In 2017, we have seen a seesaw between brick and mortar retailers going bankrupt, such as Toys R Us, and online retailers trialling physical shops, such as Amazon. One thing is for certain, there is a lot of change going on in this sector; and, as the pace of disruption continues, we will continue to see more dramatic changes in 2018.
1. Eat or be eaten
Failure to transform will lead to retailers filing for bankruptcy or being acquired.
Shoppers are increasingly making purchases through “clicks” rather than instore. To adapt to the new normal, retailers will have to transform stores to become either fulfilment centres or experience centres (see #2) – or both.
By acting as a local fulfilment centre, aiding the fulfilment speed of the overall customer experience journey, store networks – particularly those close to population centres - can allow rapid distribution of product to consumers.
2. An immersive experience
Stores will become experience centres.
By acting as an immersive experience centre, where customers can go to try out products or get to know the brand better through hands-on activities, the brick and mortar store can be reinvented.
The store has become an active part of the supply chain.
Hindsight can be useful here when you think that Toys R Us only competed based on price and assortment (the same as Amazon does). Perhaps it should have turned shops into big playrooms, where children could use their products (and their parents could order them!).
3. Adapt at the speed of Amazon
Winning retailers will be the ones that can change direction on a sixpence or a dime.
There is no “silver bullet” to competing with Amazon effectively; the key is in being able to adapt quickly and experiment with new business models and potential revenue drivers. Rental shoes and cars-by-subscription are two examples.
Innovating quickly might mean developing your own ideas or simply being a fast follower.
4. Intelligence included
AI will enable Alexa and Google Home integrations to allow consumers direct access to their chosen brands – or the other way around!
AI and augmented/virtual reality will start to play a part in retail, as will natural language intelligence with voice control for store operations; for staff to get real-time stock information in-store and for head office to see real-time performance metrics.
“Hidden AI” built into operations leveraging IoT technology will respond to changing business conditions without the need for human interactions. The result will be smart supply chains that respond automatically re-deploying inventory without management interaction.
5. I feel your pain
Retailers will look to solve their own - and mostly their customers’ - pain points to gain competitive advantage.
To differentiate, retailers need to solve a problem for the consumer; smart retailers will focus on the pains and problems in the customer experience.
“Virtually every disrupting organisation has solved a pain point in the customer experience.”
Retailers will look at their own pain, like how to compete with Amazon and other disruptors, as well as their customers to see how to get visibility and improve efficiency.
6. Channels, what channels?
Progressive retailers are moving away from having different channels that compete with one another towards true unified commerce.
Omni-channel has been the recent buzz phrase, but the new term being used is “unified commerce.” But omni-channel isn’t done yet – most retailers still struggle with a single perspective on the customer across all channels. The ability to allow consumers to return an item, via a different channel from which they purchased it, still has to be figured out.
Consumers expect retailers to have full knowledge of every prior interaction across all channels – but few manage to satisfy this expectation. Winning retailers recognise the fact that using multiple competitive channels is not the best strategy.
