There was a time when traditional retail was all about stocking products customers might have wanted, letting everybody know through old-school mass-market advertising what was in store, and when prospective customers visited, making it as easy as possible for them to buy.
Today, with the rise of the mobile connected consumer, the growing penetration of new technologies and a purchasing process reinvented through social collaboration, retailers face a more challenging, complex environment affected by a complete disruption of the traditional retail business model as we know it.
Today's empowered, connected consumers demand navigating the evolving path to purchase through multiple, predominantly digital touch points -- sources they refer to before, during and after shopping. As Bain's Global Retail Practice Head Darrell Rigby clearly states, "Customers want everything. They want the advantages of digital, such as broad selection, rich product information, and customer reviews and tips. They want the advantages of physical stores, such as personal service, the ability to touch products, and shopping as an event and an experience. Different customer segments will value parts of the shopping experience differently, but all are likely to want perfect integration of the digital and the physical."
But how does this work in practice? Let's take Amanda for example. She needs some last minute clothing for a work trip. Few years ago she would have rushed to the mall, but today she starts her shopping directly from home through a videoconference with her personal concierge at her favorite store Luxa. The concierge listens carefully to Amanda's needs and makes some recommendations, while superimposing product photos on her avatar to show her how she would look like. Amanda selects some of the items, but immediately opens another browser tab to research customer reviews and prices. She finds a better deal at another retailer and places the order that will arrive at her home just before the trip.
After some thought, she buys two items from Luxa online and drives to the nearest store to try some additional items. When she arrives a sales associate greets her by name and walks her to a dressing room already stocked with her online selections and some matching recommendations. Amanda likes a jacket, so she scans the bar code into her smartphone and finds the same jacket for 50$ less at another store. The sales associate offers to match the price and encourages her to try on some additional accessories. To make sure they truly match, she sends a video and pictures to her closest friends, asking for their opinion. They love them. She collects the items she wants, pays with her smartphone using some previously downloaded coupons and returns home.
Think this example is futuristic and innovative? Not at all. All the technology is already available, but the main challenge still remains, a conservative industry that needs to unstuck from analog. Omnichannel retailing is a fairly new concept that refers to the development of a seamless approach to the consumer experience through all available shopping channels, such as brick-and-mortar stores, smartphones, tablet computers, personal computers, direct mail, television, radio, catalog, and the like. Retailers that enable more touch points and focus on delivering a smooth, information-rich integrated experience will definitely benefit from higher share of wallet, brand equity scores and ultimately more sales. But... retailers need to pick up the pace of change and evolve their mindsets now, or they risk to be swept away.
Still not convinced? Here are seven (7) retail trends poised to shake up, redefine and drive the retail industry this year. Ignore them at your own peril.
1) Digital retailing will keep growing. The rise of e-commerce now approaching $200 billion in revenue in the United States alone may result in smaller stores (microsizing) and more store closings in months to come. Convenience, price transparency, free shipping, access to more product information, among other benefits, will keep driving people to buy more online, even though more ecommerce sites will also set up shop offline (Ex. Warby Parker).
2) Social Networks will become shopping platforms. Social media has allowed brands to talk to customers and market their products, but in the coming months you can also add "selling" to the list. Shopping functionalities in the social space such as Facebook's and Twitter's "buy" buttons are just a glimpse at the upcoming social shopping experience that will allow consumers to complete purchases much faster.
3) Data becomes more powerful and accesible. "With big data and analytics adoption growing, a wealth of strategic information becomes available to retailers of all sizes that will allow them to know their customers better and design better, customized shopping experiences." says Adrian Pelaez, Chief Digital Officer at Wind2share and Director of Communications at SOWEB. "The most exciting opportunities will come from tapping into real-time big data analysis that will take retailers close to delivering a real 1-to-1 personalization for customers while they navigate all touch points." he added.
4) Boomers and millenials will continue to heavily influence retail. The two most prominent generations -- baby boomers and millenials -- will continue to drive retail with their needs and preferences. Especially with the dynamic, connected Gen Y, retailers need to invest in mobile, robust order fulfillment systems and fast, quality customer service to serve this demanding market segment.
5) Localization will be more important than ever. Retailers that customize their merchandise and stores based on the needs of local communities will reap great benefits. Successful case studies such as Target, Chipotle and Starbucks show the potential of this strategy that will be adopted by more stores in the coming months.
6) Mobile continues to grow as part of the shopping experience. Mobile is increasingly dominating the digital world and adoption shows no signs of slowing down. To date more than half of the world population are mobile users. For retailers this translates into more opportunities to reach customers through smartphones and tablets. Expect to see more mobile loyalty programs, as well as convenient mobile services such as Mobi2Go mobile ordering and payment solutions (i.e. Apple Pay, Google Wallet).
7) Retailers with omnichannel strategies will continue to drive. Retailers that embrace multiple channels to serve customers will definitely be among the most successful ones. Successful cases such as Macy's click-and-collect have not only proven that omnichannel strategies can increase spending per customer, but also improve customer satisfaction levels if implemented properly.
Follow Ernesto Sosa on Twitter: www.twitter.com/ernestososa