Rethinking Retail and the Internet

How we can do things better

Have you ever noticed how the online shopping experience is designed to match physical in-store shopping? We enter the store, we are shown sales and specials, we begin to browse and if we like something we put it a ‘basket’ and proceed to the ‘checkout’. If the traditional retail model has worked for this long, it makes sense to replicate it in a digital arena. But what if there is a better way to do it?

It’s obvious that online shopping has its advantages over physical shopping. There isn’t going to be any crazy crowds or children crying at astonishingly loud octaves when you log onto your Amazon account from your phone on your couch. There won’t be any long waits to pay at the checkout when you’re buying yourself a new pair of shoes and if one online store has sold out of your size, the longest time you’ll have to wait is the whole of the 0.614 seconds it takes to load the website of the online store that does have your size. It’s straightforward really, the modern day consumer’s expectations are rising faster than ever and the physical retail experience fails to measure up. But is it enough to simply have a presence online?

Physical vs e-commerce

Online shopping not only offers a new medium for retail, it fundamentally changes the power balance of shopping; it offers options that would not be possible in the physical world. Previously, consumers were restricted by what shops were in their physical location, which meant retailers had all of the power. Now, the power shifts to the consumer because they can buy from all over the world. Retailers now have to place more value in the end-to-end consumer experience otherwise their competitors will get the sale.

We’ve seen watershed moments in eCommerce, Zappos.com the first company to offer free return shipping, and money back policies if the product isn’t right; Victorias secret, known for adding additional product into their beautifully crafted packages you’ve ordered. We are now on the cusp of the next wave of evolution for the retail sector — in experience stores.

Research reveals that Millennials are heading back to the shopping malls in search of the ‘real shopping’ experience and that physical stores actually boost online purchases. Amazon is an online retailer that made 107.01 billion dollars in online sales last financial year. Recently Amazon opened their first physical shop called Amazon Books in Seattle’s University Village.

Digital doesn’t just mean online shopping

Retailers should look towards incorporating digital into their business model and including the physical store as one of many omni-channels involved in their overall retail branding, rather than a separate entity that all other channels should copy. Similar to the way digital capabilities have revolutionised banking for example. Working with a bank’s physical building in conjunction with a tailored online and digital service, banks have been able to supply a more relevant and efficient service for customers. This utilisation of the opportunities that digital has presented has meant that online banking websites and apps have some of the highest conversion rates in the world.

Gone are the days of online shopping vs bricks and mortar. They can and should be used in conjunction with each other because consumers now expect to be interacted with. They want their retailers to know how to use their digital channels better than they do, to surprise them, to make them laugh, to gain their interest and to deliver a service. An omni-channel retail experience interacts with customers seamlessly throughout numerous outlets; websites, physical stores, pop ups, direct mail, social media, mobile devices, gaming consoles and televisions.

So why isn’t it happening?

There needs to be a shift not only from online shopping replicating the physical environment, but also from traditional digital to a more creative and resourceful approach. Understandably there are reasons why retailers have been slow to disrupt this model:

– The traditional retail model has been time tested; people like the comfort of something familiar, particularly when there is a vested interest.

– Un-surety and concerns with the role digital can play in the retail space.

– The in-store experience helps consumers feel confident to try and purchase new products, particularly things they wear (clothing, cosmetics and shoes).

– “Instant gratification” or “instant ownership” is still a strong drawcard for shoppers to purchase in store rather than online.

– Research indicates that older shoppers are still more resistant to shopping online, however, for younger generations online shopping is a natural part of the purchasing cycle.

– Lack of understanding, beyond the cosmetic appearances, of digital adoption and or integration.

Retailers need to understand that digital is a growing and potentially valuable resource, one that is getting cheaper, faster and more versatile with every banana Walmart sells (14.5 kilos every second). Traditional retailers should be looking towards innovative and creative possibilities and they should be doing it now if they want to benefit.

Making the most of digital technologies

Rather than thinking about of the internet as digital and online / offline retail as stand alone channels, we need to consider how we can create a seamless ecosystem for customers that firsts understands their preferences and then presents an experience that is ‘right’ for them. This will help to improve sales and connect with shoppers.

For example Alfred Anglo, a wedding dress boutique. They allow customers to browse their online collection and collate a number of dresses to try on before they arrive. Once they are in the store the shop assistant has their dresses ready for them to try. As well as this, Alfred Anglo use ‘Pick’n’Tell’ mirrors in their stores. The mirrors have an application that enables in-store customers to record a video of them trying on different outfits and post it to social networks. It also has chat features so that the customer can get ‘live’ feedback from friends and family that are not physically in the store.

Or Tesco’s Home Plus in South Korea. Tesco acknowledged that Korean consumers are time starved. Their solution; covering the walls of the Seoul subway with faux Home Plus supermarket shelves stocked with life like pictures of orange juice, bread, vegetables, meat and numerous other products. Commuters could use their waiting time to do their shopping, by scanning the codes of the products they wanted to collate a virtual shopping list. Home Plus then assembled a physical version of this shopping cart and had it delivered to the consumer’s home within hours of them placing the order. The results: Over three months online sales increased by 130%. Although Tesco was replicating the physical retail experience to an extent they did it in an entirely new and innovative way.

Reinventing retail

There are gaps in the current online and physical retail models. There is potential to have both the physical and digital elements of an online experience work together to create a new retail experience that meets higher profit margins. Digital gives us the room for disruptive innovation, and it is important that we should constantly push the limits rather than simply replicating them if we want to create a better product and service. With the potential that omni-channels present, the line between what the traditional retail model is and what is possible begin to blur.

Consumers want security in purchases without any financial compromise. With 25% of consumers spending more at their favourite retailer when they are using an omni-channel approach, it is no longer if, but rather, when we move further into the unexplored land of eCommerce and omni-channel capability. But we need to understand the basics first. Why do consumers act the way they do and how can we use this information not to simply mimic the current model, but to do it better? There is infinite space to grow.

Consider the ever-expanding Internet of Things. For example, a fridge that has the ability to scan the barcode of products that need to be purchased next supermarket run and compile these into one simple list on your smartphone. Think about never forgetting the milk ever again, it would be quite convenient wouldn’t it? Or consider trying on an item in a store and upon telling the shop assistant you would like to have a ‘think’ before you purchased it, they gave you a card with the stores online store’s URL and a code that can be entered to not only automatically add the item (same size and colour) to your online basket, but that also gives you free shipping, reviews of the product, free returns and maybe even a 5% discount. It would be somewhat easier to justify purchasing the item with this kind of convenience, wouldn’t it? There will always be limitations of course. One type of omni-channel experience does not fit all demographics; an 89 year old without a smartphone will preference a different type of shopping experience to a smartphone, tablet and desktop savvy 17 year old with 2,000 Instagram followers. So as always, know your target market.

An omni-channel retail approach does not disregard the traditional retail model. In fact, it does the opposite in acknowledging that it is changing. This kind of approach to eCommerce is necessary for retailers that want to be relevant in the changing and proliferating society we exist it. The omni-channel approach presents us with an opportunity to be ahead of the game, to be the trend, to do it better and to be the future. So why not run with it?