Mays Business Online

Imagine walking into a store with a shopping list on a digital device. As you pick up an item, information about the product, including user reviews, best prices at other retailers, and which of your friends is buying the same product, is displayed directly on the packaging, beamed there from your device. This sort of information stream that integrates technology and social interaction to fully engage the consumer at every moment of the shopping experience may be the future—the near future—of retail. (For an example of this kind of technology, watch this video clip from the recent TED conference.)

Retailing is dynamic, shifting as quickly as new technology creates new platforms, supply chains, and business models for selling everything from toilet paper to cars. Exploring such innovation in retail was the goal of the Thought Leadership Conference, held January 28 and 29 at Mays Business School. The event, which brought together 31 academic experts and senior retailing executives from the U.S. and other countries, was hosted by Mays’ Department of Marketing and Center for Retailing Studies.

The event was sponsored in part by the Center for International Business Studies at Mays, the Marketing Science Institute, and the American Marketing Association. Mays Professors of Marketing Manjit Yadav and Venky Shankar were conference co-chairs.

Social media: The game changer

Social media is revolutionizing retail, says Gary Kusin, a senior advisor at TPG and former CEO of FedEx/ Kinko’s. Kusin presented the keynote address at the start of the conference, presenting on an apt topic, as nearly every other presentation at the event had a social media component.

Our increasingly digitally connected society impacts retailing more than it does any other industry, says Kusin, as people’s consumption patterns and expectations are changing. No longer are television commercials the gold standard for advertising. In fact, consumers indicate that they are much more likely to trust product recommendations from friends or other consumers—even those they haven’t met—than they are traditional advertising. This necessitates a shift in the way retailers engage their audiences.

TPG senior advisor and former CEO of Fedex/Kinko’s Gary Kusin told attendees that social media was too valuable and widely used by consumers for retailers to ignore.

According to Kusin, social media presents an awesome opportunity for the kind of involvement consumers are looking for. Your brand IS being talked about, whether you’re a part of the conversation or not, he says. Thanks to innovations like Google Sidewiki, where any user can contribute information to any website, more and more it will be the consumers that control a brand image, not the corporation. Consumers want to be heard, not shouted at, says Kusin. They will patronize the company that listens.

Retailers that choose not to enter the social media conversation are missing the opportunity to engage their consumers where they are most interested. This platform gives a retailer a channel for providing customer service in a way that’s instant and public; building rapport and enthusiasm among customers; correcting misinformation; and gathering new ideas and feedback from those who know your products and are using them. It’s too valuable and ubiquitous a tool not to use it, says Kusin. Even the Pope is making use of social media, with his own iPhone app, Facebook and Twitter accounts, and Youtube channel. Of the top 10 most visited sites in 2009, four were social—five, if you count Craigslist.

This shift in expectations has changed retail from an environment of create > advertise > sell, to one where retailers listen > interact > react > then sell, says Kusin.

One challenge social media presents is metrics. No one has yet determined the formula for how much one follower, fan, or comment thread is worth, so when examining social media through a budgetary lens, its impact is difficult to quantify. Whatever the dollars and cents ROI turns out to be, Kusin says it’s easy to see that the retailers that are on the forefront of social media, such as Best Buy, are the ones that are succeeding in the marketplace.

Further Research

The purpose of the Though Leadership Conference was to identify new areas for research based on recent innovations in retail. Attendees were broken into six groups and assigned a specific area of retailing to explore, including global retailing, supply chain, and assortment.

The 2010 Thought Leadership Conference brought together 31 academic experts and senior retailing executives from the U.S. and around the world.

At the conclusion of the conference, each group of scholars and retail practitioners presented their thoughts on the future of retail and identified areas for future research in retailing innovation. Will facial recognition software and digital messages such as “shelf-talkers” and monitors within a store (think Wal-Mart) stream more highly targeted ads to shoppers? How could retailers best manage how customers share promotional codes via websites like Myretailcodes.com? How can retailers create a more seamless customer experience through multiple channels? Which new platforms or business models have the potential to radically alter the way retail is done?

Over the next few months, conference groups will continue to explore these questions while drafting papers to be published in a special issue of Journal of Retailing, to be published in 2011.