If customers have a negative experience shopping with one retailer, they don’t have to go far to find another. The advent of online retail has put a staggering number of options within a few taps of the keyboard. A retailer that abruptly discontinues a beloved product will just as abruptly lose that product’s customers, while a retailer that sends its customers tailored offers stands to gain their loyalty.
Let’s take a look at some real world examples:
- Bran was a loyal customer of a departmental store. A shaving razor was one of his frequent purchases. Suddenly, Bran stopped visiting the store. On realizing Bran’s extended absence, the store sent him a surprise gift: a newly launched premium shaving razor from his favorite brand along with a message “We missed you. Your favorite brand has launched a new shaving razor and you might want to try it out. Have a nice day”, Bran was delighted by this gesture and amazed that the store understood his preferences. He returned to the store again.
- Rebecca was looking to buy a new laptop, but too many options confused her. She read online reviews, compared prices, specifications and ratings of different laptops in online stores. Observing her online behaviour, an electronics retailer provided personalized advice with a list of laptops that would suit her needs along with a promotional coupon. Rebecca was pleased with the customer service and the offer. She purchased a laptop from the electronics retailer.
For both online and brick-and-mortar shops, success hinges on understanding enough about their customers to create individualized experiences—a fact retailers are recognizing. The global retail analytics market is estimated to reach $10.4 billion by 20231 and, according to a JDA Software survey, 40 out of 100 merchandising professionals and category managers said big data and predictive analytics are their top investment priorities over the next 5 years.2
A changing retail landscape
Retailers who have embraced digital transformation successfully are gaining a significant competitive advantage in an atmosphere where customer experience rules. And while traditional retailers are adopting digital technologies such as Internet of Things (IoT), mobile, augmented reality (AR) and virtual reality (VR), artificial intelligence (AI) and machine learning (ML) to connect with customers, digital players have recognized the advantages of establishing brick-and-mortar locations to round out the experience they can offer their customers.
Here are a few of the most disruptive developments in retail today:
- VR and AR - Simulation technology allows customers to arrange furniture in a virtual rendition of their home, check the fit of clothes without trying anything on, and even test drive a car.
- Customer adoption of emerging platforms - Shoppers increasingly use technology to research products and services, making it essential for retailers to address customer concerns in real time.
- New classes of retailers - Retailers are inventing new business models such as brick-and-click that integrate online and offline sales portals.
- New metrics to measure success - Customer experience per square foot is supplanting sales per square foot as the primary measure of retail performance.
- Rising digital adoption - Retailers are engaging AI technology to supplement human customer support. Chat-based shopping and voice commerce increasingly deliver personalized, customized, and localized experiences to customers.
- Essential mobile devices - Proximity technologies such as Bluetooth Low Energy (BLE) beacons, near field communication (NFC) and quick response (QR) codes provide opportunities to retailers to engage with customers via their smartphones.