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The Future of Retail Technology
Retail history is littered with has-been megastars. Those who’ve failed to adapt to changing consumer expectations. Who have failed to invest in technology. And quickly found themselves flagging with no way to catch up.
Keeping your ear to the ground and staying on the front foot of retail technology is key to survival. We share our views on the future of retail tech.
How Changing Consumer Expectations Have Altered Retail
Rewind to 1850 and local shops and markets were the only retail option providing essential goods to people who lived nearby. Service was highly personal with customers known by name. Pub landlords served regulars their usual. And tailors remembered clients’ preferred style of collar, hat or glove.By the end of the century, department stores provided a much larger alternative to local retailers attracting shoppers from further afield. How did they do this? By changing shopping from a necessity into an experience.In 1903, Mr Selfridge called on his team to, “Excite the mind and the hand will reach for the pocket.”As mass market retail took hold, shopping options expanded. People were able to source a wider range of products and local stores went from an essential service to a stop-gap. Convenience became king as out-of-town shopping centres, longer opening hours and shopping trolleys all sought to make the retail experience easier. However, these changes necessarily meant the personal touch was lost, along with the sense of community it engendered. By 1994, internet technology had improved sufficiently to enable Pizza Hut customers to create the first ever online order. Just one year later and the giant of online retail, Amazon, started selling books online. With the internet removing all human interaction, retail became even less personalised. Until social media emerged and put human connection back into online retail. There was clearly a need for an online space where brands and customers could connect. It took just three years from its inception in 2004 for Facebook to achieve its first 100,000 business pages.Today, that number is 60 million. As the world moved online, customers wanted to be able to shop across multiple platforms and retailers responded. Although the term seems to have been around forever, it wasn’t until 2013 that John Lewis coined the term ‘omnichannel retail’. Today, offering consumers an integrated off and online retail experience – while exploiting the differences in channel – is the focus for leading retailers.
Where Are Retailers Now?
Despite wanting to provide omnichannel retail and having the digital tools available to do so, research from IBM shows that retailers are failing to make the most of modern tech. The challenge for most brands is that the technology they could best differentiate themselves through is also the technology they most struggle to deploy. This includes mobile and in-store experience and personalisation. In fact, IBM state that only 3% of brands provide a leading-edge experience for their customers and 39% are failing or lagging behind.And it’s not just the front-end that contributes to a disappointing customer experience as back-office systems also play a part. It’s true that better supply chain capabilities are unlikely to truly delight customers. However, poor performance in this area can have an inflated impact on brand perception and financial performance.Which means retailers must embrace total technology solutions to:
- meet consumer expectations today
- be poised to respond to changing desires
- anticipate tomorrow’s consumer requirements
- set new standards in retail experience
Leading retailers always have their finger on the pulse, their eye on the future and the technology to help them act. As we’ll see in the next section.
Enough of the Theory – Who Got it Right and Wrong?
Trailblazing retail technology pioneers include brands like Uber who took something as simple as booking a taxi ride and turned it into a multi-billion dollar business. All through technology. Here are the stories of a number of major retail brands who used tech to secure the future of their businesses.US Retail Dynasty – NordstromNordstrom, the US mid-high-end department store, has spent the last 100 years empowering its employees to provide unmatched customer experiences. Mainly recognised for their in-store service, Nordstom recognised that they also needed to compete online, particularly in the face of rivalry from Amazon.While Nordstrom recognises the value of its high street presence, it also knew that technology was important in meeting customer needs. They invested in:
- systems that link real-time customer information to point of sale so staff have customers’ details to hand providing excellent service every time
- social media to connect with customers so they could understand what’s trending; by tagging popular items online, they linked customer demand with in-store systems informing supply chain activity
- integrating multiple channels to provide a seamless link between online and in-store experiences
While upping its online game, Nordstrom also recognised that shoppers value the ability to touch the product. And that they enjoy the human assistance offered by in-store shopping. Which is why they decided to enhance their in-person retail experience by integrating technology within their Manhattan store. While other retailers are closing New York shops, Nordstrom have opened more stores which include:
- self-service returns bins that can be used for products bought in-store and online
- apps that allow customers to see how not-yet-made clothes will look on a life-sized avatar
- the ability to reserve products online to try on in-store: a fitting room will be ready when the customer arrives with their name on the door
By using technology to achieve this blend of old-fashioned personal service and convenience at scale, Nordstrom secured year-on-year revenue rises between 2011 and 2015. Word on the street says that the store have taken their eye off their digital development in recent years. However, recent reports show that they’re aware of the importance of always moving forward with additional investments in technology to keep them at the top of their game. UK Fashion Giants – BurberryIn the UK, Burberry has taken similar strides. Back in 2012, its Regent Street store integrated a range of cutting edge technology including:
- the world’s tallest retail screens
- 550 hidden speakers
- screens which turn into mirrors when customers need them
- a hydraulic stage for performances
They even included Radio Frequency Identification (RFID) microchips in clothing that transform screens into mirrors so customers could see how they would look on a catwalk. Mobile technology has made tills a thing of the past as staff roam the store with ipads and credit card machines. By blurring the lines between the physical and digital, the shop stands as a real-life representation of its website.Offline and Online Collide – Max FactorIntegrating on and offline experience is something that Max Factor has also managed to achieve. Through its use of augmented reality technology, shoppers can fully interact with every single product. That’s nearly 500 items where consumers can:
- use curated digital content to reveal information and interactivity tailored to each product
- try out a product and compare before-and-after photos to see the results
- check out professional reviews and makeup tips during the purchase process
It’s this kind of data integration that makes a brand exciting and useful and brings customers back.Retail DinosaursAnd brands that have failed to adjust to consumer expectations? Just look at Blockbuster who stuck to their DVD and VHS guns in the face of online digital competition. Or Canon who wouldn’t relinquish their grasp on film cameras despite digital being the future.And even Henri Lloyd, once an active-fashion technology trailblazer known for the quality of their waterproofs, closed down in June 2018. The store blamed adverse trading conditions for their demise. Yet other retailers rode out the same stormy conditions which suggests that they were technologically prepared to deal with them.
What’s the Future of Retail Technology?
The future has a wonderful way of repeating the past. But add human progress into the equation and history never replicates itself exactly. Instead it spirals round and up, building on the past in new and better ways. That’s true of retail technology. Where the personal touch has been lost, it needs to be rediscovered.In the past, retailers based success on the buy-low-sell-high model which placed all the focus on the product. With the advent of digitisation and personalisation, retailers must shift their focus back once again to the consumer. However, this time personalisation can be achieved remotely and at scale using big data and in-depth customer insight. All of which can be turned into new services and engagements that meet customers needs.Those retailers that will succeed will be prepared to open their minds to:
- new organisational structures supported by flexible technology and improved processes
- integrated strategies and tactics that align the entire organisation with the mission
- a unified data strategy with an insight-driven culture that learns from customers and finds ways to deliver ROI from the insights gained
- view technology as an enabler
- invest in new technology and processes
What does this look like for consumers in reality and online? Automated servicing – by leveraging the internet of things, retailers can track consumption rates and facilitate automated deliveries. Customers will never have the inconvenience of running out of a product again.Personal service – shoppers will be acknowledged as they walk into a store and they’ll have additional product data on-hand to aid the purchase process. Comparing products using online apps connected to stock levels will ensure customers know what’s available there and then.Fully flexible employees – mobile-enabled associates will be available on the shop floor ready to check previous orders, current stock levels and to answer questions. Payment will be taken at the customers convenience instead of at fixed cash desks saving time and effort in support of busy lives.Easy multi-item comparison – consumers won’t have to toggle between screens to compare items reducing frustration and making online shopping a more pleasant experience. Search functionality will include products with spelling mistakes helping consumers find what they want faster.Supply meets demand – supply chains will be optimised using Internet of Things technology and RFID-enabled products. Integrated data will enable hyperlocal demand planning and forecasting. Tracking will predict patterns of demand and provide consistent inventory data. Some of this technology is already in use by early adopters. But the major change will be that, like the shopping trolley, this technology becomes an expected part of the experience.
Get Ready for the Future
While data and analytics are transformational, many companies are only leveraging a fraction of their worth. That’s because data is only valuable if you can ask the right questions to shape a strategic vision. There are a number of steps to take to position your retail business for the future:
- Know what data and analytics you need to drive value for your firm
- Understand where you have information gaps
- Establish how to generate, collect and organise the data you need
- Switch from legacy data systems to more agile flexible IT architecture that can make the most of big data
The good news is that this doesn’t require a wholesale systems change. You can build on existing platforms exploiting their data, ensuring a smooth transition and delivering continuity of service. By digitising operations and integrating them with new apps, platforms and technology, retailers can capture more data from customer interactions, supply chain plus front and back of store. It’s the right combination of this information that enhances internal processes, drives a better customer experience, improves loyalty and increases shoppers’ spend. If this all sounds like hard work, consider these words from the master of retail himself:“Whenever I may be tempted to slack up and let the business run for a while on its own impetus, I picture my competitor sitting at a desk in his opposition house, thinking and thinking with the most devilish intensity and clearness, and I ask myself what I can do to be prepared for his next brilliant move.” Harry Gordon SelfridgeIntroducing new technology to your business doesn’t need to be difficult. As long as you work with retail technology specialists who provide the perfect combination of consultancy and solutions. Make your next brilliant move by contacting REPL’s retail technology specialists on +44 (0) 808 200 7375 or via our contact form.