Drawing customers into the store is a significant challenge for retailers today. Consumers walk past store entrances with their eyes fixed on their smartphones, paying little interest in window displays. While traditional retail store revenue grew 2.8 percent in 2016, the ecommerce market is expected to increase 8 to 12 percent in 2017 and Amazon’s sales quintupled from 2010 to 2016. Is this the start of the end for traditional brick and mortar retail as we know it?
The New York Times has described this device-focused phenomenon as a tipping point for retailers. To maintain their position and meet changing expectations, retailers need to make the most of their interactions with consumers, both in their physical shops and online. Many retailers are doing this by introducing advanced technology and leveraging data-driven insights to digitally transform their stores and websites into places consumers want to spend their time and money. Here’s a look at five retailers with transformative approaches, that deliver a great customer experience no matter where the consumer interacts with them.
1. Ralph Lauren
One big advantage physical stores have over online shopping is that consumers can physically experience the product before purchasing them. To better enhance this customer experience, preppy retailer Ralph Lauren has experimented with “smart mirrors” that turn the fitting room into an extension of the sales floor, with interactive features that let the customer continue shopping while they try on an item.
The mirror recognizes the items the customer brought into the fitting room by reading RFID tags and then displays suggested complementary pieces. Customers can also adjust the lighting in the fitting room to match the environment where they’ll be wearing the outfit, whether in a club or outdoors at dusk. If something doesn’t look just right, the cutting edge tech lets the customer alert a store clerk to bring a different size or color.
While the mirrors – at $25,000 each – aren’t cheap, they cover themselves via increased sales. Healey Cypher, CEO of Oak Labs, which makes the mirrors, told Bloomberg BusinessWeek that tests showed the mirrors led consumers to spend more money while spending less time in the dressing room. Oak Labs is even adding a feature to let customers use Apple Pay or Android Pay to make their purchases while standing in front of the mirror, eliminating the chance that they’ll abandon their decision on the way to the cashier.
Augmented reality (AR) can give consumers the chance to try on goods without setting foot in the store. The Sephora Virtual Artist enhances the beauty retailer’s iOS mobile app with AR features that let users try the latest makeup trends and colors.
The app uses the phone’s camera and face-mapping technology to scan the user’s face, locate features such as eyes and lips and overlay the makeup, in a live-view that updates the image in real-time. The phone acts like a mirror, and allows the user to turn their face and view the look from any angle in a three-dimensional field. Virtual tutorials show users how to create the look, using their own face as the model. Sephora views the app as bringing the in-store makeover experience to at-home shoppers, according to Bridget Dolan, VP of Innovation.
The Sephora Virtual Artist is available through the retailer’s Facebook Messenger chatbot, where users can ask for product recommendations and try out suggestions on a photo they upload.
Cosabella, an upscale lingerie brand available in stores like Nordstrom and Bloomingdale’s, is using AI technology to help it determine which lingerie products consumers are likely to buy. They can leverage artificial intelligence (AI) and machine learning, using Emersys self-learning predictive algorithm and personalized incentive management to track inventory and consumer behavior. AI and machine learning enables Cosabella to improve its inventory management, keeping hot items in stock, altering items that aren’t selling and creating special fast-selling collections based on real-time customer data. AI is also enabling the brand to personalize its customer experience, by tailoring email offers and e-commerce site content based on how the customer arrived at the page.
Cosabella also used an AI-driven advertising platform, Albert, in tandem with the broader AI-driven platform Sentient, which let the brand reduce its ad spending and improve the effectiveness of their website design. This digital transformation throughout their advertising, marketing, sales and product design improved the company’s customer experience and business results.
4. Saks Fifth Avenue
One of the biggest challenges facing real-world retailers is the rise of showrooming, which is when customers visit a physical store to see a product, and then buy it at a discount online. Saks Fifth Avenue is minimizing that activity through Salesfloor technology, which integrates their brick-and-mortar stores with their websites. The product connects customers viewing goods on saks.com with sales reps in a local store; they can meet the associate in the store to continue shopping, and even follow up with the same associate online. The associates are able to use the tool to create customized pages of items curated specifically for their clients, and they can chat and communicate with those customers via social media and email.
The goal, according to Saks Fifth Avenue President, Mark Metrick, is to keep interaction with the customer going and develop an omnichannel experience. “[Salesfloor] is a highly personalized online solution to selling, merging our highest trafficked channel — saks.com — with our highest converter — our associates,” he said. While the company had previously used personalization and customized product recommendations online, Saks now uses Salesfloor to complete that experience their online experience lacked: the one-to-one interactions that their data indicated lead to customer loyalty.
In contrast to the organic, folksy experience of walking into a Walmart store and being greeted the giant discount retailer is looking to integrate technology to improve the shopping experience and increase sales. While they are not yet in stores, the retailer gained a patent for Internet-of-Things-based carts that customers could “hail” with their smartphones: the sensor-based cart would guide customers to items on their phone-based shopping list. In addition to simplifying shopping for customers, self-propelled carts could reduce the need for employees to deliver packages, check inventory and collect carts to return them to their designated location at the end of the day.
The company is also reportedly considering using drones to find items in the far reaches of its huge stores and to deliver the merchandise back to customers. While Walmart has tested drones in its concept store, it isn’t likely they’ll be in every location any time soon. That particular innovation requires a challenging physical transformation to build flight paths that won’t disturb customers. As with all advances on this scale, costs and benefits need to be weighed before adopting a radical new approach.
Meeting Today’s Retail Challenges Requires Digital Transformation
The business of retail continues to face challenges, with its growth projection falling far shorter than in online ecommerce revenue. That said, there is hope for traditional in-store retailers who incorporate digital into their sales strategies, meeting customer 21st century expectations with immersive experiences. There will be an unavoidable period of trial and error as new technologies are developed and retailers invest time and effort to discover new enhancements to the customer experience.
Using technology poorly can drive customers and business away, so the process has to be managed carefully. Properly implemented technology designed and aligned to customer needs can lead to an improved omnichannel customer experience and boost a retailer’s bottom line.