Is the physical store dead in retail? Absolutely not. However, it is safe to say that the future of brick and mortar retailing will look very different as the physical store undergoes an incredible metamorphosis. The ongoing consumarization of digital services and experiences is poised to take over the in-store experience for retailers. According to Retail Systems Research, 80 percent of retailers believe their store results will continue to erode unless they incorporate technology as part of the store experience.
Retailers that can effectively merge the advantages of online and offline retail for a new in-store experience will meet the demands of the Connected Consumer. The in-store experience is no longer just a point of sale, but rather a space where consumers engage, interact and build relationships with brands. Shoppers expect more than ever from their in-store experience: knowledgeable associates, the same flexibility and options as an online experience, convergence with their mobile platform and so much more.
So, what will retailers need to consider with their marketing, merchandising and technology strategies to develop the new in-store experience the Connected Consumer will demand? Below is a high-level overview of the top in-store experience trends driving tomorrow’s shopping experience.
Online-to-Offline (O2O) Commerce
The links between online and physical commerce are becoming stronger and stronger. The concept of online-to-offline (O2O) commerce isn’t necessarily a new term; however, we expect it to reach critical mass this year as retailers shift product discovery and payments online. Groupon is seen as an example of offline commerce being driven by an online storefront and transaction engine. Retailers are cloning the “deal of the day” concept with their closed-loop mobile apps to improve customer retention, gamify the shopping experience and bring consumers into physical stores. O2O will have ripple effects across the industry – advertising, mobile payments and digital commerce – helping retailers “localize” consumer spending that begins online.
Studies show that consumer shopping behaviors and brand preferences are changing. Consumers do want to be understood by their favorite brands. Smartphones have the potential to bridge the gaps retailers face with physical and online commerce to create personalized shopping experiences. Mobile can help inject data-driven digital enhancements in to brick and mortar stores. While the possibilities are practically endless and the constant rate of change in the technology industry is hard for retailers to keep pace with, here are some of the top personalization trends retailers cannot ignore.
iBeacons – iBeacon technology can turbocharge retailer mobile apps to improve the in-store experience you seek to deliver. Shelf tags can be added throughout the store for shoppers to view product information, compare prices and access promotions with their mobile device. With its time- and location-awareness capability, iBeacon technology provides retailers with the power to deliver highly relevant digital content (personalized promotions) and observe what shoppers are doing and learn from shopper’s in-store behaviors to revolutionize the customer experience.
Clienteling – Personal beauty and fashion brands are paving the way with clienteling tactics to personalize the in-store experience. The other day I ventured into Sephora to pick out some new face moisturizer. The store associate walked me back to a touchscreen kiosk and walked me through 3-4 simple questions about my skin type and beauty needs. The end result was a personalized list of the top-rated, bestselling moisturizers Sephora sold in-store and online. The store associate clicked on a few of her favorites and walked me to my selected skin care product. Had a store associate not been available, I could have used the barcode scanner to explore products on my own or order online. I’ll wager to guess that Sephora is moving towards enhancing its Beauty Insider loyalty program with more digital clienteling tactics geared for personalized in-store experiences. This is one of the biggest areas of opportunities for retailers committed to physical stores. How is your brand looking at applying digital clienteling strategies to solve a customer challenge or enhance the in-store experience?
Converged Identity – A converged identity is the result of a 360-degree view (omni-channel) of the customer’s online identity, regardless of name, login ID, loyalty number, credit card, social profile or email address. Retailers are familiar with personalization in an online context, but the trend going forward will be to bring personalization and contextual delivery into the in-store experience. As we mentioned before, retailers bridging the gaps with online influencing offline will be successful in the age of the Connected Consumer. How can you incorporate digital experiences in-store? Mobile products like SAP’s Shopper Experience allow users to create collaborative or “shared” shopping lists that switch to an in-store view simplifying the shopping trip and eliminating forgotten items.
Bringing the Online Experience In-store and the In-store Experience Online
Although the term omni-channel is often overused term and often viewed negatively by retailers, the goal which it describes, creating a seamless approach to the consumer experience through all available shopping channels, requires a single view of the shopper, as well a single database of products, prices, promotions, etc.
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Flexible Fulfillment – There’s a laundry list of supply chain to-do’s for retailers. While most of the demand is around improving the customer experience, there is a need to get everyone on the same page internally. Loyalty can be lost if retailers can deliver in the anytime, anywhere retail context. In a world where retailers are leveraging buy online/pick-up in-store, inaccuracies can damage customer relationships. Omni-channel may perhaps be viewed as the integration of promotions, pricing and merchandising to create a unified experience that leverages the in-store experience.
Turning Showrooming into a Bricks-and-mortar Opportunity
Showrooming isn’t necessarily seen as a barrier in the industry but rather an opportunity for retailers to leverage in-store personalization. So how can retailers using showrooming their advantage? The notion of ‘reverse showrooming’ or ‘webrooming’, as eluded to by BI Intelligence, shows that consumers are going online to research products, but then head to a bricks and mortar store to complete the purchase. Retailers can capitalize on reverse showrooming as long as they can effectively integrate offline and digital, and compete on convenience with flexible delivery and in-store pick-up and mobile couponing.
Other tactics being instituted by retailers to combat showrooming, include:
- putting price matching policies in place to convert shoppers into buyers
- instituting better customer-service improvements
- better on-floor associate training
- using interactive technology (mobile apps, coupons and payments) to incentivize shoppers and streamline the in-store experience (According to AIMIA, showroomers are 3x more likely to respond to a location-based mobile offer.)
Mobile Convergence Delivers Hyper-local Experiences
Mobile is one of the hottest retail technology trends and it will continue to be core to shaping tomorrow’s customer experience and e-commerce dominance. To effectively integrate in-store mobility, apps must be easy to login and use, visibly advertised at retail locations, provide prompts to users and incorporate offers. Here’s a run-down of the hottest mobile retailing trends in the industry:
Store Mode – Capabilities such as dynamic store maps, product locations and efficient routing present an opportunity to connect mobile with physical aspects of the store to improve the in-store experience. Store mode also incorporates customer data to deliver personalized content based on past purchasing behaviors and shopper location in the store.
Wayfinding – Similar to store mode, wayfinding helps retailers address the challenge of navigating in a store to quickly find products with the assistance of mobile apps. These mobile experiences require much more than an app with a pretty user interface. These capabilities require robust behind-the scenes system architectures, also up to the second planogram and inventory, to support location-based services.
In-store Wifi – To further enable in-store mobility, retailers are installing wifi in physical stores for easier mobile app accessibility and ‘webrooming’ in the store. The thought is free wifi will boost retail sales to enhance the level of product information available to consumers, as well as providing retailers with some precision tools for targeted offers.
Retail Mobile Apps – Full-featured mobile apps are increasing characterized as devices for customer retention. Loyalty programs and mobile coupons keep customers engaged and add value to their brand interactions. Location-based promotions, social check-ins and barcode scanning improves customer knowledge about the products and strengthens retention. Mobile provides endless possibilities for retailers – the challenge right now is seeing past the digital disruption and identifying strategies that drive return on relationship (ROR), expose new revenue streams and add value to the in-store experience.
Retailers have an opportunity to immerse consumers digitally in the brand through in-store experiences. Transformation in the traditional retail space is evolving rapidly as retailers ride the self-service wave offering kiosk units consumers in airports. Pop-up stores are literally popping up everywhere for obvious reasons – affordability and extension of the brand. Enabling technologies like mobile, Bluetooth low energy (BLE), clienteling software, retail apps, and APIs are facilitating and further enhancing the retail experience, uncovering new revenue sources and enabling one-to-one marketing. It’s safe to say that there’s a lot “in store” for the future of brick and mortar retail and it will be interesting to see who revolutionizes physical experiences for consumers.