But Keeping up Means Combining the Online and Offline Worlds
I’m a huge Star Trek fan. And, if I lived in that version of the 23rd century I’d sign-up for Starfleet in a heartbeat. Then again, I might not have much choice. Because, in the Star Trek universe, technology has made many career choices obsolete, including retail.
The Federation – the main the government in the galaxy – doesn’t even use money!
Of course, that’s science fiction. But some of the presentations I heard at the recent Digital Retail Seminar hosted by EY, (Ernst & Young) made me wonder. Retail might not disappear. But, it is certainly going to change dramatically.
Differentiating Buying and Shopping
Take this nugget I picked up in the opening remarks. According to Gartner, by next year (that’s 2020) 50% of essential household items won’t have to be shopped for. They could be auto-replenished thanks to IoT. AI will “buy” most products, leaving consumers to “shop” for the brands that appeal to them the most.
Even that part of the process won’t be face to face for much longer. Nearly half of consumers – 47% of them – are open to buying things through a chatbot.
Direct sellers and big retailers could also become an endangered species, at least among teens, where about 40% prefer to buy second-hand from a from specialty retailer. This growing demographic puts experiences over product, weighing each purchase against other criteria such as environmental friendliness and smart recycling.
One thing is clear. Retailers have to shift their focus. There’s no future in trying to protect what they have. To succeed, they need to create what they want to become!
The Retail Game is Changing Fast
As the seminar showcased, the winners of tomorrow will be retailers who are truly open to new ways of thinking and radical innovation.
According to Sam Wong, the head of SAP’s Customer Experience, one of those innovations is undoubtedly the use of Digital Currencies. They offer hug advantages, such as instantaneous transaction and essentially borderless transfer of ownership. However, there are also major challenges, including extreme volatility and liquidity difficulties that can affect merchant profitability and slow operational efficiency.
Machine learning is also fast becoming a game-changer across the board. Greg Wong, Director of Analytics, Platform & Technology, Greater China showcased the real-world results some companies are achieving. Firms like Mobilink, which has used A.I. to revamp its retention strategy and increased customer stickiness by a stunning 8X.
Of course, retail success is still heavily dependent on people, which made Gregg Chen’s SuccessFactors session on Running the Best Retail Workforce all the more eye-opening. Among the key trends in retail, he identified was the importance of Listening, Understanding, and Acting. Because, as he said, “You can’t give your people what they want if you don’t listen to what they say!”
Pulling it All Together
The constant search for convenience, price, and experience excellence have moved consumers online. Accordingly, in the next few years, one of the major challenges for retailers will be how to unify traditional offline and new online worlds.
That’s not to say that physical stores will disappear. They’ll remain an integral part of the retail shopping experience, but they will be dramatically transformed to offer an array of experiences. These will range from highly personalized services to showrooms, fitting rooms, and even brand extensions that could include classes and entertainment.
The transition is already well underway, but it won’t get far without building consumer trust. Trust will be the ultimate currency. That includes trust in treating data safely. And trust in delivering the right quality of product at exactly the right time and the right experiences from shopping to consumption and returns.
Building that trust will require an unprecedented level of transparency and delicacy as retailers collect more and more consumer information to help create personalized experiences.
Whitepaper Offers a Blueprint for Success
If you were at the seminar, you know what I’m talking about. If you missed it, don’t worry. You can get an idea of the challenges and opportunities facing the industry in a new SAP whitepaper entitled “The Intelligent Enterprise for the Retail Industry.”
Or … if you are a Trekkie like me, you could take a few tips from the galaxy’s ultimate entrepreneurs – the Ferrengi! – and follow the 57th Rule of Acquisition. It reads, “Good customers are as rare as platinum. Treasure them!”