Rapid change in the digital marketplace may give some retailers anxiety, but a closer inspection reveals how close retailing remains to its roots.
As retail executives take stock of the impact technology is having on their business and the challenges they face, an old adage may come to mind: the more things change, the more they stay the same.
Digital technology has transformed consumer behaviour and disrupted business models, yet retailing has not fundamentally changed.
Understanding customers and staying ahead of the competition have always been essential for success, and the sector’s digital transformation is not so alien when viewed in this context.
As executives ponder their challenges for 2018, the customer, as always, is at the centre of their thinking.
A key aspect of the digital revolution is the value consumers now place on ‘the experience’. That experience is measured not just against benchmarks set by other retailers, but across all digital interactions with product and service providers.
Across the region and globally we know that customers don’t distinguish between categories when it comes to setting their experience expectations. An optimum customer experience on a utility or government site may well set that customer’s benchmark when shopping for clothes or electronics online.
This is new: innovation best practice is no longer sector- or category-specific.
Understanding the experience factor
The experience factor has been elevated to a new level in the digital context. The customer’s concept of experience transcends the product or service; it includes every touch point that makes up the customer journey.
Successful retailers have always been in tune with customers’ needs. The difference now is the nuance of those needs and expectations.
The physical in-store experience is still a very important channel for product purchases, but online engagement has become the most important influencer for that in-store purchase.
At least 40 per cent of online shopping starts on one device or shopping channel and ends up on another. That means the final transaction is influenced by a customer’s cross-channel, cross-device journey. If that journey is less than seamless the customer may abort their intention to buy.
Retailers need to be highly aware of the growing role of mobile in the omni-channel mix. According to Adobe’s ADI Retail Industry Report for Q2 2017, traffic via mobile for US retailers will overtake all other devices by Q4 2017. Mobile-first shoppers have stepped forward universally, but there is particular growth in Asia Pacific. 44% of consumers in our region are currently using mobile shopping apps – the highest rate in the world.
Hyper omni-channel retailing
We tend to talk about omni-channels as if it’s a new thing, but it’s not. If you take an analogue view of omni-channel retailing, that might include advertising in the Saturday paper, perhaps a double-page spread of the latest deal, probably supported by TV and radio ads, and possibly a timely letter-box catalogue placement. Retailing has always been omni-channel; what’s different is that it’s now hyper omni-channel.
Customers are now exposed to a huge number of channels across multiple technology mediums such as social media, and those interactions provide much greater intimacy along the journey.
Retailers constantly need to rethink how they structure their offerings in the digital age. This means managing content across channels as well as designing their organisations – people and processes – for success.
Yet the core skills of knowing your product, knowing your competition and knowing your market remain as vital as ever.
Key differences for executives include the speed at which they now need to make decisions to deliver content and experiences across devices at scale and speed. Tools such as data analytics have become vital additions to their armoury in this quest.
This challenge is not lost on retailers, and executives in all retail categories are already making really smart investments.
As you look to the year ahead, it’s important to not feel overwhelmed. While the retail landscape may seem like it has vastly changed, it may surprise many to learn that, while e-commerce has been growing by 20 per cent a year for a decade, online shopping still accounts for just 8.5 per cent of global retail spending.
Retailers know what’s coming and they are prepared. Mobile is widely seen as a bridge between the digital and physical worlds. Adobe’s 2017 Digital Trends in Retail report found 79 per cent of retailers believe that “understanding how mobile users research and buy products” will be “very important” for them over the next few years.
Asked about the primary way their organisations will differentiate from competitors over the next five years, making the customer experience as “easy, fun and valuable” as possible ranked number one, with 34 per cent of respondents citing this as the single most important differentiator.
Out of a range of technologies including AI, voice interfaces, the Internet of Things and evolving payment mechanisms, “engaging audiences through virtual or augmented reality” is seen as the single most exciting prospect.
For the year ahead, I would nominate the following three priorities for retailers: understand how your customers want to engage with you; develop internal skills and resources to ensure you are equipped to meet those needs; and understand the entire shopping journey, regardless of how customers spend their money with you.
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