The changing face of retail

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The retail landscape is transforming, resulting in big names like Toys R Us closing their doors forever. While other household names, such as Foot Locker, JC Penney and Abercombie & Fitch, have announced store closures as the battle for consumer’s wallet rages on and e-commerce continues to go from strength-to-strength.

There is little doubt that the retail climate is challenging right now. The combination of rising wage bills, reduced margins and online sales outstripping the high street is forcing retailers to take stock of their bricks and mortar portfolios, according to Deloitte.  Technology is central in retailers’ fight to provide a truly immersive and personalized shopping experience to win back customers.

Personalization is a priority

Segment’s Personalization Survey 2017 found that US consumers are willing to spend more on their shopping experience if it was personalized – but retailers were wide of filling their expectations.

Forty-nine per cent of shoppers in the US survey said they made an impulse buy after receiving a personalized recommendation. Forty-four per cent will become repeat buyers after personalized experiences. So retailers have much to gain.

"Shoppers expect brands to remember who they are, whether they're on a digital channel or in-store. However, very few companies can deliver on these tailored experiences," says Peter Reinhardt, CEO and co-founder at Segment. “The brands who get this right will reap the rewards, as personalization and the customer experience will be the key differentiators for brands in the near future.”

A clever combination of technology and the personal touch is the golden chalice that retailers are chasing when it comes to personalization. Stores such as Harrods excel at personal service and ecommerce giants like Amazon know a huge amount about your retail behavior. Put the two together and you have a very powerful tool indeed.

Nordstrom, for example, is looking at consolidating its online and offline data, enabling in-store staff to access customer data in real-time to unify its personalized customer experience. 

Omnichannel selling

Omnichannel is another way of tying online and bricks and mortar stores together. Retailers have quickly recognized the benefit to be had of merging their stores with online platforms, sales channels and social media sites.

Today’s consumers demand to shop when they want, how they want and where they want. Customers want a seamless user experience at every touchpoint, regardless of where they choose to shop.

Artificial Intelligence (AI) is an important next step for retailers in bridging online and offline sales. AI will help retailers glean a 360 degree view of their channels, access real-time data on trends and demand – creating intelligent retail strategies to optimize different elements to maximize profits, whilst meeting customer expectations.

The bricks and mortar store, however, will continue to be the hub of omnichannel, according to JDA’s consumer report, despite a fall-off in in-store shoppers. To make stores a competitive differentiator against online pure-plays and attract more customers, retailers will need to embrace convenient and popular options, such as buy online, pick up in store (BOPIS) and buy online return in store (BORIS).

Say hello to voice shopping

Voice shopping is another curve ball for retail. The more consumers become confident with the use of digital personal assistants, such as Amazon Alexa, Apple Siri and Google Home, the more retailers will flock to offer voice shopping.
Voice shopping is expected to jump to a staggering $40 billion in 2022, up from $2 billion today, according to a report by OC&C Strategy Consultants, highlighting the disruptive force voice shopping will be on retail.

Amazon is leading the way with forty-five percent of grocery orders replacing existing store or online purchases. The majority are being made through Amazon Fresh.

“The speed with which consumers are adopting smart speakers will translate into a number of opportunities and even more challenges for traditional retailers and consumer products companies,” explains John Franklin, Associate Partner, OC&C.
Retailers will need to develop skills or connected apps that integrate voice offers, according to OC&C Strategy Consultants. There are surprisingly only 39 apps within the voice shopping category. At the same time, they will need provide users with inspiration, such as recipes, to drive consumer spending. 

AI & VR – transforming how we shop

AI is revolutionizing the retail space, optimizing business operations and providing a smoother customer experience. It enables retailers to better understand customer behavior to drive sales, anticipate demand and provide individualized service.  And this is only the beginning.

German ecommerce site Otto, for example, is using machine learning and AI technology from Blue Yonder to analyze data from some 3 billion transactions to predict customers’ future orders. The customer benefits from shorter delivery times, Otto from improved planning and lower warehouse costs.

US department stores Neiman Marcus is using a so called ‘snap, find, shop’ feature that enables consumers to take a photo of anything they like and the app will search out anything the same or similar in the store’s inventory.

The rise of AI will develop deep learning algorithms providing powerful insight into each and every consumer. The next big step will be a truly immersive virtual reality (VR) experience that will can create a virtual reality store with personalized products chosen specifically for you.

To find out more about changes in the retail sector, listen to our podcast with LVMH on reimagining luxury shopping in the digital era.
Jan Howells

Jan has been writing about technology for over 22 years for magazines and web sites, including ComputerActive, IQ magazine and Signum. She has been a business correspondent on ComputerWorld in Sydney and covered the channel for Ziff-Davis in New York.