The demise of many high-street retailers has been a common theme recently, especially with big chains likes Toys ‘R’ Us and Maplin Electronics closing all their UK stores. Commentators say it’s a result of the rapid growth of online sales, and the popularity of online marketplaces like Amazon.
However, this is a somewhat simplistic view, and not the whole story. Almost all industries are being affected in some way by digital transformation, and retail is no exception. While online sales are indeed skyrocketing, the successful businesses and entrepreneurs are the ones who adapt business models and ecosystems to exploit technology in a way that helps them deliver what their customers want.
It seems that the customer wants the experience that gives them a blend of online and physical stores. Just look at how Amazon is trialling physical stores in the US, with sales reported in the third quarter of 2017 from physical stores alone at US$1.3 billion.
According to Cathy Daum, a senior vice president for global channels and general business at SAP, “The high-street has seen major changes over the past ten years, and digitisation is playing a key role in that transformation. Initially, the emergence of smartphones created an impact on the bottom line of brick and mortar stores. Today, creating an omnichannel experience that is rooted in technology is crucial to providing customers with a seamless end-to-end experience. Those that pay attention and evolve with consumer attitudes are strengthening their businesses and experiencing advancements as a result.”
In fact, a survey of online shoppers in Europe released by UPS in February 2018 backs this up, finding that the majority of online shoppers (84%) feel that shopping in a store is still a major part of their retail experience. Being able to touch and feel products was seen as the most important factor for deciding to go to a physical store by just over half of shoppers, and 50% said that they wanted to solve an immediate need. The main reasons for choosing a physical store over an online marketplace are knowing the quality of products and better sales events.
The survey points to the need for retailers to understand the role of technology combined with in-store experience to provide a ‘blended’ customer experience. In addition to things like In-store events, festivals, and special member-only nights, consumers are embracing new developments in technology, with 40% finding the use of virtual reality to visualise furniture and decor in their home appealing, and over a third being comfortable using chatbots for simple shopping tasks such as creating a return label, getting product information or ordering products.
Ralph Percival spoke to us about how UK brand Joules is tackling this. Speaking at an event hosted by SAP in London on the future of SME retail, he said that the blended approach is crucial to success. “You always need to be thinking about how to add sufficient value to customers, especially around events. There needs to be a value exchange rather than just providing special offers – so you need to support their experiences using technology.”
He says that mobile is still a huge thing, and yet to be fully exploited by smaller businesses. But the future is likely to be visual search, suggesting scenarios where customers might want to find something to match something they are wearing, or to suit specific occasions.
A key in making the changes to enable smart technology in business is to invest in scalable technology, so that you don’t have to ‘re-platform’ the business as it grows. He also says that you should look around at what the big players are doing and then pick and choose features that work for you to add experiences for your customers – such as click and collect.
Percival adds that there’s absolutely no need to re-invent the technology, but to build ecosystems around what’s important for your customers’ experience. For Joules, that means the ability to use customer data across all channels – so they need the right digital partners and technology in the ecosystem to enable that, while all the time being conscious that they own the data and keep it tightly within their own internal ecosystems.
So what’s the key to Joules’ success in building the right ecosystem to compete in the rapidly evolving retail space? Percival says, “We’re fast followers, keep it simple, do it well. Visual search will be one of the big things in the future of retail. We will take small stepping stones to get there – keeping an eye on what’s available at the present and add little bits at a time to your own offering.”
Building the relevant ecosystems to adapt to digital transformation is vital for most industries. You can hear stories about how entrepreneurs have done this successfully in their sectors at the Follow the Entrepreneur Investor Summit 2018 in Dubrovnik in October. Click here for more details on the agenda, speakers and registration.