Forget 2013. Is Your Company 2016-ready? (Part 2): Retail

Forget 2013. Is Your Company 2016-ready? (Part 2): Retail

Heather Dougherty

 

Seoul Virtual Shopping Center

Seoul Virtual Shopping Center

In part 1 of this post I promised a follow up focusing on the retail and publishing industries as technology is dramatically changing the face of business in these sectors and both are struggling to keep pace. It wasn’t until I started really digging in that I realized the breadth and complexity involved on both fronts. It makes keeping up with digital marketing trends look like child’s play. Therefore, for sanity’s sake on both my end and yours, I’ve decided to tackle them one at a time, starting with retail.

As in my last post, we’ll take a look at the current state of affairs, trends on the horizon and potential scenarios of a technologically transformed future.

Current State

E-commerce growth is significantly outpacing overall retail growth. The National Retail Federation (NRF) projects a mere 3.4% U.S. retail growth compared to a whopping 9%-12% growth in U.S. retail e-commerce in 2013. And this data provided by The Census Bureau of the U.S. Department of Commerce [PDF] shows that e-commerce’s share of retail sales has steadily increased over the last decade…

US Retail E-Commerce 2003-2012

US Retail E-Commerce 2003-2012

Source: Census Bureau, U.S. Dept. of Commerce [PDF]

 

New(er) contenders, mobile commerce and social commerce, have now joined traditional e-commerce in the fight for consumer attention and dollars. Both are showing healthy growth themselves…

US Retail E-Commerce 2003-2012 [bar chart]

Mobile Commerce Sales 2011-2016

 Source: Internet Retailer http://www.internetretailer.com/trends/sales/
Social Commerce Sales 2011-2015 [bar chart]

Social Commerce Sales 2011-2015

 Source: Internet Retailer http://www.internetretailer.com/trends/sales/

 

To add fuel to the fire, many (if not most) people are now armed with smartphones while shopping and wield them to find the best deal on the products they’re browsing in-store, frequently leading them to purchase elsewhere (online or at another retailer).  This phenomenon, known as “showrooming,” has retailers up in arms and scratching their heads for a solution. You can hardly question their concern with a reported 20% of consumers admitting to price comparing in-store and one-third purchasing elsewhere (and other studies I’ve seen report even higher numbers).

Reactions have run the gamut – from disconnecting wifi and blocking cell signals, to implementing or sweetening price matching policies, to offering products not available online. Mobile commerce leader, ShopSavvy, further stokes the fire by allowing brands to reach ShopSavvy users in competitors’ stores with targeted ads and special offers.

If consumers are browsing in-store, but ultimately (and largely) purchasing online, why don’t they simply shop online in first place? A survey conducted by Ipsos in September 2012 revealed that 6 in 10 Americans (age 18-64) prefer to shop in-store. Unsurprisingly, this number decreased by approximately 10% amongst the 18-34 set. I found similar results in other studies I came across, indicating the in-store experience is still a pull for many consumers.

Smart retailers are capitalizing on this and getting in front of showrooming by reimagining the in-store experience. By and large retailers agree this is the smartest solution to stopping the in-store sales bleeding, but are having a difficult time figuring out exactly how. One encouraging example – while only really scratching the surface – is Nieman Marcus, who is looking to develop an app that identifies when customers enter the store and prompts staff to engage with them based on purchase history and preferences. On a somewhat larger scale, Walmart, is partnering with Razorfish, BodyMetrics and Microsoft to embrace new technologies and integrate them into the shopping experience. Their plans include virtual fitting “rooms” and Microsoft Surface displays that allow shoppers to mix and match looks and then swipe them onto their mobile device.

The real challenge (and latest retail buzzword) is Omni-Channel Retailing, which is basically convergence within the retail experience. It means streamlining the customer experience by integrating customer data across all touchpoints and using real-time data to deliver rich, personalized in-store experiences. Shifting to true omni-channel retailing is an enormous undertaking as most retailers will need to completely retool (or more likely replace) their entire systems infrastructure, not to mention overhauling processes, procedures and the actual physical stores.

While omni-channel retailing is the future, many retailers are woefully behind. They’re still playing catch-up on mobile-optimized e-commerce sites. They struggle to collect and leverage customer data in an effective way. Even technologies that have been widely available for years are not being utilized: automated, behavior-based communications and offers, customized online experiences, recommendation engines, social integration…to name a few.

 

What’s Coming

In the short-term, retail experts detail what’s ahead for 2013: http://www.retailtouchpoints.com/retail-crm/2175-13-retail-experts-share-predictions-in-2013-rtp-outlook-guide

There are also emerging technologies and trends in augmented reality (virtual dressing rooms, virtual floor attendants), haptic technology (texture virtualization) and see-through display windows.

One smart example of advanced technologies changing the face of retail this Seoul subway shopping center (and shopping wall) where commuters can shop while they wait and have goods delivered when they arrive at home later that day.

 

The Future of Retail?

 

Scenarios:

  • You walk into a retail store, whip out your mobile device (or whip ON your Google Glasses) and a virtual personal shopper identifies items in the store that align with previous purchases, set preferences and items your friends have liked/purchased. The floor attendant collects items in a cue, that a customer can virtually interact with or try on and show to friends for a thumbs up/down. Accepted items are collected on their mobile device, purchased with a tap, wrapped and delivered to them as they depart.
  • The mall is transformed. The social aspect is retained through reserved shopping rooms – similar to private karaoke rooms. Groups can gather, with curated collections for individuals for virtual try-on, visible to their group of friends for immediate feedback – both onsite and via social.
  • As imagined in my last post – your mirror records every outfit you wear and a holographic interface recommends wardrobe additions/replacements, based on your style, that you can virtually try on and subsequently purchase, on the spot – all within the course of getting dressed for work on a given day. How does this impact how goods are delivered? Is manufacturing re-localized? Can you order from your mirror and have items delivered the same day (a la Amazon same-day)? Does this lead to a more rental vs. purchase society?
  • Or, as depicted in this image from Frog Design, you shop off passersby, calling up info on their garments and purchasing via holographic display. Pretty sweet (if not a little stalker-ish).

In all of these scenarios (and beyond), retailers must consider how drastically this changes how they reach and interact with their customers. If getting in front of social and mobile seemed daunting, you ain’t seen nothing yet.

 

Seoul Virtual Shopping Center

Seoul Virtual Shopping Center

In part 1 of this post I promised a follow up focusing on the retail and publishing industries as technology is dramatically changing the face of business in these sectors and both are struggling to keep pace. It wasn’t until I started really digging in that I realized the breadth and complexity involved on both fronts. It makes keeping up with digital marketing trends look like child’s play. Therefore, for sanity’s sake on both my end and yours, I’ve decided to tackle them one at a time, starting with retail.

As in my last post, we’ll take a look at the current state of affairs, trends on the horizon and potential scenarios of a technologically transformed future.

Current State

E-commerce growth is significantly outpacing overall retail growth. The National Retail Federation (NRF) projects a mere 3.4% U.S. retail growth compared to a whopping 9%-12% growth in U.S. retail e-commerce in 2013. And this data provided by The Census Bureau of the U.S. Department of Commerce [PDF] shows that e-commerce’s share of retail sales has steadily increased over the last decade…

US Retail E-Commerce 2003-2012

US Retail E-Commerce 2003-2012

Source: Census Bureau, U.S. Dept. of Commerce [PDF]

 

New(er) contenders, mobile commerce and social commerce, have now joined traditional e-commerce in the fight for consumer attention and dollars. Both are showing healthy growth themselves…

US Retail E-Commerce 2003-2012 [bar chart]

Mobile Commerce Sales 2011-2016

 Source: Internet Retailer http://www.internetretailer.com/trends/sales/
Social Commerce Sales 2011-2015 [bar chart]

Social Commerce Sales 2011-2015

 Source: Internet Retailer http://www.internetretailer.com/trends/sales/

 

To add fuel to the fire, many (if not most) people are now armed with smartphones while shopping and wield them to find the best deal on the products they’re browsing in-store, frequently leading them to purchase elsewhere (online or at another retailer).  This phenomenon, known as “showrooming,” has retailers up in arms and scratching their heads for a solution. You can hardly question their concern with a reported 20% of consumers admitting to price comparing in-store and one-third purchasing elsewhere (and other studies I’ve seen report even higher numbers).

Reactions have run the gamut – from disconnecting wifi and blocking cell signals, to implementing or sweetening price matching policies, to offering products not available online. Mobile commerce leader, ShopSavvy, further stokes the fire by allowing brands to reach ShopSavvy users in competitors’ stores with targeted ads and special offers.

If consumers are browsing in-store, but ultimately (and largely) purchasing online, why don’t they simply shop online in first place? A survey conducted by Ipsos in September 2012 revealed that 6 in 10 Americans (age 18-64) prefer to shop in-store. Unsurprisingly, this number decreased by approximately 10% amongst the 18-34 set. I found similar results in other studies I came across, indicating the in-store experience is still a pull for many consumers.

Smart retailers are capitalizing on this and getting in front of showrooming by reimagining the in-store experience. By and large retailers agree this is the smartest solution to stopping the in-store sales bleeding, but are having a difficult time figuring out exactly how. One encouraging example – while only really scratching the surface – is Nieman Marcus, who is looking to develop an app that identifies when customers enter the store and prompts staff to engage with them based on purchase history and preferences. On a somewhat larger scale, Walmart, is partnering with Razorfish, BodyMetrics and Microsoft to embrace new technologies and integrate them into the shopping experience. Their plans include virtual fitting “rooms” and Microsoft Surface displays that allow shoppers to mix and match looks and then swipe them onto their mobile device.

The real challenge (and latest retail buzzword) is Omni-Channel Retailing, which is basically convergence within the retail experience. It means streamlining the customer experience by integrating customer data across all touchpoints and using real-time data to deliver rich, personalized in-store experiences. Shifting to true omni-channel retailing is an enormous undertaking as most retailers will need to completely retool (or more likely replace) their entire systems infrastructure, not to mention overhauling processes, procedures and the actual physical stores.

While omni-channel retailing is the future, many retailers are woefully behind. They’re still playing catch-up on mobile-optimized e-commerce sites. They struggle to collect and leverage customer data in an effective way. Even technologies that have been widely available for years are not being utilized: automated, behavior-based communications and offers, customized online experiences, recommendation engines, social integration…to name a few.

 

What’s Coming

In the short-term, retail experts detail what’s ahead for 2013: http://www.retailtouchpoints.com/retail-crm/2175-13-retail-experts-share-predictions-in-2013-rtp-outlook-guide

There are also emerging technologies and trends in augmented reality (virtual dressing rooms, virtual floor attendants), haptic technology (texture virtualization) and see-through display windows.

One smart example of advanced technologies changing the face of retail this Seoul subway shopping center (and shopping wall) where commuters can shop while they wait and have goods delivered when they arrive at home later that day.

 

The Future of Retail?

 

Scenarios:

  • You walk into a retail store, whip out your mobile device (or whip ON your Google Glasses) and a virtual personal shopper identifies items in the store that align with previous purchases, set preferences and items your friends have liked/purchased. The floor attendant collects items in a cue, that a customer can virtually interact with or try on and show to friends for a thumbs up/down. Accepted items are collected on their mobile device, purchased with a tap, wrapped and delivered to them as they depart.
  • The mall is transformed. The social aspect is retained through reserved shopping rooms – similar to private karaoke rooms. Groups can gather, with curated collections for individuals for virtual try-on, visible to their group of friends for immediate feedback – both onsite and via social.
  • As imagined in my last post – your mirror records every outfit you wear and a holographic interface recommends wardrobe additions/replacements, based on your style, that you can virtually try on and subsequently purchase, on the spot – all within the course of getting dressed for work on a given day. How does this impact how goods are delivered? Is manufacturing re-localized? Can you order from your mirror and have items delivered the same day (a la Amazon same-day)? Does this lead to a more rental vs. purchase society?
  • Or, as depicted in this image from Frog Design, you shop off passersby, calling up info on their garments and purchasing via holographic display. Pretty sweet (if not a little stalker-ish).

In all of these scenarios (and beyond), retailers must consider how drastically this changes how they reach and interact with their customers. If getting in front of social and mobile seemed daunting, you ain’t seen nothing yet.

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  • Anonymous says:

    Shopping off of passerby! That’s something I’ve been wanting for a long time. Hope it’s accessible soon. I’m TOTALLY comfortable with the stalkerish aspects!

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