Value, Relevance, Convenience – The Future of Retail

1
231 views

Share on LinkedIn

the Future of Retail is, well, interesting. Retailers today face an increasingly fierce competition. This competition is both, between brick-and-mortar retailers as well as between online-retailers and brick-and-mortar. Amazon, for example, is eating an increasing share of department stores’ lunch. It already now is the second largest apparel retailer in the US. According to Morgan Stanley research, quoted in a recent business insider article:

“Internet retailers (led by Amazon) have added $27.8 billion to their apparel revenue since 2005, while dept stores have lost $29.6 billion,” … “This share loss appears at risk of accelerating given 1) Amazon’s bigger push into fashion, and 2) consumer willingness/acceptance to shop fashion through Amazon.”

Additionally, customers are increasingly demanding, which is fuelled by being better informed and by the willingness to leverage this information.

As a result of both of these trends retailers are losing relevance.

One of the main challenges facing retailers (and brands, btw) is that big scale online retailers can very strongly compete on price. They also have a strong edge in data, which fuels their online experience. But here is also the chief weakness of online retailers like Amazon: They are online retailers, which confines the experience that they can offer to, well, online.

Consumers used and use stores for showrooming to get a physical experience of the product and/or service. This is a clear indication that online is not everything!

Which is one of the reasons why Amazon experiments with Internet of Things devices like their Dash button, which they recently enhanced with an SDK; it does also explain why Amazon is experimenting with kiosks and retail stores.

The chief differentiator of a brick-and-mortar retailer is that they have physical presences, retail stores. In these stores it is possible to interact with product and with people. This is something that an online retailer has a hard time to offer, and something that still matters. It is also an asset that needs to be tightly integrated into the customers’ experiences. This asset can also prove to be a treasure trove of data on customer behaviour and –intention.

Given this it can be argued that the ability to gather and work with data is nothing that sets an online retailer apart from their offline competition.

On the contrary, in an app, AI, and Internet of Things world retailers can get an edge over online behemoths again – by providing a superior and holistic customer experience and a customer engagement, across touch points that online retailers cannot offer. Traditional retailers have far more possibilities, click and collect and personal service only being the simplest ones.

Here we are back to the triple play of CRM, CEX, and CEM that I wrote about in a guest post for friend Paul Greenberg a short while ago.

What does it take? Apart from making sure that store employees can dedicate quality time to their customers?

What it takes is as a first step is using the data that is readily available in every retail company, data that is provided by the PoS, that is provided by the membership/loyalty program that might exist, by reactions to marketing campaigns, etc.

And to analyse and use it.

Even without predictive analytics and other advanced technologies it is possible to derive valuable data from it. Add a few simple survey questions, at relevant times, e.g. directly after the customer did a checkout, and improve experience and engagement from there. Especially smaller retailers can benefit from platforms like Epikonic, that provide an easy integration of loyalty system, PoS, CRM, campaigns and analytics, even beacon support, with experience and superior engagement.

Key to getting, analysing and using this data are the concepts of value (to the customer) and, more importantly, relevance. Relevance is always in a context of needs, time, place.

Let me use an example, a NZ men’s fashion retail chain. Ask me for a homewares retail chain or a department store I worked with, if you wish. The fashion retail chain is fairly upscale but not top end. I will not name it but rest assured that I bought quite some shirts there. They are doing well with varieties in good quality, an interesting web site and very forthcoming staff. They also have fairly upmarket store locations.

And they know about me, should know what I bought where and when. They have my phone number and my e-mail address.

I consequently regularly get an e-mail with the shirt of the week or another campaign which, frankly, goes away unread. They even recently did a survey that indicates a desire to find out where they could do better.

Now, what could they do better?

  • The e-mails are not personalized but very product centric. Which also means that the offers are not personalized. So, in essence, they are doing mass marketing
  • I am passing by via one of their stores fairly regularly. After all there is a supermarket as well, where I often get some groceries

It is about offering value and being relevant. With the data that they have about me they do know that here is a person who seems to prefer not overly formal business wear. Fine. You know the style, colour, and size of shirts that I purchased. How about offering matching trousers, blazers, shoes? Or offering me a new seasonally adjusted combination, addressing me with my name, ideally along with a personal greeting of the store manager. This is not that difficult. A personalised offering would have far more potential to draw me into the store. This would be a start.

Going on from there we can add simple technologies. The first two that come into mind are my mobile phone and beacons. Offer an app or, better, hook into an existing one that offers wallet functionality – maybe even payment functionality. This can be used for proximity- and hyper-real-time marketing. Make me a compelling, personalised, offer when I am nearby. With a PoS integration I could easily redeem it. Send me the receipt to the app along with a brief thank you note, or a very brief survey about my experience.

Value, relevance, and convenience for me, valuable data for the retailer. Without a big cost outlay!

Step the game up a notch. Add a beacon at the store entrance. Now you know who is entering, preferences, size, name. These are valuable information for the store personnel. Who does not want to be greeted by name? Add a few more beacons around the store and you easily know where customers walk, and where they stay.

From here on we can get fancy. Offer some more information on the merchandise, e.g. by providing a QR code that I could scan or by directly scanning the product. Make me virtually wear a shirt using an electronic mirror – that might even help my wife giving her opinion fast. Marketing messages can get personalised by showing the clothes on my own shape, with my own face, given that I gave permission for it. This might even extend to the web site. Fancy? Yes! Possible? Of course! Necessary? Not yet, but likely soon.

1 COMMENT

  1. Yes,for big companies that have online presence ,their no doubt that they will impact on the sales of their competitors negatively.There is need to adopt competitive intelligence approach.

    The term competitive intelligence is used in various contexts, and it is generally agreed that competitive intelligence is an all embracing term that has a strategic dimension associated with it . Indeed, competitive intelligence can be viewed as a “process for supporting both strategic and tactical decisions, and in order to support CI, organizations need systems and processes to gather and analyze reliable, relevant, and timely information that is available in vast amounts about competitors and markets..
    As firms are led to utilize information and knowledge in a complex environment, they often do not act on their own. Besides, alliances between direct competitors set the trend. Indeed, horizontal inter-firm ties have grown in the shape of mergers-acquisitions, partnerships, agreements, and mostly alliances. In the face of the increasing number of strategic alliances, it is advisable to shed light on this type of tie. The number of alliances bringing competitors together is on the increase in recent times because organizations want to achieve positive synergies.

LEAVE A REPLY

Please enter your comment!
Please enter your name here