In-Store vs. Online
It's no secret that since the introduction of online shopping a mere 26 years ago, how consumers shop has been completely revolutionized. This meteoric growth has been deemed the cause of the “Retail Apocalypse,'' leaving a trail of abandoned brick-and-mortar stores in its path: Toys R US, Sears, and Payless, just to name a few.
The numbers certainly back up the epic shift in retail sales trends, with consumers spending $602 billion in online sales with U.S. merchants in 2019, up 14.9% from $524 billion the prior year (per U.S. Department of Commerce quarterly eCommerce figures).
Leading the digital transformation in retail is Amazon, accounting for approximately 47% of all online U.S. sales. Other notable disruptors are Warby Parker, Glossier, Bonobos, Rent the Runway, and Away, all pioneering their interpretation of the direct to consumer model. Fascinatingly, once these digital-first brands reach a certain threshold of success, they all proceed to open their own brick-and-mortar shopping experiences.
Amazon currently has nearly 20 Amazon Book stores, 80 Amazon pop-up shops, and recently opened Amazon 4-Star. As part of their efforts to cement a strong retail industry footprint, Amazon has opened a concept store called Amazon 4-Star in Manhattan.
The store leverages their big data to curate an eclectic mix of items which have a rating of 4 stars or higher, and are the most purchased items in the local zip code. Amazon is also considering plans to open as many as 3,000 new AmazonGo cashierless stores in the next few years.
So if trends are moving to online shopping, why are the very brands which initiated this movement now investing in retail both digitally and physically? Well, the truth is, brick-and-mortar stores are not going anywhere. Americans spent $3,162 Billion in 2019 on physical store sales, accounting for 84% of all commerce sales.
The Real Impact of Technology on Retail
The core impact of introducing technology to the customer experience has not been on where they choose to spend, but rather on why they choose to spend.
Digital commerce has shifted customer expectations and lowered the threshold for accessibility. Convenience, innovation, and personalization have now become the baseline of customer standards and why they chose to spend.
For a brand to stay competitive, they must adopt this cohesively into both their digital world and traditional retail experience. If brands want to thrive in their digital transformation journey, they have to move beyond simply establishing a strong eCommerce site, and leverage the use of digital technology in stores to deliver on these new expectations.
What Retail Can Learn From eCommerce
eCommerce practitioners understand the importance of the checkout page. They are constantly testing and improving speed and convenience, ensuring efficiency. They do not allow for a single inconvenient minute to exist, or the shopper may abandon their cart.
Compare that with the archaic in-store checkout experience: standing in long lines, waiting for cashiers, credit card machines (I still don't know if I'm supposed to swipe or insert?), receipt printing. It would be enough to make any shopper abandon the store for the convenience of online shopping.
A number of brands took notice of this disconnect between the online versus in-store experience, installing self-checkout kiosks as a strategy to narrow the gap. Yet other brands have invested in taking this one step further.
For example, Nike has opened a new flagship in New York, befittingly named ‘Nike House of Innovation 000’. It boasts a multitude of impressive features, allowing the customer journey to be completely seamless and self-driven.
A customer can scan a QR code requesting an item, which is placed into a nearby locker, and unlocked using the mobile app. The mobile commerce app also has a self-checkout feature, so the client never has to speak with an associate, much less stand in line. This is the epitome of convenience.
Let Technology Power Personalization
In 2017, Sephora introduced an in-store experience mainly centering around the ‘Sephora Beauty Hub’. The Hub has a virtual lookbook and a virtual makeup artist. It utilizes an augmented reality mirror, allowing customers to try on different colors and get virtual makeovers without ever touching any actual product. This interactive experience allows the employee to better understand and guide the shopper to find their desired items.
Earlier this year, Soma (a Chico’s FAS brand) introduced SomaInnofit at the Consumer Electronics Show. It’s also on display at the Beta store and is the first time an intimate apparel retailer has entered the tech industry. This measuring bra is now being used in Soma stores to provide precise measurements to the shopper’s phone, which are then used to recommend the perfect Soma bra.
If that isn't intimate enough, Uniqlo recently launched UMood, a neuroscience stylist to recommend a t-shirt based on a shopper’s mood. Customers wear a neuroheadset that shows them a series of video and image simulations. The brainwave reading provided by the customer’s psychological reactions is placed against an algorithm that suggests a t-shirt from the retailer’s range to match the consumer’s state of mind. The states of mind are categorized as ‘adventurous,’ ‘calm’ or ‘stressed.’
These are a few examples of innovative brands who’ve noticed how digital technology can be used in-store to drive sales. The value of these in-store initiatives drills much deeper than just presenting a memorable and personalized experience for the shopper. It also allows brands to get to know their customers better and capture meaningful data. Meaningful data gives brands actionable insight, which ultimately leads to return on investment through increased sales.
How To Evolve
So what we can take away from the closing of some retail chains, and the introduction of new experiences into physical stores? The impact of technology isn't causing the retail store to become extinct. However, it is the reason they must evolve.
Technology has trained customer behavior to have a new set of standards, encompassing a more convenient, innovative experience, with a personal touch. In today's ecosystem, for a brand to overcome these challenges and remain relevant they must stay agile and iterative. This includes re-envisioning why the physical store needs to exist. Digital-first brands along with innovative brands are adapting to this omnichannel evolution through the use of digital transformation strategies, not just online but also offline.
To discuss your retail and digital evolution, contact the team at Object Edge today.