Technology is growing exponentially and driving unprecedented economic change. In many ways, technology and digital have heightened consumer expectations, removed traditional barriers to entry and caused a seismic shift in shopping habits. The focus has shifted from point of sale to the point of experience. Today, there’s no such thing as an “e-commerce” buyer.
Retail’s Digital Disruption
Customers experience your brand through end-to-end experiences, not touch-points. Brendan Witcher, VP and Principal Analyst at Forrester reveals in Vue.ai’s webinar “The New Retail imperative: Individualizing Omnichannel Experiences Using automation and AI” that while we think majority of retail sales happen online, the reality is starkly different. In 2017, U.S. online retail sales made up only about 12% of total U.S. retail sales. In fact, according to him, 4 out of 5 people who visit your website have no intention of buying on your website. But they may choose to buy at your offline store.
A fascinating phenomenon is taking place. Offline retail is making a comeback; so, the only retail that’s dead is retail that’s not connective. And, connectivity is not about having all the digital bells and whistles. Instead, it’s about thinking beyond your products. For the customers, the products don’t matter, the experience does. Retailers and brands have to not only surprise and delight but also solve their customers’ pain points regardless of touch-point or channel. Everything is commerce today; offline drives online, online drives offline.
“Digital influences far more of your business than your reporting would indicate; so, even if the conversion doesn’t happen on your website, you’re still influencing them to buy,” says Brendan in this webinar. “If coffee shops like Starbucks can do it, then anybody can.”
Undoubtedly, retailers and brands have to keep pace with shoppers. In today’s hyper-competitive, ever-changing, fast-paced, human-centric customer experience economy, there’s no room for mediocrity. The proliferation of new touch-points and channels along with emerging innovative tech, like augmented reality, virtual reality, wearables and digital assistants, is challenging retailers and brands to adapt at an unprecedented pace. If they want to prevail, they will have to find ways to combine both their physical and digital capabilities to offer individualized experiences—at scale.
The Shift To Experiential Retail
Delighting customers and solving their pain points via an exceptionally good consumer experience is no easy art. It’s almost a business imperative, to stand out from the crowd in an environment where customers wield growing power. Customers today know they have infinite choice. They’re different from consumers of the past. Relevant, compelling and customized shopping experiences, whether online, in-store or by subscription, is the new normal.
If Netflix, Spotify and Amazon are able to predict what customers want and when they want it then all retailers are expected to offer such experiences. Customer experience is about value-based engagement. This requires a deep understanding of the frustrations, desires, motivations and problems that drive them to engage with a brand in the first place.
Experiential retail caters to the connected consumer. It anticipates the consumer’s needs, generates real-time information and customized communications using emerging technologies like the Internet of Things (IoT), AI, augmented reality (AR), and virtual reality (VR). When retailers integrate digital shopping assistance technology into the build environment via voice-activated service, interactive displays and IoT applications, they can provide customers with high levels of support during their shopping experience. We’d like to call this brick-and-data retail. This type of retail experience enhances the physical shopping experience rather than replacing it.
Tom Ford is one of several brands that are setting the tone for experiential retail. Its global first-ever standalone store in London’s Covent Garden is doing digitally connective physical experiences right. Its stunning retail space includes floating marble counters, infinity mirrors, interactive scent installations and virtual lipstick try-ons. That’s not all. Guests can opt for make-up master classes that are filmed using digital mirrors and that are then emailed to the customer in chapters.
Another company that’s changing the role of the store for 21st century retail is Hero, which works with brands to transform store associates into “digitally connected brand champions.” This enables the platform to expand the reach of its live shopping experience to a global audience, thus creating sales opportunities beyond traditional working hours.
Pearson Poon, executive director at Harvey Nichols, said Hero helps improve the customer experience by “closing the service gap between online and in-store” which is a “critical part of our retail strategy.” Additionally, he said working with Hero allows the brand “to offer our online customers the same level of luxury, personalized service that they would experience at our Harvey Nichols stores.”
As per Alistair Crane, Hero’s chief executive officer, the platform reimagines the entire “omnichannel sales experience.” He said it aligns the store-level associate with the online platform in a way that aims to “delight the shopper.”
The platform fosters interaction between store associates and customers via messaging, pictures and video in a way that elevates the traditional form of retail selling. It’s client servicing and increased personalization in real time; and can focus on sizing, styling and product availability.
Now, innovative customer experiences aren’t just for luxury brands. Traditional non-luxury retailer Aldo creates an authentic omnichannel environment each time a shopper enters a store. By leveraging the power of mobile technology and IoT, Aldo creates an integrated and interactive store touch-point that’s linked to a mobile app. This experience includes high-resolution product images, product wish lists, and social media sharing options. Aldo ends up providing high levels of engagement to shoppers, resulting in a 20% year-over-year increase in sales.
Anthropologie & Co., on the other hand, takes its merchandising philosophy to another level. Its nearly 30,000-square foot concept store in Walnut Creek, California, includes a shoe salon featuring 350 designs from more than 50 brands; a beauty corner with more than 800 products and tools; a design center where customers can flick through fabric swatches for bespoke furniture and even take tips from a “home stylist.”
“In many ways, this turns back to the heritage of the great, original department stores,” said David W. McCreight, chief executive of the Anthropologie Group — which also includes Terrain and BHLDN — and president of URBN. Indeed, what McCreight and his team want to do reflects what so many traditional department stores are currently attempting to master: destination retail that not only attracts people but also compels them to continue shopping for more than 30 minutes. Such large-format stores are not entirely new to the URBN family. In 2014, Urban Outfitters opened its 57,000-square-foot store in New York’s Herald Square, complete with a café, a music record store and a beauty salon.
Retailers are attempting to make literally everything an experience. And they’re certainly doing a great job of it. For instance, a digital quiz can replace a human in the onerous challenge of helping a woman find a bra that fits perfectly. Since 2012, lingerie startup True & Co. has built better bras by gathering tons of data through one simple quiz. Thanks to the company’s efforts, bra shopping has gone from being an ordeal to being an incredibly satisfying experience.
Aldo, Anthropologie, True & Co. and Tom Ford are just four of many retailers that are looking to drive growth by providing unique consumer experiences. Stores are transforming to become places that attract and delight shoppers through features such as wine tastings and cookery classes, salons and spas, art exhibitions, celebrity appearances, in-store kiosks, smart changing rooms, pop-up shops and more. They want to ensure that people leave their stores not just with products, but also with memories.
The Next Frontier Of In-Store Experiences
Brands and retailers are investing in primarily four types of consumer experiences: convenient, communal, curated and immersive. Which experience needs to be prioritized and when? That happens only when retailers have an intimate understanding of the customer journey and their own unique value proposition.
Experience 1: Convenience
Consumers typically purchase something if they have a basic need for it. So, one of the most important challenges retailers face is to make things happen seamlessly without friction. For instance, checkout delays and wait times for item pick-up and return are an inconvenience for the shopper. But using smart sensors, facial recognition, and computer vision, painful features of the shopping journey can be eliminated, thus increasing customer loyalty and trust. Amazon is making big moves in the area of frictionless retail.
Its Amazon Go, a frictionless grocery shopping experience, relies on high-tech tracking technology rather than humans to get products off the shelves and into customers’ shopping bags. Amazon is able to make the entire shopping experience more convenient by allowing shoppers to scan their phones as soon as they enter the store. Amazon Go stores could be the future of retail whether we want them to be or not. Convenience is essentially a critical component of the consumer experience. And retailers are trying to make it easier with the help of technology like mobile PoS, curbside pick-up, pop-up stores and more.
Experience 2: Communal
Another way in which retailers have tried to captivate experience-focused customers is by tapping into the basic human need for sustaining relationships and cultivating community. Community retail, therefore, attempts to transform physical stores into destinations to enable consumers to ignite real-world connections and experience the brand. Examples of community retail experiences include charming hybrid retail cafes to shopping mall fitness facilities. For example, the Adidas RunBase concept store in Berlin merges vegan dining with fitness; it has workout equipment and even has its own in-house running track! Yet another example is luxury brand Gucci’s newly designed space in Florence called Gucci Garden. It houses a store with unique items, a restaurant by the three-Michelin-star chef, and specially curated exhibition rooms—all under one roof.
Experience 3: Curated
As the number of choices grows exponentially, and time available to explore all of these options remains constant, consumers will want retailers to thoughtfully curate products and services for them. They would want their shopping experiences to be more efficient and more relevant. But curation goes beyond careful selection and prioritization. Curation, today, should be the bridge between the consumer, the retailer and the brand. It’s about storytelling, editorializing and conveyance. Brands and retailers must tell the story of the selected products, explain why they were selected or recommended and what meaning or value they provide to the consumer. One of the most innovative forms of curated retail is that by Burberry, Neiman Marcus and Nordstrom who have leveraged a combination of mobile technology and advanced analytics to make personalized product recommendations for their customers. Nordstrom not only offers its customers a variety of ways to buy their products, but it also makes it easy for them to buy across brands. Additionally, it offers curbside pick-up, buying over text, and more. Cool, right?
Experience 4: Immersive
Immersive and interactive in-store consumer experiences are meant to be more engaging and entertaining. For instance, Zara launched an augmented reality (AR) app, which is only one of the retailer’s tech experiments. The store’s dressing rooms are equally high-tech, with information screens embedded in the mirrors.
The next frontier of customer experience will continue to be adaptive, responsive, sensitive, contextual and predictive. Retailers will employ cutting-edge technologies such as chatbots, AR, VR and AI to deliver compelling experiences. Consumer demands and desires will be foreseen, processed and fulfilled even before they’re consciously realized or articulated—thanks to the roster of tech available.
Customer Experience: Winning At The Intersection Of Physical And Digital
Retailers, until now, have invested heavily in their e-commerce offerings while forgetting the value of their physical stores. They will need to bring their physical stores at par with their mobile and online counterparts. The convergence of physical and digital experiences (also known as “phygital”) will evolve rapidly. In this new world, brands will move beyond understanding how consumers engage with the brand to how consumers interact with the world; and then realizing how the brand aligns with the customer’s view of the world. There will be an increasing focus on the context of consumer interactions: What are the consumers’ pain points? What emotions are pushing them to buy? Why is the consumer engaging with a brand at this particular moment? What are they looking for?
Therefore, knowing the why and when of consumer decisions will be mission-critical. Understanding the most important customer journeys and where opportunities exist will help a retailer maintain focus and have the greatest impact on the satisfaction of its customers and its own success. In-store experiences will become seamless extensions of the online customer experience—you won’t know where one starts and where one ends.
The Human Touch In Customer E
As traditional retailers pivot to the new digital reality, they must also remember the human touch. Retailers of the future must make the store the center of their customer experiences but also leverage the scale of digital and the power of human connections. They not only need to be able to analyze tons of data, extract insights, and use them effectively but also master empathy and enact cultural change within their organizations and beyond.
One of the biggest mistakes brands and retailers can make in their customer experience transformations is not knowing where to expend effort and how they can drive value for their customers. Therefore, in choosing where and when to invest in cutting-edge technologies, retailers must ensure consumers and their own employees are all on the same page. To make the most of this store-level convergence of digital and human assets, they should also be open to up-skilling store associates, for instance. The store associate of the future (see an example of Hero) will thus have a new role to play. He/she will not only have to be a trusted advisor to the customer but also be a brand champion.
The winners in retail will be those that bust through age-old habits, embrace new technologies, and reimagine the very essence of customer experience and what it can do for the brand. For these retailers, the future will, indeed, present a plethora of exciting, new opportunities. This webinar from Vue.ai, featuring Forrester, talks about The New Retail Imperative in greater detail – do check it out!