The Future of Retail
Business as usual? Not anymore. With the continuous revolution of technology, changing patterns in the way consumers shop and the influence of major retail pioneers like Amazon and Walmart, small business owners cannot continue to plan for the future based solely on the past.
Digital transformation, in-store experiences and consumer behaviors are affecting all retail stores regardless of size. You see it everywhere, an accelerated shift away from in-store shopping with more and more consumers looking at e-commerce as their main method of shopping. Look no further than online only gallery The Barrington Garage in Maryland, where principal Michael Faircloth has witnessed an increase in sales in 2018. “My sales over the past year have been the best I’ve seen in the 10 years or so that I’ve been in business. While I don’t see any significant headwinds that would bring a reversal, it’s reasonable and prudent to expect a leveling off in the rate of growth.”
Digital transformation makes it possible to get what you want when you want it. At any given moment you can browse the internet (on your smartphone!) for exactly what you want, compare prices from a multitude of stores, place your order and even have the item delivered that same day. Think about how quickly you can read a review on any store in town, get instant feedback from friends and view current updates across multiple social media outlets.
Emerging technologies like augmented reality (AR) technology will continue to become more sophisticated and more readily available. Forward-thinking retail brands are incorporating AR technology into the consumer experience both in store and online. A prime example is the Ikea Place app. “The app lets you place true-to-scale 3D furniture in your home using the lens of your iPhone camera,” explains Michael Valdsgaard, the Leader of Digital Transformation at Inter IKEA Systems B.V. “You see the scene as if these objects were real and you can walk around them and interact with them, even leave the room and come back. It’s really magic to experience. We found out through research that some customers weren’t confident about buying,” Michael says. “So, this is aimed at making that experience easier for them.” With the area of augmented reality evolving so fast, Michael Valdsgaard says it will be exciting to see where the technology leads. “We don’t know yet what’s around the corner,” he says.
Michael Faircloth sees AR as the future in retail shopping, “Everyone is talking about AR, we have already seen a substantial increase in customization options for consumers, and that will, no doubt, continue. Who would have thought just a few years ago that you’d be able to do a digital “fitting” with your smartphone and order custom apparel?”
Augmented reality can now bring the in-store experience direct to consumers’ homes. Think about how you can use this new technology in your shop. The possibilities are endless! Home and lifestyle brand Magnolia Market uses an AR app allowing their customers to see how their products will look in their homes. Imagine your customer able to view the handcrafted jewelry on your store shelves to find exactly the perfect piece to match her outfit. Or the customer shopping for the vase to place in their living room. All done without ever leaving their homes! While AR technology is still in its infancy stage, it is being developed at a rapid rate. Learn more on how you can use this technology in your store at Augment.com.
Augmented reality is only a small part of the ongoing digital transformation of retail. What is digital transformation? At its highest level, it means using digital technologies to disrupt existing industries or create new ones. Think Uber – the first to bring technology to connect people who need rides with people who have cars. This connection changed the economics of their specific industry. Today’s small business owners needs to begin planning their digital transformation plan, maybe not as disruptive as Uber, but ultimately a small plan to allow their company to grow and adapt to changing times. As Michael Faircloth sums it up, “unless you prefer to remain very small, you cannot thrive without a digital presence and a dynamic digital plan.”
According to Forbes.com there is one thing retail has that will not change. In the end, retail involves transferring possession of physical goods to a consumer. This one little thing – the transfer of real, physical goods to a consumer – is both the biggest difference retail faces when taking on digital transformation and is also the biggest inhibitor that locks retailers into thinking that digital transformation isn’t going to impact them like other industries.
When you look at how consumers acquire products, pretty much every part of the shopper journey is being digitized, except for that last physical transfer of goods. Probably the last bastion of the physical is fit for apparel, or “touch and feel” for non-apparel items. When stores are designed to deliver the end-to-end shopping experience, where the retailer held the most product information within the store itself, and now consumers no longer need that experience, then it’s not surprising that store traffic is down, and store sales are taking a hit. (Forbes.com)
So how can you adapt to the continuing evolution of digital transformation giants like Amazon and their influence on the retail sector? Michael Faircloth shares, “While Amazon will remain king of the hill for the foreseeable future, their presumed annihilation of bricks-and-mortar stores is overblown—at least for retailers who remain nimble and creative. Amazon’s immensity and dominance do have a downside. Like so many large enterprises, they function as a well-oiled machine as long as things are flowing as intended. But, when something unusual happens that requires a thoughtful and informed response, the machine will stutter. Just ask their marketplace sellers what it’s like to deal with Amazon Seller Support. Small physical stores can react in quick and personal ways that will engender great loyalty for a certain type of shopper.”
Today’s retail owner must be able to transform themselves from being product-centric to customer-centric, moving from efficiency to flexibility and from optimization to being inspired. Smart retailers know retail is not dying out, rather it is evolving and knowing how to evolve with it is key.
Moving from product-centric to customer-centric involves omni-channel experiences and customer touchpoints. These are the moments when you, your staff and even your brand touches a customer. It could be something simple like a postcard in their mailbox, a conversation with a friend who recently visited your shop or an employee simply answering a phone call with store hours.
Touchpoint definition: A touchpoint is any time a potential customer or customer comes in contact with your brand–before, during, or after they purchase something from you.
Making sure your customers are satisfied at every touchpoint depends on your ability to identify each touchpoint. Mapping these points creates a visual how to - which you can use to create the ultimate customer experience.
Begin by making a list of every possible interaction a consumer would have with your brand. Think about social media, window displays, signage, even your parking lot. Put yourself in the consumer shoes, visit your shop as a customer, visit other shops and take notes. Lots of notes.
When you feel you have a strong list, begin working on ways to ensure every touchpoint is effective and memorable. Think about better signage outside your shop, how your window display appears as cars drive by and how your staff greets each customer.
Small businesses need to make the customer feel they are the focus of all communication and the retailer has exactly what the customer wants. Being customer-centric is also about utility – how can you, your shop and your staff be of use to the customer? How can you make things easier for them? How can you make them excited to return? How do you make them tell their friends? How do you make your shop stand out from the crowd?
A key element to the future of retail depends on making the store visit an experience for the customer. Retailers now need to rethink their business models to put more emphasis on creating an experience rather than just a place to shop and go home.
Over the years, retailers have been creatively coming up with new strategies to invite consumers into their stores, get them to interact with the merchandise, stay longer and ultimately purchase. One such retail marketing strategy is retailtainment.
Retailtainment – is retail marketing as entertainment. In the book Enchanting a Disenchanted World: Revolutionizing the Means of Consumption (1999), author George Ritzer describes "retailtainment" as the "use of ambience, emotion, sound and activity to get customers interested in the merchandise and in a mood to buy." Sometimes called "inspirational retailing" or "entertailing," it has also been defined as "the modern trend of combining shopping and entertainment opportunities as an anchor for customers." Wikipedia.
In a CMO.com article, Kelly Gilmore, vice president of retail marketing and advertising at the National Retail Federation CMO Council, shares her thoughts on the most common mistakes companies make when adopting an omnichannel strategy. “Companies need to look at the overall experience that they’re delivering to the customer” instead of blindly going after new technologies and platforms.
“They need to understand what the customer wants and avoid chasing a shiny object because ‘everybody else has it, so we need to have that,’” Kelly says. “Make sure it’s the right thing for your brand because not everything is the right thing for the brand.”
That said, Gilmore said that experimentation is a natural part of customer-centric retailing. “With the speed of technology and the access that today’s consumer has to information, retailers need to test and learn. Smart retailers learn from mistakes and move on.”
This digital shift will certainly continue to shape the future of retail. Look for more personalization and concierge-style services, more showroom-type experiences and in-store events to capture the attention and the money of the consumer. Michael Faircloth explains, “Creating an experience is important for all retailers, but it’s vital for bricks-and-mortar if they hope to compete with online. While not all buyers are looking for shopping to be a social experience, for some, it’s more about the party than the product. There’s the opportunity for the small specialty retailer.”
Many small brick-and-mortar stores share the same fear—losing sales and customers to Amazon and other online retail giants. But these retailers can stay in the game by making their operations run smarter and providing customers with a new and improved experience. Internet of Things (IoT) technology can help you do just that.
What is IoT technology? In simple terms, it’s a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. Think Amazon Echo, FitBit, even your coffee pot as IoT technology.
According to Forbes.com these everyday objects can be connected to the internet and be recognized by other devices and contribute info to a database. The Internet of Things describes Internet V.2, where data is created by things. Kevin Ashton, digital innovation expert who is credited with coining the term, defines the Internet of Things in this quote:
“If we had computers that knew everything there was to know about things—using data they gathered without any help from us—we would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best.”
How can a small business owner implement IoT technology into their digital transformation plan? First, learn all you can about this new technology. Read as much as you can about IoT and stay up-to-date with its continued evolution. IoT will ultimately impact the way we do business. Here are just a few ways IoT will play a part in a retail setting:
- Inventory management: Smart devices will ultimately be able to track inventory automatically
- Consumer demands: Consumers will get used to smart devices and begin to expect “smart” behavior in all aspects of their lives
- Shorter buying cycle: Businesses will need to come to terms with a shorter buying cycle and consumer expectations for immediate gratification that the IoT supports
- Learn from the data: The volumes of data generated from smart devices help businesses learn how and what to innovate for the biggest impact
- Remote work: As IoT becomes more integrated, additional remote working opportunities will be available for tasks that used to require staff to be on-site to complete.
The Internet of Things is just getting started. Small business owners who start now to develop or expand IoT technology in their products, services and operations, are the ones who will realize a competitive advantage in the future of retail.
An important aspect in the future of retail, remains with the consumer and the evolution of their shopping behaviors. What the surveys say:
The Future of Retail 2018 by Walker Sands (1600 consumers surveyed)
- Politics plays a leading role in commerce
- The popularity of connected devices has skyrocketed
- Amazon's dominance forces competing retailers to evolve
- Consumers are more comfortable using voice-controlled devices to shop
- Fast delivery is no longer optional, it's a must
CEO Viewpoint 2017 Transformation of Retail by JDA/PwC (351 executives surveyed)
- Investment Priorities
- Omni-channel Fulfillment
- The Digital Transformation Strategy
- Leveraging Customer Data
The Store of the Past Meets the Shopper of the Future: Can Retailers Adapt to Modern Consumer Expectations? By Euclid (1500 USA consumers surveyed)
- New buying models (e.g. subscription boxes) are shifting how people think about stores
- The powerful Millennial generation is turned off by traditional marketing methods
- Growing channel agnosticism - an openness to regularly using multiple channels - means there's 'room for everyone'
Forward thinking shops that rethink the consumer experience and invest in it and the retailers who uncover ways to bring the omni-channel experience into their digital transformation plan, will come out of this current retail renaissance as the winners.