It’s a fresh new year, a great opportunity for retailers to look back at 2014, and evaluate which efforts produced results and which were a waste of resources – or perhaps require some tweaking. Retail Category Consultants researched global retail trends, identified patterns in the winners and losers to give you these three retail trends to watch in 2015.
1. All that Data: “You Should Know Me By Now.”
Consumers are consciously giving retailers access to more data and with that access, consumers have higher expectations of retail communications. Retailers are expected to collect, analyze and predict more about the consumer by turning this data into actionable insights. It is no longer acceptable to send generic offers. To keep consumers engaged, retailers need to invest in technology to ensure they can analyze the data quickly, and communicate on a one-to-one basis with consumers.
Planning for the storage of data is critical.
The sheer volume of data points available points to the need for a strategy to ensure space to store the data. As well, the retailer data breaches of the past 18 months have demonstrated how critical it is to keep the data safe. The best retailers are building a strategic plan to identify program objectives, the data needed to help them deliver those objectives, and plans for safe storage. Hackers are always looking for ways to infiltrate systems. Data breaches have long-term detrimental effects, so don’t wait to recover—work to stay a step ahead.
In 2015 and beyond, retailers must make the shopping experience more personal and convenient or they will lose consumers to competitors who are satisfying these needs.
This means recognizing a customer across all channels and customizing the experience by adding layers using technology to enhance the in-store experience. True omni-channel is a way to distinguish yourself from competitors. Macy’s, while still not delivering a full omni-channel experience, is recognized as a leader in this area.
Using store inventory, Macy’s is piloting same day delivery in select US locations. This complements their buy online, pick-up in store offer which is available nationwide. They are also testing a variety of technologies, available online or in-store, which will enhance the customer experience by suggesting looks and making the path to purchase easier. This is seen, most clearly, in their new enhanced mobile apps. Without data, both to understand the customer and their inventory, Macy’s would be unable to provide this experience.
Using data to create a true omni-channel personalized consumer experience is one way retail winners are distinguishing themselves.
2. Customer Experience: “Get it right and WOW them!”
In order to convince customers that you can deliver an exceptional experience, you need to master the basics. The basics include thinking differently about who you hire. Several companies made headlines this year because their policies included both careful hiring practices and more competitive sales associate wages. This led to more engaged associates and less turnover.
Your associates are not just merchandisers and shelf-stockers: they are product experts.
They’ve got to have on-the-spot answers for customers; and retailers need to arm them with the right tools to do this effectively (e.g. iPads). If you are not hiring the best, training them and arming them with the tools to excel, how will you deliver the kind of customer experience that leads to referrals and repeat business?
Do the ordinary extraordinarily well: this is the mantra of the best retailers.
Retailers dedicated to customer experience also regularly use tests and customer feedback to ensure they are delivering. They also have quantifiable metrics against which they can measure customer satisfaction. Are you talking to your customers to learn ways to improve? If not, how can you be sure what you are doing is building loyalty?
Once you have your basic customer experience model running smoothly, you are in a position to add the WOW! factor. If you are not delivering on basic customer service, wait to add the WOW!. You don’t have the credibility with consumers that you can execute. Your efforts are better invested in getting the basics right.
What is the WOW! factor? It’s that something extra that retailers bring to each customer touchpoint to differentiate their brand, whether it’s a marketing campaign, a check-out experience, or customer service.
Through the use of technology, company values in action, or by showing customers how well the retailer understands them, the WOW! factor increases customer visits and encourages a larger basket size.
Let’s take Burberry as an example. The brand reached record profits in 2014, growth largely propelled by an extraordinary omni-channel experience. After research demonstrated that their millennial shoppers were more influenced by peer opinion than by traditional marketing, Burberry created their ‘The Art of The Trench’ website to give customers a platform to showcase their connection with the brand through selfies taken while wearing their iconic trench coat.
Aside from making the customer feel special, Burberry created brand advocates by encouraging peer sharing, click-throughs for easy online purchases, and elevated the experience by giving browsers the option to sort through pictures by gender, trench coat type and features, including weather.
They also used their customer data to demonstrate their understanding of their customer’s passions. Knowing that music is an important part of their target shopper’s lifestyle, Burberry launched Burberry Acoustic to support up-and-coming British musical acts through their website, social media channels, and live shows, which has generated immense consumer conversations and positive buzz for the Burberry brand.
All retailers have social media channels and websites, but few know what steps to take to elevate the customer experience.
Whether it’s online or in-store, retailers must go above and beyond what their competitors are doing to make an impact. Use research to determine where the gaps in service or experience exist and build a platform to fill them. However, while all retailers have customer research, social media platforms, and marketing dollars, insight is needed to understand where to invest resources for maximum impact. And remember: it is only after creating a seamless, customer first experience that retailers have the credibility to add the ‘WOW!’ factor.
3. Bricks and Mortar: “Are You Fully Integrated?”
Listening to all the naysayers would lead you to believe you should moth ball your stores and take your business online. However, evidence suggests otherwise. In fact, the biggest ecommerce player, Amazon (among many others like Birchbox, Warby Parker, Frank & Oak) is opening a bricks-and-mortar location.
It’s proof that omni-channel is not just about digital, but about the fully integrated experience.
However, it also demonstrates that for all the data that retailers capture, they still need to see the customer in action in a bricks-and-mortar environment to fully understand them. Data doesn’t tell the story about motivation behind the behaviour. For example, Birchbox, a beauty and skin care retailer, is mostly an online subscription service. Their bricks-and-mortar store is a lab to help them understand how consumers shop. The knowledge they gain from this lab helps them online to ‘convert women who were passive beauty shoppers into active, passionate beauty shoppers.’
Bricks-and-mortar store formats are changing. There is a shift from the big impersonal retail boxes of the past to smaller stores or stores within a store.
These smaller formats excel at providing the one-of-a-kind experience that consumers want. For small, local stores, this trend is a way to win against the large multi-national retailers invading their markets. This trend extends to the mall of the future. In London, Boxpark has redefined the idea of the multi-store mall. It was created as a public urban space. It is wirelessly connected with a changing variety of restaurants, concept stores, bars and larger brands all built in recycled boxcars. During the summer, it is mostly open air. In the winter, it is covered. It’s also a dedicated area for all sorts of stunts and events by brands.
As well as changing the store format to suit consumers, retailers need to think about using bricks-and-mortar stores to test new ideas. No longer does every store in a chain have to be the same. For example, Story in New York City completely changes the store every 6 weeks. Pop-up store formats are everywhere and allow retailers to try new ideas and locations. Retail is in a constant state of flux; you need to test new ideas and constantly evolve to remain fresh in the consumer’s eyes.
Retailers have a lot of work to do in 2015. They first need to manage data effectively and deliver on customer expectations of personalized offerings and secure storage of data. Retailers then need to master the basics and do the ordinary extraordinarily well before they are able to elevate the customer experience. Those who master the basics will be able to credibly add the ‘WOW!’ factor to differentiate their brand from competitors’. And finally, they need to rethink how they bring product to consumers.
While the omni-channel experience is important, bricks-and-mortar stores tailored to provide unique and individual experiences will satisfy customers and deliver insight to retailers that cannot be learned through data alone. It is the combination of old and new ideas that will elevate your results.