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GUEST COMMENT How to thrive in the era of digital: three lessons for retailers

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Customers think brand, not channel, argues Sam O'Meara
Customers think brand, not channel, argues Sam O'Meara

This year’s collapses of Toys ‘R’ Us, Maplin and East have sent a clear message to the retail sector: adapt, or fail. The trend is set to continue. Forrester anticipates that physical store closings are to jump by 33% in 2018. On the other hand, ecommerce is predicted to account for 17% of retail sales by 2022, up from 12.9% in 2017.

 

Digital is increasingly an influence on the average consumer, no matter when and how they choose to make a purchase. Digital and digital-enabled experiences will be the primary growth driver for retailers. Already back in 2016 Deloitte claimed that over half of every dollar spent in a store is influenced by a digital interaction.

 

It’s one thing for retailers to be aware that digital is important, but it’s another thing for them to fully understand how - and why - to best utilise it. Many are struggling to adapt quickly enough to the latest trends and technologies. Moreover, when every customer’s buying journey is different and straddles the physical and digital worlds, it’s difficult for retailers to work out how to cater to everyone.

 

But don’t despair: once you recognise the mistakes you’re making, it becomes easier to rectify them. Here are three digital lessons that retailers need to learn in order to stay ahead.

 

1. Consumers like using retail apps - just not bad ones


Apps have a nebulous position in the online shopping world. First of all, they have to be suitably different from the website in order to make them worth downloading. A study by UPS and comScore found that 53% of shoppers who don’t use retailers’ mobile apps state that it’s because they like using the website better. Many retail apps don’t add anything to the main event of the website. Just a glimpse at the App Store and Google Play shows swathes of retailers with apps with hardly any reviews - because nobody is downloading them.

 

Secondly, the retail apps that do exist have a pretty terrible track record and fail to live up to consumer expectations. 61% of consumers expect an app to load in under 4 seconds, according to research by Dynatrace, but only one retailer made it past this threshold. And that’s just when they open the app.

 

The truth is, many brands don’t get retail apps right. This leads them to wrongly assume that the reason why their apps aren’t performing well is because consumers don’t like retail mobile apps in general - not because there’s anything wrong with their app. But the price to pay for this is enormous - 85% of respondents said they were unlikely to continue doing business with a company after having a bad mobile experience, according to a survey by LogMeIn and Vanson Bourne.

 

Retailers must take responsibility for their apps and ensure that they offer a rewarding experience that goes beyond the website. Apps should offer features that take advantage of mobile device capabilities - for example, barcode scanning, deal notifications and nearby store locators.

 

2. Shoppers think in brand experience - not in individual channels


It’s old news now to say that consumers think in omnichannel. But the term ‘omnichannel’ is too often misunderstood. Retailers often fall into the trap that omnichannel means connecting a single digital experience to a single physical one - e.g. buy an item online, and pick it up in store.

 

In the mind of the consumer, these individual channels don’t exist. They’re just interacting with the brand as a whole. Omnichannel means delivering a unified and consistent experience every time a customer interacts with your brand. And consumers are increasingly taking control over this single brand experience: in the Deloitte study, two-thirds of consumers state that they prefer a self-directed shopping journey - up from a third two years ago.

 

Single-channel shoppers are a dying breed - and multi-channel shoppers are more valuable. A Harvard Business Review study of 46,000 consumers shows that omnichannel shoppers spend 4% more in store and 10% more online compared to single channel shoppers. So it’s more profitable for your business to make the effort to understand how they work.

 

3. Bricks-and-mortar has its benefits


The rumours of the death of bricks-and-mortar have been greatly exaggerated: it may be changing, but it’s not going away any time soon. An IBM study of Gen Z shoppers (age 13-21) found that 67% said they shop in-store most of the time, compared to 22% who shop primarily via web-browser. In fact, globally, the past three years have seen an increase in weekly bricks-and-mortar shoppers from 40% to 44%, according to the recent PwC Global Consumer Insights Survey.

 

This growth in shopping in-store may be down to the tangible benefits that digital-only can’t provide. According to Retail Dive, 62% of shoppers shop in-store because they like to see, feel and touch items and 49% like the instant gratification of taking something home.

 

But the difference between now and three years ago is the role digital plays in these physical interactions. Shoppers are using digital at all stages of their shopping trip, and 71% of both millennials and non-millennials used digital before. Many retailers may fear ‘showrooming’ - where consumers go to a store to test out the product before buying it online elsewhere - but ‘webrooming’ - browsing online and buying in store - is in fact more common, according to a US Harris poll.

 

Physical locations shouldn’t be forgotten as casualties of the retail apocalypse: they should be used as a competitive differentiator. Shopping isn’t just about convenience or efficiency, and bricks-and-mortar present an opportunity to provide positive brand experiences for a customer.

 

If you have a physical presence, use digital to drive people to stores - and keep them there. Make the most of digital-enabled experiences like buying online / pick up in store, beacons and augmented reality that can transform the physical experience into something even more engaging.

 

A whopping 52% of retail CEOs have not defined or started implementing a digital transformation strategy. This is in spite of the upheaval digital has brought to the industry. It’s time to start taking the initiative and making investments into rectifying these digital mistakes.

 

The real takeaway from all this? Understand your customers inside out. Know that digital has shifted power away from retailers to the customer and that retail technology, which has traditionally been focused internally to help scale, must become customer focused in order for retailers to survive in the digital age.

 

Author: Sam O’Meara is UK director of Applause

 

Image: Fotolia

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