual element?

For security reasons, OfficeMax doesn’t put actual product boxes on display, so maybe the fact tag will tell me what the mystery dongle does? 

But there is no help here.  What I can learn from the display is that Hitachi offers two similar products the LifeStudio Mobile and the LifeStudio Mobile Plus.  Both are 500GB and both have the exact same 4 bullets on their fact tags.  The only difference I can get from the fact tags is that the “Plus” is $50 more, and includes the mystery dongle that might be purely cosmetic.  Affter walking out of the store I learned that the dongle is a 4GB thumbdrive that autosyncs to the hard disc. (OfficeMax sells Sandisc 4GB thumb drives for $9 so it’s probably not worth the $50 premium).

Hitachi and OfficeMax did nothing to make me want the Plus.  They could have at least added “Auto-sync 4GB USB key” as one of the 4 bullets, or they could have included this image on their sign (at least I’d have known the dongle is removable). 

This mistake was certainly in the retail display design, and I’m sure I’d see the same bad experience at all of OfficeMax’s stores.

This simple display took a lot of work from a Product Manager at Hitachi whom I’m sure had a vested interest in OfficeMax selling his product.  Making the dummy drive to give to OfficeMax was probably more expensive than manufacturing a live one (because the quantities are so much smaller).  Hitachi probably had to provide the fact tag copy to OfficeMax and missed the boat in promoting the Plus.  Did a Hitachi sales rep visit an OfficeMax store after the product launched and give his buyer at OfficeMax any feedback?

These kinds of simple misses occur countless times for the more than 10,000 SKU’s a typical specialty retailer tries to merchandise.  A consumer doesn’t have to be frustrated by very many displays before they decide that the retailer doesn’t make their life better.  

Doing good retail is very hard, and even the best operators are going to make mistakes.

Do you ever need to know how many stores a particular retailer has or how fast they are growing?  Here are some resources I use frequently:

	Deloitte publishes an annual Global Powers of Retailing, the 2010 version came out in January.  The report is available for free download and well worth the read.
	Stores.org (a publication from NRF) publishes the Top100 and Hot 100 lists annually.  both are great free resources.
	Chain Store Age publishes an annual Top 100 list.  The 2009 version is out, and the 2010 should be available soon.  It’s well worth the $99 download fee if you’re a shopper marketer.
	Slightly more of a niche, but TWICE publishes an annual list of the Top CE Retailers (a space I do a lot of work in).  It’s $125 to download the digital version.  The 2010 version came out in May.
	Dealerscope magazine provides a list of the Top 101 CE Retailers, and lets you download it for free.  the 2010 version came out in March.

I used to have an intern compile the data from all 5 of these lists in a single excel file (we even loaded it in our CRM system).

Does anyone have any other favorite resources?

IRI released some research last month that found most decisions to purchase “Store-Brand” product are made at the shelf-edge, as compared to “Name-Brands” which tend to be planned purchases.

This prompted a bit of discussion on LinkedIn with the old “70% of all decisions are made in store” statements being rolled out again (Peter Breen summarizes the validity of that statistic here). The reality is that purchase decisions are not a single magical moment of truth. Rather, they are the cumulative result of a huge number of previous experiences.

I doubt any purchase has ever been made in a retail store without being influenced by the in-store experience. There are the easily identified in-store influences such as: price, location, inventory level, assortment, merchandising, promotion, etc… but there are also others that are more difficult to measure. If construction was making it difficult to access a parking lot, would you make your purchase elsewhere? If a checkout line is long, would you curtail your purchases to the bare minimum to take advantage or the relative speed of the express lane? If your planned purchased was held hostage by a surly and poorly trained sales associate, would you complete your purchase or walk out?

That’s not to say that all random in-store experiences hinder purchase decision. What if every person you saw in the store was purchasing the same item. Would you be intrigued? Would that influence your decision to buy it? If you are intending to purchase a suit, would you be more or less likely to buy one like the one you saw on the attractive salesperson? The consumer decision tree and path to purchase are far too complicated to be divided into two columns (made-in-store vs. made-out-of-store). Further, the path to purchase will be dramatically different for a $1 consumable item than for a $1,000 durable good. So given IRI’s focus, when they talk about “Store-Brands,” they mean alternatives to Tide, not items such as Insignia Televisions at Best Buy.

While the consumer’s path to purchase is always in a state of evolution, I do believe we are currently experiencing a period of dramatic and disruptive change, to which our connected lifestyle, the internet, the rapid evolution of consumer goods, and the global economic slowdown have all contributed.

It’s clear that the strength of Name Brands have eroded as a result of the “pretty good” phenomenon. If poorly-made flour might kill you, Pillsbury may seem like an important brand. But if all flour at the store is “pretty good” and does not jeopardize your mortality, the preference for the Pillsbury Brand isn’t as strong. (Rob Walker talks about this in his excellent book: Buying In: What We Buy and Who We Are). The bestselling brand of televisions in the US, Vizio, didn’t even exist in 2002. That kind of meteoric rise of a durable consumer goods manufacturer could never have happened without the “Pretty Good” effect.

It’s also clear that shoppers are doing a lot more research before they even enter the store. Best Buy recently disclosed that half of all shoppers who spent more than $50 had researched the purchase on-line. Not that long ago, less than half of all Best Buy shoppers even had access to the internet! If online research followed by in-store purchase is the predominant shopper behavior, how will Best Buy facilitate unplanned or impulse purchases? The in-store shopping experience will have to change to be more research friendly. QR codes on the shelf-edge, anyone?

Add to that:

• Products are more complicated. Today’s TV can stream movies from Netflix, turn themselves off to save electricity when you leave the room, and show you 3D movies. They, like other consumer electronics products, have come a long way as compared to the relatively static feature set (size, brand, remote) from a few years ago.
• Products are introduced faster and have shorter shelf-lives, so consumers (and sales associates) have less opportunity to get familiar with a particular model.
• Interoperability is a new requirement. We no longer expect to simply use a product, now we need for the products we buy to work with all the other products we own or might own in the future. Will this TV work with my Tivo? My WiFi network? Is it compatible with 3D? If so, will I need to buy special glasses?

In the midst of all this complication, what is replacing Brand at the top of shoppers’ decision trees? Variations on peer recommendations and expert opinions seem to be rising up the list. And that makes perfect sense… as the decision gets more complicated, more of us will outsource our choice to a specialist. This is why I think K-Mart’s effort to get product reviews on the shelf edge make a lot of sense. It’s another reason why mobile will play a major role in the future of in-store marketing. But this is only a first step… the problem with peer reviews is that the signal-to-noise ratio is very low. I don’t want random reviews from strangers; I want reviews from a person in my social network whose opinion I trust. That’s not going to happen with a static fact tag.

The bottom line is that we need to learn what sort of experience this new consumer wants at each phase of the purchase decision – and deliver it to them, no matter if it is in the home, out of the home, or in the store. I can tell you where you won’t find these new customer experiences… in your rear-view mirror! We won’t be able to meet these new consumer needs by recycling our old assumptions and ideas from the past. It’s time to get out the blank sheet of paper and invent new shopping experiences. I, for one, can’t wait.

In 1992, I was part of a team at Blockbuster Entertainment that imagined what the future of entertainment retail might look like.  We believed that consumers wanted "Songs" rather than albums, and that long before video on demand was a reality in 300 million homes, it would be practical in 4,000 retail stores.  We were naive enough to build the proof of concept. This was 9 years before iTunes was launched and the content owners weren’t ready to give up their inefficient distribution model. This is the promotional video we developed for the concept… at least I got to meet Dennis Miller.

Imagine a shopper walking into a retail store, and holding their phone in front of the aisle.  The phone’s camera instantly photographs all the products on the shelf, performs image recognition on the boxes, looks up competitive prices online, and color codes the image with the products that are a good deal.

Do you think that sounds like science fiction?  It’s not.

All the technology needed to deliver that experience can already be found in the Apple AppStore.

	RedLaser, owned by eBay, is a barcode-scanning application for comparison shopping and finding product information using a mobile device.  It uses the iPhone’s built in camera to take pictures of barcodes and return competitive pricing from hundreds of thousands of stores.  It’s been downloaded over 2 million times.
	Amazon Mobile includes the “Amazon Remembers” feature, which allows you to take a picture of any product, and (using the Mechanical Turk service) identify the product and put it in your wish list.  This isn’t real-time yet, but several product categories (movies and books) are already automated.
	Layar is one of many popular augmented-reality apps on the AppStore which allow you to see the iPhone’s camera output in real-time, with supplemental data overlaid on it.  For example, it can show you the nearest cafe or subway station.

The capabilities of these three apps haven’t been combined yet, and handheld phones don’t yet have the power to do this all in real-time for an entire shelf-full of product, but at the current pace of handheld hardware evolution, it will happen in the very near future.

The mobile era has already arrived.  59% of American adults already go online wirelessly.  By 2014 there will be more mobile internet users than desktop users.   Shoppers are using mobile technology at a rapidly growing rate and teenagers are the heaviest users of mobile technology.  It is clear that using your mobile device when you shop will soon be the norm rather than the exception.

What will traditional retailers do when the likes of Amazon and eBay turn physical stores into nothing more than convenient showrooms for their on-line services?  With Amazon’s Local Express Delivery, they can even neutralize the immediate gratification advantage of a physical store.

Smart retailers are going to need to find competitive advantages to build into their own mobile apps to make sure shoppers are using their apps in the store rather than those provided by their online competition.

Luckily, there are many things a savvy physical retailer can build into their apps to give them a competitive advantage.  For starters, a physical retailers app can know what is in-stock at a given time, so that it can make recommendations for immediate purchase.  A physical retailer’s app can be tied into the store’s affinity program recommending new purchases that are relevant to the shopper based on their prior purchases history.

Most importantly, a physical retailer is now able to know where you are in the store and what you are doing.  Physical retailers need to consider building near-field transmitters into their shelves, telling your mobile app about the products in front of you, products you’re currently holding, or add-on purchases to a product you have already put in your cart.

Are you making your regular family grocery trip and want to see your typical purchase list with current shelf locations and prices?  No problem, fire-up your Safeway shopping app.  Making a special trip for an embarrassing personal product, and want to opt-out of having your shopping behavior tracked?  You can do that too.

Got the sniffles?  Enter your symptoms into your handheld shopping app (instead of a not-very-private public terminal) and the app can communicate with the store, get the current inventory of cold medicines, and turn on indicator lights attached to the cold remedies that best match your symptoms.

Retail stores are definitely going to want to consider digital fact tags and/or indicator lights to provide customized assistance to each shopper.

Shoppers could use their mobile devices to get in the queue for services (deli counter, Geek Squad, Genius Bar, sales assistance, returns line, etc…), letting the shopper keep roaming the store waiting for notification that it’s their turn.

Is the screen on a mobile device too small for the rich experience you want to provide?  No problem… let the shoppers use their handheld to put products in their shopping queue,  They can then visit a terminal at a central location in the store that is able to read their queue and give them a large screen experience for the products they’re interested in.  That’s a lot more cost effective and practical than providing large format digital screens for every product in your store.

Other interesting potential features include using the mobile device to manage wish lists, shopping lists, affinity memberships, and even allowing shoppers to pay.  The mobile device could save checkout time by allowing a shopper to store their preferences (payment method, extended warranty, etc…) and in a single barcode scan transfer payment info, affinity info, and answers to all the annoying questions that clerks are often obligated to ask.

Physical retailers are already building some innovative features into their shopping apps.

	Best Buy’s iPhone app lets you see weekly specials, check your reward zone points, and make suggestions on their IdeaX exchange.  The app allows you to scan QR barcodes and get product info and reviews.  Look for Best Buy to start putting QR barcodes on every fact tag in the store, very soon.
	Walmart’s app will let you get product recommendations from your peers on your social networks, and even help you figure out the ideal size TV for your living room.
	Starbuck’s has two apps which allow you to see the balance on your Starbucks card and even re-fill it.  You can find the nearest Starbuck’s that is open right now (handy at 11pm), store your (and your friends) favorite beverages, and at some Starbucks you can even pay using your iPhone!

The future of mobile-assisted shopping is very bright.  If you’re in the retail business you need to have significant resources invested in developing your mobile strategy.

What cool mobile shopping experiences have you had, or do you wish you could have?

Vampire Power is the electricity that consumer electronics waste when they are plugged in and not turned on.  In the case of handheld consumer electronics (such as phones and digital cameras), the wall chargers waste power, even when the actual device isn’t connected to them.

Recently AT&T began selling the Zero Charger that shuts itself off when a device is not connected.  This made me wonder how significant vampire power is, so I did some quick math…

Taking the new iPhone 4 as an example, I assumed that the typical iPhone charger spends 4 hours a day charging an phone, 8 hours a day plugged into a fully charged phone, and 12 hours a day with no phone plugged in.  The iPhone charger uses 0.4 Watts per Hour when no phone is plugged in, and 2.24 Watts per Hour when plugged into a fully charged phone.  Apple sold 3 million iPhone 4’s in their first month.  That equates to 25 Gigawatts Hours per year, which is approximately $3Million dollars of wasted electricity.  And that’s for just 1 month of sales of one SKU!

Apple sells it’s charger for $29 vs $19 for the Zero Charger from AT&T, so clearly it would be possible for Apple, HTC, RIM, etc… to bundle smart chargers with their new products and save a SIGNIFICANT amount of electricity.  What if Best Buy mandated that after some date they would only sell mobile products that were bundled with smart chargers?

Even lower hanging fruit are all the chargers that retailers use inside their own stores.  In the United States alone, there are almost 500,000 cell phones available for demonstration.  The overwhelming majority of those are connected to merchandising systems (many of which I helped invent) that also permanently connect the phones to an inefficient charger.  Best Buy and Walmart could save a dramatic amount of energy just by using smart chargers in their own stores and/or mandating that vendors use smart chargers in their products.

Moments after I blogged about Walmart’s Project Impact and it’s effect on digital merchandising… it appears that Walmart may be re-thinking Project Impact.

Bloomberg reports, that in the face of declining financial performance, Walmart’s new COO, Bill Simon, is bringing back promotional displays at the front of store and returning more items that were removed.  Overall inventory is coming back up and pallets are returning to action ally.

It’s unclear how extensive the retreat from Project Impact will be.  It will be interesting to see what effect the change will have on their digital merchandising.  If brands can once again buy a traditional end-cap slot, will they still be willing to purchase the expensive digital end-caps?  Will Walmart be forced to reduce the fee’s for those digital end-caps?  I suspect we’ll see the digital end-caps used exclusively for bigger ticket items and products with complicated selling propositions, as fast moving consumables resort to simpler promotional opportunities.