How internet and social media is transforming retail?

We are all getting increasingly overwhelmed with internet and social media. Every person reading this is obviously a well intrenched user of both. Advancement in technology is creating radical transformation in consumer behaviour. But few companies and brands are willing to look at this consumer evolution. Every company new and old era take pride in creating their own labels and blocks to slot consumers in. And then vehemently defend their view of the world. Thus new tech players vs established companies tend to have extreme views on the future of their business. But consumers shift and adapt. Their behaviour is always a blend of old habits coupled with new ones. Most companies ignore this cross blending of behaviour, always taking the high road driven by their extreme views. Its time old and new world companies woke up to this real/virtual conundrum and forged alliances to build integrated business models.

First in the series I take up retail, since it has already seen emergence of large new age players threatening the existing model. On the one hand eCommerce players predict doom and destruction of retail stores, the brick and mortar players continue to question viability of a home delivery model built on discounting and deep losses.

I believe that neither model will survive, in their current formats. It is because the consumer has evolved to a place where they leverage offline and online to their benefit. Result is a 'comparative collaborative' approach practised by consumers. Lets look some of the significant trends of evolving behaviour.

1. People use online for details on products and prices but try first hand experience at a store then buy offline or online depending on who is cheaper. This means that retailers have to change the way they sell products at their stores. Not focus on imparting information (specs etc of the product which people get easily online) but enhance the experience. Typical case in point is automobiles. While staff is ready to rattle off all specs, they find it tough to justify why and getting a test drive experience is highly cumbersome. So also with mobile phones where very few stores have models for hands on experience. This needs to change of they want to protect their business. Corollary is that online stores need to be able to provide better experience to customers through use of technology, better quality, experiential videos and any other content relevant to consumers. Currently both online and offline retailers are found wanting in this regard, thus people play for price.
2. Fashion retailing is becoming even more complicated. A huge motivation for fashion conscious consumers is sharing their pictures in a new outfit on social media and be done with it. Thus you find long lines of teenagers at fashion outlets waiting to try out umpteen outfits. Many just to take selfies. Or ask a set of friends to choose for them while they share the selfie. Similarly many others order multiple items online, selfie them out and return. This puts huge burden on the retailer to manage space or logistics. But the flip side is that there can be valuable data analytics which can start predicting which items to stock and which not. Fashion trends can be best tracked by tracking selfies. Huge opportunity for offline and online retailers to collaborate. A store need only be an experience zone while fulfilment in the right size can be done online. Think about it.
3. Social media influences purchase through peer pressure. Lets face it. Consumers succumb to a lot of peer pressure when choosing products and brands. Its so common to see people asking for advise on which phone or laptop to buy. But brands usually carry out a monologue through their FB pages, indulging in meaningless contests and offers. How many of them are trying to influence those seeking peer influence? Large opportunity for brands to go beyond 'managing' FB page and start behaving like a sociable person. Lots more can be discussed on this.
4. Grocery is the next big retail 'big fight'. Online players want to get in. Offline hold it as their last bastion, citing complexity of operations, inventory and supply chain management. Fact is at grocery stores people spend a lot of money on items not part of their shopping list. If they bought only online, all the surplus sales would go away. But the convenience aspect if highly enticing to consumers. People therefore buy regular items online but love to saunter down the aisle from time to time to discover and explore new items. Opportunity for a grocery store to encourage customer visits with more interesting displays and 'festivals' but also enable ease of online ordering of regular items. On the other hand, online channels will have to think of exciting ways to bring product experience directly to consumers. No wonder Amazon bought Whole Foods.
5. Hardware, decorative, linen and other not so easily available items. All items which may require a visit to an inconvenient place and are not regularly consumed are more than likely to switch to online purchase. But the problem is that in each such case, the retailer has an important role in providing the right product to the consumer. Eg if I need a door lock, I prefer to take the opinion of the lock retailer to find the right product for my door. Such products can't be sold online though a mere catalogue approach. Thus online stores need to build in customer handling via chatbots/ call centres to help them buy. Else the hardware stores for example can set up an easy order and deliver system online whilst their staff can get on a call to answer customer queries.

I have highlighted just a few use cases to illustrate how confers tend to mix and match their shopping, taking best from both the worlds. I see very very companies recognise this reality and offer appropriate solutions. Its time to recognise that the consumer has evolved to an virtuoreal world and build solutions that consumers want not.

Love to hear feedback and discuss.

Look out of more in the series every week. Welcome suggestions on topics.