Will the customer only be reachable through online retail in the future?
Networked, individual, experience-oriented are three keywords that currently describe the mixture of the consumer worlds on- & offline. Many experts are currently calling for the chance to build a new understanding of the customer from the ongoing transfer of the customer to the online world and this is being discussed intensively in literature such as the current book „Retail Isn’t dead“ (Matthias Spanke).
Boring trade is dead and many retailers are drowning in a sea of uniformity, customers are looking for something special and how can this look like? Digitally supported, customer-focused, mobile, personal, connected, memorable and radical.
This cannot work in reality? Surely there are already positive examples today. The Neiman Marcus Flagship Store in New York connects the digital and personal world. Depending on the location in the store, screens display information that is easy to grasp or longer entertainment items. The dressing rooms are digitally linked and controllable lighting with voice-activated mirrors. And in terms of sustainability, even a second-hand department is existing. Beauty services then round off the shopping experience. Or the next time you are in Hamburg, take a look at Bon Prix‘ Retail Connect Store on Mönkeberg Straße and find an online shop in an offline environment.
Nordstrom has found a new way towards individuality and the combination of online and offline in North America with its local concept stores. These are stores without merchandise, where products purchased online can be picked up, tried on or returned. In addition, there are services such as consulting, repairs or services adapted to the location.
To win the customers of the future (Generation Z), it is essential to combine on- & offline, high-tech and haptics. „More than half of our shop sales have an online component somewhere in the process, and more than a third of our online sales include a shop experience. (Erik Nordstrom). However, winning this buyer base has been a major challenge. The new valuable commodity in retail is attention, only those who can attract attention and stand out from the crowd will win. In many scientific social studies, the phenomenon of reduced attention span is currently observed, which is generally seen as a side effect of information overload from customers.
Online trade and offline customers. Do they go together?
What makes it so difficult for the stationary trade to face the challenges positively? On the one hand, the inner attitude to still see e-commerce as competition, because actually it can be seen as an inspiration and valuable source of information. Customers are learning new buying behavior online and are now placing these expectations on stationary retail: speed, convenience and accessibility. They appreciate advantages such as fast product searches, helpful customer reviews, real-time stocks at the touch of a button, fast payment processes and convenient delivery. But one thing always fails online: the store experience. Because a store can create added value beyond the mere purchase.
That sounds like too simple a formula to be realistic? However, this formula can be illustrated with a concrete example. One of the advantages of the online store is the possibility to create communities. It doesn’t matter whether they make product recommendations or focus on the core of the product (Mammut and its app development is a beacon example). Older generations will shake their heads and point to the roots of communities that have always been personal contact. However, the online community can integrate thoughts into the stationary trade here the big companies are again a shining example whether Apple with free training Today@Apple or Nike with playing fields in the store to test the new shoes up to American Eagle with an integrated laundromat and coworking space.
New technologies turn customer expectations into customer experiences
Technologies and digital transformation are fast becoming a core element of modern store design. Quite a few have certainly heard the abbreviations AR, VR, AI and RFID, but for many it still remains a cryptic term. The argumented reality (AR) gives you the opportunity to try on the newest things in a „Magic Mirror“ without the hassle of changing clothes or even to try cosmetics without spreading them on your skin. With Virtual Reality I can create complete worlds, configure my new sneakers and wear my feet or take a virtual test drive in my newly configured car. Artifical Intelligence is only usable if I can collect data about the customer’s navigation over surfaces, where he stays, how long and what he buys. Then AI can help to predict customer behavior, predict best positioning and promotion and determine the optimal balance between quantity of goods, stock space and expected demand. Radio frequency identification is a massive facilitation of in-store services and is now even relatively inexpensive. It increases inventory accuracy to 98% and in some cases even beyond in real time. As a result, replenishment processes can be more targeted and online customers can be supplied more easily from the store (easy pick).
The current discussion about sustainability reveals what at first glance appears to be a disadvantage of stationary retail – the ecological footprint and thus the energy consumption of the sale could be much higher than with online sales? But on the other hand, stationary trade can make its sustainability stamp tangible for customers who are only promised this online. First and foremost, it’s all about transparency, and the stationary trade can take this into account in the store design. No matter whether it is about regional renewable raw materials, recycling offers, reuse and waste avoidance. So by creating an access where there is no further barrier to transport, you can design the topics of lending, reselling, redesigning or recycling in direct exchange with the customer. Subscription or rental models like „American Eagle Style Drop“ make a lot of sense in this environment. Sustainability will not be a short-term trend, nor will it be a hype that everyone in the chain to the end customer has to deal with.
Rainer den Ouden
Partner, ADCONIA GmbH
Consultant, ADCONIA GmbH