March 13, 2013

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Corner the Market

Brick-and-Mortar Retailers Moving into Digital Spaces

Spencer Sutherland

March 13, 2013

Remember when choosing where to shop just meant finding the store closest to your house?

Oh, how times have changed. There are now more than 110 million smartphone users in the United States, who all have the ability to purchase any product, at any time of the day, from anywhere in the world. To keep up with the rapidly changing landscape of mobile purchasing, Utah retailers are ramping up their digital sales tools.

“Twenty or 25 years ago, there was the idea of marketing to large groups of people,” says Dave Davis, president of the Utah Retail Merchants Association. “Technology has provided the ability to create a market of one, where each of us becomes our own unique and individual market. The technology gives the retailer the ability to market directly to you.”

Davis says that many Utah retailers are using the data they collect about their consumers to give them a more personalized shopping experience. Under the old model, Davis explains, a company would distribute the same message to all of its clients. But by tracking a customer’s purchasing history, retailers can push more targeted advertising.

“I don’t have to get coupons for brussels sprouts from the grocery store anymore. They know I hate brussels sprouts because I never buy them. And we’re now seeing this model across all types of industries,” says Davis.

The Customer is Always Right

Speaking of grocery stores, Associated Food Stores—the grocery cooperative that owns Macey’s, Dick’s Market, Dan’s, Lin’s and Fresh Market—is one Utah company that is fully embracing the new digital model. Taken as a whole, the company’s new approach represents a sweeping change in its marketing strategy. Each of its individual parts, however, is built on a simple principle—giving customers what they want.

The company started with its website. Using the Macey’s brand as a testing ground, it launched a completely overhauled site. “As you can imagine, most grocery websites are pretty static and out of date,” says Associated Foods Retail Marketing Director Jason Sokol. “We created the Macey’s site on a blog platform so we can easily update the content and make it more relevant to our customers.”

Associated Foods has also gone social. It’s not just using its Facebook page as an online customer suggestion box, but as a crowdsourcing tool—recently asking followers to weigh on new designs for donut boxes.

Associated Foods also has more dramatic digital plans up its sleeves. The company will soon implement Google Wallet, a service that allows customers to tap their phone at the register instead of swiping their credit card.

“You can’t underestimate the importance of mobile technology,” Sokol says. “We want to make it as easy as possible for our customers to shop with their phones.”

On the Digital Horizon

In addition to replacing wallets, mobile phones are also expected to become a substitute for paper coupons.  “There is going to be a migration toward retailers creating geo-specific applications,” Davis predicts. These location-based apps allow retailers to push additional notifications or coupons to a user’s phone when they are near or inside their store—rewarding customers with special deals.

Davis also expects retailers to give added attention to radio frequency identification, or RFID. Warehouses and logistic companies are already using these electronic tags to track cases of products. However, as RFID technology becomes more affordable, retailers may look to tag each item in the store. 

“Conceptually, if every item was marked, a shopper could fill their cart, roll up to an RFID reader and see their purchase total, without a clerk needing to scan each item,” Davis says. RFID is more than just a convenience tool. It also helps retailers better track and manage their inventory. “It will likely be the barcode of the future,” he says.

Back to Brick and Mortar

While many traditional retailers are looking to add new digital or online features, some online-only retailers are starting to see the value of physical locations, Davis says.

“There are always going to be consumers that want to touch and see before they purchase, or those that enjoy interacting and being able to ask questions,” he says. “We’re seeing a few online retailers looking at the opportunity to experiment. It might not be the same traditional brick and mortar that you see with other companies. It might be very scaled down, but there are a whole host of options out there.”

Goat Head Sole Spikes is one Utah company that got its start online and is now pushing into the physical retail space. The company sells a traction spike that screws into the sole of a fishing boot or running shoe.

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