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Why retail is on the verge of total reinvention

Why retail is on the verge of total reinvention

Monday, February 15, 2016

Yesterday I walked into a small ‘local’ supermarket to buy cat food. I was unfamiliar with the store layout, and unhelpfully, ‘pet food’ wasn’t signposted. With the absence of any staff to ask for direction, it took me the best part of five minutes to find what I was looking for, and this was made worse by the massive queue at the tills. So what started out as a simple task had quickly descended into frustration. This scenario might seem a trivial one, but it does a good job of highlighting today’s consumer mentality. Technological advances and our hyper-connected lifestyles have led us to expect instant gratification and personalisation. Since Amazon Prime began offering recurring orders on things like cat food and toothpaste, and disruptive start-ups like Uber have made us come to expect a customised service at our fingertips, consumers no longer want to wait for things. As a result, retailers face a daunting ultimatum: change, or become obsolete. There’s no doubt that the role of the physical store is changing, and with digital and physical worlds colliding, retail is on the brink of total reinvention.

Throughout last year, retail was buzzing with predictions for beacon technology, mobile payments, interactive display, wearable technology and virtual reality, among other things. After struggling and remaining stagnant for a while, it seems that 2016 could be the year where the retail industry finally begins to transform. Today most retailers have a variety of brand touchpoints, but we appear to have gone full circle, where the retail store of the future could become the data hub for all customer interactions and experiences. Being able to build a single customer view, where a retailer knows everything there is to know about their customers, has been held as the utopian dream for more than a decade. Now it could become a reality, to inform the physical store experience. But it will be crucial that retailers are careful to offer up something that customers really want, which balances the creation of a personalised onmichannel view, without being too intrusive.

What will the retail store of the future look like? From the customer’s point of view, the local retail experience will change drastically. Stores will become less of a maze of products, and be replaced with more open, interactive environments. Products will become secondary to the lifestyle they promote, and the selling experience. So for example, Fleet Fleet Sports in the US was well ahead of the curve when it allowed consumers to run down the street in a pair of shoes to experience the fit and feel. In the future, consumers will be able to ‘road test’ a lifestyle in store, before they buy. To aid this process, sales reps will be on hand to personalise the customer experience. So a runner visiting a consumer electronics store to try out GPS watches, for example, could schedule an appointment via a smartphone app, and arrive to find a sales assistant waiting for them, armed with their personalised customer information. Not only will that customer receive a wealth of tailored information and offers on the product they’ve requested, but taking things one step further, they might be kitted out with a fitness tracker to read their oxygen levels and heart rate to assess their overall wellness. The days of visiting a store to buy a particular product, only to find that it’s not in stock, will be obsolete. While retailers such as Argos already allow customers to check availability and reserve items for collection; in the future we’ll see supply chains increasingly being armed with user data, usage data, inventory data and sales data, to totally redefine the idea of inventory. This will enable retailers to anticipate a customer’s needs, to create a truly personalised and frustration-free experience. This will be the greatest opportunity yet for brands to get truly personalised in the service and communications they target their customers with. Brands should be striving to have all the data associated with one customer, including their interactions and experiences, available in one place, so that they can make real-time decisions off the back of it. Retail The smartphone or tablet will be an integral part of the customer experience, through which individuals will not only navigate their way online and in-store, but also control and set the rules for how retailers interact with them. It will be crucial that brands and advertisers give their customers choices about how personally they want to be targeted, giving them the option to shop anonymously if they desire. This may vary according to the nature of the business – high-end luxury retailers, for example, will always need to prioritise customer privacy and preferences. It goes without saying that additionally, mobile payment will completely replace the checkout and queuing. The rise of a borrowing culture Today we inhabit a ‘Netflix’ or ‘Kindle Unlimited’ world, where the desire to own product has been replaced with a growing preference to borrow. Consumers want to own less, in order to be able to consume more.  For example, levels of car ownership are significantly lower (68%) among Generation Y (18-29 years), than among Generation X consumers (81%) aged 30-45 years. The mobile phone market has also moved to a lease model, where customers pay a monthly fee to rent the device of their choice, so that they can upgrade more quickly and not be left with an expensive, outdated handset. It seems likely that in the future, all technology and lifestyle retailers will evolve their product model to embrace this borrowing culture, so that they can deliver a faster stream of product, and meet customer desire for instant gratification. This could see the role of the physical store being completely transformed, and make pop-up shops, for example, more feasible. In the future we’re likely to see fewer, but more impactful stores. Will virtual reality become reality? The story behind a product can often be as important as the product itself, and in retail, virtual reality could be the technology that helps products come to life for the customer, through v-commerce. Currently some retailers are in the early stages of using virtual reality to create fully immersive, contextual experiences that reach beyond existing physical and digital channels to create a very new type of shopping experience. So for example, a customer could be the other side of the world, but able to enjoy a 360° immersive video experience of being inside London’s luxury department store Liberty, and be able to find out more about the products they are interested in, without having to set foot inside the store. For example, The New York Times recently delivered 1.2 million Google Cardboard viewers to home-delivery subscribers and asked them to watch its new virtual-reality film, as part of an ongoing rollout of VR content. The experiment debuted a new way for brands to enter the home, and importantly, grab the attention of a younger generation of future consumers. This could be the future of brand storytelling, enabling brands to thrive by connecting with customers on a new, more emotional level. It will be crucial that brands focus on creating content that is up to scratch, meeting high journalist standards. There are few limits to how retail could evolve over the next five years or so. It is definitely a space to be watching in 2016.

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