“Retail Sector” is all set to reach new heights since ‘Digital Transformation’ has become its companion. The retail sector aims to fulfill the consumption needs of the end consumer. You are well aware that the world economy as a whole is constantly evolving, so is the pace of ‘disruptive innovation’. The retail industry has now become a giant “Retail Tech” domain. And, the scope of “retail tech” is certainly very comprehensive. The constantly emerging IT trends move this sector one step forward in the direction closer to digitalization.
The brick-and-mortar model is on the verge of hitting a dead end
The essence of physical stores continue to diminish with time. Nowadays, you don’t have enough time to visit a retail shop and stand in the long queues for payment. You are living in a digital era and want everything on your fingertips. This has led to the emergence of “E-commerce”, where transactions take place through the internet. With the increasing scope of e-commerce concepts like website ranking on google, keywords, SEO content, UI and UX, bounce rate, online marketing, and promotion via ads became major points to look upon for the retailers.
In the U.S., retail sales comprise around 10% in the entire e-commerce industry and it will grow nearly by 15% every year. 44% of American e-commerce sales take place only via Amazon. Today you have websites and apps to fulfill all your consumption needs. The online market is brimming with numerous e-shops and e-malls, where any day, anytime you can make purchases at your comfort level seamlessly with e-cash.
As per sources, 51% of Americans preferred online shopping through mobiles apps as compared to the offline purchases. Around 96% of Americans have already made an online purchase transaction once in their lifetime. As smart phones got huge popularity, the focus has now significantly tilted to M-commerce.
Dawn of M-Commerce Era
The smartphone users are expected to reach approximately 2.5 billion mark globally by 2019. More than 55.1% of the world’s population is currently using the internet. These stats are enough to create a perfect ambience for setting up an era of M-commerce. Mobiles have facilitated the e-commerce transactions and revamped the entire e-commerce industry. M-commerce is when the transactions take place through mobile phones. Globally, around 1.6 billion people use their mobile phones for online shopping. M-commerce is like a boon bestowed by IT to the entire world. Now everyone is intrigued by the “mobile-centric approach”.
“Mobile first approach” has become the most discussed buzzword in the IT domain. Where the interface is designed first for the mobile view and then for the laptop/desktop. Both UI and UX need to be kept in mind while designing a website to achieve the most optimized view for mobile, considering the inclination of people towards mobile phones.
For retailers, it is like a new channel for marketing with endless opportunities. They are using m-commerce as a tool for promotional campaigns like e-mail marketing, coupons and discount notifications via text messages, social media marketing, etc. Through the internet, you can check the prices, make comparisons, read reviews, suitability of different products and so on. Payments can be done deftly with mobile phones via Apple Pay, Android Pay, PayPal or directly via bank account, etc.
With the advent of 5G technology in 2019, the mobile-commerce industry will fly high to reach new heights of achievements. Social Media has become a pivotal marketing platform to communicate with the mass as more than 90% people use social media through mobiles.
Proliferation in the scope of Augmented Reality and Virtual Reality
As per Goldman Sachs, the scope of AR and VR Retail, will surge to $1.6 billion by 2025. The objective of introducing this technology is to surpass customers’ expectations and provide a transcendent experience. Future of AR and VR is certainly very bright.
Ikea is the first name that strikes in your minds when you hear about VR and AR, as it is one of the pioneers in adopting AR for its business model. It provides a virtual experience to customers like choosing the place where they want to arrange a particular furniture, numerous options on the colors, sizes, designs, etc, without actually having to buy the physical furniture and accessories first. Virtual Reality makes the shopping experience more delightful.
Nike has been combining AR, AI, IoT, digital signage and video walls to build customized designs of shoes for their customers. The customers can now get a pair of customized Nike running/cardio gears within the matter of a few hours.
Porsche is using VR and AR, to allow sports cars to be explored in a highly fascinating manner. Using this approach, they are providing a virtual driving experience to potential buyers anywhere, anytime. It is truly justifying its vision “Uncompromised Excellence” to the fullest.
Zara, the fashion goliath, is not so far behind when it comes to adopting AR. Customers can view the entire Zara Studio and its collection right in the palms of their hands. It has also featured a sensor in stores and window displays through the Zara AR app. Customers can get the desired look with just a single click without actually trying the clothes.
IoT has Ameliorated Retail
IoT has a great scope in retail. It is the network of physical devices, which are connected through the internet and embedded with sensors. IoT is majorly used to manage inventory, to track the supply chain, and achieve route optimization. The aim is to bring efficiency at each and every step, to the goods moving from godown till they reach to the end customer. IoT can truly enhance the essence of digital transformation.
Smart Shelves: Inventory is managed through an RFID tag, RFID reader, and IoT. RFID tags will be placed on products, circuits present in them will transfer data to the RFID reader. Information is collected on an IoT platform. Hence, the products in these smart shelves can let the store manager alert in advance about shortages, thefts and avoid overstocking. It also enlights about customers’ choices and preferences.
Digital Signage: It is a way to display advertisements through Ipad screens, digital-out-of-home applications, touch screens, in-store digital screens, etc. Along with IoT, it enhances the customers’ experience in-house and boosts the sales.
Beacons: Customers can get notifications related to discounts, sale, particular off on special occasions, and other important reminders, etc. They can get such notifications either with that store’s app or when they are around the store.
Around 77% of the retailers believe that implementing IoT in their framework can enhance the customers’ experience.
Strategizing through Omnichannel presence
Nowadays, companies are not leaving a single chance to create their visibility in the minds of people. They use all the possible channels and platforms to connect with the customers. It not only creates a unified image of the company but also amplifies customer interaction, strengthens customer engagement, and perpetuates customer loyalty.
Along with boosting the existing business, it can help in creating a huge prospective market. The strategy involves covering all the customer touchpoints through both strong online and offline presence. Effective use of digital channels like social media, websites, telemarketing, m-commerce, e-mails, catalogs, in-store tablets, etc. Analysis has been done on convertibility of leads into final customers. More than 60% of the people prefer to shop or interact via multiple channels rather than using a single channel. To implement the phrase “Out of sight is out of mind”, companies are trying hard to create visibility among the minds of customers, understand their needs and fulfill them with the best suited modes.
Companies like Apple, UGG, Zumiez, Carrefour, Foot Locker, New York & Co, Macy’s, John Lewis, etc, are marvelously using omnichannel strategy.
The burgeoning start of Chatbots
Retailers are surrounded by cut throat competition. In this competitive era, where everyone is trying to prove their excellence, one wrong step can ruin the entire brand image. It is utmost important to surpass customer expectations and provide them with something extra i.e. customer delightment. Deploying chatbots will be the right choice here.
Excellent customer service: Nothing is more annoying to customers than a company which is not listening to their complaints, providing poor responses, taking too much time in answering, or worst, no reply at all. These all aid to worst customer services. Chatbots not only listen to customers’ queries but also provide a timely and swift responses. It is capable of dealing with repeated and frequently asked questions. In retail, it is a must that customer service department should be agile and expeditious in its actions.
From assistant to an advisor: Chatbots are not only confined to just solving repeated questions or fulfilling customer requests. They are also capable of offering suggestions to customers while they are making purchases. Considering their past purchases, purchase pattern, frequently purchased items, items similar to their purchased ones, etc. Chatbots have become more like an advisor than just being an assistant.
Ongoing assistance: Chatbots never take a day off, unlike humans. They are ready to assist all the concerns and grievances irrespective of day, date and, time. They are more reliable in assisting the customers and ensuring utmost customer satisfaction. If the customers are dissatisfied with the services they are likely to move to your competitors and never come back to you again, which is truly detrimental.
Alliance with Blockchain has become an Epitome for outperformance
In retail, blockchain can play a pivotal role. The focal point is not just to enhance customer experience but also to gain competitive advantage over the rivals. It is the inbuilt advantage of blockchain technology, that it safeguards the data against theft and tampering. Blockchain prevents reaching the duplicate and forged goods to the market. The manufacturers are using blockchain and smart tags on the products. It provides transparency along with security at each and every step, and ultimately facilitates smoother traceability. Blockchain takes care of the customer’s sensitive data, maintains confidentiality and plunges down the privacy breach.
Smart contracts backed with blockchain can do a lot more than just eliminating the intervention of a third party. An altogether completely automated environment through blockchain is created for the transactions to take place. The benefits are assured efficiency, trustworthy transaction and elimination of redundant mechanisms.
Retailers can use blockchain to form smart contracts. For example, ABC from Singapore wants to buy goods worth $60,000 from XYZ, who lives in Florida. Despite geographic differences and unfamiliarity, they can do this transaction seamlessly through establishing a smart contract. Both will be having their own blockchain addresses or public keys. A smart contract will be signed through private keys. The goods can be locked through a smart lock (IoT). When $60,000 will successfully credited in XYZ’s account and it is proved that goods are authentic and belong to XYZ, smart contract will get verified on the blockchain network. ABC will get access to the smart lock and will be the new owner of those goods.
Big Data and Data Mining have become Cynosure
Data is always a precious asset to any industry. For retail industry, it is equivalent to Gold. Big data is the huge bulk of data, whereas data mining is exploring the extensive database to make meaningful inferences.
Data is a prerequisite for understanding customer’s purchasing pattern and to conduct predictive analysis about future purchases. A customer is like a backbone for retail industry. Hence, collecting customer data from various available sources has become quite a necessity lately. The data is collected and analyzed, inferences are made through data engineering.
Data include which are the unique customers, which are repeated or loyal customers, what motivates them to buy, their purchase frequency, purchase pattern, their interests, spending pattern, which mode they prefer to purchase, how to outreach them for providing phenomenal customer services, customers’ feedbacks and reviews, storing information related to occasions like birthdays or anniversaries, etc. All this data is collected and stored in the database.
With the omnichannel presence, retailers are not leaving a single platform for interacting with the prospective customers and converting them into final consumers.
Streamlined Supply Chain Management
As you have seen above, blockchain technology, big data as well as IoT can make the entire supply chain management process hassle-free and can turn the entire mechanism into smart transportation.
The products flow from manufacturers, distributors, shipping carriers, insurers, wholesalers and finally reach to the retailers. The retailers dealing in non-durable goods, fragile, and luxurious items can now easily track the movement in real time. It ensures sublime transparency and easier traceability.
In case of luxurious and exorbitant products, ‘authenticity’ is very important. Chips and smart tags can be labelled on the products at the time of manufacturing itself. Later on, at each and every successive supply chain step, those chips will get scanned. At the end, when the retailer scans those chips on products, he/she can see all the scans previously being done. It thereby ensures authenticity and avoids all sort of deceptions.
Cloud computing can also be used for effective and efficient inventory management. It helps in fetching digitized documents from different parties, tracing logistics, avoid situations of over and under stocking, etc.
Artificial Intelligence has become a classic prodigy
AI can be implemented in end number of ways in the retail sector and its advantages are countless. From the point of manufacturing, logistics, delivery, Sales and CRM, payment mechanism to after-sales services, AI can do a lot. The aim is to enhance the customers’ experience. The domain of AI is indeed very broad. Its AI, whose applications are used in chatbots, robots, machine learning, AR and VR, etc. By 2035, AI can increase the profitability in the retail sector by more than 60%.
Conversica has designed a “Sales Assistant”, which helps in identifying the leads over the internet, engages in meaningful conversations with them, and aims for conversion.
L’Oréal by acquiring Modiface has introduced a “Style My Hair Mobile App” where users can virtually try different hairstyles. They tied up with Facebook, so that customers can flaunt their looks on social media platform and lure others to visit their websites.
The aim of introducing and amalgamating “digitalization in the retail sector” is not just to fulfill the basic consumption needs of customers but to enhance the overall experience to an exorbitant level. The focus has drastically shifted towards adopting “Customer Centric Approach”.
Digitalization can do a lot here than what you can imagine. Amazon’s interface (UI and UX) is truly mesmerizing with sorted tabs and search options, where you can easily make filters as per your requirements. The selection has become easier with Artificial intelligence instilled by Amazon on its Website and Mobile App. It provides us with numerous choices of all types of watches, as it stores this huge chunk of data in the Cloud.
The payment mechanism has become a lot simpler and safe and can be done in a snap of the fingers. It stores the bank details of customers, everytime you just need to put an OTP, nothing else. Tracking has become simpler, at each and every point you can check where your watch is and the expected delivery day, date and time. This entire process from ordering till delivery provides an “experience” to customers. The digital transformation process makes that experience delightful, safe and hassle-free, which is the ultimate objective.
However, it is quite fascinating to note that through “Retail as a Service”, brands with sole digital presence are establishing their identity through physical stores too. Companies help those digital brands in building a physical shop, by providing RaaS. RaaS is an emerging field and companies are nowadays taking a keen interest in that, as they want to enjoy a ubiquitous presence. We have started this blog with ‘Brick and mortar model’ and again it is in the limelight at the end.
“Retail Tech” is an untapped box of opportunities and like a boomerang, the force that you put in it “by introducing digitalization”. It will bounce back with the same intensity along with “superior customer experience”. The sector is gradually becoming “Smart Retail”, where technology is constantly and quickly adopted to make customers more satisfied.
Consult Zymr Inc. today for all your “Retail Tech” related questions, queries and concerns. We are into all sort of “cloud-based services” with a one of our niche focuses being “Retail Tech”. You can read our case studies on Vodafone ‘Groupon’ E-Commerce Marketplace and E-commerce SaaS for Social Causes for valuable insights on what we are and what we do.