With all the devices and data, processes and people that exist, will all of these components become so intertwined that the digital world and physical world will become one? To what extent will engagement and analytical insights drive change throughout the value chain and in stores? Wil retailers be required to move beyond traditional legacy business models in order to find new ways to grow? At NRF 2016, IBM conducted a great session reporting their latest global research insights on the retail industry and its perspective into the future.
IBM Retail surveyed over 470 retailers on a customer experience index focusing on convenience, consistency, context and content. 41% of consumers are satisfied with the customer experience which means there is a LOT of room for improvement.
There are three megatrends that are continuing to drive change in major and emerging markets today:
- Devices rule – phone, tablets, wearables
- They are change the how, when and where context the customer will engage
- Data Science Rocks
- The opportunity, need, ability and best practices show that data science is driving the capabilities – capture and make use of the business insights (better and more satisfying engagements with your customers)
- Destruction & Mayhem
- The convergence in the industry as retailers become branded product companies, not just private label companies, product companies become retailers developing stores, consumer to direct commerce, new industries coming in, and the companies that come out of nowhere and become billion dollar companies are creating mayhem within the industry, an ecosystem by contracting everything!
Industry research has confirmed:
- 60% – Global mobile penetration rate by 2020
- 69% – Retail execs agree that customers demand more personalized experience
- 21B – IoT devices by 2020
- 5% – World’s data being analyzed – ONLY .5%!!!!!
- 91% – Believe cognitive will play a disruptive role in retail
- 65% – Global CIO’s believe industry convergence is the BIGGEST competitive factor
Omnichannel: the consumer IS the channel!
With all the devices and channels available, what is the meaning of ominichannel anymore? IBM states there are no channels. Today, customers become even more insistent that they will be known and understood – no matter how, when or where they engage. Retailers must adapt to this by:
- Being consistent, relevant and responsive
- Being data-driven
- Enabling by cognitive computing
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- Stores become smart, social and connected – teeming wit IoT devices
- Stores will be competitive differentiator in the battle for consumers
- Smaller, flexible, modular designs
- Entertaining and experiential
- Rented, agile infrastructure
- Store will have a very different role in the future
- Wil become more a showroom
- Delivering the brand promise and experience
- Engagement in a persona way
- Connected and teeming with IoT devices
Brand Story: Retailers need to use data and cognitive in their business to create relevant responsive storytelling. By doing so, the customer needs, wants and aspirations can be forecast with 80% accuracy!
Associates: Store employees and associates will no longer serve their purpose as they do today, insead they will elevate to a concierge status
- Store associates are the secret weapon in delivering the brand promise:
- Engaged band advocates
- Enabled and educated
- Empowered by cognitive insights
To deliver operational efficiency, retailers gave up on delivering the brand promise to the customer. Today, we are not getting back to delivering the brand promise and experience by enabling employees and associates – giving them the tools, information and power to do so.
Supply Chain: Retailers MUST rethink the supply chain design as more and more companies like Amazon are providing consumer direct fulfillment. 70% of customer direct fulfillment requirement in 2015 was at a low of 15% but could become 50%+ of your business! What would need to happen?
- Traditional relationships transform
- Supply chain is completely reimagined
- That last mile is solved
- Supply chains would become secure ecosystems
So as we move into the future of retail, retailers must begin their journey in the cognitive era to become relevant, gain the competitive advantage and steal market share. To sum up everything that was discussed in the session and above, we can take away three top things retailers need to focus on in order to move forward:
Engagement: There is only one channel – the consumer is the channel
Differentiation: Cognitive systems drive differentiated experience in stores, engagement and throughout the value chain
Agility: Retailers will be forced to radically optimize non-selling functions to fund innovation
Click here to learn more about NRF and IBM sessions!