Retailers Must Innovate to Thrive in the New Normal
As customer expectations continue to shift in an increasingly digital world, shoppers have come to want products in the fastest and simplest way possible — even in the middle of a devastating pandemic.
To say the retail landscape in 2020 was difficult would be an understatement. Brick-and-mortar stores were hit by a rapid downturn in foot traffic and widespread closures due to shifting regulations. E-commerce operations have suffered whiplash due to shifting retailer strategies used to attract new shoppers, retain loyal customers, and maintain growth during this uncertain time period. While the online segment had been growing rapidly before the pandemic, with online apparel growing at 10 percent annually — but leap-frogging ahead three years to four years in the last six months alone, it's now expected that online apparel sales will draw even with in-store sales by 2025. This growth comes largely by cannibalizing in-store traffic.
This has sharpened the focus that, post-pandemic, these two channels can be seen as two distinct, but interdependent channels of a single whole. Even as this “battle” between in-store and digital rages on, retailers that offer engaging, personalized experiences can, and are, thriving.
Here’s how retailers can embrace personalization solutions and adapt to new challenges to drive sales.
Retailers with IRL locations should still strive for e-commerce innovation, now more than ever. The key is to do so without abandoning real-life customer experiences. Retailers will thrive if they manage to establish a potential customer journey as a continuous and complementary process that crosses both digital and physical destinations for a symbiotic buying ecosystem — and they can do so via hyperpersonalization.
At least 63 percent of consumers want personalized recommendations, while 62 percent of consumers expect personalized discounts and recommendations based on shopping histories across in-store and online. COVID-19 has made return on investment a bottom line game-changer for retailers in particular. Retailers are beginning to truly break through with analytics-based commerce by catering to customers’ unique tastes in real time — in-store and online. Customized inventory can also uniquely position products and experiences across diverse customer demographics, which deepens customer loyalty to brands as opposed to one-and-done sales.
From cash, to cards, to your Apple wallet, to Klarna, technology has worked to improve transactional efficiency while offering the interpersonal connections consumers care about. A retailer’s primary goal is to not just make a sale, but create the perfect equation to strategically price items and make the final payment process as frictionless and secure as possible.
Retailers must strive for customer journeys that are fast, easy, inexpensive and personable. They can do that by ensuring the final step is smooth and intuitive by integrating contactless payments and pickups to cut down on lengthy checkout times. They can also use that extra time saved to run detailed sales and inventory reports to adequately adjust pricing to maximize the store’s profit and sell-through ecosystem. Sophisticated real-time pricing algorithms have started making a big difference in optimizing sales.
(Digitally) Try Before You Buy
Fifty-nine percent of consumers think companies have lost touch with the human element of customer experience. As much as shoppers would like to be the masters of their own purchasing domain, they still crave human interactions despite COVID restrictions. And, at the same time, retailers can’t simply reject advancing technology for the old, pre-pandemic ways of doing things.
Unfortunately a side-effect of many retail technologies is increasing depersonalization. Yet the best businesses tend to succeed when their retail marketing strategies match discreet retail innovation with digital proxies of tangible shopping experiences.
Shoppers obviously don’t want to go into stores, but it's just as important as ever for customers to try on products, such as apparel, before they buy. Even with buy online, pickup in-store (BOPIS) and curbside pickup, customers need to see how certain items fit and look beforehand so that they don’t have to return in-store. Augmented reality (AR) solutions help to minimize that risk, undercutting the doubt one might have to make an online purchase or the potential COVID exposure and time needed for trying on in-store.
Even market heavy hitters like Goldman Sachs recognized the importance of body measurement technology before the pandemic accelerated the need. Apparel retailers can provide their shoppers with a fun, easy and helpful virtual fitting room experience that benefits both the shopper and retailer. AR attempts to rethink the experience and presents future opportunities for repeat, loyal e-commerce customers.
All of these factors make it clear that creating a necessary ecosystem balance between in-store and online can connect shoppers to brands and products on a deeper level, creating an unmatched loyalty. For struggling stores to survive, they need to re-evaluate how to deliver their audiences what they want. Giving consumers a dependable experience is a winning strategy only if brands know how to achieve that in the current omnichannel retail landscape. The speed and success with which retailers adopt emerging sales technologies may differentiate which retailers thrive and which wither.
Dave Sharma is the co-founder and CEO of AR-powered virtual fitting room solution Perfitly.
Forty-plus years leading large operations in manufacturing, technology. Founded, established, divested and acquired several businesses in the TTA-Transitair group of companies. Led international consortia in large infrastructure projects and workforces of several thousand. Education: MBA, IIT Chicago; B. Tech, Indian Railways Institute of Eng.