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IBM retail guru uses technology to spot industry trends

Fred Balboni is director of retail consulting for IBM Corp.

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Fred Balboni is director of retail consulting for IBM Corp.

How many times can a retail store tick off customers before they switch to the competition? What role has the recession had on pending retail technologies? Can a new technology help women unclutter their cosmetics drawer? Fred Balboni, 49, is director of retail consulting at IBM Corp., and he knows the answers. He chatted with the St. Petersburg Times last week at the National Retail Federation convention in New York about how online retailing technology is about to change and his company's recent study of 30,000 shoppers that showed even loyal customers are getting more fickle about stores that disappoint them.

Your study showed even a retailer's best customers will bolt after a store fails to please them 3.1 times on any of a laundry list of attributes like price, selection, customer service, convenience, being out of stock and store experience. Are they more forgiving than you expected?

Not really. We did the same study in India, where it only takes two disappointments. The point is they don't leave you immediately, but they start looking elsewhere. About 30 percent of a store's customers are loyal, but the percentage of disappointed looking elsewhere jumped from 30 to 38 percent in 2008 when it became all about price.

IBM is aggressively marketing an array of systems that help retailers become multichannel operators so they can sell seamlessly online, in stores and from mobile devices like iPhones and Blackberries. How quickly will this evolve and why must it?

We think it will start happening over the next two years. The reason is the customer today expects every retailer to be completely integrated between the Web, the store and their mobile device. To them it's all one brand, so why can't they order it online, pick it up at a store, return it somewhere else, access product information on a mobile device. They also expect everything carried in a store to be available online, which still rarely happens today in apparel. That's changing but will be hard because some retailers use unique merchandise purposely not sold on the Web to get people to go to their store.

Some of the new multichannel applications you are marketing do some cool things. One lets shoppers use a short code to text message directly to a chain store, which then maps the route to their nearest location, identifies the customer by name, credit card and purchase history, then can reserve or even execute a purchase before they get there to pick it up. It can also transmit pictures of the product back and forth. Another application for home furnishing stores lets you bring in a photo of a room being redecorated, then you can download photos of furniture and see how they look in various parts of the room. You can even transmit the arrangement back to someone at home for their approval. Has the economy slowed interest in stuff like this?

There is a lot of experimenting going on among online retailers. But even with today's economy, retailers are upgrading systems that create instant improvements in sales. The speed to market is what's changed. We design and deliver online retail systems in seven months that used to take two years.

Another new launch is the EZFace virtual mirror. It's an LCD screen designed to be a fixture at cosmetics counters in stores and beauty sites online. (It can be checked out at covergirl.com or EZFace.com.) It snaps a 4-megapixel, high-resolution mug shot of a customer's face, then digitally shows what different lip gloss, hair and eye color and mascara look like on you. It also makes recommendations of other treatments based on a customer's skin type. How quickly will this launch domestically?

Pretty quickly, because just about all the cosmetics companies are on board. It was developed in Israel, where it has increased cosmetics sales in drugstores among packaged cosmetics you can't unwrap to try out. Mature women may be slow to adapt to it, but young kids who are unafraid of technology will love it. Every woman has a drawer full of cosmetics they bought without testing, then never used because the color didn't look right. This is a convenient way to reduce that.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

IBM retail guru uses technology to spot industry trends 01/18/09 [Last modified: Monday, January 19, 2009 7:14am]
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