In the past few years, the retail industry has undergone a massive transformation driven by digital technology innovations that are fundamentally changing the way consumers interact with retailers and brands. Decreasing footfalls, new online-only competitors, and profound changes in customer preferences are increasingly buffeting the industry and posing it on a knife’s edge. Retailers are combating the online revolution not only to get people into their stores, but to drive them to purchase, as well.
The shift is pushing retailers to review and transform their traditional business approaches going forward. They are increasingly adapting to the new consumer demand-driven shopping paradigm and different segments (luxury, apparel, mass merchandisers, etc.) are developing. But as they strive to catch up with the trend, retailers must realize that retailing in the digital age doesn’t mean introducing “digital” to the physical space. Instead, it means redefining one’s entire business around operating in a digital world.
Brands must follow the customer’s journey across touchpoints — only some of which will include digital tools at all. A touchpoint might be defined by a smile or the feel of a linen shirt. A mirror image of you dressed in the new style of the iconic Burberry trench coat. The smell of a store as you enter. Operating in a digital world requires integrating the physical and digital, hand in hand.
So, how do retailers go about defining the best combination of physical and digital for their brand? Here are the five overarching rules for retailers to keep in mind when designing the future of their retail experience:
1. Retailers must become more flexible, immersive, and fit for purpose
Digital extensions — a great interactive kiosk, mobile app, or sales associate tool — are no longer enough. Retail brands must reimagine their business in the age of the customer. Retailing in the digital age should be more flexible than in the past. This means omni-channel and visibility; click and collect; mobile ordering; ship-to-home; and all the permutations.
2. Think experience-led and mobile first: Mobile as the gateway to the brand
For most retailers, smartphones are now gateways to the brand. Mobile is how they start and sustain customer relationships and is now a primary touchpoint for retailers. It is becoming an essential channel pre-visit, in the store (with growing expectations for image search, wayfinding, mobile payments, and voice-based search functions), and post-visit. Increasingly, both retailers and mobile providers are entering the mobile payment space, with 60% of omni-channel retailers predicted to launch customer mobile payment initiatives by 2018.
Focus on the full customer journey
By broadening the aperture of experience beyond its traditional focus in retail — the store — leading brands can create a new competitive battleground and begin winning sales before someone even arrives at a physical property. Capturing pre-visit sales with pre-orders, click and collect can help drive revenue growth for retailers. Another pre-visit technique is that of try-on and try-out innovation, which encourages customers to buy products in-store by letting them try products on at home. But even more important, in our opinion, is post-visit activity. Designing for the post-visit stage of the journey — using follow-up emails, texts, savings catchers, or other communications — is a significant opportunity missed, or poorly executed.
4. Move from data and reports to intelligence about performance and your customers
Retailing in the digital age requires the optimization of store environments, and analysing flow with real-time analytics is now possible and gaining a foothold. Recent research notes that 71 percent of retailers use or plan to use people-counting technology in their stores, while 68 percent are looking to introduce in-store Wi-Fi and loyalty systems. The evaluation of data from these installations can lead to major revisions in retailers’ understanding of customer behavior. Executives might find that store dwell time is significantly different than they thought, or that smartphone usage is primarily for entertainment or communication, rather than “showrooming.” These and other insights can lead brands to increase (or decrease) their investments into mobile apps, as well as their in-store use of digital endcaps.
5. Keep in mind that stores are far from irrelevant
The value of the store experience — tactile engagement, a full 360-degree experience, and of course a sales force — makes it a difficult channel to ignore, replace, or shut off. The store remains a predominant part of the total retail experience, but its role is changing and requires that it be more in tune with the needs of the Millennial shopper. For this, retailers need to reimagine and evolve their in-store channels and engagement innovations.
Retailers are on the verge and too few successfully blend the three main channels — mobile, e-commerce, and stores — together in a way that is optimized for customer experience. To succeed over the next decade, retailers must fundamentally transform themselves, touching every area from organizational structure to the products and services that they offer.
This wholesale reimagining of their business requires that retailers be focused on five main points: The need for a vision of a future retailer; the importance of mobile; the opportunities in the pre- and post-visit phases of the purchase cycle; the importance of analytics and optimization; and, finally, the continued, central role of the physical store.
The brands that succeed in this environment will be the ones that transition and evolve quickly enough to get ahead of the changes in their core business. How will you design the future of your retail experience?
Discover how these trends are evolving across the retail space by diving into our global research report, available for download here.
By Jemuel Ripley (VP & Global Retail Lead, New York), Zachary Paradis (VP, Customer Experience Strategy, Chicago), Hilding Anderson (Director, Research & Insights, Washington, D.C.) & Nathan Chmielewski (Senior Associate, Marketing Strategy & Analysis, Chicago)