With Black Friday and Christmas just around the corner, the fight is on to emerge victorious in the holiday shopping race. It’s no surprise that retailers who end up on top are those who embrace the wealth of opportunities enabled technology, leaving behind those who failed to innovate. In the space of just two decades, technology has fundamentally transformed every aspect of the way retailers interact with consumers.
The Rise to Power of E-Commerce
Since the first online sale of a Sting album over twenty years ago, e-commerce has irreversibly changed the power dynamics of the retail sector. Sales figures for traditional retailers are down as consumers turn to the Internet for better choices of products, competitive pricing and convenience of service. Online now makes up a significant proportion of overallrevenue, with the UK forming one of the world’s most advanced markets. It is set to generate about £60bn or 15% of retail sales in 2016, close to £1000 per head annually, and this is expected to rise to £95bn (23%) by 2020.
The digital era has seen the coming-of-age of new players based entirely online, most notably Amazon, Ebay and Alibaba. These e-commerce giants have built hugely successful models based on the fact that anyone can become a seller, socialising and globalising the retail model. This marketplace concept offers small retailers a huge scaling opportunity without having to build the technical or operational infrastructure of scale. Power has also been shifted towards the consumer, who can now shop around online for the best deal. With this shift, the concept of brand loyalty to high street institutions has effectively disappeared – just look at the demise of Woolworths and BHS!
A New Model: ‘Experiential Retail’
Traditional retailers must now rethink their models to differentiate themselves from new players who can offer cheaper products and more efficient services. High-street retailers are looking at ways to create an in-store experience of the brand, the environment, the products, and the service, which the web cannot offer. Take British high street institution John Lewis, whose new CEO Paula Nickolds recently announced plans to revive the department store chain by downgrading traditional products in favour of ‘services’ such a bikini waxes, prosecco-bars and travel kiosks. For established retailers, physical stores are taking on a new role of refining the brand image and highlighting the value of its products. Other channels are supported where transactions take place.
Technology has a key role to play in the concept of ‘experiential retail’. Retailers can employ automation on both the operations and consumer side, to make in-store shopping a more seamless, efficient and cost-effective experience for the customer. Developments such as interactive kiosks, mobile payments, and RFID tagged products aim to reduce the friction of in-store customer experience; from minimizing queues at tills to making sure customers can find out which products are in stock. Additionally, exciting technologies such as AR and VR are being leveraged to create unique experiences that are unachievable online. Virtual mannequins which allow customers to see a model in their chosen garments, hangers that shows Facebook likes for products in real time, and VR catwalk shows are just a few example of notable innovations.
Creating a customer centric omni-channel experience
Now, the challenge for marketers is to unify all channels of the retail experience so that the physical store experience is a logical extension of the mobile and online counterparts. Shopping now extends to an end-to-end consumer journey. The customer will begin by researching the goods online, then will come into a store or order online to purchase the goods, will vocalise reviews of products and the brand on the retailer’s website, app or social media. For a brand to be successful, these channels must seamlessly be woven together creating an omni-channel experience that remains consistent to brand image throughout.
Hand in hand with the extension of the retail experience over multiple channels, technology has dramatically changed the face of retail marketing and advertising. Smart retailers who utilise the opportunities provided by Big Data and Predictive Analytics technology can gain invaluable insights into customer behaviour, meaning they can intelligently encourage them to spend more, and ultimately stand out in the ultra-competitive marketplace. The smartphone has gained the biggest impact in this arena; in a constantly connected world, the data gathered from the way customers interact with the brand via apps can help retailers deliver augmented customer experiences by providing them with relevant, contextual and personalised suggestions.
Undoubtedly, technology has changed the retail sector in every way possible. Yet, this shouldn’t be seen as the writing on the wall for traditional retailers, but rather a lucrative opportunity for those who are willing to innovate. Technological advancements can be leveraged as tools to build and strengthen a customer centric omni-channel presence, so that the in-store experience is complemented by the online and mobile experience, resulting in stronger brands and driving higher revenue.