ecommerce

Looking Ahead | Emerging Trends in Retail and Digital

A future looking perspective on Retailer's world in coming years and me making sense of the technology events around us.
Source: eMarketer Report by Ethan Cramer-Flood-Feb2023

Globally, the retail industry went through an interesting shakeup in the last three years. The share of digital retail revenue in total retail revenue saw a sharp climb in 2020, rising from 14.3% in 2019 to 18.5%. However, it later settled at 20.2% in 2023.

Investments in digital skyrocketed during the pandemic and many real estate deals were renegotiated or exited. Supply chain disruptions also brought Retailers on its knees. Now, the overall outlook for retail looks slow with a projected growth rate of only 3.9% in 2023. It is likely to grow at slower rate in the next four years (around 4% or lower).

In 2019, everything from Meta to Web3 and IoT were considered promising technology. Meta was expected to impact the sphere of customer experience, blockchain in the sphere of supply chain and so on. Then, last year, Generative AI caught the imagination of all businesses and retailers across the globe. As of today, it is known to impact digital retail through its ability to change marketing operations, customer experience management, and many more areas. McKinsey says the overall impact will be about $400 to $660billion a year. 

If you are a retailer and looking at this rebalanced and stirred-up world of digital and physical retail and wondering what new paradigms to consider while building plans and strategies based on everything (digital) around us, here is a little something I would like to share.

Three ideas to consider as you build your future digital and retail enterprise.

1. Think of media in its new avatar: 

Among all the business functions which are impacted by Generative AI the most obvious one is media and content because, well, it is ‘Generative AI’. The technology could increase the productivity of marketing function with a value of 5%-15% of total marketing spending says McKinsey

I believe about 50% of digital assets I call media (images, product data, styled photos, social posts, consumer engagement, email templates, web content, videos, audio etc.) would be supported by Generative AI in 2 years and therefore must be much impressive creatively.

If this was the case, all the current vehicles of production which develop this media (collectively referred as agencies) will have two key threats.

  1. Impact on commercial model: Commercial models will have to change when a high productivity and generative tool is available at every agency’s disposal.
  2. Accountability to generate real sale: Greater accountability will have to be introduced for all the marketing, media, and engagement. The function will be under pressure to justify the marketing ROI. The generative tools will not come cheap and not using them will not be an option and above all creativity will be commoditised for a while. Although, true creativity will outshine all. 

The older models of developing broadcast media, digital media and having your trusted entities to build, engage and broadcast will be significantly challenged. (Yes, there are many businesses still running on older models where high level of inefficiencies exist in marketing operations.

Generative AI will indeed introduce a new avatar of media that will be either truly creative or just mediocre and it will have new hybrid methods of developing it. 

One unit fully aligned to brand’s purpose and business objectives should ideally have all the capabilities to develop all this media (across channels) in its new avatar. 

2. Make store as your technology powered asset.

The massive re-balance of customers coming back to the stores after the pandemic while maintaining their new online activity highlighted the X factor of physical stores.

Of course, the focus on omnichannel capabilities increased during the pandemic. Only 8% retailers had omnichannel capabilities in 2018. It reached 52% in 2020 according to a 2021 survey. 1

Yes, some retailers (e.g., Canada Goose, Story, Neighbourhood Goods, Camp, Nike etc.) have excelled at the store experience2 but the experience is possible by technology powered convenience factor. To elevate the X factor requires retailers to re-focus their technology linked efforts in re-inventing the role of stores. For example, the use of dynamic pricing displays, catalog extensions, use of Generative AI to create virtual try-on of a product and making them available when they visit the stores and Generative AI enabled concierge staff to provide a superior experience to the customers are all examples of technology enabled convenience.

All such technology powered solutions will impact hard business metrics across ALL channels and not just stores and that indeed re-asserts the irrelevance of channel centric thinking in building action plans and strategies.Store is the best asset (and not a channel) to be powered through technology because it represents your business like no other entity does. 

3. Redefine customer service.

Elevated customer services begin with empowered employees.

Although Gartner predicts that 1 out of 10 workers in customer support will be replaced by AI by 2026 the essential action for businesses is really in retraining and empowering the remaining 9.

In an era when every customer begins to get massive amounts of synthesised level of information with a click of a button, the expectations from all businesses who provide their support/services for the goods or services they sell will have to be significantly information rich.

Businesses will be expected to operate at the same level of efficiency and information as the customers are used to in their personal and professional lives.

All businesses that have been working on initiatives to personalise customer experiences or build more effective marketing campaigns will have to do away with creating campaign calendars and think of constant communication in real time with your audiences.

All businesses that depend on large amount of customer data and run post facto analysis and hold control within their hierarchies, will have to empower customer service and support reps with real time synthesised knowledge about the customer and their services to address customer queries, complaints and literally every form of engagement.

It may appear daunting to stay on top of the technology trends and ignore the hyperboles but building practical action plan and strategy is possible. Being bold and knowing what is of the highest value to you and your customers alike is an essential part of it. The ability to deliver the technology benefits should be based on what value you want to deliver to your customers and not what the technology can do for you. Putting it simply at a visceral level – technology linked advantages as promised will only be realised when it significantly impacts (1)human experience (2) capability (3) convenience, and most importantly brings business benefits as a consequence of all three of them.

References

1 – Digital Commerce 360 Report in 2021

2 – Store is Media by Doug Stephens

Other Posts

Digital Minimalism | Exceptional Retail | Digital Retailer’s Litmus Test

OmniChannel Customer Experience

Globally when businesses talk about OMNICHANNEL COMMERCE few themes emerge very strong.
  • Start with the Customer Experience in mind
  • Build systems/digital infrastructure which are sustainable and ready for a dynamic  future. (REST APIs etc.)
  • Consolidate downstream systems (supply chain and services) to orchestrate a better customer experience(again customer!!!).

CustomerExp3
So what is this customer experience we keep talking about? How do you go about making a delighted customer from a happy one. Let’s take some examples of an improved OMNICHANNEL COMMERCE experience.  Let’s ask some questions to get some answers.

PRODUCTS AND PRICE

PDP2When a customer looks up for a product seen by him/her at your competitor’s physical store, will your e-store provide a detailed and rich product data to the customer? Will the product search show the product he/she is looking for(correcting his/her typos and still knowing what he/she wants? Perhaps land on product detail in a couple of clicks only? If yes, he/she is likely to switch from your competitor.

Will the product data consist of details he/she is looking for? (e.g. a demo video for a coffee maker, or a product zoom for a beautiful dress)

Will the product offer a better value for the money he/she is willing to spend? Will the product be available to him/her when he/she wants it? Perhaps on her way back home in the evening? Perhaps before the weekend social event?

Will the final product price inform about tax breakups and delivery options way before he/she proceeds to checkout?

If you want to look at an awesome review of a good customer experience of an online store – checkout this article by Christopher Ratcliff @ Econsultancy. 

BTW – Did you know that Thornton’s (cited in the article above) – an online chocolate retailer in UK  sold more chocolates online than their own physical stores during the same time due to a better customer experience.

STORE PICKUP

StorePickupIf the customer is looking for store pickup, can your system tell a customer – which of those SKUs can be picked up from which stores and also tell exact inventory for each? Can it also say upfront which items are generally on store pickup? Can it give a trending info about those items? Can it say, generally available in store A during Thanksgiving?

When a customer places a ‘store pickup’ order, is the business in a position to provide real time update to the customer when the ordered item is picked and reserved for a pickup in the specified store? Can you backfill the inventory immediately if the customer does not pickup in a stipulated time?

Does the email or sms alert provide a hyperlink to the customer to view the item status or update it or cancel it? Is it device optimized (aka phone, tablet, phablet, smartwatch, google play etc.) ? Better still is it a rich media message with personalized suggestions?

Does the email or sms contain a direct phone contact to a rep for any queries? Can the customer reach an agent faster who already has customer data preloaded before the customer shoots his/her question?

In a very rare occurrence(yes it should be rare), if the reserved item not available anymore or is identified being damaged, is the system in a position to provide alternative nearest store for a pickup proactively?

Better still, is the system capable to intelligently re-route/reshuffle shipments in real time -to make the promised item in the said store?

Does your store actively track and improvise store pickups process per day? Is your store staff mature and aware about online ordering process?

Does the store have a clearly laid out business process and system level tasks for the store reps to honour store pickup requests? Hope that the reps are not attending to store pickup requests while a REAL PHYSICAL CUSTOMER is waiting for his/her billing?

WISHLIST & GIFT REGISTRY

1425474422_PresentIf a customer is buying for a friend’s gift registry in a store, is the system capable enough to suggest the customer other related items of that gift registry created online? Does the rep know where are those items? Does he/she know how much is required(as specified online) vs how much is actually available in that store? Is the store rep empowered enough to do all of the above with a finesse, only a human can provide?

What about other gifting ideas for the buyer? What about suggestions relevant to the owner of the gift registry? Can you assign a store rep to talk about all of the above with knowledge and charm? Can he/she ensure it is not intrusive but only delighting?

Can the store rep, suggest the buyer if his/her item in the wishlist is on sale? Can he/she show the item physically in the store with buyer’s consent? Can he/she demo it?

If a customer is in a store and creating a gift registry(with a phone in hand), can the customer scan the barcode of the item via a mobile app and add that item to the gift registry? Can he/she look up for a related item and still add that item to the same registry? The related item may not be present in the store at that time.

RETURNS & EXCHANGES AND REFUNDS
ReturnsWhen a customer walks into the store to return an item which was bought online, does the store rep know about the order, the time and fulfillment method of that item? Does the store system have the capability to register this return, ship to applicable DC and perhaps offer a replacement item right at that moment? Can the replacement sale be linked to the original order?

When a customer initiates a return of the item, can your system capture customer friendly version of “reason data” and also let merchandisers have intelligent insights on why certain products of certain suppliers are returned more than usual? Do you know why is it that customers from a certain region often have a relatively active return history?

When the customer looks at his order history, can he view the store location where he/she could return/exchange the item or have returned in the past? Could he have rated that experience immediately on his/her mobile device? Can he/she remember that store as a preferred store for all future purchases, returns and exchanges? Can all of this be done right at that moment by the customer? (immediacy and relevancy)

When a customer at the last moment decides to pickup the order from store B instead of store A,  can the system offer this flexibility to the customer to cancel 1 pickup and reorder the same for another store pickup?

If the customer bought a product on promotion, can you make it transparent to the customer as to what would be the refund amount when the customer returns a discounted item?

NEXT GEN EXPERIENCES
UserProfileCan the retailer app (OR APPLE SIRI), provide a time and  distance dependent reminder to the customer for a store pickup(e.g. you are 1 mile away from the store which has your ordered item waiting for you. Yes the store is open until 8:00 pm, Lisa is at the CS desk”)

Can the NFC enabled loyalty card(in the customer’s pocket) help a retailer to identify the customer’s interests, purchase history, patterns, returns, exchanges etc without being intrusive? The loyalty card is not used to identify the customer but only personalize the offers, update about returns/exchanges when the store rep interacts with those users?

Can the augmented reality glasses (perhaps Google Glass V2.0) help store reps know customer before making a relevant offer? Imagine a “HIGH SPENDER” text floating on top of customer’s head when he/she is around the store? Imagine “LOOKING FOR SIZE M” floating over my head when a store rep looks at me in the store via Google Glass (or equivalent) ? You guessed it right – the loyalty card talks to store systems which feed into the store rep’s Google glass, and voila you have a smarter store rep via augmented reality device.

You would notice that in all of the instances sighted above (including the futuristic ones) – the overarching rule will and shall remain delivering value to your customers. Didn’t we know this already? Didn’t we know, technology is just an enabler? The use cases of customer experiences are plenty and limited by anybody’s imagination. The key to knowing them ALSO lies with your customers. I am sure you would agree.