The retail industry is at the highest risk of being disrupted by new market entrants, with customer experience being the battleground for its future.
According to Gartner, despite the urgent nature of digital business transformation, only 3% of retailers are harvesting results from delivering and scaling digital business initiatives. Bob Hetu at Gartner said “Disruptors seek the weakest parts of the customer experience, emphasising the benefits of their solution and converting customers in the process.” It is imperative therefore that every retailer carefully examines its engagement with customers to discover any weaknesses before it impacts the bottom line.
Digital first retailers such as Amazon and ASOS have transformed the way that the industry thinks about the customer experience using technology. The endless digital aisles, next-day-deliveries, one-click ordering and ability to order using voice assistants like Alexa are all focused on removing points of friction in the customer journey, which are becoming the standard to meet and beat.
In this interconnected industry, the term customer experience now has two sides – making purchasing easy for the customer and making purchases fun for the customer.
The path to purchase
The path to purchase is the total journey that a customer participates in between the decision to consider buying something – i.e. need, selection, purchase, receipt - and then use.
It is more vital than ever before that in the age of growing digital-first disrupting powers, shopping experiences are as easy and friction free as possible to streamline the customer journey. Amazon is the textbook example of using technology to remove friction, with rapid delivery, on-click ordering and buy by voice all available to consumers.
There is no denying that in today’s customer-driven economy, the demands on brick and mortar stores have evolved. In June 2018, in-store sales fell by 1.7 per cent, the worst figures for 12 years. But onlineretail sales in the same month grew by 17.5 per cent, as they have done almost every month since 2000. It is therefore imperative that physical stores do more to attract customers. Enter experiential retail.
The idea behind experiential retail is to create an environment where customers go to learn, play and experience rather than just transact – a destination for experience.
Experiential retail can enhance the customer’s journey and help to pull traffic into stores. It often offers a way to defend against the big online-only retailers by doing something they cannot do. Games Workshop offer a form of Experiential Retail and it is no coincidence that its profits continue to grow.
The Apple Store is a great example, but others have followed this approach – Dyson, for example, and Samsung 837 in New York. Customers go to these stores to experience the products and get in touch with the brand. They often then go home and make purchases online, or in store to be delivered to customers homes. In fact, Samsung 837 does not have any product available to buy at the store. Going forward we will see more of this across different retail sectors – DIY stores teaching how to install shelves and grocery stores with cookery schools already appearing.
Experiential retail can be a key step in the customer’s journey. For many retailers it offers a key way to defend against Amazon and other digital first disruptors, by doing something that Amazon cannot do.
The key thing these two aspects of customer experience have in common is that they require a detailed understanding of the full journey that the customer takes.
Map the customer journey
So, if disruptors are targeting the weak points of competitors, how do you know what these are? To avoid disruption, you must identify these and fix them. According to Forrester, this is where customer journey maps come into focus.
A good customer journey map allows the business to recognise the steps and be immediately clear what they need to do in order to create a good customer experience.
I have been lucky enough to work with numerous retailers and other consumer-focused companies who have really taken this seriously. One of these companies we have helped to design and map over 2000 discrete customer journeys. This allows them to simultaneously understand from an outside-in and an inside-out perspective the impact of the customer journey on the organisation as a whole and every associated job role, system, data entity and risk. Friction points can be identified and eliminated, opportunities exploited, and new customer offerings or business models understood, evaluated and assessed for feasibility and risk before being implemented.
Understanding the customer journey allows you to build a real picture about your business and implement best practices to ensure that you never lose customers due to poor experience. As the field of retail becomes increasingly competitive, it is vital that retailers know as much about their customers’ journey as possible, in order to provide a tailored experience. The battle lines are drawn and as it stands, disruptors have an immediate advantage. Customer journey maps, as well as really understanding your customer data, will help retailers draw up battle plans and ensure they can compete now and in the future.
About Oliver Guy Software AG
Oliver Guy is Global Industry Director at Software AG, specialising in Retail Digital Transformation and omni-channel technology strategy. Oliver advises retailers across the globe on their technology strategy and decisions. With more than 20 years focused in technology, he has worked with major names in global retail helping them improve their business through the use of innovative technology.