Digital Marketing: Digital Marketing in the Retail Industry

The changing shoppers’ behaviours have left retailers with the challenge of meeting the shifting and evolving trends in customer demand and expectations. With the inception of the digital technology the world over, shoppers have armed themselves with tablets, smartphones and an unrestrained access to the internet wherever they are. The demand to serve them through various channels that are convenient to them has been the worrying trend to which the small retailer cannot meet. Large retailers like Wal-Mart, Tesco, Burberry, Safeway and Target have, however, opted to go the customer way and adopted the digital marketing strategy entirely bringing them within the shoppers’ reach whenever the shoppers have any need for them(Levy, Weitz & Beitelspacher 2012). This paper explores the different forms in which digital technology has entered into the retail industry and the impact it has made. It also explores the potential of every method to see how far the technology can go.

Development of digital technology in the retail industry

Technology improvements in the retail industry have been found to be, not just an option but, a requirement. They have therefore come in many forms and dimension with the intention of attracting every customer and retailer. The ability to adopt digital technology in the retail industry has been highlighted as a source of competitive advantage especially with the just ended economic crisis and the wavering consumer demands. Retailers have therefore adopted digital technology in various forms in order to tap all the markets presented by the technology including but not limited to digital promotions, location-based applications and mobile applications, mobile point-of-sale, digital wallets and mobile payments, personal shopping assistants, electronic price tags and radio frequency identification technology.

Digital promotions

The internet’s low cost and its ability to reach an unrestricted number of customers have made it the most favoured promotional method. This has chiefly been done using methods such as email marketing, printed coupons and social media promotions. They have been further advanced using innovative methods so as to offer customers more customised information according to their shopping preferences, age and occupation (Mathieson 2010). The use of loyalty programs like Tesco’s Clubcard has made this possible by allowing the retailers to communicate directly to shoppers based on the cards’ analysed data. Since these messages are based on data that only the retailer who issued the card has, they give the retailer a competitive advantage over other retailers thereby building royalty from the shoppers.

Digital promotions have been embraced by most of the big retailers as of the best ideas. However, it also has some disadvantages(Levy, Weitz & Beitelspacher 2012). First, the distance the customer has to cover to redeem the coupons sent through this method is seen as a disadvantage. Second, it has been found that the redemption rate of digital coupons is far lower than that of physical coupons.

Mobile Promotions and Location based Applications

Another way that retailers have altered their marketing strategies is by integrating mobile promotions and location based applications into them. Location based applications such as Foursquare and Shopkick are adopted so that once shoppers get into a store, the applications on their handsets update their location. A text message is then sent to the store staff notifying them of the shoppers’ entrance. Based on this knowledge, they send information on the shoppers’ handset informing them about offers and promotions or even send them coupons.

Using this method enables the retailers to influence the shoppers’ decisions by increasing the time the shopper stays in the store and the distance walked (Mathieson 2010).

Retailers are further able to up the game on the shoppers by integrating these applications with reward points which are earned by the shopper enters into a participating store. These points may then be redeemed from the stores any time they are at the store.

Mobile point-of-sale

The use of erudite mobile and smartphone applications has offered retailers one way of creating and nurturing sustainable long-term relationships with their customers. The mobile point-of-sale (POS) is just like the traditional POS except for the fact that it is portable around the store to the point where the customer gets into contact with the product he is interested in(Levy, Weitz & Beitelspacher 2012).

Mobile POS further makes the marketing efforts of the retailers more effective since the shop attendant handling the POS is able to make recommendations to the customer before he or she makes the purchase. Another advantage is that the mobile POS saves the time that customers spend queuing especially during peak hours. It is, therefore, favoured by young people and customers of higher stature who view their time as very important (Turow 2006).

The mobile POS has, however, some drawbacks. First, the technology can only be conveniently used for customers making cashless payments. Secondly, it has not been figure what would happen in the case where the device goes off or gets destroyed in the course of a transaction. Finally, it poses a security threat to customer data and customers who have fears of their security have opted to use other methods of payment (Tipper 2008).

Digital wallets and mobile payment

The use of mobile payments has been on the rise for the past decade. The most used platforms are text messaging and web. The text messaging platform is most used in developing and emerging countries where limiting factors of low income prohibit consumers from buying advanced handsets. However, the trend is changing as companies try to provide consumers with cheaper smart phones(Levy, Weitz & Beitelspacher 2012).

Mobile payments, apart from facilitating transactions, provide valuable information in the form of phone numbers and email addresses as e-receipts and confirmation messages. This information could be tapped by retailers to provide information to customers in the future.

Digital wallet is a functionality embedded in the phone that allows a consumer to carry all their cards in one place. It therefore works in the same way as an actual wallet except that the possibility of losing or forgetting the cards at home is reduced. They enable one to use their cards anywhere they need them without really having to have them physically (Tipper 2008).

Personal shopping assistants

Personal shopping assistants are another innovative method through which retailers are able to keep the customer informed about the products he is shopping in a store. A personal shopping assistant comes in the form of touch screens with in the shape and functionality of tablets. They are shopping assistants in that they help the shopper with all the information they may require about the store. They provide prices of goods, suggested price lists, and a total cost of the goods put in the shopping cart already (Mathieson 2010).

Shopping assistants have been associated with prompt and better service for the consumer and better sales for the retailers.

Electronic Price Tags

The problem of mispricing goods in retail stores are best solved using electronic price tags. Electronic price tags are put on goods in the store from one central computer. They can also be changed at any time during the day without the need to hire extra labour. Electronic price tags also increase sales as customers do not have to return goods when they get to the counter or afterwards when they find the goods were too expensive (Levy, Weitz & Beitelspacher 2012).

Electronic price tags also reduce the amount of labour required at the store. This is because the labour that would be required to manually put price tags is eliminated. Assistants at the store sections are also not very necessary as all goods are well labelled. Price tags also reduce the amount of good that are returned by customers at the cash register hence making it unnecessary to have someone to return them to their respective shelves.

Radio frequency activated technology

Radiofrequency identification (RFID) is a technology in which each product in a store is attached with a transponder that reflects radio frequencies that are transmitted from a central point. The items in the store can, through the transponders, be controlled through a network of computers(Hunt, Puglia & Puglia 2007). RFID also makes stock management easier for the store management as all the items in the store can be viewed through the computer network. Above that, and most importantly, stock can be charged without having to be rolled through the scanner one by one. This saves a lot of time for the customer.

This system has further potential that has not been explored. It is also possible to have an arrangement where the consumer goes to the consumer store and taking all his or her shopping and then leaving. This system will then consult the customer’s bank for payment. RFID has however been viewed by some researchers to be a security threat as a person with access to the computers is able to follow the shoppers even outside the stores (Hunt, Puglia & Puglia 2007).

Conclusion

Technology is dynamism of change. The transformation to digital marketing has acted as a springboard for a sustainable competitive advantage. Retailers who want to stay relevant to their customers have embraced the technology. The retailers who are already using the technology include Wal-Mart, Burberry, and Target among others (Mathieson 2010). Their transformation has not just attracted existing customers but also new customers due to the efficiency and convenience. In future the transformation to digital marketing will be fully assimilated into industry and those who will be unable or unwilling to transform with it will be forced to exit the industry.

References

Hunt, V. D., Puglia, A., & Puglia, M. 2007, RFID: A guide to radio frequency identification. Hoboken, N.J: Wiley-Interscience.

Levy, M., Weitz, B. A., & Beitelspacher, L. S. 2012, Retailing management. New York: McGraw-Hill Irwin.

Mathieson, R. 2010, The on-demand brand: 10 rules for digital marketing success in an anytime, everywhere world. New York: AMACOM.

Pöltner, P., & Grechenig, T. 2010, A joint infrastructure of “digital corporate organisms” as facilitator for a virtual digital retail ecosystem.

RFID & Digital Signage Case Study: Using Technology for Competitive Differentiation in High Street Retail. 2007, S.l.: Datamonitor Plc.

Tipper, A. 2008, Digital Publishing & Online Retailing How is the ‘digital revolution’ affecting the evolution of the Australian Book Industry? Turow, J. 2006, Niche envy: Marketing discrimination in the digital age. Cambridge, Mass: MIT Press.