Yearly Archives: 2017


Survivor 2017: Retail Edition

Survivor 2017 Image

We’re being bombarded daily by prognostications of retail doom and the imminent death of bricks and mortar retailing. If one is to believe the pundits, in the near future shopping strips and regional malls will be abandoned decaying structures, reminiscent of Alcatraz.

Admittedly, the advent of digital and 24/7 pervasive ecommerce has enabled a seismic shift in consumer shopping habits. It’s important to note that digital didn’t create the desire for “always on” shopping, it simply enabled it. Retailers that complain of being marginalized in an ever increasing digital commerce environment simply need to ask themselves, “Why is this happening?” Ask yourself: Is your current format the most efficient way for consumers to explore, learn and buy your products? Do you engage, excite and educate shoppers when they invest their precious time in your stores? How are you exceeding their expectations? Are you saving them time, creating value or offering emotional reward in their shopping journeys? If you aren’t doing these things, it’s not your competitors or Amazon’s that is killing you – it’s your lack of customer-centric focus!

On My Terms

Customer centricity has become an over-used catch phrase, and the problem with such catch phrases is that once we know its meaning, we usually stop asking the deeper questions. Rather than actively study the complexity and concepts that underlie the “shorthand”, we profess the phrase and assume others will know the specifics. Clienteling, CRM and Loyalty are some of the worst offenders.

Simply put, customer centricity means that your organization’s physical environment, culture, staffing, technology, assortment and financial decisions are all made from the perspective of the customer. It requires taking absolute responsibility for the customer’s satisfaction through every possible step of their preferred shopping journey. It means solving their “problem” on their “terms”.

To more fully understand the future of retail and the increasing role of digital we need to do a better job defining what is meant by “RETAIL”. Merriam Webster defines it as “to sell in small quantities directly to the ultimate consumer.” The definition implicitly contrasts retail to wholesale but tells us nothing of how consumers interact with sellers to conduct commerce. Clearly, the anticipated demise of retail is not referring to the end of commerce, but instead it refers to a transformation of how and where commerce is conducted.

Clearly, the anticipated demise of retail is not referring to the end of commerce, but instead it refers to a transformation of how and where commerce is conducted.

Unfortunately, we lack the precise lexicon to accurately describe retail in all its various forms. The way consumers engage with their grocer is unlike how they purchase a new outfit, or engagement ring, or laptop or new kitchen. While all of these transactions are technically “RETAIL”, the path to purchase, underlying consumer behavior and level of engagement differs greatly. Those retailers that succeed in the years ahead will digitally transform their businesses to address the changing behaviors of their increasingly demanding customers.

Repeating History

While the pace of change may be accelerating, retailer have always adapted to the influences of new technology and resulting social change. Since the 12th-century merchants have sold curated products at organized markets or bazaars, using many of the same basic retailing principals we see today. The proverbial market square then, like the high streets and regional malls of the recent past, have always been an important aspect of daily life — further enhanced by an environment that creates connection with the community. Then like now, curation, connection and commerce were fundamental elements of a positive retail experience. What has changed over the centuries is the efficiency, transparency and scalability of the underlying “selling platform” that supports these three elements of the retail process.

Then like now, curation , connection and commerce were fundamental elements of a positive retail experience. What has changed over the centuries is the efficiency, transparency and scalability of the underlying “selling platform” that supports these three elements of the retail process.

In the past, merchants and traders conveniently assembled in town squares and along high streets, adhering to quality standards and transacting on a uniform currency. As new technologies like automobiles and the influence of media reshaped societies, that retail platform was usurped. Starting as early as the late 1950’s large regional suburban malls and shopping centers reinvented retail, offering improved experiences. With hundreds of stores, these shopping centers resulted in more relevant curation and selection, fostered social connection (restaurants, amusements, and theatres) and took advantage of efficient infrastructure to enable commerce (POS, payment, merchandising systems, ERP, etc.). In towns across America, high street shopping virtually disappeared and thousands of previously vibrant retailers shuttered their stores. Retail didn’t die, it simply evolved to meet the changing needs, tastes and lifestyles of its customers. For those multigenerational neighborhood retailers it felt like a “retail apocalypse”, but it was just retail adapting to the market and technological capabilities of the day.

Similarly, the normative shift that retail is undergoing today is the result of new technologies transforming the curation, connection and commerce equation. Online search, marketplaces, curation apps, location-based marketing and subscription retailing are the digital equivalent of a village markets and regional malls. Digital is transforming the social connection element as well, especially for younger shoppers. Digital natives experience their physical and digital lives simultaneously, creating real-time human connection and “shop-alongs” with their friends. These shopping journeys are aided by chat, digital cameras and myriad social platforms. For these digitally savvy consumers, omni-channel is assumed and flowing in and out of the online and physical experience must be frictionless, transparent and fun.

So, will the growth of digital decimate bricks and mortar retailing? That depends…

How Will Retail Survive?

Conventional retail selling platforms (stores) are capital and real-estate intensive and lack the agility to address dynamic changes in market demand. Double digit decreases in customer traffic and a shift toward digital commerce has many retailers closing stores and reducing staff. This might be a prudent response if one sees the growth of digital simply as a shift from one retail selling platform to another. An argument can be made that for many categories (i.e. consumables and other regularly purchased products), disruption will be swift as IoT platforms like Amazon’s Alexa, Samsung’s Smart Refrigerator and HP’s Instant Ink will address the consumers need for convenience. However, for many more retail categories, blending digital consumer engagement with the physical store will best address the evolving needs and desires of their customers.

A recent study by Sapient Razorfish concluded that while most consumers start their hunt outside the walls of the store, between 53-67% of consumers preferred shopping in physical stores.

A recent study by Sapient Razorfish concluded that while most consumers start their hunt outside the walls of the store, between 53-67% (age-based) of consumers preferred shopping in physical stores. This is particularly true when retailers invest in clienteling tools for their associates and focus on personalization, demonstrations, in-store events, and concierge level services. Let’s examine just a few different types of shopping categories to see how each will be supported by emerging digital and physical store practices and technologies.

Emerging Digital Solutions Image

Surviving in an era of technological change requires that the entire retail landscape be reimagined. Fortunately, retail has historically excelled at creatively adapting to changing tastes, behavior and economic conditions. Today’s retail leaders are redefining malls, stores, business models, experiences and organizational structures to exploit new digital opportunities and exciting new ways so they can engage the customer before, during and after the sale. There will undoubtedly be retail winners and losers in the months and years ahead, but those that survive will ultimately thrive by building innovative business models that meet the customer-centric demands of a digitally enabled in-store experience.


The Retail Maelstrom: Plotting a Course for What Comes Next

 

 

Retail is undergoing a customer-driven transformation and the pace of innovation is accelerating geometrically. This has technologists and retailers struggling with the same basic question: “With the explosion of promising new digital technologies and the shifting behaviors of omni-channel consumers, how do I know which technology investments will provide real immediate value?”

Every year the retail industry proclaims the next big thing — promising a new technology that will help retailers compete in an ever more challenging omni-commerce arena. Unfortunately, many retailers don’t have a clear picture on what is actually happening inside their businesses or what investments would insure a successful future. The complexity of changing customer demand and decreasing store traffic, online competition, BOPUS, DOM, showrooming and excessive returns are wreaking havoc with traditional operational and merchandising decisions. Simply put, “true north” is illusive and many are hopelessly guessing at what to do next. In an attempt to “stay afloat” retailers are testing myriad social, proximity-based, mobile, loyalty, clienteling, digital marketing, IoT or CRM solutions.  However they are seldom the result of charting a well-defined customer engagement strategy.

So, how does a retailer cut through the noise and hype? My recommendation: start by going back to the basics…

First: Understand the Customer

Retail has always been about people and relationships. Engage customers, solve their problems and take responsibility for their satisfaction throughout the entire “want-it, buy-it, and use-it experience”. Finding ways to create that satisfaction and delivering satisfying customer journeys is the foundation of a well- executed customer strategy. Success comes from knowing your customer and thoughtfully differentiating your service and assortment in ways that meet their individual desires. Every retailer has it’s own unique DNA and accordingly must have its own way of expressing itself in the lives of its customers.

After years of working with some of the world’s most successful customer-centric retailers, I’ve identified over 150 retail best practices, proven to differentiate the customer experience and drive significant incremental profitability. While it may sound heretical, it’s really not about the technology… it’s about the people! We recommend that retailers reflect deeply on what customers hope to experience from their brand and then select a half dozen practices/initiatives that drive customer satisfaction throughout each step of those potential customer journeys. Find the “easy wins” first and build upon those with future customer journey initiatives. Create a culture of extraordinary customer service and realize increased loyalty and revenue.

Second: Analyze the Math

Consider how any new initiative is likely to impact corporate KPI’s. Retail math is pretty simple. Revenue = (Traffic) x (Conversion) x (Average Transaction Value). While everyone knows that these KPI’s determine the health of a retail business, it is amazing to me how often technology decisions aren’t first run through these KPI filters. Any online or store-level solution is likely going to affect one or more of these metrics. Even small changes in any one will result in significant shifts in profit. The goal is to identify which practices will drive each of these factors. Analyze and identify how the solution is going to move these metrics and consider the investment based on those projected results. We strongly suggest building out more sophisticated Business Impact Models that consider all of the potential levers a solution may impact and using that model to measure potential and realized business benefit. Remember, just because your competitors are jumping onto the latest tech trend, doesn’t mean it fits your customer strategy or the KPI’s that matter most to your business.

Third: Test and Innovate with Technology

Select or build solutions with functionality that supports the desired practices and strive for minimal “friction” in adoption. Use agile methodologies to innovate and test new ideas that are consistent with the unique customer journeys you’ve prioritized. For example, if you are trying to drive appointment sales, consider the detailed workflows of customer communication, online scheduling, task assignment and other client-centric functions. Inducing a sales associate to use a new tool can be a formidable task if there is conflict with established norms. Getting staff involvement early is critical to solution implementation success. Be clear on which behaviors you are trying to influence and bring multiple disciplines together in gathering business and technical requirements. As for consumers, most won’t try new technologies (or download a retail app) unless there is immediate perceived value in doing so. If in-store mobile engagement is central to your strategy, consider how the interaction of staff can improve the customer experience through shared digital experiences. Always build or buy technologies that are intuitive and designed from the user point of view.

Disruption often leads to opportunity and retail is no exception. Plotting a course for what comes next requires a clear vision, a solid financial analysis and the application of innovative technologies. As one CEO told me, “managing business requires setting a well-reasoned course, with the right crew and vessel… then carefully steering around the rocks.”


2017: The Year of the Personally Curated Customer Experience

If 2014 to 2016 can be defined by the dawn of omni-channel retailing, 2017 may well be the year of the “curated customer experience.”

Always-on always-connected mobile technology is fundamentally transforming the way consumers purchase goods and services. However, with instant access to nearly infinite online and in-store options, consumers are fast becoming overwhelmed. As Barry Schwartz stated in The Paradox of Choice: “The fact that some choice is good doesn’t necessarily mean that more choice is better.” Striving to eliminate “noise” to make better choices, consumers are opting out of digital email programs in growing numbers and limiting irrelevant, burdensome digital messages. Traditional online search also falls short and the “browsing process” is often tedious and unproductive.

So, what do the time-starved consumers of 2017 want? Simply put, they want the retailers and brands they trust to intimately understand their needs and expertly solve their “problems.” They want to see limited but carefully curated options delivered in a relevant personal context, enabling great choices. And they want to be engaged consistently across all channels. They want a personally curated customer experience!

This experience is as important in-store as with any digital channel and is made possible by impressive technology advances over the last several years. To facilitate better customer-centric engagement, retailers are investing in big-data predictive analytics platforms, merchandise optimization tools, personalized offer and messaging platforms, next-generation e-Commerce and unified commerce engines, mobile POS and in-store clienteling tools, omnichannel order management and associate-to-customer mobile messaging capabilities. But stitching together these technologies is only part of the curated customer solution. Retailers must explore new ways to add value in this emerging omni-commerce landscape and redefine their vision of what it means to be a retailer.   

ONLINE AND MOBILE CURATED ENGAGEMENT

In 2017 we’ll see new ways to engage with online content. New “visual search” apps are leveraging big-data and cognitive computing platforms to predict which products best meet a consumer’s needs and lifestyle. These apps incorporate implicit “demand signals” gleaned from browsing/swiping behavior and match it with explicit preferences captured in a consumer app. The result is a shopping experience displaying highly relevant but limited choices that meet articulated needs. Developing the “taxonomy” for product and consumer attributes tied to sophisticated learning algorithms is still in its infancy, but these solutions are now achieving traction in apparel and furniture categories.  

ONLINE MEETS CLIENTELING AND IN-STORE CURATION

Clienteling is not new, but in 2017 we’ll see retailers seize the opportunity related to Omni-channel engagement and cognitive computing within their mobile clienteling initiatives. In some categories 70% of transactions are influenced by the online channel. Consumers are increasingly buying or reserving product online with the intent of picking up or trying on in-store.

Many retailers are experiencing a significant decrease in traffic so they are looking to more engaging personalized experiences to improve store relevancy. As traffic decreases, conversion and ATV must increase. Leading retailers are arming associates with mobile multi-dimensional customer, transaction and product tools that leverage predictive analytics to improve performance metrics. Deeper customer insights, captured online or in-store, feed automated curated recommendations and communication workflows. These same mobile clienteling tools prompt associates to periodically communicate with their best customers. By sharing personalized curated suggestions, associates inspire customers with ideas and new reasons to visit.

Originally Published in Retail TouchPoints 2017 Outlook Guide – January 2017 – For more information visit www.clientricity.net or [email protected]