The retail industry operates in a dynamic environment that is constantly changing. Those retailers that continue to innovate, invest and evolve their businesses and operations will be successful over the long-term. While the industry has its challenges, it also has its opportunities, which create optimism for the future. Achieving and sustaining improved results will require innovation and investment to keep customers engaged and interested through an elevated and evolving shopping experience which the new generations of consumer demands.
Customers continue to look for brands they are passionate about. Remember, it is always about the product. When products resonate with consumers, they will come. That said, a superior, seamless shopping experience, has become more important to a retailers’ success. Ultimately, today’s consumers are channel agnostic and want the option to get their favorite brands across all channels on demand. Those retailers who go above and beyond in this regard have a much better chance to succeed in today’s retail environment.
Companies need to continuously innovate their products to meet the consumer tastes of today and tomorrow. Doing this successfully hinges on introducing and testing new products, and building on those that generate demand. A number of bigger retailers have innovation labs, which come up with ideas; launch, test and track them with data analytics; then refine and launch them on a larger scale.
It’s important to note that innovation is also about the shopping experience, both in-store and online. In fact, millennials have been known to share and even brag about their latest shopping experience through the internet and social media to friends. Customers, who can order anything from their desktops or mobile devices, are much more selective about in-store shopping experiences, and they won’t tolerate a subpar in-store or online experience. Many retailers are exploring technologies that offer unique experiences in their stores that customers can’t find online, such as smart fitting rooms, smart shelves, beacons to transmit smartphone notifications to passersby and interactive capabilities. Other new ways of interacting with customers also call for some new thinking, such as developing distinctive customer communities and experiences, and effective use of brand ambassadors and social media.
Leveraging available data in innovative ways to create a more personalized shopping experience presents another opportunity to further develop brand loyalty. To that end, customer analytics continues to be a key focal point of successful retail companies.
Integrating both technology and in-store experience investments is taking omnichannel to the next level. Centralizing inventory reporting, visibility and alignment with operations is one way retailers can use analytics to provide the customer with a more seamless shopping experience. Investing in technology that provides integration of information across all channels can not only help reduce duplicate investments in inventory but, equally as important, improve the customer experience. Whether the customer is purchasing in-store or online, having the ability to get them the product when and where they want it is key. To take it one step further, retailers that are working more closely with their vendors, manufacturers and suppliers to improve integration of information and reduce time in the supply chain order cycle can also increase efficiency of operations.
Questions retailers should be asking:
• What are we doing in our store to get customers engaged or interested?
• What experiences do we offer in our stores that can’t be replicated online?
• Are we in the right locations?
• How do we stay competitive on costs?
• How unique is our shopping experience across all channels?
Though technology investments are very important, let’s not forget about the stores. Even with the explosive growth of online and mobile shopping in recent years, 90% of retail sales still happen in the brick-and-mortar environment. Maintaining a balanced approach and continuing to invest in the store experience, in addition to technology, brings results. A superior in-store shopping experience can separate one retailer from another, not only via the physical store appearance, merchandise displays and overall comfortable shopping environment, but also through engaged store associates and the use of technologies in stores. The skill set of sales associates is evolving and investing in training and development for store associates enhances the shopping experience, which is another opportunity to drive customer loyalty and ultimate success.
To keep pace with the changing demands of consumers and revolutionary impact of technology, retailers must evolve the way they do business to maintain an edge in a very competitive environment to grow market share or avoid losing it to their competitors. Therefore, revisiting how business is done is paramount to success. Doing nothing is no longer an option. The pace of change is too fast to ignore. Customers have more technology at their fingertips now than ever before, which is challenging retailers to reimagine how best to reach the end consumer in a compelling way. Retailers must continually reinvent themselves to sustain success and the growth in the role of Innovation Executive in retail companies is a great example of this evolution.
In recent years we have seen the growth of e-commerce and mobile shopping. What does that mean for the catalog? Some companies have announced the end of their catalogs, while others have shifted their catalog’s focus to drive the delivery of their brand message, which also drives traffic to stores and online. Either way there is ongoing change and evolution in how catalogs are used. At the same time companies are also expanding their social media activity and all things digital. What will be next? How do you engage the millennial shopper while retaining the baby boomers?
Historically we have seen explosive growth in stores, which has resulted in a significant and disproportionate amount of retail square footage per capita in the U.S. than other developed countries. While stores are still critical, many retailers will certainly be reducing their store openings in the future and closing stores as their leases come due (or take advantage of co-tenancy clauses to exit space as a result of other retail store closures). What does that mean for the average mall? Given the growth of online shopping, maybe stores can be utilized in a different manner, more as a showroom or mini distribution center to provide an efficient and cost-effective method to get product to the consumer along with a convenient way to process returns. Even the store must evolve.
Innovation, investment and evolution are keys to success in the ever-changing dynamic environment that drives the retail industry. Consumers are passionate about the brands they love and will reward retailers that provide compelling products along with a seamless and unique shopping experience.
Partner; Practice Leader, Retail
T +1 212 624 5270