In 2019 I attended the CX Retail Exchange Conference. Originally posted on CX Network.
In a landscape of what seems like an ever-growing focus on digital e-commerce, where does that leave ‘old-fashioned’ bricks and mortar? When e-commerce covers the five ‘C’s; cost, convenience, choice, control and customer relationships. What can physical retail stores offer to compete? Human interaction, community, immediacy of delivery and an experience to remember. An experience that leaves customers eagerly anticipating their next return. As Forbes describes: “Physical retail is not dead. Boring retail is.”
Here are the top lessons from this year's CX Exchange for Retail:
Customer Experience in Retail
1. Be global, act local
“Lines are blurring, it’s no longer black and white,” explains Oliver Fehl, senior director of retail concepts at Adidas, “so the most important thing is to be a global brand, that acts locally.” If you only act globally, you’ll be left missing the key ingredient; people. “A year ago, we opened a small concept store in Shoreditch, London, so we could be in the same place as the community. We hosted events, invited people to recreate shoes and chatted about the future of the community. What we learnt on a local level, informed what we did with the global stores.
"You might think that our biggest threat at Adidas, is our competition - but we are not afraid of them. In fact, we’re afraid of the small brands coming into the business and taking the market share. When there’s a lot of small brands you have to protect your business, and these small brands are the local shops connecting with the local community.”
2. Understand the behaviours, expectations and desires of each generation
Adidas’ Oliver Fehl explains the demands of the new customer and how Adidas are differentiating between their desires and ultimately catering to their specific needs:
Generation Y, otherwise known as, ‘The Lost Generation’ - they came out of education, straight into a recession which hit our economy quite hard. Subsequently they will not be as ‘well-off’ as their parents, they are still yet to own a house, and have accumulated debt - this group represents 30 per cent of our population. They’re highly social media driven, but they need to, ‘figure out how they are going to cope over the next couple of years.’
Generation Z are a totally ‘new’ generation - they grew up with the Internet - they’re ‘The Internet Generation’ - they spend nearly six hours a day online of which one hour a day is usually dedicated to YouTube videos, so they love video content Generation Alpha - These children were born when the iPad was. They are fully digitally native. They have access to endless amounts of information, so this generation will ‘rule the game in the future’ and in five years, this generation will be 30 per cent of the overall population. It is important to be aware of this group and their expectations.
3. Be an easy business to do business with
“In today’s hyperconnected world, convenience is the ultimate currency,” says Nielsen, “hyperconnectivity and busy lifestyles are influencing buying decisions of global consumers. Global consumers want convenience at every stage of shopping and brand engagement with products and services.”
Simplicity equals convenience; same-day delivery, one-click purchasing, fast response times and connecting with customers in the way they want. When consumers are free to gain access into endless amounts of information, brands have to make themselves easy to discover, contactable and intuitive, both on-and-offline; “we are no longer talking about omni-channel, it’s one-channel.” says Oliver Fehl.
The younger generation are effectively playing by a “different set of rules and expectations,” says Erica Volini, Forbes, “driven by technology and an on-demand culture, the younger consumers have grown up with media and services that are available at the push of a button, anytime, anyplace.” There are expectations that retailers must be willing to bring their products closer to the customer - through cheap, fast home delivery and easy-to-use apps.
4. Retail is not dead: you just have to be interactive
As Chris Walton, Retail contributor at Forbes, describes, “throughout history, stores have existed for five reasons, both physically and digitally; inspiration, immediate gratification, convenience, taction (feeling, touching, trying on products) and experience (the memory or social delight of being somewhere)... Stores have to offer something special, from food, a sense of community, an environment for learning or play. It all comes down to experience - the social joy of being in physical places.”
Steve Dennis, Forbes explains that, “undifferentiated, irrelevant and unremarkable stores are most definitely dead, dying or moving perilously close to the edge of the precipice… there is a hypergrowth of dollar stores and off-price retail, but there is a significant growth on the more upscale specialty stores and a move towards digitally-native brands like Warby Parker into brick and mortar.”
It’s often depicted that the high street is dying and that commerce is moving entirely online, but with brands like Adidas welcoming 740 million visitors into their stores, it could prove detrimental for some retailers to ignore the power of physical outlets. “Despite the anticipated, rapid growth of online shopping, more than 80 per cent of all retail sales will likely still be done in actual physical stores in the year 2025,” says Steve Dennis.
5. Stop waiting for a future that is already here
“Physical stores aren’t going anywhere,” reiterates Nielsen, but it is clear that stores need to reinvent their strategy.
"Large, small and virtual stores need to be infused with positive sensory encounters, relevant services, and technological capabilities that provide ease, utility and simplicity. Eliminating mundane shopping actions with programmatic functions, automated lists and subscriptions that utilises artificial intelligence, augmented reality and virtual reality as well as other technologies, are the way forward.”
Michael Webley, Head of Customer Experience Strategy at Tesco, explained that; “Tesco is using artificial intelligence internally, to make employees jobs more effective. It’s our belief that if we look after our employees, they’ll look after our customers.” Tesco are developing convenience stores where the customer is free from using checkouts - the ‘just walk out technology’ which emulates Amazon Go. AI powered cameras, computer vision, sensor fusion and deep learning are used to detect purchased items and track what each shopper puts in their bag. The items get logged directly through an app where the customer payment details are stored.
IT Pro Portal have investigated the future of retail technology to better connect with consumers, increase loyalty and boost sales:
Automated Servicing Retailers are able to track consumption rates and facilitate automated deliveries (think smart fridges - when a product runs out, the retailer is alerted, item is delivered and replenished). A customer therefore is rarely faced with the frustration of running out a product ever again!
Personal Service Acknowledgement of customers as soon as they enter the store, and additional product data on hand to aid the purchase process. Customers will be encouraged to feel, touch, try on, smell or taste products by the assistants - who also have detailed knowledge and information about products.
Fully Flexible Employees Mobile-enabled associates will be on the shop floor, ready to check previous orders, current stock levels and answer questions and take payment there and then - meaning retailers are free to move around the shop floor and offer better, more personalised levels of service (something already seen in Apple stores).
Supply meets demand Internet of Things technology and RFID-enabled products will enable hyperlocal demand planning and forecasting. Tracking can predict patterns of demand, provide consistent inventory data and will extend to both staffing, where retailers can be aware of busy or quiet times to assign the appropriate amount of staff, and on-shelf product availability.
6. Humanise your brand
With a wealth of data to play with, Hannah Dawson, Customer Service Manager EU for Urban Outfitters, Anthropologie Group and Free People, urges us not to forget about the human behind the stats; “all these data points created from all these interactions have a human and a unique set of circumstances behind them. "At Urban Outfitters, our store teams are encouraged to engage with customer feedback and draft responses to follow up. It’s important that our store staff know their local customer.”
“It’s easy to get lost in the data, especially when you’re trying to understand cultural nuances and maintaining an ethos that is culturally sensitive."
Stores should be a space that gathers a community interested in change and purpose. Adding humanistic elements to your customers journey can help companies “can steeraway from the traditional, and often robotic, marketing techniques and focus on being more relatable and engaging."
7. Communicate effectively
Failing to communicate well with customers can result in disatisfaction and ultimately lead to customer churn. Brands need to be aware of customer preferences, for example research is showing that younger generations prefer to avoid phone as a channel of communication with companies.
“Communication is at the heart of human interaction, and it can make or break a business. Being able to communicate effectively with customers can lead to increased sales, repeat business and referrals,” says Mike Taylor.
8. You must be engaging
Getting customers through the door is one thing, but you have to inspire them, and keep them interested in your brand if you want them to purchase and remain loyal. Customers who are engaged with a brand are more likely to forgive process hiccups.
Every stage in an Adidas store is sculpted to be supported by mobile, describes Oliver Fehl. In its Paris store, Adidas has held product launch parties. When customers entered the store they were sent a welcome message to their phone and offered of the store so they know where to find products. The whole experience all keeps inline with their brand focus - sports; “when you enter the building, it’s like coming through the football tunnel.
9. Be a brand with a purpose and lead change
Research indicates that the spending habits of younger generations have evolved with a greater concern for the environment, these customers seek brands that “preach pro-social messages, apply sustainable manufacturing practices and exercise ethical business standards.”
Daniel Fischer, ecosphere, explains that, “millennials won’t just buy anything. Having grown up in a progressive world of globalisation and economic disruption, this generation holds a very different worldview compared to previous generations. Millennials seek meaning, like to rally around important causes and increasingly look for authenticity. They are naturally opinionated sceptics that are perpetually filtering overwhelming amounts of sources, misleading content, and ‘fake news’."
Research has uncovered that 66 per cent of consumers would spend more on a product if it came from a sustainable brand. This is a clear incentive for brands to incorporate ethical, mindful and environmentally positive practices which have a brand purpose and advertise them as such. This kind of purpose encourages engagement from consumers, they can identify and generate opinions on your brand’s message and tap into their emotional buying psyche.
Clearly, physical retail is still highly relevant, but only when it’s done in the right way. Brands must look to provide a space for the community to come together, where it’s convenient (worth emerging from your home to visit), incorporates stimulating and inspiring technologies and excellent customer service provided through the power of data. There will always be an innate desire to connect with other humans, stores and brands need to offer human experiences and communications. Invite discussion, encourage engagement, both on-and-offline, and most importantly; be a brand with a purpose, vision, message and sentiment. Consumers want to buy into brands that represent who they are, what they believe and how they want to better the planet.