While the jury is out on whether we are seeing the beginning of the end for pure play online retailers as some industry experts and academics are predicting, there is increasing evidence that a transformation is taking place in the traditional retail industry, suggests Warren Billington, managing director, Australia, New Zealand and Southeast Asia, Signal in this opinion piece.
Hypotheses about the death of online-only retail centre on several points. Firstly the ever-increasing costs of last mile delivery, highlighting Amazon’s lack of significant profit and pointing to the opening of physical stores by US brands including Rent the Runway and Warby Parker. And secondly, the fact that over 90 per cent of retail spend in Australia still happen in physical stores.
While both of these points indeed represent big challenges to pureplay online stores, they’re not the only ones. The potential threat – but also the opportunity – for retailers undoubtedly includes the raft of digitally driven innovative new technologies that are poised to transform the traditional retail experience and drive a true omnichannel customer experience.
I use the word ‘experience’ deliberately because the consumer experience in many respects is the future of retail, and the experience will interconnect the on and offline worlds. The way we are shopping today is already very different. Smartphone penetration has blurred the lines between the physical and digital retail experience with alarming speed, with last year’s Black Friday sale at Target proving this point. Ten percent of online revenue from the day came via consumers shopping on their smartphone while in store. This was further amplified by Target enabling consumers to build a Black Friday shopping list in their mobile app, confirm inventory at a nearby location and identify where to find it in the actual store by using indoor mapping technology to drive speed and efficiency.
We can expect that the technology-driven shift to a seamless customer experience will only continue. The options are extraordinary – browse on-line and pick up in store; browse in store and deliver to home; browse in-store and discount to item or related items on line; identified by iBeacons, sent personalised discounts and recommendations online; pay with a biometric system using individual loyalty discounts in-store; or simply shopping, in-store with geo-located details. One thing that is very clear – the retail renaissance will most certainly be experiential.
In many respects this is taking the best-practices from pure play online retailing, but extending and amplifying them to include and connect with the offline world. With Amazon and Google both opening brick and mortar shops over the last 12 months, albeit for limited periods or in limited markets, it indicates that even the online behemoths are increasingly focused on the customer experience and keeping one eye on what the future of retailing might bring.
Many of the technologies that are being touted to drive this retail revolution may not end up being widely adopted, but retailers are experimenting to determine which ones are worth investing in for the long-term. There are many options to chose from including iBeacons (already becoming more widely adopted) RFID, Biometrics, Voice Recognition, GPS, 3D printing, Virtual Reality, Robotics and even MRI in use. While all offer vastly different approaches to customer experience, they all have one thing common: they require the ability to interconnect and apply data from the on and offline worlds.
It’s this connection of data from online and offline worlds that has become the new Holy Grail for retailers seeking to deliver a single, connected and always-on customer experience. This means working out how to best gather, organise and manage the vast amount of data available to them from the multiple and emerging channels in their offline and online worlds, and harnessing it all to secure insights that will enable dynamic marketing and in-store innovation.
In short, the ability to deliver a positive consumer experience will be wholly tied to connecting the many disparate data points across the customer journey. Retailers will need to navigate their way towards establishing a real-time single unified view of each of their customers so they can engage with them at scale and with certainty, to deliver the best possible retail experience. Truly knowing the customer is a huge challenge. But, the solutions to create a unified customer view do exist, and these solutions empower marketers with clean, matched customer profiles that they can control and use however they want, wherever they choose to create impactful, relevant retail experiences.
So while the assertion that “E-commerce companies are either going to open stores or go out of business” is exaggerated, what is clear is that the retail sector is on the cusp of a wholesale technological driven metamorphosis. And it is certain that connected data will be the fuel that will power its transformation.