As a retailer, you probably already feel the magic of big sales in the air. You may even be preparing your business for long lines and traffic influx by enhancing your digital assets and hiring the temps. And for good reason.
U.S. consumers plan to buy 14 gifts on average and spend nearly $10bn in total during Black Friday, Cyber Monday and Thanksgiving in 2017. (Adobe)
If you are into this game, you should be keeping track of digital environment and trends that determine the state of retail industry and strategies in your domain. And you want to know what your competitors have up in sleeves, obviously.
Numbers speak better than words in this regard. This is why at Digiteum we decided to make a survey on How Much Digital Technology Matters to Retail Brands.
We interviewed C-level executives and owners of retail brands across markets to see how decision makers in the industry assess technological level of their companies, what they focus on and how they plan to address challenges in the nearest couple of years.
This is a short wrap-up on the survey results. Full report can be found here.(link to the report)
Global trends that bring up transformation and disruptions across industries and markets have substantial impact on retail. So as industry specific factors that shape its environment.
3 factors that influence the state of retail in 2017
1. Emerging markets.
Emerging markets make retailers’ life harder on two sides.
On one hand, the industry experiences unprecedented level of fragmentation due to emerging business and profit models with more tech-savvy economics, partnerships and on demand channels taking market share from traditional in-store and online retailers.
On the other hand, competition is getting more complex with the development of global market and certain geos. Non-traditional markets such as Asia and Pacific step in and bring unique products with shipping perks and lucrative price based on reduced operational cost.
Many retailers are finding themselves in an uphill battle to win market share at a time when digital opportunities have opened the door to new retailers and business models that continue to splinter marketplaces. (Deloitte)
2. Fast pace of technology.
Apparently, it’s not enough to identify emerging technology trends and invest into perpetual digital transformation and development to stay afloat.
The pace of innovation and rate of disruptions caused by technological advances — application of machine learning and cognitive computing, IoT, 3D and 4D printing and manufacturing, cloud environment, etc.–have already reached the marks when retailers need to elaborate digital strategies with a far ahead outlook and adopt “fast-fail” principle not to lose in the race.
With such a rapidly evolving digital landscape, it’s not enough for retailers to be looking at how technology innovation is disrupting their businesses today. They also need to be gazing into the future to understand — and begin planning for — the next wave of game-changing technology. (Accenture)
3. Elevated customer expectations.
Retailers are expected to adopt agility. The profile of today’s customers is marked with uncertainty, volatility, mobility and high connectivity across digital channels and social groups. In this constantly changing environment, retail brands face the problem of finding new ways to target, engage and retain the customers with enhanced expectations and wide range of choice in the market.
Social, technological, environmental, political, and economic trends have converged to create disruptive forces that are shaping many consumers’ behaviors and preferences, including how, when, and where they make purchases. (Deloitte)
Combination of these factors influences business, digital, marketing and sales strategies retailers apply today and will build in future.
The results of the survey How Much Digital Technology Matters to Retail Brands underline the pillars that the respondents–decision makers in retail–determine as the foundation of their complex strategies in 2017–2018.
1. Retailers enhance customer-centric approach and create continuous relevant connection with consumers across digital channels along the whole purchase journey.
Prevailing majority of respondents identify web and mobile (92% each) as primary online traffic sources, with social media taking a strong second (84%) and paid traffic taking the third place (54%).
Retail brands address this sharing with greater diversification of efforts. Even though user experience on web (93%) and mobile (69%) remain the leaders among technological investments, companies assign hefty portion of innovation budgets to discover new digital channels, such as social media and chatbots (54%), improve digital marketing activities to leverage customer data (62%) and put into digitization and optimization of loyalty programs (31%) in retail.
2. Majority of brands are ready for hard core technology investment and believe this is indeed the right way to survive competition.
In total, more than 90% of respondents invest into digital to certain extent. More than three fourths (77%) of retail brands have already performed technology investment and plan to increase this budget in future. Only around 8% of respondents keep digitization on the agenda, but only plan to invest into technology.
This solidarity among retail brands of different scale demonstrates maturity and will to sync technology and business goals in 2017 and further. The next question stands open: what force will retailers use to implement their digital strategy?
56% of retailers surveyed by Accenture say they will engage with new digital partners within their industry during the next two years for digital initiatives, while 42% of retailers will look outside their industry for digital partners.
3. Large-scale diverse investment into digital is explained by the variety of challenges retail brands have to cope with simultaneously.
Traditional challenges that retailers have been confronting for generations, such as cart abandonment and seasonal overloads, move to the background in the times of omnichannel experience and high digitization of the market.
In particular, the results of the survey put customer engagement and retainment first (54%), and place purely digital automation of processes and leveraging of customer data to the second priority, according to the opinion of 39% of respondents.
Another set of challenges that close to 40% of decision makers in retail consider primary–outdated digital assets, poor customer support and insufficient human teams–are supposed to be addressed by industry-specific digital solutions, such as customer service chatbots and ecommerce platforms.
In other words, companies invest into technology seeking to find industry-proven or develop custom solutions to tackle both the retail-specific issues and brand new challenges arisen by the current state of the industry and market in general.
4. To deepen customer relationship, ensure operational excellence and increase cart size and checkout rate, retailers will stay among the first adopters of a new disruptive technology.
Now more than ever, retail companies pay attention to new digital channels and tools to retain customers. According to the survey results, escalated demand of personalization and smooth customer experience across different channels are the reason for this interest.
According to Accenture research, 40% of retailers agree that a personalized customer experience is their top priority with nearly two-thirds (61%) saying that personalization technologies present them with a positive return on investment.
This is how chatbot technology comes to light.
In total, around 76% of respondents consider chatbots as a possible point of investment. Almost 10% of brands are likely to adopt the technology and find it promising. However, most of retailers admit they need more information about chatbots to make a decision. Only 8% of executives who took part in the survey claim they are not familiar with the technology and its benefits for the retail.
Thus, survey results prove that retailers are willing to take reasonable risks. As mentioned before, brands are ready to test “fast-fail” approach to adopt technologies and strategies within short periods. It helps companies maneuver in the market of infinite opportunities and make innovation cost-efficient.
Together, key outcomes of the research create a distinct picture of the surveyed retail segment.
The image demonstrates a crowded, highly fragmented market open for digital initiatives, rich technology investment and reasonable risks.
The center of this market is excellent customer experience and seamless purchase journey across all digital and in-store channels. The target of each market player is to create an efficient environment based on intelligent people-machine collaboration, data-driven predictive decision making, and sustainable business model flexible enough to adjust to changing market environment.
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Ready to talk about a chatbot project? Contact Digiteum team to discuss a strategy on how your chatbot will bring value to your brand and its customers and design, build and implement a chatbot for your business.