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Kiosks Keep Lights On

With dozens of national retailers announcing plans to shutter shops as sales move online, the decision to invest in a new storefront might seem counterintuitive. Yet that’s exactly what Lamps Plus Inc. will do in Austin, Texas later this summer, when it will open its first brick-and-mortar location in nearly a decade. At 8,000 square feet, it will be smaller than most of the Chatsworth lighting retailer’s other 38 stores, many of which are as large as 14,000 square feet. But just like the rest, the new shop will feature at least half a dozen computer kiosks where in-store customers can browse the company’s website. “The kiosks are a very significant part of our business,” Chief Executive Dennis Swanson explained. It was his decision to implement them in Lamps Plus stores in the mid-2000s, when the retailer became one of the first in the nation to bring an online catalog into its physical locations. Working with the internet rather than against it has since been a major contributor to the company’s success, Swanson said. Today, more than half of its sales take place on LampsPlus.com, where it offers roughly 65,000 lighting and home decor items from both external vendors and its own product lines. While Lamps Plus declined to disclose revenue figures, its online sales have placed it among the top 20 houseware retailers in the U.S. for 2015 and 2016, as ranked by Internet Retailer Magazine. Earlier this year, the company announced that it had expanded its Redlands warehouse space to fulfill more online orders. “I like a changing environment, and the environment has been changing rapidly in the last 10 years,” Swanson said. “It’s made us a much bigger, stronger company.” Digital advantage Swanson implemented kiosks in Lamps Plus stores after realizing there was not room in physical locations to let customers browse complete product lines. Expanding inventory with an online catalog also allowed the company to take full advantage of its manufacturing capabilities by giving shoppers choices for finishes and colors. “I noticed that if you buy an outdoor light, you buy a family – a post light, front door light, side lights – but you could never carry an entire family in a store, you carry pieces of the family,” he explained. “So I thought, if you put the internet in a store, they can find it there.” The kiosks’ success was apparent within the first weekend they were implemented, Swanson recalled. The company started conducting sales online shortly after, when a store associate began taking calls from customers who had been browsing the online catalog from home. “Personally, I didn’t think we were going to sell anything from the internet – I thought it would be a great place for customers to get information, and then they would come in and buy,” he said. “I very quickly learned from an employee that if we give our customers the same experience on the internet as we do in the stores, there was big sales potential.” Making the in-store and internet shopping models as similar as possible made the initiative successful from the start, Swanson believes. Other retailers attempted to implement touchscreens and other high-tech tools before consumers were familiar with them, whereas Lamps Plus still uses the standard desktop format. Also, allowing store associates to make commissions from sales that took place at the kiosks was crucial. “A lot of major chain stores put in kiosks but didn’t compensate the salespeople, so the salespeople would just unplug the kiosks,” Swanson said. “I know that for a fact. And why wouldn’t they? The kiosk was a competitor.” Lamps Plus sales associates receive commission from kiosk sales just as they would from selling in-stock items. They also make money when the customer makes a purchase from home after location-based consultations, if the customer provides them with their e-mail address. The tactic has made not only for happy workers, but also loyal buyers – and has provided a stream of marketing data in the process. “The internet taught me more about the retail business, our customers and our product than I ever knew,” Swanson explained. “Not only what items they’re searching for specifically, but the attributes.” This knowledge serves as a window into customers’ minds, allowing the company to tailor its products and shopping experience to the way shoppers think and trends in the market. While sales data is useful, the browsing behavior of would-be customers who leave the site without making a purchase is just as important, Swanson explained. Fruitless searches indicate that shoppers want something the company does not currently have, but may be able to manufacture. “We know through our site how many times they’re searching for a particular thing, and if they’re getting no results then we know we should be building a product with that look,” he said. Next: Mobile Data from online shopping is priceless for marketing initiatives, Lamps Plus’ Vice President of Internet Business and Marketing Angela Hsu explained. The company over the last several years has refined its digital marketing strategy to center on Google Inc. advertising platforms and social media campaigns, with the return on investment closely tracked by Hsu’s team as long as shoppers do their browsing and buying on a single device. But “mobile has really changed the dynamic of marketing,” Hsu said. In the days before ubiquitous smartphones, there was no need to consider screen size in website design. Nor did brick-and-mortar stores need to handle phone traffic from shoppers who, thanks to Google, now can pull up a map and call their nearest location at the touch of a button to find out whether an online item is available for immediate purchase. “Stores, including ours, have always been bad at selling people over the phone,” Swanson said. Now Lamps Plus is training associates at all stores to manage phone inquiries and has even added new staff at some locations to field calls from mobile shoppers. “The results are very good,” Swanson noted. “Very frequently, the salesperson or store will make the internet sale without the person even coming in.” While it is clear that training store associates on phone etiquette is a value-add exercise, knowing whether or not other digital initiatives work has become much more complicated. There is no simple way to track how users are interacting with a company’s products on different devices, a problem that is troubling both brick-and-mortar and online-only retailers, Michael Osborne, chief executive of software-as-a-service firm SmarterHQ, explained. His company licenses a platform that uses machine learning to predict customer behavior based on information from online browsing and in-store sales. “(Knowing) if a customer is shopping from their iPhone or iPad lets us target them specifically and design content around that platform,” Osborne said. “Mobile data itself is just insight into where shoppers are shopping from.” But that insight is important to tracking the performance of location-based initiatives, such as Google’s local inventory ads. It also provides the infrastructure for investing in new, more sophisticated marketing techniques. One example is beacon technology; if a customer has agreed to release his or her geographical data to a company, the firm can know when the customer is in a store and offer a more personalized experience based on his or her history with the brand. Buyers who have opted into loyalty programs or signed up for text or e-mail alerts could also receive special offers based on their browsing history, Osborne added. “You can take that segment and target them for an in-store promo, or even just a notice that the product they’re looking for is in stock at a location down the street,” he said. Slow but steady Bridging the “digital divide” between mobile and in-store shoppers presents a new kind of challenge for Lamps Plus, one that likely will require more than kiosks to solve. Hsu and her team are in the process of partnering with a vendor that can stitch together browsing from across devices, which will enable them to better track cross-channel marketing programs and to test out more advanced campaigns. Even without the ability to track campaigns across multiple devices, there is evidence to suggest that the dollars spent on mobile is paying off, Hsu said. Overall sales have improved since the initiatives were implemented, and buyers have begun making big purchases on smartphones – a sign that a mobile-first approach is a smart move. “Someone recently purchased $10,000 worth of lighting on a mobile phone, so that’s how comfortable people could be,” Hsu said. “While we can’t track mobile spending very specifically, we do see the impact.” The Austin store was established because the intersection of time, place and price made for a lucrative opportunity, one that was identified thanks to the internet, said Senior Vice President of Store Operations Terre Wellington. “We aren’t diving in to opening a bunch of locations,” Wellington said. “It’s a great site that became available. … There’s a bit of a risk here, but it’s also exciting because you feel it’s the right thing to do.” As for when the company will open other locations, it is too soon to tell. For now, Lamps Plus will focus on keeping the relationship between its brick-and-mortar and online businesses strong. As much as the internet has boosted the business of Lamps Plus, the company’s slow, steady approach to physical expansion has been equally integral to its long-term success, Swanson believes. “The lighting business is not a get-rich-quick business. … If you take time to become the best at it, you’ll do well,” he said.

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