What’s a Store For?

The first e-commerce transaction—a music CD, pizza, or weed, depending on who you ask—took place around thirty years ago. That means that first truly native ecommerce generation is now in charge of their own foot traffic and armed with at least one device that spares them the trouble of leaving the house. This, paired with the broader shift in consumer behavior across all generations, means brick and mortars need to find new ways to compete with digital to inspire visits and sales. Stores are evolving and, along the way, challenging the very notion of what a store is for.
Up against digital
A big part of brick and mortar’s evolution is digital integration. Today, retailers are working to enhance and personalize customer experience by connecting to consumers in-store through their mobile devices—building apps, targeting ads, and using beacons. You can find many examples of digital integration today, though online retailer Rebecca Minkoff’s flagship store in New York offers one of the more comprehensive ones; its interactive wall and dressing rooms have been credited with tripling expected clothing sales. Timberland also just launched its first connected store while Nordstrom’s commitment to digital integration has been credited with 50% growth in revenue over 5 years. (They just hired a former Amazon exec to serve as CTO.) Target, too, is getting into the mix, launching an LA25 initiative where it’s testing 50 of its top enhancements in 25 Los Angeles stores.
The IRL advantage
But digital integration is not the only strategy; retailers can also draw on the in-real-life [IRL] advantages of the physical space. Immediacy comes in here, with more retailers enabling online ordering and pick up in store or curbside. It’s competitive because fewer exclusively online retailers can offer this instant gratification, but is not necessarily a long-term strategy given that online fulfillment will continue to evolve and speed up.
More effective is the opportunity to build community. Oftentimes, this comes in the form of caffeine; Barnes and Noble was an early innovator here, adding a Starbucks to a New Jersey store back in 1993. Since then, many retailers have adopted or tested in-store cafes, including Urban Outfitters, Target, Restoration Hardware, and Kohl’s. Along the same lines, Target, Whole Foods, and Nordstrom, among others, are offering cocktails in some stores. When trying to attract customers and increase dwell time, there’s an advantage in offering something that can’t be instantly downloaded, like coffee, booze, and yes, maybe even tattoos. (See Whole Foods.)
Meanwhile, another concept that keeps popping up is—ahem—the pop up shop. The pop up shop’s currency is urgency; if customers don’t come now they risk missing out forever. Bloomingdales is hosting a pop up inspired by the musical Hamilton while Macy’s is bringing in pop ups as part of the reinvention of its Brooklyn store. The pop up also presents a low-risk testing ground for online retailers, one compelling example being Warby Parker’s touring store that was housed in a school bus.
But…is it a store?
As brick and mortar adapts, becoming deeper integrated with digital, acting a fulfillment center and expanding to offer drinks and other services, the classic definition of “store” begins to fragment. Already, the “store” has lost its longstanding position as the finale of the customer purchase funnel; in no small part because that purchase funnel itself is an antiquated concept. Savvy retailers and brands in general now think of the consumer experience as an ongoing loop, with consumers moving from digital to physical and back until, eventually, there may be no clear delineation between the two. This emphasis on the overall experience changes the expectations of stores. It also opens opportunities for more types of brands to invest in physical locations.
For example, last year, there was an more than an hour wait at the Museum of Feelings in downtown New York City. The museum invited visitors to walk through a sensory presentation of each feeling: Optimism, Joy, Invigorated, Exhilarated and Calm, while its exterior changed color to reflect the social mood of New York. You might argue that this wasn’t actually a store, but then it wasn’t actually a museum either; The Museum of Feelings was a branded retail experience for Glade, generating buzz for an otherwise not-so-buzzed-about brand.
More recently, Samsung launched Samsung 837, a “first-its-kind cultural destination, digital playground and marketing center of excellence.” Samsung 837 serves as a showcase for innovation, offering what may be the first virtual reality experience for many visitors and providing Instagram-friendly experiences like the walk-through Social Media Gallery. But what’s unique about Samsung’s space is that there is nothing sold there. It’s an experience—an opportunity for Samsung to tell its story and give visitors a way to get excited about the brand they’ll buy in the future.
In cases like these, brick and mortars serve as a marketing vehicle—an opportunity for brands to curate their own presence for customers, just as social provided the format to operate as a media company. It’s a trend that makes Amazon’s decision to open its own brick and mortars seem strategic. But is the return there?
It always comes back to data
The ability to more accurately track consumer activity gives brick and mortars a host of insights. Not only can the more connected store know what was purchased, they can also see what products compelled the most research, price comparisons, or inspired trips to the fitting room. They can engage with in-store customers via social media as well as encourage and measure posts from their store and, increasingly, tap into emotional analytics. Further, more sophisticated attribution measurement is making it possible to determine what investments drove traffic to the store, even without purchase.
Though it would be inaccurate to suggest that traffic and sales aren’t still the key performance indicators for most stores, this broader set of data, if put to use, can help a retailer optimize beyond the limits of its four walls—especially critical at a time when stores are closing so rapidly that CNN wrote “Store Closings are the Hottest Trend in Retail.”
Where to go from here
Digital has an odd way of creating challenges and then presenting solutions for those challenges it creates. It offers a range of ways of to add genuine value, from brand awareness to interaction, coupled with pop-up flexibility. If retailers are savvier about embracing this value, they’ll stand a better chance of attracting customers. If not, they’re not only missing out on opportunities in the near term, they’re limiting their future prospects for growth—after all, isn’t it a waste to see a store as a fulfilment outlet?

Anthem breach: Vendors never let a good crisis go to waste

Given this week’s news of a potentially huge security breach at insurance provider Anthem, security vendors of all types are eager to give advice, and, oh, get their company names in front of affected consumers or (better yet) other big companies spooked by what happened to Anthem.

The [company]Anthem[/company] breach, in which hackers accessed names, addresses, birth dates, medical ID numbers and social security numbers of customers, could affect up to 80 million people.

So, what could Anthem do better going forward? According to what showed up in my inbox, it should apply file-level protection (Varonis), use fraud detection and behavioral analysis (NuData Security), apply cloud-based security (Zscalar) and speed up disclosure and response (Co3 Systems and Incident Response Management Systems). You get the picture.

Given that no one outside of Anthem, its vendors and maybe the hackers, actually knows what systems it had in place, it seems rather presumptuous for security vendors to insert themselves as would-be saviors, but such is the way of corporate PR.

And now for the real victims

So now that we know what security companies thinks other customer-facing vendors should do — which is basically, “buy our stuff” what about the  poor schlubs whose information was stolen? What are they supposed to do? Well there was the usual advice from the National Consumers League and others.

People should be more suspicious than usual of email from unknown people — bad guys use email to launch phishing attacks. Don’t open messages from anyone you don’t know; don’t click on links in email unless you’re sure where it will take you (hover over the link to see if the URL looks legit); don’t respond to odd email if you happen to open it. Stop reusing passwords across sites or, better yet, get a password manager. Use two-factor authentication. Yaddayaddayadda.

If you suspect credit card fraud, get your credit reports or credit score updates (Credit Karma is a good and free service), although, as NBC reported, the credit agencies will not catch medical identity theft. In that scenario, a person’s purloined medical ID number could be used at hospitals, ERs and pharmacies to get care and drugs, “racking up charges and wrecking victims’ medical records.”

The best way to detect medical ID theft is to scrupulously check your Explanation of Benefits documents each and every time. And make sure to shred all medical documents.

At this point, given all the breaches at Target, Home Depot, JPMorgan Chase and now Anthem, it’s probably safe to assume that some of your information is already “out there,” so do as much as you can yourself to protect your assets. No vendor is going to do it for you.

Another big data breach, this time at insurance company Anthem

Anthem, the nation’s second largest insurance provider, was hit by hackers who stole lots of customer data including names, birth dates, medical IDs, social security numbers, snail-mail and e-mail addresses, and employment information —  but allegedly no credit card or medical information, the company said. Although with all that other information out there, that may not be much comfort.

In a letter to customers, Anthem CEO Joseph Swedish acknowledged that his own information was stolen but said there is no evidence that credit card or medical information were compromised. [company]Anthem[/company], formerly known as [company]Wellpoint[/company], posted more information here for customers.

Little is known about which of the company’s databases or applications were hijacked, but Anthem said all of its businesses were affected. And there was the usual butt-covering: Swedish said the company “immediately made every effort to close the security vulnerability, contacted the FBI and began fully cooperating with their investigation.” Anthem also characterized the breach as a result of “a very sophisticated external cyber attack.” But, seriously, what else would they say? As a couple wiseguys on Twitter put it: “It’s better than saying you left the front door open.” Or the keys on the visor.

Anthem also said it hired Mandiant, a sort of cybersecurity SWAT team, to assess its systems and recommend solutions. Cybersecurity specialist Brian Krebs has more on the potential impact.

The topic of the breach came up during a call earlier today during which the White House discussed its interim report on big data opportunties with reporters. The gist was that Anthem appeared to have notified authorities within 30 days of finding the problem, which is what the White House would stipulate in bills it is formulating.

The security of healthcare data is of particular concern — and preserving patient privacy was the impetus behind HIPAA and other regulations. But, as Gigaom pointed out earlier this year, that data security may be as much fiction as fact.

The benefits of consolidating digital patient data in one place so that a patient or her doctors can access it spells convenience for authorized users, but that data conglomeration also offers a compelling target for bad guys.

At this point it would be natural for a given consumer to feel both spooked and jaded by these security snafus. Last year alone, there were major breaches at Target, Home Depot, and JPMorgan Chase, affecting hundreds of millions of people in aggregate.

7 stories to read this weekend

Why it sucks to be a retail worker, the Target failure and Candy-Crushed?: These are three of the top seven stories I recommend for this weekend’s reading.

Staples, RadioShack remove Amazon Lockers from their stores

Staples and RadioShack are both pulling Amazon Lockers, which allowed customers to pick up online purchases at their convenience, from their stores. It’s not that surprising: Other chains, like Walmart and Target, both stopped selling Kindle products last year.