A recent discussion with an experienced industry leader who is working to reimagine the role of the high street store has highlighted some important implications of current retail omni-channel trends that will have a profound impact on retail business models and IT strategies in future.
Rapidly changing, technology-led consumer expectations and demands while online and in-store will make it essential for retailers to better align their business and operations with the core notion of customer-centricity, which goes far beyond providing exceptional customer service.
Of course, customer service is not really dead. Nor is it losing its fundamental significance as part of a business-to-consumer (B2C) offering. But delivering good service could arguably be said to no longer be the sole preserve of customer-facing sales or support staff when so many customers now carry out so many of their retail interactions through self-service digital channels. Indeed veteran retired retailer Bill Grimsey, who has been at the helm of a number of major international food and DIY retailers during a career spanning 40 years, questioned what incentives retailers will have to offer consumers to frequent their shops in the future. He countered that, “It’s all about the customer experience.”
With so many shoppers now engaging with retailers both off- and online, Grimsey believes retailers must do better to reconfigure the role of the high street and store for the omni-channel age. Estimating that 80% of U.K. retail store leases alone were coming up for renewal in the next five years, he predicted that many would close as a result of the cannibalization of traditional store sales to online. He also pointed out that retailers add to the base cost of every product that goes onto a store shelf by shipping to and merchandising it in a store.
While these trends have led some to opine the “death of the high street,” Grimsey does not see these technology-driven consumer shifts as a threat, but rather as an opportunity for retailers to focus on using what physical sales space that remains as experiential hubs, technology centers and a focal point for local communities. Alongside convenience consumers will always want, in certain circumstances, instant gratification.
Whether that means buying online and collecting in-store, or trying out an item in-store to be delivered elsewhere, the store will continue to play a key role. So omni-channel experiences developed online and used to enhance the in-store experience – including the emergence of “click & collect” services, for example – will also be vital, as will the use of analytics to establish the optimum mix of distribution and store capacity and location, alongside digital commerce investment.
Consider that some online U.S. apparel retailers have found success with stores that only carry enough inventory to let customers try on their products, while fulfilling any subsequent purchases by home delivery. Grimsey also suggested commodity items, such as groceries, would more often be fulfilled in this way. Customers might also go online to select more personal products, such as gifts, apparel or shoes, for example, before visiting the store to try them with the help of an associate.
And a grocery store experience in future might instead include sumptuous food displays and offer hands-on advice about recipes or the opportunity to attend celebrity chef demonstrations. And advanced self-checkout and self-service options for wayfinding, special offers and personalized, interactive communications with those customers “opting in” via WiFi and/or a mobile app can complement and enhance more integrated and immersive experiences. IDC believes that consumers want to look forward to visiting a personalized service and product showcase, not just a payment or fulfillment center.
It is clear to IDC that customer interaction, including sales support and transactions, will still take place in-store. But reconfiguring the physical customer experience against a predominantly digital backdrop will require retailers to find new ways to evaluate performance in future, if same-store sales or new-store openings are no longer as reliable a measure of growth for investors in an omni-channel environment. IDC believes that this is likely to place more emphasis on total sales overall rather than by channel.
Retailers should develop new customer experiences in-store with interactive displays, kiosks, self-service POS, mobile and clienteling apps, and the use of “gamification” to add a new layer of customer engagement that leverages existing digital marketing and ecommerce investments; more sophisticated store analytics should also be deployed to help retailers personalize and optimize shopping journeys. This is confirmed by IDC indicators of steady 12% growth in worldwide retail spending on customer-facing store IT hardware, software and services over the next three years.
IDC concludes that, in making such investments, it will be essential for retailers to examine the balance of spending in-store versus online, as consumers will increasingly expect the physical retail experience to become an extension of a high street retailer’s digital brand and presence – and not the other way round.
Posted by Miya Knights
AICEX Italian Customer Experience Association