The Biggest Challenges Facing Retailers Now
At the Retail Innovation Conference in Chicago last week, I participated in a discussion that zeroed in on the biggest problem in retail right now. Louise Hynd, SVP of Digital Wave Technology, put it this way: “The key is bringing physical [and virtual] together … to make them … interchangeable.”
What she means is, how can we give consumers online the ability to discover, explore and experience online as they do in stores? And, how can retailers with physical stores get access to consumer behavior data as effectively as online merchants who measure every click?
What makes the question so interesting is that everyone has a different answer right now and no one has a complete, definitive answer. There are thousands of technology solutions to address the issue and it’s a huge lift for a retailer to figure out which ones to use. No retailer has the capacity to install and operate them all.
When the answer finally comes, there won’t be one way to do it, it will be different for every retailer and brand.
Part of the future of retail will be hybrid channels that include the strengths of both physical and digital retail. Here are a few examples:
Shoppable livestreaming is where a live product demonstration is presented online from a store or other location. Consumers interact with each other and with the presenter as they shop, buy, pay, track and return all on the same app. According to Coresight Research, shoppable livestreaming will be a $100 billion business in China this year. No one can say whether livestreaming will be as big in the U.S. but it is clearly a big opportunity.
A company called Firework has software that embeds the livestream into a company’s website. That sounds like a small thing but experts tell me livestreaming is successful only when consumers can do everything in one place and that makes Firework’s approach a critical piece for success in livestreaming.
Another company called Mavi.io enables the touchscreen in your car to order groceries, like when while you’re on your way home from work and you want to pick up that item you forgot. That may sound unimportant but Albertson’s, the second largest grocer in the U.S., has already signed up for it and other big grocers are in discussions.
These new channels combine live with online and pickup and that is part of retail’s future.
Having a consistent experience in all channels is also part of the solution. The auction house Phillips, the third largest after Sotheby and Christie, asked Michelle Collins, President & Chief Experience Officer of digital agency A Non-Agency [sic], to create a consistent feel for both their physical and digital events so that their brand identity is clear no matter where buyers view an auction.
Conceptually, all this is simple but in reality it’s hard. Very hard. You only have to look at Amazon and see how successful they aren’t in physical stores to know that combining and coordinating channels is tough.
Technology is definitely part of the solution but the more technology you add, the more complex it gets. For example:
Retailers create enormous amounts of marketing materials but how do you know when to show what to who? A company called Data Wave Technology uses artificial intelligence to make sure consumers get the right presentation appropriate to their demographic, location or device.
Matt Maher, founder of retail tech advisor agency M7, says augmented reality is “a huge opportunity for retailers to scale product trials … to give you a retail experience anywhere in the world.” A company called Topology has unique technology to fit your prescription eyewear without ever going into a store. They will calculate how long the arms should be, how wide the bridge should be and how exactly the frame should sit over your eye for the best vision. Once you measure with them, they can accurately show you how the glasses will look and fit on your face. You can also order new frames you’ve never tried on before and they will fit you perfectly without ever having to go to the store.
The new skills that retailers need to learn will also create potential additional revenue streams.
Deborah Weinswig, CEO and Founder of Coresight Research explains that as retailers get more sophisticated in monitoring consumer activity in stores and online, they collect enormous data. Stripped of personalized information, the data can be resold. A grocer may develop information on how consumers act in the breakfast aisle. That’s valuable to makers of breakfast cereals and they will pay for it.
Content will also generate revenue. As consumer brands create more interesting content, the way the internet is developing (what’s called Web 3.0) will enable them to sell advertising on their own content (similar to how traditional TV works). For brands that create the best content, revenue streams will be meaningful sources of new revenue.
Making It Work
The above are the smallest fraction of the new channels and new technologies that retailers are looking at. When you compare these new opportunities to what retail was historically, you can’t help but conclude that retail is becoming an entirely different business than it was a short time ago, requiring new skills they never needed historically.
It will also be harder to develop those skills than in the past because each retailer needs to be original to be effective. So copying a competitor or raiding their talent pool won’t work as well as in the past.
It’s so complicated that you’d say the odds are against a legacy retailer being able to do it, you’d be better off starting an entirely new company with new skills and new culture to make it happen. That’s one of the important reasons why the last few years have seen so many startups effectively able to challenge existing retailers with far greater resources.
Raj Dhiman of Retail Strategy Group said that when they shop, “consumers go on a journey that is dark to retailers.” As technology improves, retailers will be better able to see how consumers arrived at the purchase decisions they’ve made. That will allow retailers to see what consumers are doing, what’s motivating them and how they can be better served. And that’s where retail has to go, giving merchants the information they need to do what their companies were made to do: giving consumers what they want.