Total Digital Business Intelligence Is Real Close
I don’t know about you, but my music collection is totally digital. I can’t remember the last time I bought a CD, let alone wandered the music aisles of any store. All the CDs we own – some sort of silicon insurance policy, I guess – are gathering dust in the rafters of our garage. And while I like music, and we have certainly added to our music collection, I am nowhere in the realm of others that I know when it comes to collecting.
This is a pretty dramatic shift in consumer behavior, and I’m by no means the first to point it out. This shift is still shaping the music industry, leading bands to sue fans, and the RIAA to sue everybody. It’s also having a dramatic impact on the media sections of retail stores – not to mention media big boxes like Barnes & Noble and Borders.
But this is just the tip of the iceberg. After all, there are still movies and books to tackle in the digital realm, right? But major developments continue to impact those realms too.
Last month, MOD Systems announced a big alliance with Toshiba and NCR, and has partnerships in place or on the horizon with studios and cable companies to enable in-store downloads of movies onto SD cards, which can be inserted directly into a consumer’s cable set top box (among other devices) at home. On the surface this could seem like “paving cow paths” – just putting a digital layer over what is still basically a physical distribution system. But while downloading songs at home is easy, bandwidth constraints make movie downloading – especially if you want it in HD – still very demanding in the patience category at home. So I see this as a major step forward, in part because it demonstrates all parts of the movie food chain working together, and also because it puts digital content directly into the hands of consumers.
Amazon was expected to announce a new version of the Kindle as we went to press, proving that their foray into the hardware business has done pretty well. And as a very recent convert to iPhone land, I’ve discovered that there are e-book options available to turn that little device into a digital library.
But there are, to put it mildly, a few stumbling blocks. Let’s put studios, music labels, and trade organizations aside. Home storage is a big deal, and digital rights management gets in the way fairly quickly. For example, right now all of my music is on my husband’s computer. It’s the home machine. But it means I have to fight with him for screen time so that I can download songs onto my iPhone – and even more time consuming, play with GarageBand so that I can create my own ringtones. It’s very frustrating – “we” as a married couple jointly own all this music. Why can’t we both use it on our respective devices? We very likely wouldn’t even be using the same song at the same time.
On the movie front, we tested Sony’s movie service to download a movie to the PS3. Yeah, we let that download run overnight. As an alternative, we tried DirecTV’s On Demand service – and recorded it to our TiVO. But now it’s only available to that TV. And the one movie eats up a quarter of our storage.
I see home servers – Microsoft already offers one – in our collective future.
So what does this mean for retail? Outside of retailers that sell media, who MUST figure out how they are going to stay relevant both during and after this transition to digital media, there are implications for retailers who sell physical merchandise. Here are two:
On the consumer side, expect to provide online access to content, no matter how the consumer chooses to access it – via mobile phone, on a computer at home, or via a kiosk, and no matter how trivial the information might seem to you. Why shouldn’t every consumer be able to mine their own purchase history? Safeway offers a take on that by analyzing the healthiness of their club card customers’ purchases, but even identifying basic frequencies could be valuable: Joe, you buy dog food every 3 weeks on average. That piece of information can become the inputs to budget, to-do/shopping lists, even pet health history for vets. Emailed receipts skip the manual data entry part of recording the purchase in a consumer’s personal finance software. And they could include links to product pedigrees, which become a network for notifying people for product recalls, or additionally as links to manufacturers’ sites, where consumers can learn more about other similar products.
On the employee side, there has got to be movement away from reports. Reports are as archaic as an eight-track. Yet I still see so much cultural bias towards reports – people are so used to having to wade through data to find what is important, and are used to doubting the capabilities of a ‘system’ to help you find what you should be looking for. But it demonstrates an additional real challenge in digital content: you have to get the user interface right. There have been many, many attempts to create dashboards for decision-makers, from merchandisers to store managers. But take one look at Facebook: its home screen is a life dashboard. And increasingly all levels of employees are being de-facto trained to expect that kind of interface into not just their life, but their work too. This is the flip side of digital content – music and movies are all about taking existing content and making it digital. Facebook and the like are about capturing content that has never really been captured before.
Once it’s digital, it impacts how we use it. And while “totally digital” is closer than ever before, we’re still only scratching the surface.
About the author: Nikki Baird is a Managing Partner at RSR Research, a technology analyst firm specializing in consumer and retailer technology adoption trends.
