Where Does The Retail Industry Go From Here?

This item was originally written by Gopal Iyer

As the retail sector is propelled by a bright economic outlook‚ emerging markets and increased consumerism across the globe‚ e-commerce is widely predicted to overshadow high street shops. 

Is this the case? To give you an insight into changes within the industry‚ here are a couple of personal stories that I believe demonstrate how we as consumers have shaped the way we deal with e-commerce.

Eldon Square is a major shopping hub in Newcastle‚ home to most of the big retailers in the UK‚ ranging from groceries and apparels to electronics‚ toys and gifts. During a recent visit with my wife‚ as we shopped for her birthday‚ she was searching for a particular style of footwear that she liked.

However‚ she needed ‘wide fit’ footwear‚ which at the time was unavailable in the store we visited. The representative suggested that we visited the online shop; we instantly looked up the product on her smartphone and voila!‚ she was able to order it online‚ with free delivery and a 20% discount as the icing on the cake.

Source: Flickr

This experience was satisfying‚ but certainly not out of the ordinary. Recently‚ a cousin of mine who lives in the US recalled a visit to a major hypermarket to stock up on groceries. After finishing her grocery shopping‚ she remembered seeing a particular toy within the store‚ which she wanted to buy for a relative’s birthday. 

She quickly scrolled through the store’s app and found that the toy was not available‚ however she could order it online. In moments‚ she was able to buy the product through the app‚ and days later it was delivered to her doorstep.

Source: Flickr

Why am I telling you these stories? Because industry pundits predict that rapid technological and digital advancements will come at the cost of brick and mortar stores. However‚ I believe that high street stores are not coming to an end; the slow pace of growth in the e-commerce sector breathes a new lease of life into the retail sector. 

As consumer behaviour‚ spending and demographic profiles change rapidly‚ retailers need to adapt to better serve the customer through multiple channels‚ rather than using a single touch point for selling products.

Source: Flickr

The rise of social media is encouraging retailers to explore novel ways of reaching out to consumers. Retail players are trying to spot the change in consumer trends‚ seizing every opportunity to merge their physical entities with their virtual platforms to delight their customers.   

Amidst rapidly changing trends‚ what can retailers do to survive and sustain their shops? Our recommendations include the following:

‘Watch to buy’: leverage advocacy mediums and cater to customers’ needs 

Nowadays‚ consumers keep tabs on products through various mediums‚ like pop-up adverts on the web‚ touch screens in shopping malls‚ digital hoarding platforms and various other locations. Retailers have to leverage these mediums‚ by offering services to customers that drive a multi-channel experience from watching to buying. 

To do this‚ retailers can take the ‘stores only’ model and transform them into distribution centres‚ pickup sites and return locations‚ enabling them to provide the complete experience right from watching‚ to purchasing‚ collecting and the after sales service if required.

Move from customer satisfaction to customer delight by developing the value chain

Savvy retailers understand that the value chain is imperative to building a loyal customer base‚ preventing them from being poached by competitors. However‚ most digital tools like smartphone applications are focussed on customer satisfaction rather than delight. So how can brand’s incorporate this into their retail mobile strategy?

One example would be to push app notifications when a particular product arrives at a store nearby to the customer’s residence‚ or inform the customer through watch notifications about discounts being offered on the products he/she wanted to buy. 

The key is to show the consumer that the brand ‘cares’ about them and their needs‚ by providing a meaningful shopping experience. For instance‚ US retailer Wal-Mart invested in technology to gain better customer insights and segmentation capabilities‚ allowing them to tailor products and the way it sells them. In doing so‚ they could secure higher revenues and build brand loyalty. 

Balancing digital and traditional investments

One of the perplexing dilemmas that retailers today face is the huge capital requirements of investing in digital medium capabilities‚ such as app development‚ website design‚ lucid UI’s (user interface’s)‚ data monitoring and collection‚ as well as enhanced customer communication.  

However‚ retailers also need to focus on traditional mediums like maintaining requisite inventory‚ by investing in seamless supply chain management. In order to gain an advantage over both‚ retailers should develop an intimate understanding of their strengths and weaknesses in both mediums‚ aligning these to consumers’ needs‚ demands and tastes to judiciously balance their investments.

It’s easy to assume that digital advancements will overshadow traditional bricks and mortar‚ but when taking a holistic view the verdict is clear: customers would rather have more channels to watch‚ buy and claim refunds from‚ giving them flexibility when shopping with their favourite brands. As such‚ retailers need to strengthen every channel in their purview if they wish to usher in delight on the faces of their customers.

References:

http://www.strategyand.pwc.com/perspectives/2015-retail-trends