IBM Demonstrates How Retailers Can Build Loyalty Through Consumer Experience at NRF 2008

NRF Annual Convention & EXPO 2008 -- IBM (NYSE: IBM) demonstrated the latest in customer-experience innovations and insights today at the National Retail Federation (NRF) 97th Annual Convention & Expo. IBM showcased 3-D multi-sensory shopping experiences and announced a number of new strategic client engagements, innovations that improve energy efficiency for retailers, new software-based business strategies, and a comprehensive study of what drives shopper loyalty.

IBM announced agreements with the METRO Group and Wakefern Food Corporation. The company also unveiled a new software-based architecture, called the IBM Retail Integration Framework, designed to accelerate the implementation of new customer-focused strategies. And, IBM detailed solutions and services which help retailers improve energy efficiency across in-store systems, back-office hardware and supply chain systems.

“Creating loyalty and advocacy with today’s sophisticated consumer is a challenge for retailers worldwide. Retailers who create a superior consumer experience will emerge as the clear winners in this intensely competitive marketplace,” said Karen Lowe, General Manager, IBM Retail Industry. “IBM delivers technology, consulting and services to help retailers build differentiated experiences and drive consumer advocacy.”

New Insights into Retail Loyalty

IBM unveiled a new survey of 19,000 US consumers which found that across multiple retail segments, only 21 percent of consumers are advocates for their primary retailers. The study, titled, “Why Advocacy Matters to Retailers,” provides an in-depth analysis of what makes consumers loyal and the specific financial benefits that loyalty delivers for retailers.

The study surveyed consumers about retailers in the grocery, large-format apparel, mall-based specialty apparel, drugstore and online retailer segments. Across all these segments, customer experience and product range emerged as the top drivers of advocacy. Those retailers who integrated customer-focused initiatives throughout their businesses have a greater number of advocates and often outperform their competitors.

The study defines advocates as customers who recommend their retailer to their friends and family, would increase their purchase amount if their retailer offered products found at other stores and would stay with their retailer even if another retailer offered a competitive product.

“Customers who are not loyal to your brand will be loyal to price,” said Fred Balboni, Global Retail Industry Leader for IBM Global Business Services. “Customer advocacy often rewards retailers with financial benefit. Our research found advocates spend 17 percent more with their primary retailer than customers who are antagonists. Building an enjoyable and convenient shopping experience, coupled with having the right products available drives advocacy.”

Delivering Innovation to the Marketplace

IBM announced it has worked with METRO Group to implement RFID technology to improve the availability of products in its stores, enhance its consumer shopping experience, and boost supply chain performance. The companies are successfully using RFID in a system which tracks shipments from suppliers to warehouses, distribution centers and stores.

The companies are also teaming on an innovative customer focused RFID project in one of METRO Group’s Galeria Kaufhof department stores in Essen, Germany. As part of a pilot program, approximately 30,000 articles in the menswear department have been equipped with ultra high frequency second generation RFID tags. Employees and shoppers are using the system to locate specific items and to monitor stock to ensure that popular items are always available. The store also features devices in the store’s fitting rooms which recognize the tagged garments and display information such as price, fabric and care instructions.

IBM also announced that it is working with the Wakefern Food Corporation to deploy advanced IBM point-of-sale (POS) systems, software and infrared touch displays. With today’s announcement, Wakefern is moving to bring the most advanced functionality and technology to ShopRite stores, allowing employees to deliver a better shopping experience to consumers. In collaboration with IBM and Agilysys, an IBM Business Partner, Wakefern will install IBM’s SurePOS Application Client/Server Environment (ACE), an application that optimizes customer service and improves reliability at the point-of-sale system, and IBM’s Store Integrator on the IBM 4690 operating system. ShopRite stores also will be upgraded with IBM SurePOS 700 POS terminals and servers and IBM SurePoint 4820 Touch displays at all check-out lanes. Wakefern is using an IBM Electronic Marketing Enterprise (EME) solution aimed at improving its customer loyalty program.

Showcasing What is Possible

At NRF, IBM is demonstrating future innovations which could help retailers create unique consumer experiences. Through the use of 3-D technology, virtual worlds and some imagination, IBM is showing how retailing is moving beyond the walls of the store into the hands of consumers. For example, new “Immersive Retailing” technologies which immerse consumers into an experience are one example of how retailers could augment their strategies to attract and interact with customers in ways which build loyalty.

One of the “Immersive Retailing” demonstrations IBM shared with customers is the IBM Multi-Sensory Experience. Through the use of 3-D glasses, participants are treated to a fashion show from Europe complete with music and smells. For example, as a model walks down the runway her perfume will be noticeably in the air. Also, when she holds out the very expensive leather purse viewers will get a 3-D view of it you all will be able to smell the fine leather.

IBM treated customers to another “Immersive Retailing” demonstration called the IBM Cave. Meant to complement a multi-channel retailing experience, this demonstration brings the user into a virtual reality experience using a 3-D virtual world and stereoscopic goggles. These goggles react with the head movement of the user and create 360 degree view of a virtual reality room. IBM uses the technology as part of a scenario which has a consumer redesigning a room in his house into an entertainment room.

Integration Eased With New Open Standard Framework

IBM unveiled the IBM Retail Integration Framework, an open standards-based enterprise software architecture designed to help retailers accelerate the implementation of new customer focused strategies. With increasingly complex customer demands requiring more transparency across the enterprise, retailers are embracing a service oriented architecture (SOA) strategy to use their existing technology to link various sales channels and provide a comprehensive view into their company’s business activities.

IBM’s Retail Integration Framework features retail-specific components, templates and patterns to improve the integration of business processes including new product introduction, cross-channel selling, point of sale (POS) integration, store-to-enterprise integration and retailing business intelligence. IBM’s broad independent software vendor (ISV) ecosystem provides retailers with full flexibility in choosing the business applications they need to address specific business processes and challenges.

Meet Consumer Demand for Environmental Responsibility

IBM also unveiled technologies and services that are uniquely able to improve energy and operational efficiency across a retailer’s entire IT operation. The IBM “Green Retail Store” portfolio includes high-performance point-of-sale systems, industry-leading IBM blade servers, and system management software that allow retailers to deploy end-to-end solutions from the front of the store to the back office that benefit the environment.

The anchor of IBM’s “Green Retail Store” portfolio is the IBM SurePOS 700, the world’s number one selling point-of-sale system. It offers clients a choice of three high-performance, energy-efficient processors that help reduce their power consumption by 36 percent or more. Acting has the power behind the IBM Green Retail store is an IBM BladeCenter S system capable of managing an entire retail IT environment -- from servers to the point-of-sale terminals to phone systems and antivirus applications, all from a single back-office location. IBM blade’s environmental features allow retailers to reduce their energy costs up to 20 percent, cut back office noise by 50 percent, and to run the system desk-side, enabling clients to maximize back office space for other mission critical application platforms.

Many of IBM’s “green retail” solutions, including complementing IBM Business Partner offerings, will be on display in the IBM Green Pavilion during this week’s National Retail Federation Conference at the Jacob Javits Center in New York City. The displays include a first-of-a-kind concept kiosk enclosure with its main structure made from organic waste material. Among the innovative demonstrations are an avatar advisor on power consumption, an innovative recycling check-in kiosk solution, an expert advisor kiosk to empower stay-at-home workers, and a “green” data center in action.

About IBM at NRF 2008

IBM’s booth in the main hall convention floor is #1319. IBM is also featuring a number of solutions with Business Partners in pavilions across the NRF show floor. Customers can see IBM in the Green Pavilion, Customer Experience Pavilion, X08 Pavilion, Supply Chain Pavilion and the ARTS Pavilion.