Meeting the expectations of consumers today is a challenge for even the most innovative and forward-thinking retailers. These consumers, armed with smartphones and access to seemingly infinite amounts of information about brands, products, and prices, are more demanding than ever before. They want to be able to buy wherever, whenever, and however they chose.
More retailers are starting to “talk the talk” of how they are changing to serve the omni-channel consumer, and taking steps at adapting to this new reality. Yet in their haste to get ahead of competitors and show how customer-centric they are, retailers risk missing some crucial steps needed for their new initiatives to be successful and sustainable in the long term. Recent retailer experiences implementing mobile order and pay provide some valuable lessons of the potential pitfalls to avoid.
Starbucks Tackles Mobile Order and Pay
Mobile order and pay, the next wave of click and collect, is gaining steam, and Starbucks is at the forefront of this trend. In 2015, Starbucks introduced the service in the U.S., so that customers could order in advance and avoid waiting in line at their local outlet, where they could pick up their coffee and go. It makes sense to give the person who wants a simple black coffee the chance to bypass the one who wants a grande-skinny-frozen-whipped caramel latte, and customers flocked to it in droves: in Q4 2016, mobile order and pay made up 8% of total U.S. transactions.
However, this fast pick-up had unintended consequences. Since the orders all fall to in-store baristas, who are also serving customers in line, the baristas become overwhelmed and can’t keep up with the volume during peak periods. This has a negative knock-on effect on walk-in customers, who see the large number of people waiting, and decide not to come in at all. More worrisome, it hit the company’s bottom line: transactions dropped 2% in the most recent quarter, leading to a 3.8% decline in the company’s stock price and a reduction in its full year revenue forecast.
The Lesson for Retailers: Post-Implementation Planning Is Vital
The good news for consumers is that many retailers deem to be learning from problems in implementing omni-channel services. Starbucks, for one, is already taking steps to improve by assigning baristas to concentrate on mobile orders. Other retailers may not be as well-capitalized and diversified as Starbucks, but nevertheless, its mobile order and pay implementation offers some valuable lessons:
- When choosing technology vendors and implementation partners, make sure they understand, and have experience solving key issues typical in blending the digital and physical worlds of retail. These include online and in-store fulfillment that can scale to meet surges in demand, cross-channel payments, and analytics and reporting that provides a single view of the customer.
- Prior to rollout, conduct scenario analysis that includes peak and off-peak foot and online traffic. With the ubiquity of mobile usage and technologies such as beacons in stores, there is a variety of data from independent research firms (e.g. Nielsen and comScore), mobile operators, and payment providers that can be consulted to inform this analysis.
- Plan for staff augmentation to handle peak periods in demand, and for retraining existing employees taking on additional or new responsibilities, such as handling complaints of delayed or incorrect orders.
Above all, retailers will need to balance their desire to keep up with the latest trends in improving customer experience with the reality of their starting points and existing capabilities. There is nothing wrong with pursuing a multi-phased approach that starts with a pilot in a defined geographic area for a limited period (say, over a relatively calm few weeks without holidays or major sales), expanding that pilot to cover a wider area and amount of time, then rolling out on a wider scale to meet the most challenging seasons. While a retailer can’t be too customer-centric, the risk of blowback should a new initiative fail spectacularly could be more damaging in the longer term.