How Retail is being Disrupted by the Consumer

Datascience, Omnichannel and new Customer Expectations  

Recently I was talking with Susan Pak, who was graciously giving me a summary of retail tech trends and links on how retailers are using new technology and data science more in their approach to optimizing customer experience.

Call it what you will, but Retail is in a process of radical adaptation to new trends that are largely driven by consumer preferences. I'm of the belief that data science is at the heart of the solution to these developments.

• Adopting Cloud solutions that can scale seamlessly (Mobile & cloud POS)
• Adopting SaaS apps that generate ROI
• Adapting better customer analytics of your store 

Visual Marketing Takes Front and Center

Even with regards to digital channels used, with the independent stores (>5 stores) I'm noticing shifts. This articles explores some of these: 

Independent retail entrepreneurs are flourishing on Instagram, I'm noticing serious engagement there because they are using social channels where their customers are engaged.

Other retailers that have more of a female millennial audience, are doing great on Pinterest or if they are even younger, on Snapchat. Other independent stores are rewarding customer for their online brand advocacy, referred to as user generated content (UGC) with a loyalty marketing app.

Digital Touchpoints 

 Better use of digital touchpoints is one of the keys for independent retailers and SMB/SMEs to truly differentiate their emotional connection with their customers. It's very important for branding. 

Emotion branding is at the heart of how a retailer can retain customers and grow revenue, via customer brand advocacy, or UGC content. 

Customers nowadays trust their peers and other customers way more than branded content that is crafted by marketing and advertising. So it's very important to utilize this properly and discover peer influencers that your audience can relate to. In 2015, we saw a rise of UGC that was unprecedented and will continue. 

Disruption in Retail Content 

At the start of 2016, I literally read dozens if not nearly a hundred white papers on how digital technology is changing and shaping the future of Retail. Retail technology is pushing what retailers can do, with the click of a button from API integrated Software as a service (SaaS).  

Digital natives are demanding a seamless reality of product UX, customer experience and digital touchpoints in the buying process in retail. According to a study of retail executives, 65% cite “changing consumer behavior” as the single largest issue that they face today. This is not just relevant to ecommerce, it's relevant to your community and local brick and mortar shops. 

The New Norm 

• User Generated Content, as pervasive viral campaigns 
• Corporate social responsibility ("doing good") PR campaigns on social media
• Influencer marketing 
• Incentivized friend-rerrals 
• Digital wallets 
• Wearables integrated into "smart spaces"
• Marketing automation that's retention and recency segment targeted

These topics are becoming the norm for digital marketing and are trickling down to how retail shops brand themselves. 

Technology has changed expectations, presenting an opportunity for retailers to provide rich experiences that differentiate their business enough to stand out among a sea of competitors – both online and off. - Helen Merriott, managing director of retail at Accenture

How Can Retailers Adapt?

Retailers have to put a strategy in place where if they do not have the staff to adapt, they put in place a service like our own Thirdshelf, that can do loyalty, analytics and the marketing for them. 

This change is defined by a few key trends: 

• Movement from legacy POS systems to Cloud POS
• Adopting SaaS apps that generate ROI connected to Cloud POS
• Brick and mortar stores have to start to gather customer data, insights and analytics that are actionable. 
• Campaigns have to be intelligent (data-centric, smart segments, real-time triggers). 
• The experience of high-value customers needs to be optimized
• Who potential high-value customers need to be identified from their first-purchase onwards (VIP status)
• Loyalty program has to be white label, so it impacts brand trust directly, and not through a third party. 
• IT infrastructure and retail technology has to be scalable and as seamless as possible for store management, the retail reality and for staff. 
• A Business plan on how to adapt with changes has to be drafted that gives a chronological plan on what to implement, how and with a budget. 

Customer-Centricity 

Retailers have to keep asking their customers how they can improve, so their store can reflect the reality of the consumer. 

• Would they prefer Email or SMS correspondences?
• What kind of loyalty program types get them the most excited and engaged?
• What time in the day or of the week do they prefer being contacted?
• What bottlenecks or delays did they experience with your store?
• Where are they most active on social media?

Data-Centric Retailers

This kind of information, enables retailers to use technology to better personalize their marketing promotions and campaigns with their audience. The new breed of retailer whose customers are mostly Millennials and GenZ, knows that their store has to be on the cloud with the latest tools that can enable marketing automation that's optimized by the facts, the data. 

Homework for Retails 

• What SaaS integrations of your POS can boost revenue?
• Is cloud or mobile POS appropriate for your store?
• How to better create emotional experiences with your customers in their interaction with your store?
• How can I do better location targeting in social media and with local events that tie into my social media strategy? (Instagram #s, for example)
• Do I have an omnichannel marketing strategy, where are my gaps?
• Am I rewarding my customers who create user generated content and brand advocacy in support of my store, products and events online? If not, how can I implement this. 

What does the Customer Want 

• Customers expect your store's website is optimized for mobile devices
• Customers want a seamless experience of click and brick. 
• Customers want a personalized message, that corresponds to their shopping preferences, gender, age and a tone that suits them. 
• Customers are used to an omnichannel purchasing experiences and to have technology integrated into your shop display, and product layout. 
• Customers want their local retail shops to be able to provide unique and special promotions (free giveaway, loyalty point accelerator days or events, educational sessions on your product or related lifestyle, DIY resources, etc...) 

To Get Customers Back to your Store

Getting higher transaction rates, shopping frequency and optimizing the customer lifetime value is not just about good customer service, it's about how retail store innovate to create new experiences that are more rare for consumers. 

• It's not just technology; it's the initiative of your ownership, employees and marketing. 
• It's about implement the right retail technology solutions that fit your store, your vertical and your customers. 
• It's your ability to create "delightful" customer experiences not just in-store, but online. Managing digital touch points better requires creativity. 

Where Disruption Occurs

Disruption is occurring due to rapid changes in technology, but also just in the way and the pace of digital evolution among younger cohorts. 

Have you thought of: 

• Improved marketing automation?
• Interactive in-store displays?
• How your store can interact with IoT?
• How your social media can better integrate consumer content?

Maybe it's time you should. 

We’ve been doing business the same way for 40 years, and there are very few 40-year-old business models that are successful forever.

 Concluding Statement 

Independent retail entrepreneurs (IREs) have a special challenge, they have to adapt, adapt and adapt. Much like a store is about location, location, location. In the digital omnichannel reality, the new "location" is a question of being "adaptable" to technology. If that makes sense?

• Understand consumers better than ever, online and offline, from value to the store to recency of their last transactions. By talking with them and engaging their attention on many channels. 
• Develop an API strategy of the best software to create ROI on the touchpoints that truly matter. Do marketing better, doing loyalty better and doing store data and analytics better. 
• Finally, and of course, develop a strategy for omni-channel retailing that mirrors how your customers actually behave, find you, and buy and smooth each touchpoint until even the pickiest of your customers is satisfied and you are confidence your store mirrors the new reality of consumers. 

US retailer Target’s use of predictive data caused revenues to grow from 44 billion dollars to 67 billion dollars from 2002-2010.