3 Key Transformations Happening In Retail Right Now

3 Key Transformations Happening In Retail Right Now

By Brent Franson | Industry Insights | 15 March, 2016

How often have you heard the following? It’s all about the customer. The customer is at the heart of everything we do. This year, the focus is on the customer.

Let’s face it: no matter the industry, we can all agree the customer is central to success. This is absolutely nothing new.

But we can take a fresh approach with our customers – and that’s what the retail industry is starting to do right now by using data to personalize in-person store experiences. That use of data and personalization is core to online retailers and is the logical next step for physical retail.

This shift is seismic and it’s in direct response to the customers of today, who are exerting increasing control over the companies they do business with. The combination of mobility, digital empowerment and social media has created a world where people set a high bar for expectations and want to buy whenever, wherever. But it’s not an easy transition – in fact, it’s causing tremendous pain for a huge number of brands.

As retailers focus on people with smartphones (i.e. everybody), the “online retail vs. physical retail” question disappears and the wall separating the two worlds crumbles.

With this blending, three important transformations take place:

Expectations are higher than ever. Recently, Forrester noted that when people have a great buying experience, regardless of brand or channel (online or offline), their expectations are raised across all other buying experiences.  People don’t stop to think about the difficulty of recreating that wonderful experience in the physical world or for a different product. Expectations are simply and subconsciously higher each time the bar is raised by a new and better buying experience.

The war between online and offline is over. Online delivers convenience; stores offer an experience. Physical retail is not going away, no matter how many extol its demise. Rather, the nature of physical retail will change from transactional to experiential. Physical retail spaces will be optimized to support the mobile consumer across every step of the buying journey.  Online will continue to play its valuable role by delivering speed, efficiency and convenience.digitalvsphysical

Personalization is coming.
Perhaps the biggest market shift will be that physical retail will finally know who is walking into their stores BEFORE she buys. With this knowledge, gained only through explicit permission, brands can create one view of the customer across channels and create personalized and efficient buying experiences — the nirvana of customer centricity.  The key question for retailers here is figuring out how to deliver enough value and trust in exchange for people to be comfortable providing access to who they are (via app of Wi-Fi) when they walk into the store.  You’ve never bought anything on Amazon without being “logged in” – and the same will ultimately be true in physical retail.

The pure play online retailers understand the importance of customer centricity, and how the experiential nature of physical retail will accelerate growth. Today, eTail brands such as Amazon, Bonobos, Gilt and Warby Parker are building an extensive physical presence. In fact, Amazon is rumored to be expanding its physical footprint with 300-400 additional stores. There’s no question: these online brands will extend their mastery of data and personalization into the physical world.

Who will dominate the new era of retail? The market is still up for grabs. That said, the future leaders of retail will deliver on the brand promise of mastering both online and physical for the mobile customer — and the seamless transition between the two.

Brent Franson

Brent Franson

Brent is the CEO of Euclid Analytics.

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