Future-proofing retail – going back to basics
As the retail industry recalibrates for the digital era, it is increasingly technology that is receiving the most significant investment.
According to one report, 85% of retail CEOs are investing in mobile applications to improve the customer experience, with established high street brands such as Next upping investment by 25% in online and digital to £50m.
Ultimately, whether digital-only, established bricks and mortar or challenger brand, retailers are seeking new ways to attract and retain consumers. A mad rush to abandon any physical presence is not the answer according to Clicks and Mortar – the fight for the future of retail, a new report from VMware. It states that customers value simple, easy ways to shop over an all-in digital approach, with almost half of consumers surveyed currently stating they still do most of their shopping in store.
Does that mean that retailers’ digital investments are wasted? Definitely not – one in four respondents to a separate VMware survey were willing to accept businesses delivering below par experiences while experimenting with new tech in the pursuit of improved services. However, that’s not a free pass to implement interactive apps or digital experiences – fundamentally, retailers need be continually thinking about how they can engage with customers. So how do you connect with an audience that is less concerned about how that’s achieved?
A better customer experience
It’s important to take a step back and understand why we have this drive for digital. At its heart, it’s about delivering an improved customer experience – but then what isn’t? Most retailers, and indeed businesses generally, talk about connecting with customers, but when it comes to shopping, what does a positive, or improved experience mean?
Based on the findings of Clicks and Mortar – the fight for the future of retail, it’s a simple, easy way to shop, with transparent stock levels, more choice when it comes to delivery, and straight forward ways to return items. In fact, clear stock visibility (38%), simple returns (30%) and one-hour delivery (29%) were all rated as more important investment areas than interactive apps to try on products or clothing (17%) and entertaining in-store experiences such as augmented and virtual reality (7%).
Being able to instantly see if an item is available; multiple and straight forward ways to send back unwanted items; fast delivery – all things that top online retailers (more specifically, Amazon) do. So what consumers are asking for is for the online experience to be the complete retail experience – not something they only get when they use a device, but when they go in-store, or via social, or to a pop-up.
They may not care about it, but they need it
This idea of mirroring the digital shopping experience isn’t particularly new – ever since traditional retailers started to realise they weren’t going to be able to beat these new entrants, there’s been talk of bringing online practices into bricks and mortar.
The difference now is that we have the technology to deliver it. Because even though they might not incorporate augmented reality or virtual outfits, these innovations all need a resilient technology infrastructure.
That means retailers need to prioritise the right investments that will contribute to the overall customer experience in store. They need to determine what adds value to customers, while at the same time planning for the future.
What does that future look like? Well, despite numerous negative headlines the high street is not dead. As highlighted, the retail store remains the most popular way of shopping; it’s also the most valuable, with in-store shoppers spending an average of £197.80. Compare that with those that consider themselves as mostly online buyers, currently one fifth of respondents, spending an average of £167.30.
That said, just because customers may not care for innovative means of shopping right now, but that doesn’t mean it won’t become part of the way they shop in the future. Consider how quickly online shopping has become the norm; just as it has eaten away at high street, social and mobile will continue to have increasing influence on shopping behaviour.
While traditional high-street retailers may have been slow to react to shopping online, held back in part by legacy systems, they cannot afford to have the same thing happen again as younger demographics become more influential and, most importantly, increase their spending power.
In order to prepare for this, any technology investment must be future-proofed, even if its full capabilities will not be deployed right away. UK consumers admit to not fully understanding emerging technologies, according to VMware research, but as knowledge improves, so we will see greater consumer acceptance of an array of technologies and, through them, different ways of shopping.
The keys to retail success
In practical terms, there are four steps retailers need to take to ensure success now. At the head of the list is knowing what experience their prices dictate. It’s still the deciding factor for the majority (70%) of shoppers, so the experience needs to justify it. Shopping with a discount or budget retailer, customers will accept a more no-frills approach, but even as prices reach a more mid-market experience, the expectation is for a much higher standard of interaction.
Empowering both employees and customers is also critical. It’s about knowledgeable employees being able to support customers – whether it’s in person, via chat or on the phone. So often, being unable to provide the right information on-the-spot isn’t down to a lack of willing on the part of the employee, but a lack of the system being available from the retailer.
Closely linked to that is offering the channels customers will use, not the ones retailers think they will. That means being experts in the ones which deliver revenue and investing accordingly. Integrated social commerce with an AR app might be a goldmine, but it could just as well be in-store with employees that can take payments using mobile devices where the customers are stood, rather than at a till.
Finally, retailers have to protect customer data. Consumers are more aware than ever before of the power of the data, and their rights to privacy and security. As retailers become increasingly digital, the risk of data breaches grows, and any shop that fails to adequately demonstrate how they are using and securing data responsibly will struggle.
Basics, underpinned by future-proofed technology
Consumer expectations have increased beyond all reckoning. Whether an established high street presence, a challenger brand or a digital-only disruptor, retailers that want to stay in business must be using and investing in technology now, both for today and the future. It is the only way that they can be sure they are well equipped to capitalise on emerging trends becoming the norm as they gain consumer acceptance, while at the same time delivering the simple experience consumers are demanding now. Without that foundation, they will struggle to meet even the most basic of expectations.
