Retail was one of the first and most disrupted industries by the emergence of the internet. What years later would be referred to as Web 1.0 drove exponential growth in remote selling with the eCommerce revolution. The arrival of Web 2.0 with social, mobile and SaaS was also very impactful, so much so that all of these innovations are now taken for granted and mainstream in the retail industry.
Some technologist now believe that Web 3.0 is the adoption of crypto for delivery of existing and new services. However this is not yet widely accepted as the next step for the Internet. The wild swings on the prices of coins largely impact the discussion on the potential utility of the technology. There are plenty passionate proponents and detractors. Add to that the leading industry in application is not retail but finance and the picture specific for retail is even less clear.
When most people think of crypto in retail, they think of the ability to accept Bitcoin as a tender. News of Tesla accepting Bitcoin for then stopping the acceptance of Bitcoin made headlines recently. With the price of Bitcoin moving up and down and being considered by many as an investment hedge against USD inflation it is unclear why would anyone use it to buy a car.
There are other use cases in retail which are more interesting. Arguably with far more potential to disrupt the retail industry:
- Payments: this is indeed a wide potential area for disruption. Crypto should be able to provide anonymity and decentralization at scale for payments. Some services from DeFi (decentralised finance) will be made available to retail. While there are multiple approaches for feasibility, solutions around stablecoins are the most common. As of this writing there are already hundreds of different stablecoins in the market. Big retailers like Wallmart or El Corte Ingles might seek to create their own stablecoins while there are platforms available in which to develop solutions like Celo. Another utility is for consumers in developing countries. SkillNet worked in the last decade with retailers in Africa to introduce M-Pesa, which allowed for digital payments for people without access to a debit card. This new generation of solutions, over the next decade, will be able to extend the portfolio of financial services for those without or with limited access to traditional banking to include things like credit and insurance.
- Personal identifiable information and loyalty systems: out of the Dapps (decentralised applications) being built at the moment, those that deal with customer information might prove most disruptive for retail. A key driver for retailers to unlock value is to provide a personalised experience. The main barrier of adoption, other than technology, is the initial disclosure and subsequent management of personal information with relation to privacy and security. Crypto can potentially provide the intermediate tier which enables personalization features without customer disclosing personal information or retailers storing such information. Combined with systems of reward which can also be blind to PII , this is an area for potential large changes. The business model for these applications in which selling customer data is not an option, remains to be seen. Loyalty systems based on blockchain are starting to emerge for other industries but are much less ambitious in leveraging a decentralised model.
- Trusted supply chains: traceability in the supply chain through blockchain was perhaps the first enterprise use case widely in pursuit for Crypto. There have also been barriers to these solutions over the last five years. Schemes not being truly decentralised and open but being managed by large tech companies has been one. Another issue has been the link between proofs in the physical world and on chain proofs given the limitations of storage and the security considerations of the blockchain. Innovation to overcome these barriers is ongoing. The prevalent approach for implementation is to introduce smart contracts which have access to physical proofs through APIs that trigger on chain events. One example of these is Chainlink, which allows smart contracts on Ethereum to securely connect to external data sources, APIs, and payment systems .The scale of investment in these initiatives is already in the billions of dollars.
- Receipts and return management: one way to easily classify blockchain initiatives in retail is to think of them as before or after customer purchase. For the latter, the creation of receipts and management of transactions is another potential area of disruption in retail. In a crypto solution, a receipt can be a token and a return policy a smart contract. Another potential approach is use of NFTs. Non-fungible tokens have raised in popularity due to outlandish purchases recently. These unique tokens can map to what today are serialised items in retail. In hospitality they could map to event tickets
- Marketplaces: currently for a marketplace the authenticity and reputation of buyer and seller are critical for a particular transaction to take place. These are mainly driven by the previous activities of both users on the marketplace and the amount of data they are willing to share between them. Crypto can anonymise their identity and yet increase the security. It can also through smart contracts place proofs on the goods sold and hence change completely the technology and process that underpins these digital exchanges.
There are still technical barriers for the wide adoption of crypto but the investment in the sector and the amount of continuous innovation is impressive. The current performance limitations, high energy consumption and high transaction fees are barriers for this type of solutions but the use cases in which crypto has value could drive the innovation required to overcome them.
Some of the current limitations in crypto might need to be resolved before really going mainstream or the utility for some use cases just might win regardless at the end.
It is an exciting time to find out.
This Blog first appeared on Medium.
COVID-19 is reshaping modern retail. While sales are recovering – retail sales in the US increased 9.4 percent last March over the previous month and were up 26.9 percent over last year – the change in consumer buying behavior, channel preferences and loyalty will outlive the pandemic. Optimism that comes with the vaccine will fuel a spurt in discretionary spends even as additional government stimulus will bring back demand. Naturally, the consumer suffering pandemic fatigue, will go back to some old-fashioned retail therapy and we can expect to see it play out most prominently in beauty, apparel, travel, hobby, sporting goods, and dining out.
We could debate the fact this “recovery” in store visits will be short lived, the reasoning being that consumers have begun to favor online channels. But let’s admit it: consumers value the touch, feel and smell of the things they buy. Think clothes, jewelry, perfumes, a coffee mug, an avocado or even a purse or a wallet. The immersive product experience creates a pull into the stores.
Admittedly, e-commerce sales are growing fast. From being 5.1 percent of total retail sales in the US a decade ago they accounted for 21 percent of sales in 2020. But a whopping 79 percent of sales are still from brick-and-mortar stores. Stores will continue to be around, and will need to transform to offering great experience, or great convenience or both. Increasingly, smart retailers do not see the two channels as being competitive, but rather supplementing each other in the myriad paths consumers take from intent to purchase.
The tilt in favor of stores of every proclivity – from big box to pop-up, and from specialty to discount – will continue for several decades into the foreseeable future. Stores that adjust their role and purpose and remain meaningful to the consumer will win. Those that don’t will perish.
Many interesting changes in retail are already underway, even as the pandemic rages across the world. Dark stores offering curbside pickups are on the rise along with a `buy on line, pick up in store’ (BOPIS) trend. These models point to the convergence of channels. With the use of analytics for consumer insight and automation for fulfilment, these models will improve and bring down costs. In hindsight, they will look like obvious evolutionary steps.
However, smart retailers are working harder. They are focused on super charging the in-store experience and the convenience they bring to consumers. These modern trends will prove revolutionary to retail as we head into the next normal.
It is natural for retailers to do everything they can to protect the investments made in their stores. There is no reason stores should be left to underperform. This is where four deep-impact measures of retail store management come into play, placing stores in a position to have healthy bottom lines:
- Integrate physical and digital assets, making for the best experience. Provide a content-rich, intuitive and immersive experience for all online and in-app interactions. Does your consumer want to chat with a store executive or a product expert before visiting the store? Does your consumer need an online demo for a product before checking the product in the store? Provide this using live text and video interactions. Use automated bots where possible, handing over the interaction to live service executives where necessary.
- Create fresh in-store experiences that provide customers a reason to visit, make it personal. For example, make the store a place of discovery using store-only or in-stores-first product launches that draw consumers into returning. Use consumer data captured from every touch point – store visits, card and loyalty data, social media, website footprint, surveys, CRM and partner data – to shape in-store consumer interactions. Most important, help consumers seamlessly continue their online journey when they visit the store.
- Make it convenient, make it interesting, make it rewarding. Do your consumers want to try your products before they buy? The cosmetic industry turned this approach into a fine art, allowing consumers to try various styles in the presence of an expert. Can your grocery store have a master chef to adroitly guide consumers, answer questions and put their apprehensions to rest? Can your white goods store have a well-informed engineer available – perhaps online – to gently turn consumers into confident power buyers by decoding and simplifying technical details using AR and VR? Will you provide day care to turn shopping into a pleasure for the harried mother?
- Go contactless, make it safe. Provide self-service options ranging from the ability to check product details using a QR code, easily look up alternatives and options for products, order and return products, make payments and track refunds. The goal should be to make the experience comfortable, non-intrusive, dependable, simple and safe.
A variety of industries have evolved with the business landscape and with changing consumer demands. One example is of the adjacent entertainment industry. Movie theatres went from being massive 600-seaters showing a single movie into becoming clusters of small and classy 100-seater multiplexes offering online movie trailers, the ability to book tickets online, enjoy a variety of movies in the same multiplex, soak in the Dolby surround sound, get joyfully overwhelmed by 3D, gawk at the digital sharpness on the big screen, and sink into luxurious beds with freshly laundered blankets. Some multiplexes went as far as to combine movies with a fine dining experience with menus created by celebrity chefs. The industry changed itself by bringing an unrelenting focus to experience and convenience to stay in step with changing times.
The pandemic has made it abundantly clear that retail cannot keep going down the traditional path. Expectations and needs have changed. It is time to re-imagine the retail store through the lens of modern marketing and commerce, upping the differentiation by improving experience and convenience.
This post was first published on Medium.com
In his yearly letter to shareholders published 15th of April 2021, Jeff Bezos shared some fascinating back of the envelope calculations on the value that Amazon creates to its customers.
28% of purchases at Amazon are completed in three minutes or less and 50% in less than 15 minutes. He concludes than on average a shop in Amazon takes 15 minutes. In contrast, he mentions that a visit to a store would take on average an hour and each customer would save two visits to the store per week (this latter part lacks mention of how that data was arrived to) If a time saving is value as 10$ per hour and multiplied by the 200 million of Amazon Prime members, the value creation in 2020 alone is $126 billion (after discounting the cost of Prime member fees)
As Amazon prime member myself, I have completed many of these quick purchases and find the value proposition compelling. However comparing time of purchase in store, which includes time to travel, with time for a digital sale is not a fair comparison. The lockdowns and pandemic have accelerated the transition to digital sales but should have also reminded us of the importance of the in store sales experience.
The challenge to compete with Amazon for retailers is huge. The logistics and commercial advantage that Amazon has through its scale are unparalleled. However if the main value to customers as stated by Jeff Bezos in this letter, is a frictionless digital sale, this is something that retailers can improve on today, on their own digital experiences.
A frictionless digital experience is only part of the value proposition for a store sale. If it is a convenience shop in a store, customer is not travelling to the store, the location is nearby and needs to have the ability to be in and out quickly, it is indeed the main value. Solutions around scan and go should be available so there is no need to interact with staff, if the customer doesn’t want to. This is not a sale that takes an hour. However if customer is travelling to a shop, in order to be motivated to do so, having a different rich experience is what would differentiate from buying online.
Metrics to differentiate between time spent in friction in the sales process and the value add provided by an in person experience are useful to explain why people still go to shops. Investing in both frictionless digital experiences and rich interactions delivers on critical metrics to generate value and compete against Amazon. The value add can translate into entertainment, education, loyalty rewards, gamification, social interaction, or others based on the specific retail brand. This value add is part of the digital solution.
At SkillNet a lot of our focus over the last 12 months has been to help retailers to design and implement the right digital customer journeys with the metrics built-in to track and reduce friction and enrich customer experience. Starting with the customer journey allows to ask the right questions about how to best use technology to serve customers and better measure the real value creation. Knowing the technology and the retail domain operation is still critically important but not sufficient.
As Jeff Bezos reminds us in most of its public communications, Amazon’s vision for being Earth’s most customer-centric company has paid off well.
Being a maker of modern commerce isn’t just about building cool looking applications and utilizing the latest and greatest architectural patterns. It’s about a complete and holistic approach to delivering a superior customer experience. Right now, as we enter the New Normal, everyone seems to be talking “customer experience” and that’s certainly a step in the right direction. But what are the mechanisms required to deliver a successful customer experience that will differentiate and separate your retail business from the competition?
Focus on the Customer
While it’s important to have a strong and stable back-end supporting your applications and systems, without a focus on the front-end experience all those great integrations and data sharing won’t matter once the application is deployed in stores. If the experience isn’t usable and fails to meet the customer’s needs, whether the customer is the consumer or employee, the application will collect dust on a shelf and not be used. This will result in an application which will be a complete waste of money.
Focusing on the front-end means talking to your customers and finding out what they want and need. What’s also important to remember is that many customers may not know what they want and need. Or, worse, be wrong about what they think they want or need. If you get this wrong then you’re back to “App on a Shelf”. So how do you get this right?
Modern Methods for Modern Commerce
- Design Thinking
Usually, the first modern development methodology that comes to mind is Agile. While certainly not without its problems, Agile is a far cry and way above the traditional waterfall approach. It also has many different incarnations such as Kanban and Scrum that allow teams to find out what works for them. But what’s most important is keeping Agile as a philosophy and remembering the key values of Agile and not let yourself get caught up in the processes and “rules” of Agile. Trust your teams to build working software through constant collaboration with customers and never be afraid to respond to change.
As you work in an Agile environment, Design Thinking becomes a critical piece of the development puzzle. By working interactively with the Design Thinking steps, and not being afraid to work the steps out of order, you can build better applications, prototypes, and a customer experience that will better serve your business. Design Thinking is about making sure you hit all the important concepts. You have to start with talking to your customers and determine what they want and need. Then you need to define these wants and needs as requirements. Next, have brainstorming sessions with your team to develop new and innovative ideas. Building a prototype based on these ideas will allow you to do some testing and get some valuable feedback. This feedback will tell you what you need to do next. Maybe you need to go back and talk to your customers again. Maybe your requirements were off. Maybe your idea needs a few tweaks.
With both Agile and Design Thinking it’s time to get technical. This is where DevOps comes in. Like both Agile and Design Thinking, DevOps is an iterative approach that constantly loops back on itself to improve and proactively produce working software that is usable, desirable, and feasible. The cycle of DevOps allows for working releasable software to be in constant production. By always building releasable software on a consistent basis, you can easily react to new customer requirements instead of having to wait for a yearly scheduled release.
The only way to improve is to collect and analyze quality feedback from your customers. There are multiple ways to generate this feedback. On one end of the spectrum are surveys. These can be sent out to customers as an email where, hopefully, enough customers will participate to create adequate actionable feedback. On the other end of the feedback generation spectrum is direct one-on-one interviews with customers. This may be more difficult with consumers than employees but it is extremely worth the effort. This is how you find out whether or not you truly understood what your customers desired and whether or not you delivered. The key here is that negative feedback is good. Negative feedback is actionable. Positive feedback feels good but doesn’t really give a viable means to improve. And if you’re not improving then you’re stagnating and if you’re stagnating then your competition is about to pass you by. In between surveys and interviews are focus groups where the opinions of groups of customers are solicited. This is another great way to gather large amounts of feedback quickly and in an inexpensive manner.
In summary, using modern methodologies, focusing on end customer experience, and gathering continuous feedback will allow retailers to deliver a successful customer experience to consumers and employees. It will also keep you to ahead of the competition by differentiating your businesses.
This is the fourth blog in a series of four blogs( Read Blog 1, Blog 2 and Blog 3) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.
The last year has been challenging for almost every company’s bottom line. Even essential businesses like Grocery stores that saw a revenue lift, have also seen tight margins as labor and product costs rose. In this time of uncertainty, it may be hard to convince internal decision makers to make investments which will provide long term benefits.
On a recent call, a client mentioned that they convinced a skeptical Chief Financial Officer (CFO) to invest in a new multi-million dollar app enhancement by simply demonstrating how easy it was to complete a purchase on a competitor’s mobile app, “within 5 minutes, because I was able to show how easily I could purchase a $30 Mr. Coffee Maker on my competitor’s app, I got the funding I had been asking all year”.
Change is often initiated as a reaction to market or competitive forces. However, a true Modern Commerce Leader is often trying to be an innovator, before these forces become apparent, and may not have the easy argument “our competitors are doing it”. In those cases, a more strategic approach may need to be taken to get stakeholders to agree to not only a major financial investment, but a commitment that their organization will adopt new operational process changes.
At SkillNet, we look at developing a Return on Investment (ROI) model as a 5-step strategic effort:
- Step 1: Define Business Needs
- Step 2: Identify Costs
- Step 3: Identify Benefits
- Step 4: Gather KPIs and Baseline Data
- Step 5: Make a Decision
In our experience, getting a customer journey defined in step 1 is critical and its effort is often underestimated. The journey could be a new or enhanced process, but a trend we have seen accelerate over the last year is the re-platforming of existing journeys to new platforms. An example of this re-platforming is the replication of the in-store shopping experience through mobile applications. Retailers, across both softlines and hardlines, are offering virtual chats with in-store sales associates. Others are creating a curbside pick-up process that allows for complimentary sales to make up for the loss of impulse purchases that would normally happen in stores. Once these customer journeys are identified and mapped, potential solutions can be identified.
We also see many Retailers stumble when trying to see if their initiatives actually paid off. Hence we make sure to include a Step 4, where Key Performance Indicators are identified prior to making a decision. Below is a model for a recent ROI exercise just completed for another client which highlights the potential solutions based on the journeys and some key performance indicators we considered.
The major benefit of taking a more strategic view when justifying a project is the alignment you will gain from stakeholders. The benefits of this alignment include a common stakeholder understanding on how your customer’s experience will improve, the costs to get there, and what subjective and objective metrics will prove you made your innovation goals.
Watch the Webinar on customer engagement – Real Engagement is the new normal
This is the third of a series of four-blogs (Read Blog 1 and Blog 2) from SkillNet on how Modern Commerce Leaders are adapting to the New Normal. SkillNet defines a Modern Commerce Leader as a retail brand that is engaging customers through new customer journeys enabled by Technology. The flexibility and ability to adapt, provides these companies with a competitive advantage.
Retailers are using customer engagement not only to weather the current economic uncertainty but also to build a sustainable competitive advantage. As we surveyed retailers, both essential and non-essential, we are seeing three trends on how Customer Engagement leaders are investing their dollars strategically:
- Building or enhancing existing mobile applications from a transactional to a relationship building platform
- Investing in offers and programs to build customer loyalty
- Offering additional fulfillment options that not only promote safety, but convenience
When it comes to the first trend, there are countless examples of Retailers investing in their mobile apps. When mobile apps first arrived, they were often just designed as extensions to the company’s website, but now mobile apps have their own distinct customer journeys. An example is Avocado Mattresses which offers scheduled visual chat sessions with store team members, mimicking the in-store shopping experience from the comfort of your mobile phone.
On a recent webinar I hosted, Scott Steever, Adjunct Professor at Fashion Institute of Technology, shared his story of how his local Fairway grocery store in Brooklyn quickly turned on functionality that allowed him to have a complete contactless grocery shopping experience in-store with his app: self-scan, self-checkout, and Apple Pay all through his phone. He noted, “I don’t know whether they were working on that ahead of time or they just really pivoted quickly, but in any case, it really made a difference in terms of the experience of shopping with Fairway. It greatly reduced the anxiety for me as a consumer during the early days of the pandemic in New York City.”
Loyalty programs have been around for years, but recent trends show retailers are looking for innovative ways to reward their customers. According to a 2020 Marketing Week survey, 29% of brands are re-budgeting marketing dollars to fund initiatives to maintain customer loyalty. This trend is evident in mobile application integrations to existing Customer Relationship Management (CRM) packages to tailor discounts and recommend complimentary products based on previous purchase history. Other brands such as Levi’s are offering a special concert series for their top customers while Sephora is offering special private beauty events.
The third trend we are seeing in engagement is providing customers with additional ways to acquire a Brand’s products. Obvious additions to fulfillment options have been curbside or drive-up pick up. On a recent trip to Target after placing an order using their app and requesting drive-up pick up, I timed how long I had to wait before the team member came out with my order: 33 seconds, and this was during a snowstorm! In Q3, Target reported that 75% of digital orders were fulfilled from their stores. This helped them reach some remarkable sales increases (19% same store sales), while starting the quarter with 3 % less inventory.
Another example of fulfillment innovation is seeing brands partnering with each other. Even before the Pandemic, Kohl’s was offering Amazon lockers and in person return services. Another interesting example has been a test where select Walgreens’ stores are offering Kroger grocery drive-up pick-up services.
Even when we return to pre-pandemic behavior, we believe these customer journey enhancements will continue to be adopted because of the convenience and safety they provide to the community and the improved profitability that these journeys realize for Modern Commerce leaders.
Watch the Webinar on customer engagement – Real Engagement is the new normal
This is the second blog in a series of 4-blogs (Read Blog 1, Blog 3, Blog 4) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.
During this time of uncertainty, Modern Commerce Leaders have been investing in improved customer experiences to help them build customer loyalty and to weather a drop in traffic.
A recent McKinsey study showed that in last major downturn (2008 economic crisis) the top publicly traded customer-focused companies had three times greater shareholder return than customer experience laggards.
Customer experience (CX) leaders are more resilient during recessionary periods, experiencing shallower troughs and quicker recovery
Even before the pandemic and resulting economic downturn, Modern Commerce Leaders had already begun investing in customer focused innovation, but the pandemic increased the impetus to find new ways to engage with a newly home-bound customer. More importantly, it also has resulted in massive changes to behavior, with customers being more willing to try new technologies thus reducing the challenges that retailers may have faced prior to COVID-19. As reported in CNET, Oz Alon, co-founder and CEO of HoneyBook, a financial tech startup in San Francisco said, “I do believe this is an opportunity. This is a huge event in the world, people are going to change their behaviors and a lot of things that have struggled for adoption will get a new push.”
Much of the customer experience improvement has come with enhancements to existing mobile applications. Scott Steever, Adjunct Professor at Fashion Institute of Technology, on a recent SkillNet Webinar shared his own experience developing Mobile Applications for ABC Carpet and Home in New York City:
“Before the Pandemic, ABC Carpet and Home saw some customers wanting an option to be able to schedule an appointment and potentially initiate a video chat, online or through an app, with associates. Buying a $15,000 sofa or a $50,000 carpet is a major purchasing decision and anything we could do to facilitate the decision making process was seen as a win for the customer, sales associate and our bottom line. The Pandemic just pushed the adoption of this technology.” Professor Steever also added, “I think tools like this that are flexible and adaptable are very important in this age of COVID 19 because we don’t know when or where the next hot spot will come up. The good news is that we know this long-term investment and current adoption will give ABC a competitive advantage.”
Recent earnings reports seem to support this correlation between an enhanced customer experience and better financial/operational performance as shown by three customer engagement leaders:
- Target: enhanced mobile apps, fulfillment and loyalty program
- Q3 2020 saw digital sales grow over $2B and drive-up service grow over 500% in Q3
- 20% increase in same store sales with 3% decrease in starting inventory for Q3 2020
- 75% of digital orders were fulfilled by stores in Q3 2020
- Walmart: enhanced mobile apps, fulfillment and new subscription program
- Curbside projected to drive over $7B in sales and account for 33% of digital sales in 2020
- Average basket size for curbside pickup were double that of in-store baskets
- Q3 2020 saw the number of transactions drop by 14%, but average ticket increased by 24% and eCommerce was up 79%
- Kroger: enhanced mobile apps and fulfillment
- Q3 2020 saw 108% digital sales growth and 10.9% comparable store growth
- Expanded to 2,213 pickup locations and 2,468 delivery locations, covering over 98% of Kroger households
- Estimates that 50% of online revenue is coming from competitor’s customers
In conclusion, investments in customer engagements definitely pay off for retailers and, in today’s world, pay off quickly. The good news is that it is never too late to start. Given the speed with which technology changes can be implemented to support both digital and in-store experiences today, retailers will quickly see the benefits of innovation in improved financial and operational performance.
Watch the Webinar on customer engagement – Real Engagement is the new normal
This is the first of a series of 4-blogs (Read Blog 2, Blog 3, Blog 4) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.
Up through the Fall of 2020, the economy looked like it was approaching a “New Normal” of economic activity. However, pessimism based on poor holiday sales and political unrest has countered the optimism coming from new stimulus spending and vaccines. Uncertainty continues to be the defining term for 2021. In this blog, we will discuss where we are on the path to the New Normal, and how retailers can support customers changes in behavior.
First question we all have is “Has the bleeding stopped?” According to TrackRecovery.org, consumer spending in week ending January 17, 2021, was up 6.5% over same time period in 2020. Driven by $600 stimulus checks, retail spending was up 25%. Consumers have dramatically shifted spending from Entertainment, Travel, and Restaurants to Essential Retail and eCommerce.
Consumer Spending up 6%; retail spending up 24.5%
Given this situation, if your business is not seeing a rebound in Sales, you may have a problem, in that your customer may have made a long-term behavioral change. These changes can be as simple as your customer still buying your product but just not coming into the store (reducing add-on sales), to your customer finding more convenient options from your competitors. Kroger reported in their 2020 Q2 earnings call that they estimate 50% of their new digital customers are coming from their competitors.
With this consumer behavioral change, not only does a business have to worry about competitors, but also whether they have lost the traditional add-on opportunities in the urgency of making the shopping experience safer. When adding functionality online, retailers may have neglected to identify opportunities to replace the incremental sales normally associated with in store traffic. Traditional merchandising and pricing techniques, which offers add-on sales opportunities, just may not work if the customer is not walking your aisles, end caps, shelves, tables, four ways, or seeing your accompanying promotional signage.
I was recently on a call with a Midwest Essentials Retail client, and one of the initiatives they have undertaken to address this uncertainty, is to partner with SkillNet to improve customers mobile shopping experience and to offer additional customer engagement functionality that not only mimics in-store experience, but in many circumstances enhances on it. This functionality includes additional fulfillment options, appointment scheduling, loyalty program, inventory availability, personalized marketing and an enhanced consumer shopping experience.
What will help retailers regain lost sales is identify what has changed in their customer’s journey. One of the ways to identify this is through financial modeling by analyzing traffic and average order values, by channel, pre-2020 and post-2021. Using technology to bridge the gap and to enhance customer experience will go a long way in deepening customer engagements and help getting the dollars back while enabling growth.
Watch the Webinar on customer engagement – Real Engagement is the new normal
Another great show this year at NRF in New York. Between great meetings with our customers and partners, here are top five retail technology takeaways from NRF 2020 from the exhibitor floor.
Store Digital twins
Satya Nadella mentioned them in his opening keynote of NRF and were a topic of conversation with many partners. A digital store twin in the cloud that can monitor and predict behavior is a proposition full of potential applications across customer, product and inventory.
The increase on the number of sensors and general data gathering end points at the store augments the fidelity of the digital replicas. At SkillNet, the virtualization and devops automation of the registers and devices of the retail POS state is a solution we have been providing to customers for testing and monitoring purposes at scale.
Vendors continue to define value around Customer Journeys
Consistent with previous events and current trends across industries, a lot of the conversations on how to best define the requirements for modern retail centered on customer journeys. From a technology perspective there were more general purpose Customer Data Platforms (CDPs) in show than the more narrow solutions for retail customer relationship management (CRMs) or in the spaces of loyalty or gift cards.
From our experience working on customer journeys definition, one definite risk is in aligning too much with methodologies associated with business process reengineering. The aim of frictionless execution of business processes, particularly on omnichannel flows, is only part of the objective. Retailers look for differentiation in the customer experience, not just efficiency. While the CDP platforms revolve around customer, the customer experience is a relationship between two: the customer and the brand. It will be interesting to see if these CDP solutions evolve their focus on that relationship. This should manifest first between customer and product, bringing better capabilities on interactions between the two by the extended use of Artificial Intelligence.
AI is everywhere but not all AI is created equal
Since mentioning AI. AI was everywhere at the event. Across the buy,move,sell,return retail process landscape and in most booths. AI was mentioned as part of most services and products. However very little detail on implementation or capability. The general impression is that most vendors are using now machine learning for predictive analytics. It was difficult not to be a bit cynical about some of the claims. Not necessarily expecting that vendors will include all details of their algorithms or techniques. But at least provide some signal of what is there under the covers as a minimum standard. Some of the claims were so broad that you could think general intelligence had been achieved. May be there is already a good capability classification somewhere suitable for events like this. Going beyond powered by AI but not explicitly talking about things like naive Baynes, logarithmic regression or random forests. If exists it was nowhere to be found in NRF
AR and 3D modeling are finding more practical use cases
Practical use cases for Virtual Reality have not always been easy to find in retail. It is more exciting to be placed inside a virtual alien world than inside a virtual shopping center. However there were plenty of great uses cases for augmented reality and 3d models at the show this year.
Beyond experiences at the retail store with smart mirrors and other dedicated devices, AR should be looking to grow as part of the mobile experience with the increase of coverage for 5G in 2020. Many tools available and vendors after this market.
For 3D models, the solutions were more matured and can be used at scale on large catalogs with certain degree of automation. Multiple options were available for 3D model capabilities on media generation in content management. Beyond content management, solutions for product customization were also available, executing the configuration with 3D printing or with a traditional manufacturing process.
Robotics for store inventory management
While robots are commonplace in warehouses for inventory management, a number of solutions at the show this year were showing robot based solutions for inventory management at the store. It would be interesting to see how these solutions evolve and mature. The methods and parameters of inventory data that could be captured into the system will significantly change and expand.
A version of this article is also published at www.Medium.com
Written by Antonio Alvaro, Antonio is Senior Vice President Solutions and General Manager International
For retailers that sell goods and services in the EU, the looming May 2018 deadline to comply with the EU General Data Protection Regulation is not groundbreaking news – it has been barreling towards them since it was approved and adopted in early 2016. But while there are certainly some retailers locked, loaded, and ready to go, we’ve had many firsthand conversations with others on the opposite end of the spectrum. We’ve heard quiet rumblings among many retailers expressing fear over whether they will be ready in time and uncertainty over whether their current course of action will fully meet all requirements.
We are pleased to offer regional expertise to consult and provide insight into these compliance issues. SkillNet has been serving the global retail community for the last 20+ years with retail engagements in over 25 countries across EMEAI. Our experience specifically with retail implementations in the EU and the provision of internationalization accelerators for payment systems, tax requirements, and localized regulatory compliance for this region has put us in a unique position to be able to provide insight to retailers on how to best mitigate this transition towards GDPR compliance.
2-Week Rapid Assessment of GDPR Compliance
Are you unsure whether your enterprise is ready for GDPR? We can quickly put your fear to rest. SkillNet is offering a 2-week rapid assessment of your GDPR compliance roadmap. Within this timeframe, we can provide you with a tailored assessment of your current and future preparations to ensure you have taken all necessary steps to comply with the new GDPR requirements for marketing consent and profiling, as well as ensuring proper data protection compliance and procedures are in place. We want to help you better understand how your enterprise and compliance approach stacks up to these regulations.
For those organizations determined to be noncompliant, the fines are significant. The maximum penalty for serious infringements can incur a fine up to 4% of annual global turnover or € 20 million with tiered fines for lesser infringements. We are here to help you make your preparations far in advance of the deadline to reduce your risk and losses from noncompliance penalties and fallout.
Join SkillNet at the Oracle Retail Industry Forum, Europe 2017
Please contact us for more information on this topic or come meet us in person. SkillNet is proudly sponsoring the Oracle Retail Industry Forum Europe in Barcelona September 19-20. Please reach out to us at the event or set up a meeting in advance, we would be thrilled to discuss any issues or concerns you may have on this topic with regard to your enterprise.