The Digital Literacy Divide

By Paco Underhill, CEO & Founder, Envirosell


The hard goods industries are looking longingly at the broader Digital Revolution. From office product super stores to the home goods sector to hardware to furniture and pet supplies, all are asking themselves the question: “When is the second stage of the revolution coming to us?” Many have developed robust online businesses, but the integration of that online business into their brick-and-mortar formats is still in transition. How do they use their brick-and-mortar assets to facilitate online ordering systems? Can technology be blended into self-checkout for big orders? Can in-store informational and product kiosks round out what the world is calling omnichannel? Some basic stumbling blocks still abound.

Old Fashioned Customer #1
The B2B model in retail is about servicing small- and medium-sized businesses: most are privately held, many are family based. From catering to contracting, legacy businesses are used to doing things the way they always have. They say: “I’ve been ordering supplies over the telephone since 1983. I can do it from my truck, from my office desk and on-the-job.” What about mobile phones you ask? Step away from cities and use of mobile phones changes. You can drive and talk on the phone. It may be illegal, but driving and texting is possible—but focused interactions are harder. Many of the small- and medium-sized business are where key people work standing up or on-the-go. Finding a way to reach this customer segment digitally is critical to growth.

Old Fashioned Customer #2
Digital literacy and affluence don’t always walk hand-in-hand—a hard lesson from modern retail banking. Millennials may do everything on their phones, but their parents and grandparents don’t. We ask the rhetorical question: “Who has the money?” In many family businesses, the office manager and or the decision-maker is not a Millennial. Go to digital industry capitals from Austin, Texas, to Seattle, and Baby Boomer digital literacy can be high. But go to El Paso, Texas, or Walla Walla, Wash., and the story is different. Yes, the world is going to change, but the question is when. At least in the near term, the challenge is two-fold: How important is it to hang on to that aging customer base? Are you willing to make the effort and spend the money to help train that legacy customer on how you’d like them to interact with you?

In the 1990s, we worked for a major bank trying to find ways to migrate customers from the teller to the ATM. They hired a group of friendly young aides to approach customers in the teller line and ask them if they could show them how an ATM worked. I watched a young woman approach an older customer—the line she used was “It’s just like a slot machine, only you never lose.” Cute story, but in hard goods locations, the failure rate for customer-focused kiosks is high—few make it past the first year.

Old Fashioned Staff
The smaller format hardware store industry has been successful competing with the big-box stores by delivering expert service. A good mix of handy men and women help customers buy with confidence. In the big boxes, too, the presence of good staff has been important, both interacting with the contractor market and the generic homeowner. What has been interesting is looking at the digital literacy of that staff. Again, many are older; some have retired from their own contracting careers. The challenge is how do they fit into the digital transformation? The answer is they are critical. Are you willing to train them? The answer has to be yes.

We suggest two models to review. The first is the launch of the ATM. It is interesting to note that like many technologies that migrate from tech to appliance status, the first ATM adapters were pink-collar working women who recognized quickly that ATM use saved them time. How do we position digital transformation as an advantage to the customer? How will it fit into a multitasking life?

The second example is the check-in kiosk at the airport—again speed was the benefit. However, what was more transformational was the change in physical interaction, where the interaction with airline personnel was not over a counter, but hip-to-hip; friendlier and, most importantly, driven by need. Need help? I’m here to help you be self-sufficient. You’ll get through this even faster.

The tech-factor fades over time. Retail digital transformation is facilitated by technology, but the change is rooted first in operational transformation and second in clear, unambiguous benefits for the customer, anchored in saving time and money.

Paco Underhill is the founder of Envirosell and author of the books “Why We Buy” and “What Women Want.” He shares his retail and consumer insights with design:retail in this bi-issue column.

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