Inspiration to Gratification: How Digital Channels have Changed the Retail Game

February 20, 2019 Sumesh Chawla

 

There's a compelling argument to be made that digital channels powered by Augmented Reality, Artificial Intelligence and other technologies are already the norm in retail today. Consider the fact that, while over 90% of purchases still take place in brick-and-mortar stores, nearly 60% of shoppers are simultaneously using their smartphones to research products and prices as they stroll retail aisles in real life. In other words, in-store experiences are already being filtered through a critical digital overlay for the majority of retail customers.

That means at least two things for retailers: One is that brands capable of creating truly unified and seamless customer experiences will be able to stake out a clear competitive advantage in the marketplace. The other is that these same brands will need to expertly leverage digital channels if they want to enhance customers' in-store experiences and influence buying decisions.

Obviously, retailers face a moment of unprecedented challenge, as well as tremendous opportunity. How should they respond?

In this blog, we'll break down three key differentiators — immediacy, individualization and intelligence — that are shaping the future of customer experience in the retail space.

Immediacy

In most large U.S. metropolitan markets today, Amazon Prime Now will deliver things like ukuleles, portable badminton sets and Yoda-themed costumes for your dog — directly to your door, within an hour, with one click.

That helps explain fashion designer Tommy Hilfiger's decision last year to drop the traditional retail production calendar. After all, given the increasing immediacy of the retail marketplace, who among his customers would wait as long as 18 months for the latest runway designs to arrive on store shelves?

So instead, the designer opted for a more dynamic, "see-now/buy-now" approach. Now, Hilfiger fans can get their hands on all of the gear they crave right away. This "instantly shoppable" collection proved to be a major success in 2018, eventually contributing to an impressive 64% spike in the company's U.S. sales.

But that's just the tip of the iceberg. For forward-thinking retailers, a raft of new technologies promise to obviate some of the most vexing pain points for digital customers — and contribute greater immediacy to the entire experience at the same time. How?

Have you ever been mid-purchase at an online shopping portal, only to pause and ask yourself a question such as: how will this lamp actually look in my living room?

Well, fret no more. Thanks to highly sophisticated virtual trial mirrors, which allow digital customers to neatly (and literally) mirror the kinds of information-gathering traditionally only available to their in-store counterparts.

Individualization

Gartner forecasts that, by 2021, 15% of all customer service interactions will be handled entirely by AI — and that has powerful implications for forward-thinking retailers looking to create implications for forward-thinking retailers looking to create more individualized customer experiences.

For example, retailers are already leveraging search browser history to make the offerings their customers see online far more individualized. And, even when customers are not actively shopping online, these retailers can use predictive analytics to remind past customers to stock up on items when they are likely running low. These things are already happening now.

Taking it a step further, consider the possible applications of user generated content (UGC). It's not so difficult to imagine a future in which clothing retailers, for example, leverage information culled from customers' social media feeds to influence design decisions — or at least to figure out what they ought to showcase in the windows of physical stores. And, equipped with analytics, they could even run A/B tests to determine which window display merchandizing attracts the most store traffic, at what time of day, and so on. The possibilities are endless.

As a final example, look at Kroger’s recent deal with Ocado. Taking that “Instacart-style experience” to another level, the new partnership allows Kroger to automate even more of the shopping experience — transforming internal operations to deliver on customer demands. 

Ocado is a UK-based online grocery retailer known for using robots rather than people to process and pack orders. Kroger Chief Executive Officer Rodney McMullen called the partnership “transformative” and told Reuters that it accelerates the company’s efforts to give customers anything, anytime, anywhere.

It's an interesting experiment in automation — and one with the potential to change the Amazon power equation over the longer term. 

Intelligence

Why is creating immediate, individualized, intelligent omnichannel customer experiences such tricky business for most retailers?

The crux of the answer is that doing so requires retailers to have achieved a successful, 360-degree integration between online and digital realms. But, particularly as paths to purchase become ever-more-complex to track and measure, many marketers are simply struggling to keep up.

For example, while 73% of customers say they'd like to be able to track their orders across all touch points in the customer journey, as few as 7% of retailers have the capabilities in place today to make that a reality.

This is a key opportunity for retailers. After all, omnichannel shoppers — those who are using multiple channels during their shopping journey — today make up a significant majority, or 73%, of all shoppers. What's more, engagement across channels is a strong indicator of likelihood to buy. For example, in one study, shoppers who engaged with retailers across 10 or more channels were more than twice as likely to make purchases than shoppers who engaged across one to four channels.

It’s clear that retailers have their work cut out for them, particularly given the fact that customer experience is becoming an increasingly vital differentiator for brands. In the future, companies that are able to leverage the latest-and-greatest analytics to deliver seamless, individualized and consistent omnichannel experiences should see substantial competitive advantage.

Our digital future is bright

With major retailers like Macy's, The Limited, Gymboree, American Apparel and others recently announcing large-scale store closings, the quest to marry digital and physical channels (we call it “phygital”) is a major imperative for many retailers right now. But the good news is, Conduent can help. Are you ready to see how cutting-edge analytics and digital technologies can help power the growth of your business — both online and in brick-and-mortar stores? 

Drop me a note at commercialbusiness@conduent.com to continue the dialogue.  To learn more about the kinds of digital experiences consumers expect from retail brands, check out our Consumer Experience Report – Retail Edition.

 
 

About the Author

Sumesh Chawla is Vice President and General Manager, Retail, Travel & Logistics (RTL) and Manufacturing

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