Achieving Retailing Excellence in the next five years
October 21, 2015
As I am preparing for WIRED Retail together with Valtech in London on November 23 2015 it had me reflect more about the challenges retailers face as digital becomes more dominant, and how they transition to becoming customer-centric, fully digital enterprises.
User Experience as the new star
In the beginning of the year I attended the global retail forum NRF and the star was not, as may have been expected, technology. It was instead the rapidly evolving customer experience. When I started out in retail strategy 15 years ago customer experience was a start-to-end experience: I’m looking in the store window, I’m stepping into the store, I’m getting out, and that’s the end. Today, there is no start, there is no end.
Of course, different sectors find different challenges and retailers differ in their opinions as to what customer experience is, and why focussing on it is important. I like Harvard psychologist Daniel Gilbert’s take on it, that has to do with the way we relate to objects versus events and that the experience makes people happier than actually buying things does. It’s more than a start-to-end product or service relationship. We have to shoot for a lifestyle experience and the most successful retailers are going to be the ones who build an experience that customers remember.
The Experience Gap
In an increasingly on-line world retailers are starting from an unfavourable position. They’re up against the Big Five digital leaders -- Amazon, Apple, Google, Facebook and Uber -- as well as tens of thousands of start-ups fuelled by the power of innovation. I would estimate that this wave of innovation is channelling a staggering $44 billion into retail R&D.
Between the Big Five and the established customer experience is a big gap. Millennials don’t see the consumer experience in the same way as previous generations, and the strength of start-ups lies in their targeting of this “gap of experience.” For instance, Uber is now much more than a taxi platform. In some markets it’s a key piece of the retail experience and ultimately it is being fully integrated into the retail chain.
I am a seed-stage investor myself and I know how focussed tech-savvy start-ups are in addressing the customer experience. But at the same time I don’t think the current experience will disappear altogether; I see the gap being bridged by start-ups acting as very impressive middlemen between consumers and traditional brands and retailers. Take men’s apparel retailer Trunk Club, which was acquired by Nordstrom. Millennials and zen shoppers don’t see a stop in a shop or a mall as a critical piece of the consumer experience. And Nordstrom knows that men don’t enjoy spending time in shopping malls, so Trunk is pitched to men in the US as a fun, multi-channel alternative.
And when it comes to Big Five, they’re going for frequent data and your lifestyle intimacy. In order to pitch their message quickly and accurately they’ve embraced their consumers’ native smartphone lifestyle, something that only few retailers have taken seriously so far - but they should! Retailers must also address the millennials’ super omni-channel journey. It’s about offering a total, flexible shopping journey, and retailers must track the customer throughout.
The connected store experience
Finally, companies must anticipate the inevitable connected store experience. I really like the Apple store app, it consolidates all the technologies so well that it forms a crucial part of the customer experience. I am convinced that, three years from now, stores that don’t propose that level of experience will be near obsolescence.
The era of retailers resisting the online world is over. They must connect with technology: real-time stock inventory and traceability by store will become a must-have over the next five years.
Smartphone maturity means that retailers must be able to fully engage with customers online, including in-store. The store must become an efficient “physical website” and multi-device, real-time CRM will be vital for successful last-mile delivery.
Retailers have to master image and video engagement. Brands must focus on engaging with their very digital, agile customers via images and video and develop a coherent content strategy that can cope with inevitable “massive” video needs and subsequent lack of content.
If you want to know more I will speak on the Main Stage at this year’s Wired Retail together with Valtech, and talk further about how to close the experience gap.