From retail to me-tail: 2013's most important customer experience changes

From retail to me-tail: 2013's most important customer experience changes

Customer experience expert Shaun Smith forecasts the CEX trends likely to emerge in 2013 - and why brands must go back to basics.

 

 

 

“Retailers must take advice from Burberry and Virgin Media and take online in-store if they wish to survive.”

So says customer experience expert Shaun Smith of consultancy smith+co in the wake of even more British High Street retailers going to the wall. “Brands must offer additional value for someone going into the store - whether that's going to be fantastic advice or to some kind of experience that you couldn't receive in any other way - if they're going to survive long-term,” he says.

Retailers already demonstrating this convergence include Burberry, via its flagship store in Regent Street, and Virgin Media, both having brought online technology such as plasma screens in-store for customer information. Additionally, by abandoning the traditional sales register and arming sales assistants with iPads, some brands are delivering an entirely new new in-store experience.

For Smith, this convergence of online/in-store is the biggest trend we will witness in the customer experience space in 2013. But who’s driving this technology-inspired in-store experience – the brands or the consumers? Smith believes a bit of both: “Innovative brands are pushing the envelope because the latest technologies and experiences are things which consumers haven't experienced before. But this may well have come on the back of consumers expressing irritation with the fact that these different channels haven't been fully connected in the past.”

Associated with the growing convergence of online and in-store is the trend towards me-tail. According to Smith, consumers are going to see increasingly personalised offerings. For instance, O2's Priority Moments proposition leverages geolocation technology to deliver personalised offers and discounts to customers according to where they are. Tesco is also customising the experience for its wannabe wine connoisseur customers, offering a wine finder which provides information about the wines they might personally enjoy.

“It's all about personalising the retail experience and focusing on the individual,” he explains. With manufacturers such as Apple working on a web-integrated smart watch and Google with its internet-connected glasses, Smith believes that the emergence of these technologies will only increase the level of personalisation that is possible.

Secret sauce

So with so many High Street retailers going to the wall, is the combination of personlisation and the convergence of offline and online going to be the secret sauce to survival? “It may help save some, but not all of the High Street,” says Smith. "For brands like Burberry, Apple or Lush, the in-store experience creates value in and of itself, and the convergence is a powerful thing. Burberry has 12m Facebook followers and clearly the stores are very successful too, similarly with Apple. It very much supports their business and the foundations of their business.

"But there are also High Street retailers which don't really have a reason for existing on the High Street - they're not providing added value. A convergence between online and offline may slow down their demise, but I’m not sure it's going to save them.

"Those brands that are suffering most are bookstores for instance, which sell products that are easy to find online for a cheaper price or you can buy them from a number of different outlets more conveniently – so why bother going to a bookstore? A lot of empty retail spaces will become occupied by niche retailers or brands like Starbucks and Costa who will create different formats for local markets.”

Looking forward, Smith also forecasts the emergence of companies become community-focused rather than shareholder-focused. Noting the recent furore over Amazon and Starbucks’ tax avoidance, he explains that consumers are now increasingly demanding brands create value for the community in which they operate. For instance, in the financial services sector, brands such as Metro Bank and First Direct are creating a high level of trust by existing to truly serve the customer.

Tied to this trend, we’re also going to see a growing clarity about what brands stand for and what their real purpose is, he says. “American Apparel, for instance, got a huge amount of publicity because of their sale during Hurricane Sandy. Consumers reacted with anger at this commercialisation of what was a terrible event for many people, and social media was buzzing with outraged customers voicing their opinions about the apparent lack of sensitivity.

“You will increasingly see brands having a clearer sense of who they are and why they exist, and brands that achieve this will be able to gravitate towards those things that create value. Such brands will have much greater influence in the future.”

Customer control of data

Smith also believes that another trend we are likely to see in the customer experience space this year is the shift from social status to social influence. Whilst social status used to be about who you know, marketing tools such as Klout, Kred and PeerIndex are putting greater focus on who you influence. As a result, we’re going to see brands increasingly prioritising response to those customers with the greatest influence, as measured by their Klout, Kred and PeerIndex scores.

Following years of growing concerns about data privacy, 2013 is also going to mark the year that consumers really start to demand a say in how businesses use their data, says Smith.

“They are now understanding the value of their data and are going to take an active role in managing it, refusing to provide data to brands that use their data and sell it on, or demanding some sort of commercial arrangement in the way that their data is used," he explains. "The public outcry at Instagram's changes to its terms and conditions in recent weeks is a good illustration of how customers are now wishing to control their own data.”

So what can brands take away from these forecasted trends - and how can they put them into practice? Smith recommends that businesses go back to basics, re-evaluate their purpose and, once they have done that, reconsider their positioning in the market and their promise to customers, to ensure that there is alignment with the company's core purpose. Once there is complete strategic alignment, then the business will have greater clarity about how it should approach the customer experience, and what that in turn means for the company's people, processes and products.

“In the absence of a clear strategic framework, then organisations tend to do lots of well-intentioned things, that in themselves are good things to do, but that don't provide a return," Smith says. "These initiatives end up competing for budget or resources, when clearly it is better to do those things that are going to give you the biggest leverage. After all, you can only do so many of them.

"So there needs to be a way of helping organisations to focus on the critical few rather than the trivial many.

If you have an aligned framework then it really does help you create conditions around the best way of running the business as well as identify those things that are going to have the biggest impact,” he concludes.

 

Shaun Smith speaks and consults internationally on the subject of the customer experience. Shaun’s new book ‘BOLD- how to be brave in business and win’ co-authored with Andy Milligan was published in April 2011 and has recently been awarded ‘Business e-book of the year’ by CMI. You can compare your brand with the BOLD brands by downloading the FREE ‘Bold how to be brave in business’ App from the Apple iTunes Store or by following this link: www.boldthebook.com.
For more details about Smith+Co see www.smithcoconsultancy.com.

Comments

This is an interesting item on the future of multichannel retail but I think it should look further ahead. I feel responsibility for the changes taking place in retail (and beyond) at the moment sits firmly with the consumers, not shared as ther article suggests. Their behaviour is changing and it is driving the way technology is used and developed. Brands and retailers are playing catch-up and will continue to do so until the step back from their business and work out what the future will hold.

The first thing retailers need to do is take an honest look at the market they are in and evaluate whether they are being dissintermediated by the web. Books, CD's and Video (DVD & Blueray) are all experiencing dramatic changes in the way they are consumed. Digital downloads of all three are on the rise and will outstrip sales of physical products in the future, in the same way online advertising has now outstripped TV advertising.

The article claims bookstores are suffering because it is easier and cheaper to buy books online. That is today's problem for music and video and probably yesterdays problem for books. The real issue is that the market for physical products is shrinking and the rate of shrinkage will accelerate. Retailers in these markets have simple choices: diversify; go niche; or exit. The problems they face are different to Burberry.

Burberry can have a strategy that creates showrooms because they are the brand. I agree that the experience in store is important but in the case of Burberry I think the brand strength is critical. Burberry has just reported 13% retail growth with like for like store growth contributing 6%. This alludes to online growing much faster offline. There's is the model of the future - a small number of single brand "showrooms", delivering on the brand experience and supporting online sales both directly and indirectly.

A store experience can be created but it is a different prospect creating one in a flagship store on Oxford street to recreating the same experience on my local high street. In the future consumers will travel to major shopping areas for the experience of physical shopping but the high street will not exist as it does today and nor will retailers.

 

 

 

 

-- Paul Blunden www.paulblunden.com @pblunden www.uk.linkedin.com/in/paulblunden

 Paul,

Thank you for your comments. I completely agree with you, particulalrly your point, "There's is the model of the future - a small number of single brand "showrooms", delivering on the brand experience and supporting online sales both directly and indirectly." This was where I was going with my article. Had HMV been able to shut 50%+ of its stores in the local high-street and focus on more profitable, larger, flagship stores with richer online/instore customer experiences supported by enthusiastic and knowledgable staff, it may have had a future.  I think the high-street retailers will only survive if they can create a store experience that offers value beyond the products themselves (Burberry, Apple) or they provide an experience that just cannot be replicated online (Lush, Build-a-Bear).

I believe the web allows consumers to interact with the brand at a deeper level which, in turn, supports, the desire to visit the store which becomes a showroom for experiencing the brand thus creating a virtual circle. I think the Ferrari store is a good example of this. You may be interested to read this article.

http://www.smithcoconsultancy.com/cx-blog/

Thanks again for your comment.

Regards,

Shaun Smith

Thanks Shaun, I'm glad we agree and I'll take a look at the article you linked to.

 

-- Paul Blunden www.paulblunden.com @pblunden www.uk.linkedin.com/in/paulblunden

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