There remains a strong case for physical retail stores.
From aggressively competitive pricing, to personalised online storefronts, to increasingly streamlined global supply chains, there are many reasons why the new breed of online-only retailers continue to disrupt their high street counterparts, writes José Manuel Benedetti, Principal Architect at Insight.
There are signs that this in turn will lead to a permanent shift in consumer behaviour – with predictions that, in ten years’ time, online sales will overtake high street store transactions.
Traditional retailers cannot go head-to-head against online giants in areas such as price or speed to market. However, there is one area where they are well-placed to differentiate themselves – the customer experience. According to Adyen/451 Group’s 2019 Retail Report, poor customer experience cost retailers £2.6 trillion in the last year, showing that there are huge gains to be made by any improvement.
Picking your Terrain
Physical stores still have significant advantages over online-only: for example, they allow people to try before they buy; get advice and information from in-store staff; and get their hands on a product without having to wait for it to be delivered. Technology continues to open up a range of boundary-pushing experiences in physical retailers – for example using Mixed-Reality goggles and smart surfaces to show swimwear shoppers how their outfit looks on the beach, or using 3D printing to create products right before the customer’s eyes.
Applying technology in this way will allow retailers to really add value and strengthen the customer experience on offer, so they can not only just survive, but also get on the front foot and begin to thrive.
Retailers who use the data at their disposal will also be able to provide a more personalised experience. This can begin before the customer even sets foot in a store, with information about new offers or special events that will be relevant to them. Once the customer enters the store, facial recognition technology can identify them and direct store associates to help further, armed with all the information they need. This may include the specific location and availability of products that interest the customer, through to recommendations for products that might complement one another, or even on how to make the most out of that day’s special offers.
There is also the practical aspect of making the customer’s journey through the store as streamlined as possible. For example, allowing them to use a mobile app to scan products, find specific items in-store, and make payments. Intelligent image recognition algorithms could, meanwhile, provide information about customers’ behaviour, whether they’re seeking further information about a product – or even trying to steal it. Intelligent automation could then act on this information: for example by automatically alerting store assistants that somebody might be interested in a particular line of products, or informing security staff of a potential issue.
Starting the Counterattack
With the wealth of opportunities and technology available, transforming the in-store customer experience can seem overwhelming. However, as with any digital innovation project, there are essential steps that retailers can follow to ensure they are approaching transformation in the right way.
Firstly, the organisation needs to understand its current position – what does the current customer experience look like? What technology and data is it using to provide this, and why isn’t this sufficient? What available resources are not being fully utilised? For example, most retailers will have access to a wealth of customer data, but will not necessarily have the data segmented by demographics or shopping habits to gain a better understanding of how they could improve the customer experience.
Secondly, the retailer needs to understand its goals and how to achieve them. For instance, retailers can unlock a huge number of customer experience improvements by adopting a mobile-first approach to technology, both for in-store staff and for their customers. To achieve this, the retailer will need buy-in from the entire business – as a strategic imperative, any digital transformation cannot be left to the IT department alone.
The organisation will also need to consider what extra data is required to gain the insight it needs – and not only how to obtain that data, but how to integrate it within the business while complying with regulations such as the GDPR.
Finally, the retailer needs to take action and implement the project. It will have to make sure it has the data, the skills, the technology and the buy-in across the entire organisation to meet its goals. At the same time, it cannot see implementing technology as an end-goal in itself. Everyone across the business – from shop floor staff to those in the online supply chain – must understand the new technology, know how it will benefit them, and know how to make the best use of it. Without this, improvements to customer experience will not meet expectations. Guaranteeing success may mean employing a third party to help deliver a project, but it will be a worthwhile investment.
There remains a strong case for physical retail stores. This is evident with the likes of Amazon, possibly the single greatest proponent of the online-only store, continuing to invest in physical store concepts. The high street is fighting back and using technology to improve customer experience is a valuable weapon.