The store experience in digital retailing
Technology is rapidly changing the face of customer experience. Almost every retailer operates an e-commerce division of their business and while online purchasing for many is not the primary source of profit today (shopping in United States accounts for 9% of total retail sales, 10% in the United Kingdom), the online experience is undoubtedly a primary source of change in consumer behaviour which will eventually take its toll.
The architecture of digital retailing allows e-commerce based companies not only to achieve greater return on investment (Amazon’s five-year average return on investment, for example, is 17%, whereas traditional discount and department stores average 6.5) but do it while reducing prices forcing brick-and-mortar retailers to re-evaluate their entire way of being. They have been almost forced to either compete on price, which is almost impossible, or provide additional value to compensate for the price difference. Either way the business makes a sacrifice.
More importantly, digital retailing and technology have changed customer’s behaviour, expectations and attitudes. Today online retailing occurs for items no one would even dear suggest would happen without the value added by physical interaction. Zappos and ASOS however, selling shoes and apparel, have been growing and making profits for more than a decade now. Information is so accessible that customers are able to check prices and availability of products using their tablets or smartphones on the spot, while in store. And waiting lines are substituted with clicks altering expectations across moments of interaction.
With all that, the key mind boggling question becomes: What is the store’s role and value at a time when digital retailing is fast growing? Best Buy deciding to close the 11 and withdrawing from opening 200 stores in UK is just an example of what many retailers in western economies think about and fear.
An emerging and growing response to the issue is “omnichannel” retailing. This essentially means integrating physical and online channels in order to provide a seamless experience and implies that the company behaves in a consistent and deliberate manner towards the customer regardless of the door they walk in so to speak.
The main assumption here is that the retailer would be able to collect and connect all data they have of the customer (such as preferences for example) through interacting with different channels and use them to decide how to behave towards them at key moments of contact.
But rather than trying to predict customer preferences and tailor the experience to them, perhaps businesses should focus on creating settings that allow the customer take over control and design their own experience. This idea was initially proposed by Doc Searls but Don Peppers from Peppers & Rogers Group in a recent article summarizes it well:
“For years now, Internet guru Doc Searls has been suggesting that the future of commerce will be defined not in terms of how commercial enterprises manage their selling and marketing processes, but by how consumers manage their spending and buying processes………….our thinking was that sooner or later technology would be so inexpensive that consumers would be able to use it themselves to retain control of their own personal information and preferences, rather than having them “managed” by the companies they dealt with….. “
What this would mean for the store experience is that, rather than being a point of purchase or key source of information (which it gradually ceases to be) it would actually become, like other moments of contact, merely a space for customer decision making.
In “The future of Shopping”, Darrell Rigby describes a scenario where a customer walks in the shop to look for an item and on the spot, via her smart phone, used customer reviews, checks prices and even video calls friends for an advice. Imagine a store where customers walk in to and go straight to a terminal that aggregates others’ reviews, scans your bag and suggests the perfect shoe to match and allows you to dial or MMS your best friend for a quick consultation. In the end customers “order the item” in store or not but walking away feeling that space is familiar and safe. The store essentially becomes a familiar space and essentially “time-out” for customers to make up their mind.
This is “neither as futuristic nor as fanciful as you might think” as Darrell notes and under these circumstances it will become important for retailers to stay ahead of the curve by designing all that purposefully in the experience.
This is a big jump in mindset for retailers and requires e a visionary approach. For example, consider instead of focusing on sales, having stores focus (and measure) number of decisions made or customers’ attitudes changed. Or instead of training staff in knowledge, train them in psychological techniques of confidence boosting….
Retailers are forced to start seeing things from a customer perspective (which is not new to them really), but more than ever they need to be courageous and visionary.