Adapting to a new environment
Globalisation, the proliferation of technology, and the rise of the connected consumer are rapidly changing the environment we live in and many traditional retailers have been unable to adapt.
For example, in 2012, 54 retail brands were made extinct in the UK resulting in 4,000 store closures.
In essence the major threats to traditional retailers are:
- Products are becoming highly commoditised
- Price differentiation is increasingly difficult
- Customers are being spoilt for choice through globalisation and accessibility though increasingly mature digital channels.
As a result, customers are demanding more at every stage of their brand relationships.
Although many retailers will be unable to adapt, brands that focus on differentiating through superior ‘every channel’ or ‘omni-channel’ customer experience will have a greater chance of prospering in this new environment.
More Australians are shopping online
In Australia, our world is changing too and changing rapidly. Today:
- 30% of Australians now shop at least weekly online
- Five out of six Australians use the web to seek information about potential purchases before buying
- Online purchasing grew by more than 46 per cent between 2011 and 2013
- Average monthly spend of Australian online shopper is now $218
Also according to the CEO of the Retailers’ Association, “domestic online spending hit $2.8 billion, up 13.8 per cent, and International online surged to 20.1 per cent, to $1.7 billion between Boxing Day and the middle of January 2014” (local retail was forecast to grow at approximately 2% over the same period)
Changing how brand experiences are delivered
Today and in the future, shopping will look different. Very different. Consumer behaviour is changing which means the way we deliver our brand experiences need to also change.
Today, most retailers build experiences around individual moments at which customers browse, purchase and receive products and/or services. This is old world thinking, and will expose those retailers to diminishing returns through fractured brand and customer experiences.
The risk will only increase as consumers’ behaviours continue to adapt to a seamless digital future as indicated in the “What’s driving Tomorrow’s Retail Experience” (PDF) study by Motorola Solutions, in July 2, 2012.
As customers purchase across more devices and expect better service, retailers will need to provide a cohesive, coherent and actively curated and designed experience to maintain and enhance our customer relationships.
In essence, to be successful, retailers will need to:
- Think shopping instead of channels
- Focus on customer needs and desires – beyond products and into experiences
- Structure capability and capacity to meet these new customer experience expectation
So what does this mean for our beloved store?
Well this is not the death of the (bricks & mortar) store. It is the rebirth. To quote Interbrand: “The store, as the heart of the brand and its emotional centre, cannot be starved of investment and innovation, or appropriate levels of design, media and technology. It needs to be the showcase for interesting new collaborations to keep things exciting”
We have provided examples of retail brands below that are changing the way they deliver their brand experiences. To achieve success, these retail brands are investing in their stores by achieving the following five key outcomes.
1. Increase brand engagement through experience
Acustom Apparel is an example of a store that has increased their brand engagement by using digital measuring technologies so that their customers can build and personalise their own wardrobe. Everything is custom-fitted but you get to help in the design process.
The entire process take less than 15 minutes and you can pick up the finished product or have it sent to your home within 3-7 weeks.
Fashion retail giant, Nordstrom, are encouraging brand engagement by using social media as proof for potential buyers.
The company is tagging products with the Pinterest logo and posting photos of their in-store experiments on both its Facebook and Instagram accounts.
2. Extend the relationship with the digitally predisposed in-store
Burberry unveiled its largest and most technologically advanced store in the world in London’s Regent Street in 2012.
“The Regent Street is the brand’s most technologically advanced in the world, allowing customers to experience the brand through a journey of digital and physical experiences.”
3. Improve the utility within the shopping experience
Sportsgirl Explore is an augmented reality application created by IE. The app was designed to provide access to the Sportsgirl magazine ‘The Daily Us’, to give app customers an augmented reality interaction with magazine products in-store.
4. Convert intention directly into sales
Sneakerboy has created an innovative digital retail model that blends the tactility of a physical store with the efficiencies of the Internet.
The store houses no purchasable inventory on site, only a range of samples in various sizes for fitting purposes. All transactions are processed via a single web platform.
Sneakerboy has no fixed points of sale. Instead, customers check out via a Sneakerboy app (on their own phones or in-store iPads) that remembers their shoe size, payment references and purchase history.
“Young people know what they want; they are used to controlling their own environment, they shop online. I think they should be able to do that in the store as well. Our customers can come in, see an amazing range of products that are relevant to their tastes.
They can touch it, feel it, try it on, then scan it themselves, check if their size is available, then buy it from an iPad or phone and it will be delivered within three days,” explains Chris Kyvetos, founder of Sneakerboy.
5. Ensure that the a retailer’s digital and in-store experience is singular and compelling
The Nike Action Sports interactive experience is digital solution with an engaging customer experience at the forefront using RFID technology, tablets and banks of TV screens.
An iPad allows customers to purchase their desired product online after leaving the store. If a size or style is unavailable, customers are provided with a QR code, email or MMS with links to the Nike online store.
Source: Nike – Action Sports
The future is bright for those retailers who can harness the technology of today to create the experiences for tomorrow’s consumers. Maybe we should take a leaf out of John Lewis’ book and create a Business Accelerator Fund for our very own retail businesses.
David Pisker - Head of Customer Experience, Officeworks
David Pisker, Head of Customer Experience & eCommerce at Officeworks. David has almost 20 years experience delivering customer-focussed solutions across a variety of industries including Retail, Automotive, Tourism, Real estate, FMCG, and Wagering. After cutting his teeth at McKinsey & Company, David worked agency side running Tribal DDB, NetX, and IE as well as holding various senior management roles both locally and overseas.