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We’ve all seen the clickbait headlines spouting the end of physical retail as we know it, scaremongering that future competition will come from anywhere and everywhere. And it’s true, many of the big retail brands we’ve hung our hats on for the past few decades are considered to be in a vulnerable mature growth phase. However, with the rising trends in retail, there’s an opportunity for creative marketers to redefine their approach to retention and engagement to grow their customers.
Consumers Can Buy Stuff Everywhere
Today’s shopper buys wherever and however they wish, and they don’t and won’t differentiate by channel. To truly meet future needs, retailers must enable a seamless journey to purchase that embraces all channels, as it’s the crossover points between the channels where offer delivery can break down. The future lies in developing a true omni-channel presence including even social commerce and voice-activated commerce.
Wave after wave of new technology
Retail applications will always struggle to keep up with the pace of technology. Current trends in AI and machine learning enable pinpoint understanding of shopper behavior, offering marketers a chance to build personalized point-of-purchase engagement strategies. Stakeholders are wise to establish a wider vision of their strategy to determine the technology and training in which to invest today, for the future, avoiding the lag time and costs associated with implementing new technology.
The age of the empowered customer
Retail has evolved past simple supply and demand into a brave new age defined by the empowered customer. As mobile technology has removed the dimensional ties of both time and space, the customer now controls the marketplace. Retailers must be open for business wherever and whenever the customer wants. The flipping of the traditional relationship revolves around a reciprocal trade off in which the retailer provides value to the customer (product, experience, saving, convenience), who in turn provides value to the retailer (repeat business, feedback, advocacy).
If being the cheapest on the market isn’t your model, then your offer must evolve to provide another reason for customers to choose your brand. This could entail a more convenient delivery option, the development of an aspirational or inspirational brand label, a leading-edge personalized reward scheme beyond simple transactions, the promise of a retail experience like no other, a true individualized experience or even a commitment to an ethical cause.
Convenience has become a fluid concept
Simply put, convenience now resonates as strongly with many consumers as price historically has. The main difference is that convenience is more fluid and varies by customer, by product category, and even by mission. Knowing which interpretation of convenience to build into your business model to appeal to the needs of your target customers, while being able to deliver on convenience operationally, will define the level of your future success.
The role of the physical store has changed
Although the online Fast Moving Consumer Goods (FMCG) channel is projected to be worth USD $170 billion globally by 2025, this only represents a 10% total market share globally (Kantar Worldpanel). This statistic alone shows physical retail is alive and kicking - albeit with some adaptations.
In the future, the largest stores will not survive if all they represent is a showroom for a limited product assortment. The brands that transition well into this new age will offer a wider experience for shoppers, such as limited-time pop-up shops, personalized shopping excursions, or equipping in-store staff with mobile to help customers research items. This concept of retailtainment creates a more socially interactive shopping experience that appeals to the Millennial demographic, in particular.
Owning the last mile
The last mile of delivering the product into the hands of the customer is one of the most challenging aspects of carrying out a friction-free buying experience. In grocery, stores may look to an enhanced click-and-collect or BOPIS solution, or an Uber-style operation for greater flexibility in making that last mile more serving to customers. Eventually, driverless cars and drones may well become more viable as delivery solutions.
New sources of competition
As new technology breaks down the barriers to entry, traditional retailers have been confronted by a plethora of new competitors from niche online specialists and pop-up FMCG brand showcases to giant one-stop-shop digital platforms. While many may see this as the end of physical retail, creative marketers and stakeholders can aspire to the examples set by players such as Amazon and Alibaba. These companies’ commitment to the customer and the unerring use of customer data to formulate relevant offers set the trend in retail.
Partnership is paramount
When a retailer cannot deliver an effective connected experience, strategic partnerships with retail technology providers can better manage customer journeys. The skill is to choose a partner with a matched value proposition, while avoiding the creation of pain points along the buying process.
The unseen impact of gatekeepers
Flying under the radar and impacting both online and offline customer journeys is the role played by the new power brokers in retail: digital gatekeepers. These entities are the seen (Google) and unseen (cookies) paid and unpaid directors of search engine traffic that determine which sites customers are directed to and what they see when they land on a webpage. Voice-activated commerce devices are already becoming the next wave of key-holders. Gatekeepers are modern day offer curators and knowing how they influence the experience of your customer is a key management consideration.
Going forward, the retail brands that succeed will be those that put the customer experience at the center of their strategy to retain, engage and grow their highest value customers. Get the full Building a Customer-First Retail Future whitepaper now, or email [email protected] for more information.