More than 700 shopping malls got closed in the US since 2011. The prediction says another 300 are going to close in the near future*. More than 9000 retail stores have closed down only in 2017. Since 2011, more than 4% footfall in malls of USA and Germany has decreased. Are we heading towards a completely digital world? Is it the end of the Brick and Mortar retail stores? In this article I tried summing up the top 10 retail trends that are going to be the key for retailers to remain in the competition. For retailers, it is now a do or die situation.
The question came to my mind in 2016 at the IRF (India Retail Forum) event. I was speaking on OmniChannel with an exquisite panel of retail leaders. Since I was the odd man out, I decided to begin with a question. I asked, what to you is going to be the most crucial disruption in retail for 2017? The panellist didn’t answer. So I asked the audience. The hall was full of senior leaders from the retail industry. And trust me, no one could answer that question. 2017 was one of the most impactful years in the retail industry. Multiple things have changed in a very short time. Retailers have realised the change was coming, but 2017 made them believe in the power of omnichannel. The year also taught them, more than anything, the most important area to improve is the experience.
Channels are blurring but the key is to give a similar experience to the customer from online to offline. I met a lot of retailers, even some of the CIOs and CTOs who asked me to provide them with an omnichannel software. There are companies who are trying to sell their retail offering as an omnichannel solution. We need to understand, there is nothing like an omnichannel solution. Omnichannel is a concept that needs to be backed by multiple technology platforms. The ultimate aim is to give the customer an experience where irrespective of channels she would feel the brand presence. The only way to attain this is to have a clear vision and a retail software which is extremely flexible in adapting to your need and could be integrated with any other solution. French Fashion Retailer Kiabi and cosmetic retailer Sephora has taken such innovation to the second level where the customer can experience the brand across any device, online or offline. This is to me the Omnichannel 2.0 – the new era of omnichannel.
Customer profiling and predictive analysis are going to be a major change in retail. Here is a risk of making “Analytics” as the second most overrated and over-sold tool after “security”. In a recent retail event in Dubai, I met 10 organizations. And 9 of them said that they are working on Retail Analytics. Some of them even said to have been working on Big Data. In the software industry, consultants tend to make things difficult for end users.
To know what a true personalisation is to check Netflix. Netflix to me is a perfect example of customer profiling and making a predictive analysis on the basis of that personalization. Based on your movie selection, Netflix provides you movies suited to your taste.
Remember those good old days when you used to buy things from the mom and pop shop at the corner of the street. The uncle at the store used to lure you with your favourite candies. That was personalization. Retailers need to bring back that personal touch when they want to capture the customer forever.
Sephora, Nordstrom, Disney, Amazon, Netflix have shown us on how to leverage the personalization as a competitive advantage. In India, the best example is probably lenskart. They all have developed tools to analyze a customer’s journey and churn model. Based on that they are working on the predictive analysis.
3. Advance Warehouse Management
Inventory still holds the most important place in a retail lifecycle. Read my previous article that talks about a secret weapon for retailers to use real-time tracking of goods across the supply chain. Usage of the drone to deliver products up to 2.5 kg is successfully piloted by Amazon. DHL used automated parcelcopter to deliver goods up to 2 kgs. UPS is piloting Drone delivery for the last mile in rural areas. Overall what is crucial is to keep the delivery within the control and using technology this could become extremely possible. Inventory movement is definitely the key and complete visibility of inventory across the logistic cycle is something retailers must consider and focus.
4. Finding the right influence
Word of mouth still plays the most critical role in the customer decision making. Social Media marketing is definitely the key where you can connect with aspirational influencers, subject matter experts, Mavens and your current customers on a platform to influence others. The key is to build a community across your brand. The community connects more people to your brand.
Brand repositioning has often become a need of the hour. Influencers love to talk about your brand when you do something unique. Social Responsiveness of a brand always helps. Everyone talked about P&G when they deliver personal care, cleaning kits and laundry services to Irma affected residents. Nothing is more important when the community starts talking about you.
Social Media Marketing is another over-sold and less effectively used tools by most of the retailers. Social Media is not to promote but to connect with people. And analytical usage of the same can re-establish the brand for a larger community.
5. Moving from online to offline
While the world is talking about being online, my take is to go the other way. Amazon to me has made a full cycle complete when they started their offline store after starting the e-commerce revolution 20 years ago. Offline stores attract people to interact and experience what they are seeing in the virtual world.
Zivame, Lenskart, Casper, Kiabi are all working towards creating experience stores.
6. Opening Small Stores
Large retailers are coming up with small stores concepts. Decathlon from their traditional large format stores opened a few small stores which mainly operates on the click and collect model.
Target has started small stores in smaller localities and using analytics extensively to find the local choice. The same concept is run by Carrefore for several years.
Small format stores are mainly set up at lesser costs but they become an experienced store which ultimately worked as an influencer. Sharaf DG, the Middle East Retail giant has also started having small booths and kiosks at airports and metro stations in Dubai.
7. Product to Experience
Customer’s buying pattern is changing from products to experience. Retailers are now working on more inspirational stores and create non-transaction related visit.
REI Outdoor classes and outings, EATALY dining experience, Golf Galaxy with a golf course simulators, William Sonoma Cooking classes are some of these non-traditional experience shops. Decathlon with their store tries to give you a unique place to hang around.
8. Engaged Shoppers – 3D printing
Brands are slowly using the customers and just attracting them. Threadless is one of the biggest experience where a conglomerate is made out of social engagement. The market penetration of 3D printing is increasing at 22%* which has reduced the cost of 3D printing as well. Macy has started using the consumers as designers for their products lines. 3D printing also enables new products to get manufactured.
Crowdsourcing in design is now a common concept. Lego for that matter is using designs posted by their fans and creating models which have received 10000+ votes. Consumers have their opinion about almost everything. I suggest the key is to giving consumers the feel to be involved in the process and own the brand you created. There is nothing more important than the word of mouth.
9. Augmented Reality
In my list, this is the last but a significant change in the way retail has worked till date. Technology is going to play a crucial role almost in every area of the retail operation.
Here is what going to change in definite processes
Exploration – it is going to be heavily done through the web. However in store, you need to use digital signage to make navigation in the store easier,
Larger retailers could use Robot, Augmented Virtual Reality in order to make the experience unique. I will write a separate article on the usage of Augmented Virtual Reality in Retail.
10. Mobile Payments
Those who are still thinking about the future of mobile payment, make sure you are ready for 2018 and future. Mobile Payment is going to make things easier for retailers. Retailers need to adopt soon to mobile payment-related award program. Larger retailers like Amazon, Starbucks are coming out with their own payment apps.
My suggestion to retailers is not to wait till the next regulations rather proactively engage with mobile payment providers and encourage customers to use them. This is surely going to be the future.
As retailers, you don’t need to be the next Apple or Facebook. But constant innovation, finding newer ways to listen to your customers, building the culture of innovation within the team and rethinking on the business model will keep you on top.