Virtual reality

Fifth Dimension’s Michael Letchford talks to Next Generation Retail about the benefits of virtual market research in the world of retail.

What are the main challenges that retailers face when trying to attain accurate market research?

Michael Letchford. It's not unusual for retailers to commission primary research. More often they'll work in collaboration with a trusted vendor partner; perhaps their regular category captains, who might present new product opportunities or specific promotions, or volunteer insights gained from other work that has relevance to the retailer but needs further research.

Here lies both benefit and potential difficulty. Retailers know their category assortments and how those products perform within the context of their own stores, but they don't regard themselves as experts in any one specific products' performance. They rely on their vendors for that perspective and also for inspiration and innovative thinking. Retailers' concern, therefore, is the objectivity of the advice they get, and that they must always balance any recommendations in such 'partisan' advice with their own insight, which of course, is itself limited and biased by the retailer's relative inability to conduct accurate research outside of its own store environments.

How can virtual consumer research technologies ensure increased security of retailers' market research data?

ML. Running a program of eight week, plus research projects in real stores is both a disruptive and very public way of finding out if new ideas are going to be successful or not, before rolling them out to hundreds, if not thousands of stores. One of the principal benefits of using Virtual Environments is that they allow retailers to conduct trials of in-store innovations in secret, away from the ever-watchful eyes of competitors.

Virtual Environments provide secure opportunities to experiment with both evolutionary ideas and the more radical; from implementing new merchandising displays that rework the presentation of an existing category, to the introduction of a new department within the same store space, with all the changes that would involve. Changes that would cause embarrassing failures in-store and upset customers can be avoided by discovering any potential problems in the 'privacy' of a Virtual Store test. More importantly perhaps, for maximum impact in-store, the implementation of potentially 'big win' ideas can be refined and honed to perfection in a Virtual Store and then fully coordinated with major advertising without leaking the initiative to either the public or competitors.

When implemented and managed successfully, what benefits can retailers expect to gain from virtual consumer research?

ML. There are a number of benefits to virtual consumer research. First, it is faster to test store innovations virtually than in real stores, and in addition competitors don't learn of new ideas until they are rolled out, securing your brand's competitive edge. Second, multiple concepts can be tested in a single virtual environment, not only reducing costs but eliminating disruptions to store displays and routines. Third, virtual environments allow innovations to flourish that would be impossible or too risky to test in real stores, providing a greater range of products. Fourth, it allows for more control and improved accuracy, as virtual environments don't need supervision to ensure accuracy as in real stores, and virtual products don't go out of stock during the test period, test disruption through bad weather or competitive activity are no longer factors. And finally, virtual consumer research can allows more respondents in more locations to be tested, as well as more variants of the innovations or shopping scenarios, which leads to greater accuracy and flexibility.

What advice would you give to retailers looking to succeed in this time of recovery?

ML. In today's trading conditions, driving store space more efficiently, lowering costs and prices is still the challenge. Retailers should seek out tools that rebalance optimised category space within the constraints of existing store layouts; solutions which analyse item level inventory and performance simultaneously with existing fixtures, aisles, departments and store arrangements, redraw floor plans and create optimised plans to match the improved layouts.

Of course, attracting and retaining customers is also about delivering a great shopping experience. Since customers increasingly shop on-line, or at least research their purchases before entering a store and often check pricing and product details on-line whilst there, or when they come to pick up purchases, today's retailing challenge also includes improving and integrating the shopper's mobile and on-line experiences with an exciting and satisfying in-store experience. Virtual tools are very effective in refining the customers' in-store experience.

About

Michael Letchford is Chairman and CEO of Fifth Dimension, with over 25 years experience as a successful innovator and thought leader in retail space planning automation, category and aisle management, store optimisation and virtual store based consumer research. His passion is providing powerful tools that deliver highly profitable, shopper-centric retail solutions.