According to the IMRG Capgemini e-Retail Sales Index, UK online sales exceeded £130 billion in 2016, marking a 15% uplift over 2015. Smartphones proved to be a key driver of this growth, with December alone showing a massive 47% year-on-year hike.
Predictions for 2017 online retail success may be marred by hesitancy over the impact of Brexit, however, with intensified investment in enhancing the shopping experience, records could still be broken, in spite of any fears pointing towards a deceleration.
But what about the in-store forecasts? Has the industry been seduced so much by the promise of online profit that it’s turned its back on the faithful shop floor? Have retailers forgotten the concepts of inspiration, entertainment, and discoverability? These three pillars still lie at the core of the shopping experience for many – they have the power to motivate shoppers out of their homes and into bricks-and-mortar stores. But if the physical environments aren’t geared up to provide an exceptional experience, there’ll be nothing to gain, for anyone.
Function versus inspiration
The problems with the current in-store experience are multitudinous, but before we can identify them and consider the right solution, we must first address a major issue that so many overlook: the term ‘retail’ is used with such a broad brushstroke that it doesn’t paint a true picture of the diverse shopping landscape. So when we break ‘retail’ down, we soon discover two distinct layers that serve two different shopping personas – one that is functional and one that is inspirational.
Groceries and supermarkets largely serve the functional shopping persona – they sell products that customers need, even if there is little desire to purchase them. Customers today don’t want to have to worry about the purchasing process for essential items, they want the shopping and delivery to be dealt with by technology.
Identifying those functional items will help customers and retailers alike understand if/where the process can be automated – Amazon, for example, is already leading the way in this respect with its Dash Button, a Wi-Fi-connected device that reorders your favourite product at the press of a button, ensuring you never run low on your essential items. Indeed, if these types of purchases can be automated, then it should, because it adds no ‘pleasure’ value to the purchasing experience. Then you can see what is left.
Which brings us to the inspirational element, where customers visit a store to explore the produce, discover new ideas and look at what’s fresh. This is particularly prevalent within the clothing/fashion sub-sector of retail.
Inspiration and discoverability are undeniably important factors in the overall shopping experience. Customers don’t always know what they’re looking for, and in fact, often want less choice as it’s easier to absorb and cope with. If you’re an online retailer, this can mess things up.
Layering into this, we need to look at the role of data – gathered from both the physical and digital environments - to give a more targeted direction for retailers. If we take Selfridges as an example, it may have high-volume sales but it has no data about how the purchases were made. Did it sell ten pairs of jeans because ten people tried them on and bought them? Or did 300 try them?
Understanding what your stock and customers are doing can be massively influential on future sales – it’s fundamental to improving and getting the most out of digital technologies for the betterment of the in-store experience.
Less is more
Founder of US clothing store Reformation, Yael Aflalo, raised the question of in-store functionality and her findings led her to believe that, in fact, many don’t function well at all. There’s often too much stock on display, customers spend too much time routing through it, assistants are constantly putting items back on the shelves and disappear off the shop floor to seek answers to stock questions – it can be a dreadful experience for many.
With this in mind, Aflalo turned her attention to other business models, such as Apple and Tesla, and discovered a clean experience and exceptional customer service where less was definitely more. Consequently, she applied her findings to Reformation and in February this year announced the launch of the San Francisco store which would showcase a tech-enabled retail concept.
Within the shop, there are only individual sets of garments on display, with the stock being kept in the back, all of which is logged, thus enabling Reformation to understand what is happening to it and how to manage it. Instantly, the clutter is removed and the space opens up – space which can be used to enlarge the changing rooms which are often another point of friction for customers.
Moreover, assistants are immediately freed up from ‘stock management’ and have the room to grow and perform, guiding customers through a seamless shopping process.
Adding to this sense of a friction-free retail experience, there’s even an option to buy in-store and take the purchase with you, or have items delivered to your home.
Connecting the dots
Alternative technologies that can be used to track the movement of stock include RFID [radio frequency identification] tags and sensors. By identifying the movement, you acquire a layer of information about what’s happening in your store, which you can draw on to optimise sales and improve the overall experience.
Likewise, social media activity can flag up what’s trending, but these technologies need to be connected if they are to become meaningful. If retailers aren’t achieving this, then they’re simply not doing a good job. For instance, they may see that they have ‘likes’ but have no insight into the correlation between likes and sales. Without analysing the relationship, retailers won’t be able to determine if the likes are meaningful, if they should care, or if they are just creating a halo effect.
There’s a lot of machine learning that can be done with data, producing different levels and values of extraction compared to human analysis. And so, by connecting the technology and analysing the data, retailers can improve their understanding about what’s happening to their stock, which will empower them to make better decisions.
Upskill and upsell
Once the right technologies are working in the background, the human workers then have the chance to develop advanced customer engagement skills, thereby improving the opportunity to not only close a sale but upsell too.
In a bid to strengthen this cross-channel consumer experience, John Lewis recently announced that it’s spending £4 million on iPhones for 8,000 shop floor employees across 20 of its stores.
They will each receive a phone loaded with a ‘partner app’ which has been designed to improve their ability to provide information about products and stock availability and place orders more quickly and efficiently.
With the rise of the phygital experience – where physical and digital realms combine to create a fully immersive experience – retailers should take stock of initiatives like this in order to up their in-store game in an increasingly digital world. But why are so many hesitant to take the leap?
One of the biggest threats to retailers with physical stores is the internet itself, which works to the advantage of those who don’t have to have a store. But a more worrying issue is the promiscuity of customers, who use a store perhaps for inspiration and information, then with in-hand price comparisons available, move off to make the purchase online.
Many retailers are feeling this pain of being someone else’s shop window, and without a doubt, mobile has been a significant driver of this.
As consumer behaviour shifts with the winds of change, retailers must learn and adapt or face the real threat of being outstripped by customer demands and expectations.
Customer comfort levels, in terms of ordering online, have changed dramatically – particularly spurred on by the speed of delivery which is exponentially faster, as can be seen by market leaders such as Amazon which already turn same day deliveries around.
So how can retailers who are currently hanging on by their shirt tails get ahead? By evolving and by pushing adoption. The likes of Amazon and John Lewis are presently leading the way, and it’s high time that others followed. Indeed, with the right fine tuning, they could even surpass today’s frontrunners.
What retailers must understand, however, is that it’s not about technology or mobile first; it’s about customer first. As long as you continue to watch them and learn from them, understanding their need for a simple, smooth and carefree journey, then you will always win through.
Top tips to improve your in-store experience:
- Incentivise and empower employees by investing in their training and knowledge enrichment. With the right technology working in the background, more time and energy can be spent on customer engagement – not only will this help to drive loyalty but it can also engender greater retention of valuable employees
- Use the data you capture to identify trends and direct your proposition
- Drive customers in-store with personalised and targeted offers and rewards via technology-based interactions
- Inspire customers with a sensory experience that is free of clutter, aesthetically pleasing and encourages tactile interaction