The growth in digital touch points and personalization in the retail sector is creating more detailed and innovative ways for retailers to reach the public. Driving retail innovation will require a strategy to leverage these new digital omnichannel approaches if retailers want to compete and grow in this ever changing and dynamic sector.
Driving and Measuring Retail Transformation
The keys to creating an optimal retail customer experience are understanding the proper metrics to benchmark against when measuring and optimizing towards the most impactful experiences. Understanding how to capitalize on customer analytics will be imperative in understanding the retail customer sector better. By discussing and sharing these insights, the NRF’s Big Show could have the ability to assist in driving expanded adoption of these practices that eventually could drive increased revenues for their clients and more retail jobs as this sector continues to grow.
As The National Retail Federation states, many research studies have shown that the winning retailers in today’s marketing are the ones putting emphasis on customer expectations. Today customers not only expect a pleasingly easy buying experience, but also one that is tailored to their individual needs. Fortunately, by having a firm grasp on current technology as well as a strong viewpoint on emerging trends, this customer experience is deliverable by companies who are paying attention.
A great example of a company taking risks to be on the front-edge of retail transformation is L.L. Bean. L.L, Bean invested heavily in a seamless multi-channel customer experience, challenging their marketing department to leverage more digital technologies. The company first embarked on developing a digital marketing strategy to target millennials. By analyzing their customer’s data through analytics research, they were able to better understand their customer’s needs. This more insightful understanding of their consumer base led L.L. Beans partnership with a leading analytics provider, MediaMath, who then assisted them in developing a better data-driven approach to marketing. This allowed L.L. Bean to deliver a best in class user proposition and positioned L.L. Bean as a case study on how to adapt to the new digital retail dynamic.
Technological Innovation in Retail
What are the new technologies driving retail transformation and how will this change the customer experience? The NRF’s Innovation Lab has been instrumental in learning about the new products and technologies that drive customer behaviors. New technologies such as artificial intelligence, virtual reality, augmented reality, and Wearables will be instrumental in achieving retail transformation in the new digital ecosystem. With more modern channels taking hold, we hope to hear how NRF’s Innovation Lab will continue to support advancement in digital strategies that we are starting to deploy.
Customer Experience Personalization
Companies like Indochino and Shoes of Prey are pioneering 21st-century customer experience by employing 3D technologies to drive a next level personalized shopping paradigm. What are traditional fashion retailers doing to innovate at this level “if anything” and how can they bridge this gap to compete as innovation disrupts the retail fashion industry? Luxury retail fashion should take heed of these new efficiencies as the NRF’s Big Show is helping drive new insights and subsequently, actions to assist those retailers looking to adapt.
Retail Innovation’s Current & Future State
The retail industry has been in a state of transformation for over five years and while digitally native companies have thrived, more traditional companies have been struggling. To compete, traditional retailers need to start addressing strategies around better customer experiences as the emphasis on mobile is growing at an incredible rate. According to eMarketer, mobile commerce has been steadily building since 2013 when US smartphone penetration crossed 50%.
In December of 2015, Pew Research Center discovered that 51% of Americans made a purchase using a mobile phone. It’s important to remember that this is a further extension of purchases through digital means, demonstrating a steady increase in customer demand to integrate digital into their everyday lifestyles. In a more recent eMarketer study, they that mobile commerce will represent 29% of total retail e-commerce sales in 2016, and that mobile commerce is expected to reach 48% of e-commerce sales by 2020.
Another caveat to this new digital experience is the advent of social into the new media channel mix. Predictions are that social direct to consumer product retailers will continue to expand. Single product retailers that focus on ethical production and distribution of niche products have shown that they are able to find an audience and deliver profits. Brands such as Allbirds, Nora, and Pebble normally go to market via Kickstarter or Indiegogo and use viral marketing or social ads with Facebook to find traction.
Other notable new media retailer movements are as follows:
- Jet.com acquisition by Walmart
- Amazon expanding logistical capabilities by operating its own planes and growing its delivery fleet. FedEx increasing costs. This will impact e-commerce in 2017. Amazon Prime subscriptions continue to grow. Let’s not forget drones – first drone delivery.
- VR / AR starting to show potential applications for retail (immersive experience for home furniture shopping and apparel) Wayfair AR App
- Online grocery delivery startup Instacart reached a $2Billion valuation (Grocery sales are valued at $700 billion annually, however, only about 2% of them will occur online this year, according to BI Intelligence)
- Unilever bought Dollar Shave Club for $1B
- Sears and Kmart closing down 150 stores
- Macy’s closing down 100 stores
Notes to be taken from the above are that the retail industry is currently in a significant technological transition; this includes everything from the production and distribution of goods to how the digital and multi-touchpoint interactions of new media are assisting in their consumption. Business models are under threat and efforts should be taken to learn and adopt new technologies, strategies, and processes as the consumer experience continue to go digital.
Solidifying a Retail Brand Through Continuous Disruption
Building brand equity in retail through first class experience is no small feat, especially in the rapidly changing environment that the retail industry is now frequenting. The more socially aware consumer has more touch points of engagement today than at any previous time This creates new types of data that need to be measured and understood. If done right, smaller retailers will be able to compete with old-industry stalwarts at a fraction of the budget, to create affinity towards their businesses in a new and more digitally savvy customer base.
By observing how some of the best in the business are adapting (see Target for a great example) retailers should take efforts to strengthen their internal digital and product teams and focus on the core parts of their business that drive results. Companies like Kohl’s are investing in a significant effort to integrate their digital channels to drive results. By championing continuous digital innovation and leveraging data-driven decision making by way of machine learning and artificial intelligence innovation, they are positioning themselves to succeed as customers demand more individualized experiences.
For retailers to succeed, they need to put forth concerted efforts to learn, innovate, and execute on these new technologies. In order to do so, finding and partnering with companies to foster and assist them in driving their digital strategy will be important for growth and survival in a digital-first world.
To Learn More About How We May Help, Read About our Digital Playbooks Here.