Technology today is transforming industries across the board. Smart devices, wearable devices, and Big Data are reshaping retail. Companies need to infuse digital solutions into everything from product creation to customer interaction.
A shifting retail experience
In ten years, retail is likely to be different, just as retail was much different a decade ago. While the physical storefront will likely remain a cornerstone, the landscape is changing fast.
Consumers can buy goods anywhere and at any time. The Internet of Things (IoT), the collection of devices connected by sensors and software, is a big reason why. Connected devices offer volumes of data to savvy retailers. This information is guiding production and has the potential to boost brand loyalty.
Consumers today are looking for a different experience with the products they use. They see themselves as partners with retailers in this shifting environment.
What are some of the trends smart retailers need to consider? Let’s take a closer look at the three of the factors shifting the shopping paradigm.
The outcome economy
Ted Levitt of Harvard Business Review once said customers buy holes, not drills.Today’s consumer is still interested in the look, feel, and practical use of products. Yet they are also seeking something new: outcomes.
The “outcome economy” blends traditional measures with the experiences a customer expects. Customers want more than just an item’s face value. Customers value the outcomes of using, consuming, and participating in a product or service.
Major technological enhancements fuel this economic shift. Smart products have sensors, software and wireless function to record, store and send data. Cloud-based analytics allow interpretation of performance and usage data on a large scale.
This shift means retailers should use a different approach in product design and product TCO certification.
Changing customer journey
The traditional customer funnel is changing. Today retailers need to think of the journey as “from tweet to receipt.”
Smart, connected devices let retailers grab consumers with products personalized in function and form. Retail areas like digital marketing and e-commerce are no longer enough. They need to partner with customer experience management and customer relationship management.
The connection for all these areas is mobile technology—especially smart, connected IoT devices.
IoT is still in its infancy, but it will grow fast. Retailers need to rethink their brands now to be ready. They need to hire and train staff who are proficient in these new technical tools. Tomorrow’s retail leaders will embrace the change and be technically savvy.
Estimates of the size of the Internet of Things vary. Some experts predict that there will be 30 billion to 50 billion connected devices by 2020.
In retail, these products and consumer demand for them will mean IoT investment in many areas. Product tracking and tracing need growth. Mobile payment systems are crucial. Interactive engagement between customers, marketing staff, and operations will become more normalized. Demand for faster deliver means managing assets, fleets, and yards better.
For retailers, there are clear advantages to embracing IoT technologies. First, consumers are already there, using connected devices in many areas of their lives.
The relationship works when customers connect and engage in ways that save time or money.
Consumers want convenience. They want to know products are available and personalized interactions with retailers. They will share data but need confidence that companies ensure privacy and security.
Radio-frequency identification (RFID) benefits merchandise management, loss prevention, and merchandise replenishment. Tying RFID to product management software helps with inventory processes.
Big Data changes the game
Retailers have massive amounts of data. The next phase is how to leverage the data, often in real time.
Predictive analytics let retailers anticipate customer needs and market relevant solutions. Drones aren’t yet delivering products we merely thought we wanted, but retail is moving in that direction.
Big Data allows for powerful modeling using metadata collected from millions of users in thousands of locations. Cloud-based storage has dropped in price, allowing for affordable storage of that data. Software today allows for complex number crunching of those data points.
This future is right in front of retailers.
Heat maps use real-time customer behaviors to improve the interaction and identify key touchpoints. Retailers can track consumers in the store and in the wild.
Completed and abandoned shopping cart analysis can lead to better follow-through marketing. Gamification strategies improve come-back rates and add playful marketing points.
Analytics need to be infused throughout the retail product cycle. Trend analytics can predict which products are likely to be popular in the near future.
Forecasting and buying pattern analysis can identify where demand will be greatest. Processes from supply chain management to warehouse operations to delivery scheduling can improve.
Workforce scheduling is simplified.
Think about Uber, which alters pricing to meet high demands during peak usage periods. Optimized pricing programs let retailers adjust price to meet customer demographics and purchasing patterns. Marketing can change to customized delivery based on past purchases and geolocation info.
Putting it together
Smart retailers see the potential. At each step, retailers will reshape to be successful in this digital economy. This means sales forces need new language and materials. Marketing staff need responsive technology tied to Big Data.
Commerce itself needs to integrate in-store, desktop, and mobile experiences. Even call centers will need to adjust, offering technical help along with inventory, shipping, and payment help.
New partnerships are possible, too. Sharing data with suppliers and vendors can improve process and solve problems.
The potential is significant, according to a study by the Aberdeen Group. The research showed that companies with a omnichannel commerce model keep customers. Such companies report a 91 percent year-over-year customer retention rate.