Exclusive: Store success rests on digital transformation
The brick-and-mortar store is becoming a major center of technology.
In a recent wide-ranging conversation with Chain Store Age, Jeff Orschell, Americas retail leader, EY, explained how every aspect of the brick-and-mortar store must tightly connect to a broader omnichannel shopping experience. In January, Orschell shared insight on how customer behavior is permanently changing in response to COVID-19.
How is the brick-and-mortar checkout experience evolving?
COVID-19 has redefined the definition of ‘convenience.’ People quickly learned new ways to get the products that they want and need and became accustomed to having it on their terms – anytime, anywhere.
EY’s Future Consumer Index has been tracking changing consumer behavior since the start of the pandemic, and according to its most recent Index, 80% of consumers have changed the way they shop. Customers now expect that they can shop in store if they want, have it delivered to home (within a couple hours in many cases), shop online and pick it up at the store, or through other means such as social shopping and live shopping. The lines between channels are very blurry. The journey often starts in one channel and ends in another, but brick-and-mortar is still a part of each of those journeys.
Retailers are now focused on this new definition of convenience. They are working hard to remove the friction from all in-store touchpoints – contactless checkout, contactless payments, seamless integration with digital channels, apps that help you find what you need and assess the benefits to your diet, exercise regime, and so on. Meeting the customers new definition of convenience is becoming table stakes.
Do you see buy-now-pay-later (BNPL) becoming a standard offering for in-store payment?
BNPL is a modern application of a payment method that has been around for decades. It is re-energized with technology that is making it easier to use and more accessible, growing 215% year over year in the first two month of 2021 (via Adobe).
It is hard to say if this will become a standard offering, but the same old concerns still exist. Consumers need to proceed with caution when it comes to BNPL – and recognize the potential for overspending and long-term interest accumulation. While consumers may be tempted with low interest rates and easy application processes, it’s important to read the fine print and really understand what they are signing up for.
[Read more: How retailers can ensure quick customer adoption of store technology]
How can retailers use AI to create in-store personalization?
To be truly relevant, retailers need to fundamentally shift how they view and implement their technology and focus on creating value customers appreciate. As brick-and-mortar retailers continue to focus on personalization, we can expect a rise in strategic technical and digital acquisitions, from artificial intelligence (AI) to blockchain and logistics. According to EY’s recent study, Reimaging Industry Futures Study, 67% of retailers are investing in AI.
As an example, size inclusivity and gender inclusivity have become key initiatives for many retailers. The digital channels, instore representations and artwork need to portray models that connect with the consumer in order to make the conversion. To achieve this, several retailers are now experimenting with technology that will virtually display clothing on models that relate most closely to how the customers view themselves.
Additionally, AI is now being used to optimize the inventory needed in the store and at every node in the supply chain. This allows retailers to carry the right inventory at the right location to satisfy the customer whether they are in-store or online.
What type of digital experiences should retailers offer in-store?
Retailers need to create a connected journey that’s relevant to customers and consider all of the places they shop – online, in-person or curbside. A unified view of your customer, regardless of where and how they shop, allows retailers to improve user experience and drive personalization across the entire customer journey.
In an increasingly digital world, there is immense pressure on retailers to go above and beyond to meet customer demand and provide a customized retail experience. EY believes this is an area of opportunity for a retailer to become an integrated part of the customer’s life by creating experiences that add value above and beyond the transaction.
If you have a trusted relationship with your customer, they will start to give you access to the data that is needed to provide experiences, offers, ideas, and content that can deliver value beyond the transaction. But this must be a connected strategy and approach. Every experience, offer, and idea must be contextually relevant to the individual customer – right experience, right place, right time. If it isn’t, you will have betrayed their trust.
Trust is the key word. Does your customer trust what you tell them, do they trust that your products will be delivered when you say they will, and do they believe that you share the same values that they do? This is the key to being able to deliver value to your customers above and beyond the just selling them a product or service. When you are able to create trust, your customer will believe that the loyalty they have shown to you is being reciprocated. This is when you will see the increase in customer lifetime value and advocacy for your brand.
How do you see consumer app-activated store experiences developing in the next 12 months?
We probably should not limit this to in-store apps. Apps are a great way to connect a customer across all the points that they shop and live. There are apps that help select healthy products in the store; apps that help manage your health condition by selecting the right products; apps that encourage exercise more effectively while wearing certain apparel; and there are apps that help connect with others with similar interests and allow people to share ideas and experiences.
These are great ways to provide value beyond the transaction, but they also provide opportunities to listen to your customers. You can learn how they are using your products and obtain real-time feedback. This will make you more relevant to your customer and help you provide value above and beyond the transaction.