Four ways to survive the retail apocalypseby
Could any of the recent high street retail failings have been avoided?
John Lewis, House of Fraser and Poundworld are closing stores. Sir Charlie Mayfield, chairman of the John Lewis Partnership, has warned that the malaise "isn't a blip, it is a major shift and it has a while to run”. It would be an understatement to say that retail is undergoing a transformation.
Shopping centres are empty, ecommerce is taking a larger share of the pie and consumers are spending more on experiences than products.
Media reports have been quick to label these changes “the retail apocalypse” with the Financial Times web-site recently featuring the headline “More clouds gather over UK retail” and the Guardian; “6,000 shops close in tough year for UK’s high streets”, but it is a misleading label.
A quick retail reality check: in 2017 total retail sales reached 19 trillion Euros – an increase of 5.8% over 2016. Price-based and premium retailers opened more stores from 2015 to 2017 than closed them. About 91% of all retail sales were transacted in a brick and mortar location and finally, by 2025 it is predicted more than 80% of retail sales will still likely occur in shops.
According to a recent article by Deloitte, 2017 was tough but there are signs that 2018 will be a better year for consumers as inflation is set to reduce and wages are starting to rise. Less of a squeeze on consumers should be good news for retailers. They correctly predict 2018 as seeing more store closures but stress that although the store has a key role to play, there will be fewer of them. The key is transforming to meet the shift in customer expectations.
By 2025 it is predicted more than 80% of retail sales will still likely occur in shops.
While it is true that some brands will not survive this shift in both customer expectations and the rise in online competition, other brands are thriving. Retailers cannot afford to rest on their laurels, though, as the landscape continues to evolve.
Here are four ways I see successful retailers beating the odds:
- More click and collect
Click and collect is still a growing area for strategic retailers. For consumers, the option to pick up their orders at a local store is incredibly convenient, but that’s not the primary reason customers choose this option. In a survey of consumers who shop online and pick up in-store, conducted by Internet Retailer, 73% of respondents said they choose that option to avoid shipping fees.
There were a number of other reasons selected by respondents, including “they did so because the store was nearby”, “they didn’t want to wait for delivery and needed the item that day” or that “they were going to that store anyway”.
This consumer feedback provides valuable insight into how you can attract more of your online customers to pick up the product in-store, reducing your overall fulfilment costs and potentially selling more product.
There are also a number of ways to entice more customers such as including delivery details directly on your product pages that let them know when they can expect the order or notifying them during the checkout process that the product is available now to pick up directly from their local store.
- Invisible AI
"By 2020, 85% of customer interactions will be managed without a human,” says Gartner.
From personalised recommendations to image recognition, artificial intelligence is transforming retail. In fact 42% of retailers have already purchased or plan to purchase a consumer AI device, according to PwC. Not all AI solutions are equally valuable though, and it’s essential to be strategic in how to adopt the technology.
- Transparency is the new currency of loyalty
Shoppers are becoming more attuned to the conditions in which products are manufactured, the materials used, and the environmental impact of the entire retail ecosystem with partners and the supply chain. According to a survey by Label Insight, 73% of customers were willing to pay more for a product that offers complete transparency. However, transitioning to new transparency standards can be a complicated task that affects suppliers and vendor partners.
Instead of attempting to implement all the changes at once, prioritise customer feedback. Identify the areas where customers want more information to guide the efforts to build transparency into your business.
- Using customer feedback and emotion analytics to give insight
In such a competitive market place as retail, if the product is no longer the differentiator – so what's left? The answer is the relationship you have with your customers. And it is both the foundation and objective of great customer experience.
Work in the field of behavioural economics has demonstrated just how dependent on emotions we are for decision-making - even very big decisions, where we think we are acting 'rationally' - and many retailers are today using emotion analytics to help them understand their customer and most importantly how the customer feels about them.
Retailers are looking to better understand their customers’ journeys and how customers generally feel at different stages - what might be motivating them, what might influence their decisions – and using those insights to design a better experience.
One example of how this insight could be used would be in the arena of receptiveness. An organisation could convert the emotions into understanding whether and when a customer would be receptive to hearing from it. This would therefore influence whether they are contacted, the content that is provided to them and how through which channel the interaction is completed.
The use of emotional insights could also extend into the world of bots and AI, enabling organisations to choose which script to use and which tone of voice to adopt whether the interaction is managed by a human associate or being delivered through an intelligent virtual assistant.
And the evidence shows that people will pay a premium to those organisations that will provide them with a personalised, relevant and seamless experience.
Sources: eMarketer, Deloitte, PwC, GPShopper, Kantar Retail, Bell and Howell, Alliance Data, Label Insight, Forrester Research.
Iain Banks, Regional VP International Markets, TTEC is responsible for developing TTEC's full International go-to-market business plan for sales, marketing and solutions. Iain is an experienced, senior-level business development professional with a career spanning more than 18 years in the Global BPO/Contact Centre environment, with a proven...