The benefits of online shopping are obvious: its speed, ease and convenience drove Q2 2017 e-commerce sales to $111.5 billion, a 16.2 percent increase year-over-year. Still, if given a choice, 64 percent of online shoppers prefer buying from physical outlets — a number that, surprisingly, increases when talking about younger shoppers. Millennials and even Gen Z prefer to shop in stores.
It’s become clear that aspects such as tactile satisfaction, instant gratification and social dynamics are creating a resurgence of retail stores, illustrated by the well-documented move of formerly online-only retailers opening physical stores.
But to make it worthwhile, especially among younger cohorts, simple brick-and-mortar 2.0 won’t cut it. Retailers will need to reimagine what the in-store experience can be — and technology is the key. An effective “brick and tech” omnichannel model blends the best of the online and offline worlds, creating concierge shopping experiences and opening opportunities for brands to dramatically reinvent how they understand and engage consumers.
Stores of the future will tap into the craving for experiences, both entertaining and educational. Retailers will use virtual reality (VR) content to design immersive, interactive experiences where the customer becomes part of the story. Examples include a sporting goods store offering a fitness studio to try out products; a kitchen supply store offers cooking classes; or an outdoor equipment store organizing outdoor activities. In Nike’s SoHo store, customers enjoy a basketball court with digital video screens, an enclosed soccer trial area, a treadmill/jumbotron combination that simulates outdoor runs, a customization shoe bar, touchscreens embedded into walls throughout the store, and dedicated coaches on-hand to put customers through their paces as they test out new sneakers. This is an example of true “experience-driven retail.”
As an antidote to online choice overload, curated retail experiences in the form of pop-up stores are proving more popular with brands. Ideal for short-term support, like product launches, seasonal merchandise and try-me opportunities, revolving storefronts offer customers an evergreen menu and provide retailers with cheaper and lower risk ways to deliver a physical option.
In-store, technology will provide a more interactive retail experience, using touchscreen panels to find and combine merchandise, virtual fitting rooms, and augmented reality for customers to see themselves in different scenarios. Technology will also enable retailers to replicate the customer-recognition benefits of online shopping, where customers will walk into a store and associates will have information on who they are, how they shop, what they've looked at online, etc., continuing the engagement, rather than starting over.
Hungry for social interaction, millennials are deeply influenced by social media and peer recommendations. They’ll go online to discover products, but they still want to touch, feel and explore before purchasing — and often want to do that with friends and family. They’ll even trade off online discounts for a group experience, like those offered at Books-A-Million, where a bookstore became a social destination. Retailers will deploy social shopping technology with digital screens in key areas, like parking lots, shopping district junctions, shop windows, and eateries to help customers find products, check out reviews, and point the way to where to buy. Interactive online galleries display user-generated content on digital screens.
In another example, Nordstrom is launching a new concept store, Nordstrom Local, that offers manicures, a bar that sells coffee and alcohol, and in-store pickup for online orders.
Even if the compute power in smartphones doesn’t translate to online purchases, it still dramatically impacts consumers’ expectations and requirements for how the in-store experience should be. Ninety percent of consumers said they use their phone while shopping in stores. Going forward, they’ll expect to use those devices even more, especially to streamline the process, such as mobile checkout and click-and-collect services. Another convenience, in-store pickup, is gaining in popularity, with nearly eight in 10 respondents saying they would consider buying digitally and picking up if they could receive an item three days earlier.
Further extending the bridge between click and brick, technology-enabled parking, including robot parking valets and integrated parking apps, will help shoppers find parking spaces. We’ll see other options like dedicated e-hailing pickup zones, shared economy parking, and fast-charging EV stations. Parking garages may even be designed for future conversion to retail space as autonomous vehicles reduce the need for private-car parking.
A huge benefit of online shopping is the ability to track customer data. By integrating online data with in-store data, retailers will better understand the end-to-end customer journey and develop new types of digital communication with customers in-store. For example, shelf-edge technology enables shoppers to look up product information, read reviews and recommendations, and get personalized offers directly to their devices. IoT-enabled digital signage can push location-specific content to consumers in real time. Store associates will be able to access customer preference and behavioral data, and engage and transact with customers anywhere on the floor.
Connected technologies also offer operational efficiencies such as improving inventory management. Also on the horizon: the ability to adjust shelf-edge pricing in real time using internet-enabled smart tags to lower prices on promotional or low-turnover items.
Clearly, the desire for physical retail shopping remains high, but how that experience is delivered must change significantly to keep up with consumers’ evolving expectations. As with most other industries, technology holds the power to radically transform the in-store experience and create fresh and unexpected ways to attract and connect with customers.
Kobi Elbaz is vice president and general manager of the Americas Personal Systems Business at HP.
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Kobi Elbaz is Vice President and General Manager of the Americas Personal Systems Business at HP. Kobi’s end to end responsibilities include P&L management, product management, sales management, business planning and operations, and marketing for both Consumer and Commercial product categories in the Americas region. Prior to this role, Kobi was Vice President of North America Commercial Personal Systems, responsible for the overall Commercial business, including product, marketing and sales strategies; business and product development; and business execution for North America. Kobi joined the company in 1996. Since that time he has held various leadership positions, including Vice President of Commercial Personal Systems, Printing and Personal Systems for Europe for the Middle-East and Africa (EMEA), as well as General Manager of Personal Systems Group in Israel and Director of Commercial Retails Solutions for PPS EMEA.