Retail seeing the light

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Loyalty in retail signaled that consumers have had enough of rationalization in retail and are starting to feel disconnected.

Co-authored by Katja Van Beaumont, Marc Rietra and Wouter de Wolf from Signify 

And then there was light. Light has been around for all of humanity’s history: first directly from the sun, then fire, then through gas and incandescent bulbs, in recent years LED has become the norm. Light sources are mainly seen as functional, with LED primarily being more energy-efficient than its predecessors. But this does not do justice to the full potential of light, including its business value. It seems that light(ing) deserves some rekindled attention by retailers.

The latest Capgemini report Loyalty in retail signaled that consumers have had enough of rationalization in retail and are starting to feel disconnected. Although they still want the easily accessible information to justify their buying decisions that they have become accustomed to receiving online, consumers increasingly seek emotional engagement as they choose and stay with what and where they shop and buy.

Emotions are fed by our senses, which in retail are not always triggered in the best way. The combination of what we see, hear, smell, taste, and touch influences our emotions in complex ways. The potential to engage all our senses as part of the retail experience is far greater in the physical world than online. This can have a positive or negative outcome.

Light (“what we see”) can also have a huge impact on how we emotionally experience a physical store. Without thinking about it, we walk into stores and are attracted to or repelled from well- or poorly lit areas. Do you realize just how much inadequate lighting in fitting rooms contributes to lost sales, as 60% of the buying decisions are made in the fitting room? Do you realize that not only the appearance but also the actual freshness of food is influenced by the (type of) light you shine on it, as it can increase the shelf life of fresh products by up to 20%? Can you imagine what this could mean for both turnover and waste?

If we start to use lighting purposefully, we can use different light combinations and intensities to make consumers feel attracted to certain areas and products in stores. For instance, with a dynamic scene setting (or basically an easily programmed light show), we’ve seen an additional 11% of people stop at a shop window during weekdays and up to 19% more people enter the store. And, by adding colors to certain areas of the store, we’ve seen that up to 15% more people enter the zone, which can bring a 6% increase in that area of six percent.

In retail, “digital” has become hot. Definitions vary, but they all generally include the term “online presence” and the use of screens in the store and/or by the customer (mobile devices). It is through those screens that a “user experience” is to be delivered to the customer. Customer and user experience is not limited to the world of screens, even though “UX” is now almost invariably connected to website and application design. At Capgemini, we advocate seeing the possibilities in retail of digital technologies in a much broader perspective. Our Smart Digital Store framework and solutions show that by linking up the physical retail world with digital innovations, the future of profitable retail lies in the brick-and-mortar store as well.

The current evolution and extension of the online store into the physical world (and vice versa) is a hot topic in daily retail news. Advances like Amazon’s counter-less physical store or the integration of robotics into the store are becoming commonplace and confirm that the brick-and-mortar store is reinventing itself.

With the introduction of LED, light has become “digital”, too. Have you considered the other possibilities that are enabled by this, making your lighting smart and usable for other and more dynamic purposes? Think about using light to influence the routes that customers take through stores, optimizing both the flow for the customer, and the sales capacity. You can even create context-dependent atmospheres, creating settings in fitting rooms to best show off that beach outfit and a different one for office attire – automatically triggered by what the customer takes into the fitting area. Imagine the impact on customer satisfaction.

Even more, LED lighting can be used instead of Wi-Fi to transmit (digital) data through light, using a technology called Li-Fi (light fidelity). In retail, Li-Fi can be used for indoor positioning. The light sends a code that can be identified by a smart phone camera to determine its precise location. In essence, it is the same as GPS, but indoors and with an accuracy of 30cm. With this technology, many new use cases can be developed. Think of a product-finding app that guides you to the exact location of the product you are looking for; or location-based advertising that sends a message about an item on sale whenever a customer approaches that area; or, on the employee side, an alert directing them to empty shelves or customers in need.

In conclusion, light can have a huge impact on the in-store customer experience. It’s an important building block in an in-store digital customer journey. And, of course, LED is still much more energy-efficient and durable. When changing to LED lighting, energy consumption reduction of up to 70% can be achieved, and a smart lighting system can generate further energy savings.

Combining different technologies and optimizing business processes to create value is what we do. Get in touch and let us shed some light on what this could mean for your business.

Capgemini and Signify (formerly Philips Lighting) work together as part of Capgemini’s Smart Digital Store Framework to apply innovation to retail that makes business sense. Where most of us see light and lighting as a given, the R&D department of Signify has been working over a hundred years on research into light, bringing the right light into homes, offices, and stores. Together we bring solutions to retail businesses to enhance value by applying technological and digital innovations, including light, focusing on stores, customers, products, and employees.

 

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