The retail industry is in a state of constant change and the rate of change is increasing. There’s a huge amount of disruption, new players, business models and shopper behaviors. It’s left retailers reeling, not knowing what strategies are needed to maintain growth and margins. While they’re slick at moving stock, they’re not adept at transforming business and stepping into the unknown.
We’re living, working, sleeping and shopping with our smartphones. It’s this ubiquity that is driving huge disruption and opportunity in almost every aspect of life and in every market. Snacking on bite-sized content fills much of our spare time and that snacking mindset is transferring to how we shop. We expect to buy easily, when and where we want, triggered by any medium. Shoppable media and new disruptive business models in retail make it easy to buy at any time in the journey, and start far before the purchase moment.
They also make purchase as automatic as possible, in one click, or completely automatic through subscription. Shoppers also demand unprecedented personalization and choice, expectations being driven by digital experience in other parts of our lives; whether it’s because we want the best of the best product, alignment with our personal values or our specific needs, we demand our specific personal choice and we’ve learned to vote with our feet if we don’t get what we want. Brands and retailers have to be transparent—we want to know how things are made, where they’re from and what’s in them.
This has resulted in a new era of winners who are making retail frictionless, from Amazon Prime deliveries and ASOS logistics to Dollar Shave Club turning a commodity into a subscription (and being snapped up by Unilever). It’s also destroyed or dented players who appeared untouchable, with BHS and Dixons disappearing from the UK high street to JCPenney significantly scaling back and reshaping its retail footprint and bookseller Borders famously going bust a couple of years ago.
What should brick and mortar retailers do to survive and thrive?
The answer lies in understanding how these new players are creating value for shoppers and brands, then developing and testing new models and mechanics for the physical retail space. It requires killing dogma and precedents and rapidly testing models with a proof of concept mindset.
The opportunity is to take the benefits of digital commerce—personalization, ratings and reviews, and depth of information—and blending them what shoppers love about physical retail, browsing and serendipity.
The use of augmented reality promises to help retailers offer just this service to their shoppers in the physical world. Think about it as bringing the personalization, depth and immediacy of online shopping into physical retail, thereby giving it a new lease of life and creating a new experience akin to a personal shopper for everyone.
While enhancing shopper experience should be front and center, there are huge opportunities also to fulfill multiple objectives of brands and retailers. Adding a digital layer to the physical shopping experience creates exciting opportunities for both, collecting data and insight on shopping behavior, being able to target promotional investment to specific shoppers, deepening relationships and loyalty. Shoppers will come back more often and buy more than they do.
A great example of this is L’Oreal Paris’ smartphone app "Makeup Genius," which lets users try out makeup and beauty styles using a front-facing camera. This not only helps women choose the right makeup for them, but also gives them ideas and advice on how to get that amazing look. Ikea achieved a similar objective in a very different category with the Ikea Catalog app, which lets users place selected products in their homes. Through the technology, customers can place virtual furniture in their homes based on the actual physical dimensions from the Ikea catalog.
E-commerce has drawn a lot of customers from the high street in the last decade. We now have opportunity to take insights from that world and apply them in physical stores and entice shoppers back.