Retailing today is shifting from product-centric to customer-centric models where the customer experience is everything. In this world of experiential retail, leading companies know how to blend products, services (both physical and digital), personalization, and unprecedented levels of convenience. Experiences are measured and improved. Stores are becoming brand experiences and innovation centers.
In this world, trust is the ultimate currency – trust in treating data safely, in delivering quality products at exactly the right time, and in providing the best experiences possible, from shopping to consumption and returns. Building that trust will require an unprecedented level of transparency and delicacy as retailers collect more and more consumer information to help create personalized experiences.
But the question remains: how, exactly, do retailers move forward to ensure success in this world? Many are pursuing the following strategic priorities for becoming an intelligent enterprise.
Be customer-centric across the value chain
Increasingly, retailers seek to create deep data and predictive insights from data generated at every customer touchpoint – physical, digital, and social. These insights are driving a forward-looking understanding of consumer trends that allows retailers to anticipate change and design the right experiences that drive customer loyalty.
It starts with optimizing existing processes to offer targeted assortments and better manage campaigns. These processes are driven by real-world data input – such as search and consumption data from sensors and home devices. Changes in usage and consumption are tracked to make relevant offers when consumers need them. The result is a more tailored, immersive experience that anticipates customer needs.
Serve the segment of one
Increasingly, retailers are using large data-management platforms to gather big sets of sales, service, and marketing data. The goal is to build 360-degree customer profiles to predict customer needs and serve the segment of one with personalized offerings.
With the right data at hand, the possibilities are limitless. Algorithms can be used to power recommendations and tailor experiences. Augmented and virtual reality can be used to support personalized dressing room experiences, furniture displays, or digital store walkthroughs. Sensors can be used to monitor use, consumption, wear, and freshness, alerting consumers to replace, replenish, or repair.
Importantly, though, retailers will need the explicit consent of their customers to gather data and put it to work. This requires a new level of transparency and a new level of collaboration between customer and retailer.
Implement digital supply chains
Today’s consumers expect their needs to be met automatically. Consequently, retailers are becoming more vertically integrated, connecting the end-to-end supply chain to detect demand and automate replenishment.
To get there, retailers are using predictive analytics and machine learning to predict demand and supply more accurately. Increasingly, retailers will even be able to extend their business processes to the point of consumption – such as the fridge – and automatically generate new orders as required. Meanwhile, scalable, efficient, and convenient source-to-consumer services will help to build brand loyalty and allow retailers to develop brand extensions, such as food preparation services.
Run smart stores
Consumer-centric retail stores use experience management technology to turn their customers into advocates, their employees into ambassadors, and their brands and products into obsessions. But to execute, retailers need more flexible supply chain processes capable of supporting a constant feedback loop to the consumer downstream and to the manufacturer upstream.
The journey starts with empowering front-line sales staff with real-time customer, product, and inventory data to support customer identification, individualized store interactions, faster checkout, and automated store processes. Moving forward, retailers seek to merge online and physical shopping into a single brand experience. Augmented reality, for example, can be used to overlay real-world content with digital content (virtual dressing rooms, for example). This will allow retailers to create differentiating shopping experiences that keep customers coming back.
Develop new business models
Retail revenue increasingly comes from services developed based on insight from consumer data. New business models include subscription, pay-per-use, or outcome-based models.
Moving forward, these services will move from product add-ons to offerings in their own right, with separate revenue streams that are not restricted to the retailer’s products, but rather evolve into multi-brand services beyond current product categories. Thus, the next wave of retailers will think of their brand as a scalable platform, allowing for brand extensions and creative partnerships into areas such as telecommunications, travel and entertainment, and financial services.
But to make it all work, retailers will need to collect and analyze the data needed to develop a deep understanding of their customers’ consumption habits – which, in turn, requires them to occupy a trusted position in their customers’ lives.
The future is bright
Ultimately, consumers are not looking for a digital experience or a real-world experience. They are looking for a seamless shopping experience, one that bridges the online and offline worlds. To provide it, retailers must embrace emerging technology, think creatively about the services they can uniquely provide, and, most important, earn their consumers’ trust to become a part of their lives.
Join our virtual event to learn more
Want to find out more about the latest trends and innovations in today’s global retail business? Register today to join our flagship 60-minute virtual industry event:
SAP Industries Forum 2020: Retail
Experience the Intelligent Enterprise
Thursday, March 26, 2020
9:00 a.m. PDT | 12:00 p.m. EDT | 5:00 p.m. CET