In the last few months we’ve had news of an array of store closures – including 100 from Marks & Spencer and 31 House of Fraser, in the UK alone. The United States isn’t safe either, following an announcement that department store Sears will shut 42 stores across 26 states in July and August. In this piece for RetailTechNews, Manu Tyagi, associate partner, Infosys Consulting, tells us that it seems there may be more turbulent times ahead as brands reflect on the future of brick-and-mortar.
Increasingly, we’re seeing pressure from more nimble, innovative e-commerce providers that are harnessing new technologies to deliver better customer experiences, more efficient supply chains, more choice, and lower costs.
Yet, there is nothing preventing traditional high street retailers from harnessing these same technologies. The problem though, is how to identify and prioritise the right ones from the vast choice available, and how to fit them into an overarching modernisation strategy.
By focusing on the technologies that can bring the biggest transformational change, and which directly solve the most pressing problems facing the industry, we can identify four key areas: generating greater customer loyalty, increasing footfall, improving sourcing/supply chains, and the impact of automation.
The importance of customer loyalty
With so much choice and convenience in e-commerce today, retailers must fight for loyalty like never before. They can’t solely rely on the strength of their brand; they also need to support this with a wealth of customer data that enables them to get the right offers in front of the right customers at the right time. Data management and analytics are obviously important, but they must be combined with a strategy that drives footfall into their physical stores.
To stand out from the crowd, retailers need to differentiate their customers on a highly granular level, since each shopper responds to different offers and loyalty tactics. Simply having customer data isn’t enough – retailers need to segment, analyse, and score a range of information from consumer data, purchase history, search or purchase location, device used, product classification, price sensitivity, and more, to determine the personalised, real-time offer that gets them over the checkout line.
Increasing footfall through convenience and technology
E-commerce will always win on convenience, and usually on price. Technologies such as augmented (AR) / virtual reality (VR) and gamification show immense promise, especially in the way they encourage customers to engage with products, but they remain more talked-about than implemented. Change, however, is coming. Increasingly, we’re seeing retailers experimenting in more and more directions – not least with AR-based gamification, where consumers in the retail store can aisle-hunt for the best deals and promotions using the retailer’s app on their mobile phones.
Based on their loyalty profile, purchase history, and brand propensity, the retailer can offer specific, personalised promotions to consumers using AR to generate brand excitement, especially around new launches or a new product range. But even more importantly, this helps drive more footfall to the store by creating a fun and enticing experience for high street shoppers.
Meanwhile, technologies such as interactive displays, magic mirrors that Bourjois are using, and Kinect technology that enables shoppers to try on virtual clothes, are starting to make their way onto the high street. If retailers can make the shopping experience relevant to the 21st century consumer, they have every chance of reigniting shoppers’ interest in visiting the physical store.
Behind the scenes: The supply chain
Customer experience often focuses on what people see when they walk into the store, but the workings behind the scenes are just as important. Technologies such as AI, the Internet of Things, and predictive analytics are crucial for improving supply chains and making sure that retailers have the ability to monitor and react in real time, to ensure they make crucial efficiencies and don’t miss an opportunity.
Less talked about, but just as important, is how technologies like these can improve the sourcing and delivery of goods and raw materials, bringing down costs and improving accountability. Consumers today are more aware than ever of their impact on the world. As a result, procurement is under scrutiny to ensure ethical sourcing throughout the supply chain. Technologies like predictive analytics, geolocation, eco-technology and, of course, blockchain, are crucial to ensuring end-to-end ethical sourcing across the whole supply chain – as well as enabling the greater product personalisation that customers are increasingly demanding.
There’s also the more mundane, but equally essential, issue of making sure that the shelves are stocked. There is no excuse today for lacking items that customers want. If it’s a manufacturing problem, a shipping problem, fuel protest or transport strike, technology can find a way around these by identifying them before it becomes an issue or by suggesting an alternative solution.
The impact of automation
Automation touches every aspect of retail operations. These range from customer-focused applications such as self-service checkouts, touchscreens with catalogues, interactive kiosks incorporating chatbots, and magic mirrors leveraging AR techniques – to back-office applications in, say, supply chain and merchandise planning. Automation can bring about instant improvement in areas such as order management, warehousing, packing and delivery operations, logistics and merchandise planning, and pricing. It can’t be stressed enough what a differentiator automation can be – it’s the reason why once-struggling Ocado has evolved into the thriving business it is today, for example.
As well as implementing automation in the warehouse, retailers should be incorporating automation and artificial intelligence into their customer touchpoints. This will enable you to make radical improvements to the customer journey, and help to create more powerful ‘moments that matter’ to surprise, delight, and inspire the loyal consumer.
Preparing for a data-driven future of retail
There is still a huge emphasis on brands to have and maximise their presence on the high street. What retailers need to realise, is a huge part of this relies on maximising their data so they can develop a comprehensive understanding of their customers and respond in the most relevant way.
Brick-and-mortar is in a struggle for relevance with e-commerce; yet it trumps online in so many different ways – from the chance to view and ‘e-model’ items in real life, to the opportunities of providing great standards of personal customer service. Yet these are rendered nugatory if you can’t get the punters through the door; for that, you need to create an immersive, engaging, and faultless experience.
Putting the customer experience first, focusing on convenience, embracing new technologies, investing in the supply chain, and leveraging automation are all important parts in the jigsaw that work towards establishing brand presence for the long term.
Personalisation shouldn’t just be a buzzword for retailers; it should be the focus of all their efforts. Data plays a huge part in this. Having data, collecting and collating information, understanding what that data tells us and means, and responding as a result, are all essential elements in helping build the customer profile and enable bespoke engagement. The future of retail truly is data-driven – and the sooner retailers can acknowledge this and react, the better.