Some facts …
Omni-channel and innovation have been, and still are, the keys to success of modern retailers. Today’s consumers live, work and shop in a digitally integrated world and retailers need to leverage on innovation to deliver a more enriched, personalized and seamless customer experience. A significant example is Burberry, which provided its in-store sales team, globally, with tablets accessing a clients’ database keeping track of their generalities, tastes, shopping preferences and latest purchases on- and off-line, delivering a bespoke user experience, no matter in which store worldwide.
Another american retailer Lowe drastically improved shopping experience and customers satisfaction by developing an app which guides its customers through the stores directly to the products they are after, without having to ask any employer.
The number of retailers investing in IT and seeding early stage innovation is quickly growing: Nordstrom, Walmart, Staples, Home Depot, John Lewis, to name a few. Bigger companies opened their inner innovation labs: small team of designers, ethnographers and engineers looking to meet customer demands before they have even thought of it.
Meanwhile smaller retailers, which don’t have the resources to establish an inner lab, turned to startups instead, because they are more agile, responsive, cost-effective and more flexible than larger IT suppliers, said Fred Soneya (1) co-founder of Haatch, a UK-based digital investment and business incubator.
What both – big retailers inner labs and small retailers and startups collaboration – share is their focus field of study: mobile apps development, big data analytics and providing a first-rate customer experience. Mobile devices, bespoke apps, indoor proximity systems (such as iBeacon) offer, not only countless way to create a more participative purchase experience, but also relevant big-data for retailers to study customers’ behavior.
Here are five of the most interesting trends to keep an eye on throughout the next months:
1. Mastering gentle sell
Former Burberry’s CEO and new retail chief at Apple, Angela Ahrendt, explains key principles of an unforgettable in-store experience and how she plans to revitalize Apple’s dated brick-and-store philosophy.
For as long as there have been Apple Stores, they have been run independently of the online sales operation and this has been “a historical failure” at Apple, says analyst Horace Dediu (2), neglecting how shoppers actually shop.
Angela Ahrendt will revolutionize customer experience based on her expertise from Burberry, where she transformed brand’s culture, tripled earnings and restored the brand’s reputation as innovator. Her redesign was based on three principles:
- The gentle sell philosophy: leveraging on storytelling and in-store technologies to create an aura around Burberry and technology, which delivered a memorable shopping experience without having to spend a penny. Experience is as important as sales.
- Omni-channeled consumer experience. Ahrendt pushed for a seamless consumer experience between online and brick-and-mortar where everything about the messaging was unified, from the music played on the website and in stores, to the photography and displays.
- Highly prepped sales team and customized service – granted by a system allowing associates in all 330 Burberry stores to have relevant customer information about online and in-store activities – Burberry could ensure to deliver bespoke service worldwide.
Ahrendt faces her ultimate challenge: Apple Stores’ annual revenue of just over $20 billion is more than six times Burberry’s and its 30.000 strong staff is almost three times as large and its products have insinuated themselves much deeper into consumers’ daily lives.
Read here the full interview „Can Apple’s Angela Ahrendts Spark A Retail Revolution?“.
2. Consumers’ precious, retailers hidden weapon. (3)
A recent Deloitte study found that the use of digital devices — such as tablets and smartphones — influences 36% of all in-store purchases, representing $1.1 trillion in retail sales.
The rate of smartphone influence grew from 5% in 2012 to 19% in 2013, playing a role in $593 billion in sales. Deloitte also found that the majority of in-store shoppers lean on their mobile devices or an unmanned kiosk — rather than a sales representative — for questions about products. 75% of consumers say information found on social networks influenced their shopping and enhanced brand loyalty.
This is the study.
3. The rise of the black hole
Amazon threatens smaller retailers with innovation
Amazon has entered the top 10 US retailers (4), jumping from No. 11 to No. 9 after sales increased by more than 27% from 2012 to 2013.
It spends more than $6 billion (5) a year on research and development, which is what has enabled it to release groundbreaking features such as 1-Click Ordering and the Prime free two-day shipping subscription service.
Amazon’s latest innovation is „Fire Phone“,2 launched in July 2014, will give the e-commerce giant yet another piece of ammunition against retailers in its goal to own online shopping through showrooming – the practice to examine a product in a store before buying it online at a lower price (6). The phone includes a feature called Firefly that claims to recognize more than 100 million products. Firefly employs the phone’s 13-megapixel camera to detect QR codes and Web links on packages to drive traffic to Amazon items.
Read more about – „Why Amazon’s New Phone Threatens Retailers“.
4. The return of the small retailers
Innovations labs, tech hubs and start-ups are smaller retailers’ ammunition to fight back giants Amazon and Walmart.
The recently launched startup, Iterate studio, connects retailers with an army of tech firms that develop and test new features and services. “It’s a fully managed innovation lab without having to commit anything more than the equivalent of one person’s salary,” said Jon Nordmark, founder of Iterate studios „They [retailers] need it to just keep pace with today’s powerhouse, which is Amazon. Iterate provides a much-needed resource for retailers, who, unlike Walmart and Amazon, haven’t had access to innovation labs to test out new concepts” (7).
The genius of „Iterate“ is they make this easy for the retailers, and they’re in the perfect position to bring great startups that can really accelerate the retailer’s e-commerce business.
Big retailers seek innovation establishing private innovation labs.
Nordstrom, the fifth-largest department store in the US, put together a small team of designers, ethnographers and engineers and founded its innovation lab, looking to meet new customer demands, often before they’ve even thought of them. One of most successful end products developed consisted in the ability for customers to ask for help over text message, with an application that protects privacy of both the customer and the clerk, allowing people to be notified of alterations, or refills for their cosmetics or a new shirt or favorite brand. (8)
UK retailers John Lewis opened its own innovation lab: „JLab“ (9), an incubator whose first initiative offers startups office space and advice before backing winner with £50,000 and store roll-out. The digital workshop was launched in June and will run until September showcasing five startup companies and their projects for innovating retail. At the end of the incubation period, JLab will select a winner and if the project is a success the idea will be introduced across its 40 stores. JLab’s five startups are experimenting with the internet of things (IoT), iBeacon indoor positioning technology, smart labeling and 3D room planning. Check out what the five startups are developing and the winner at JLab website.
Another big retailer pairing up with startups is ASOS which teamed up with Microsoft’s Ventures startup program.(1) “Why are retailers turning to startups for innovation” www.computerweekly.com (2) “Can Apple’s Angela Ahrendts Spark A Retail Revolution?” www.fastcompany.com (3) “The New Digital Divide” www.deloitte.com (4) “Top 10 US Retailers: Amazon Joins Ranks Of Walmart, Kroger For First Time Ever” www.ibtimes.com (5) “In Battle with Amazon, Traditional Retailers Innovate, Turn to Iterate” www.digitaljournal.com (6) “Showrooming” Wikipedia
(7) “In Battle with Amazon, Traditional Retailers Innovate, Turn to Iterate” www.digitaljournal.com
(8) “Dancing Giants: Nordstrom’s Innovation Labs help a 113-year old department store chain to innovate …” www.pando.com
(9) “U.K. Retailers Hatch Incubators to Boost Tech Innovation” www.adage.com