The internet, when it came in, took the world by storm and it continues to do so with its rapid growth and adoption. Markets are evolving and technologies are evolving faster. Retail’s technological innovation came in through stages of automation, e-commerce and digital revolution. It was e-commerce among the three that disrupted the retail market challenging brick and mortar retailers to stay relevant.
According to Statista, e-commerce statistics confirm the explosive pace at which this industry has developed as worldwide B2C e-commerce sales amounted to more than 1.2 trillion US dollars in 2013. While convenience and competitive prices are what draws consumers to e-commerce, the biggest competitive advantage that e-commerce players have over brick and mortar stores is the ability to track consumer behavior using on-page and on-app tools, which gives them information about consumer preferences and searches, allowing them to tailor their pages accordingly. This information is relatively more difficult to collect in a physical store. E-commerce players also do not have to worry about overhead costs of maintaining stores or merchandising limitations like keeping enough stock of items in the store.
Is the brick and mortar retail store doomed? Well, the answer is not immediately. Even today 94% of retail sales happen at brick and mortar retail outlets. Physical stores have several advantages over e-commerce websites. Nicole Reyhle’s article called “5 Advantages of Brick & Mortar Over E-Commerce” illustrates some of these. She points out that there is a lot more competition on e-commerce websites for sellers, and that brick and mortar stores allows you the ability to physically control your stock, redefining price points for surplus items. The biggest advantage that physical stores enjoy over e–commerce is the ability to offer more impactful customer experience in-store.
However, to stay relevant and sustain their businesses in today’s market, retailers need to make fundamental changes to how they approach business priorities, strategy and investments. Retailers are currently competing with the platform approach that uses data as a currency, because everything retail, is going digital. Agility of working with market changes will be the key of a successful retailer in the future be it online or offline.
For today’s tech-savvy customer who is conditioned by personalized shopping on e-commerce platforms, the best way to provide a good customer experience is by digitizing the physical store- in other words, going “Phygital”. Here are 3 ways, retailers can do this
1. Harness the power of Location technology to target consumers betterUse indoor positioning technology to track and analyze customer location and behavior while they are in the store and use this information to give them more relevant offers and advertisements
2. Improve Cross Channel Customer ExperienceUnify the online and in-store shopping experience by allowing actions such as “pay online, pick up in- store”, “self-checkout”, “scan and get product information” etc.
3. Personalize experiences at the individual consumer levelOffer personalized suggestions, messages, and advertisements by leveraging the power of existing customer data along with data gathered through customer interactions on websites or apps
As long as brick and mortar retailers are innovating and providing good customer experience, they will stay relevant and ahead of e-commerce players. But, to still stay relevant tomorrow, retailers should start taking the necessary action now and re-evaluate their future investments to bring technology to the core and make long term IT investments to be infinitely scalable.