How Competition in Consumer-Facing Technology Threatens the Stability of Retail
Competition in providing the most innovative, unique, and up-to-date services and features to consumers is escalating with the rise and expansion of omnicommerce, a strategy that delivers a seamless customer experience through all available shopping channels. Brands are building in-house development teams or partnering with start-ups and other companies to extend their reach while catering to their customers’ demands of convenience, personalization, and on-trend technology.
The resulting features range from product locating mobile apps such as Target’s Cartwheel in-store deal-finding extension, digital and virtual shopping experiences such as Ikea’s augmented reality catalogue and StubHub’s VR 3-D ticket seat preview, and shipping and return processes such as Amazon’s two-hour shipping and Zappos' free, simple return option.
Each company is trying to out-do its competition by innovating faster and being the most on- trend, not just with retail but with advertising as well. For example, Burberry partnered with Snapchat, arguably one of the most highly used social media messaging applications, to be the first brand to create a 24-hour “Discover” channel promoting their new men’s fragrance.
Their campaign is not only a “first,” but it also addresses and incorporates everything their target market asks for and expects. It can be argued that they are “winning” in this brand competition – but only until someone else comes up with the next trendy idea that makes new news tomorrow.
And more and more companies are joining in this competition as omnicommerce becomes the norm. However, these new features are offering services that are disrupting the way the retail industry has functioned up until now.
The new technology creates serious demands on time, data flow and storage, all while requiring the accuracy and flexibility to handle technology updates and changes to the infrastructure. For example, Nordstrom allows customers to find products in store, buy online, pick-up in store, return in store or online, and a multitude of other forms of product discovery and movement.
Yet this flexibility offered to the customer requires a backend infrastructure that can handle the complexities of product tracking, inventory count, and fulfillment processing. Traditional processes such as the straight “ship from distribution center to customer” and “buy in store, return in store” are now being replaced with more complex inventory movement systems and customer tracking abilities.
The new omnicommerce features also provide highly personalized experiences to customers and rely on tracking customer behaviors and real-time data to create unique customer profiles. Easy and error-free communication from system to system, backend to front, is required to achieve this goal, especially in regards to stock levels, shipping and fulfillment, and order history, all important parts of the supply chain.
And while some innovators have built technology to robustly and efficiently handle these changes, not all backend infrastructures are up to speed. This is true not only for specific brands but across the retail industry as a whole. Given that supply chain and brand functioning rely on the “well-oiled machine,” if one part breaks, the whole retail process is at risk.
Some companies have patched up their backend infrastructure to integrate with the new frontend technology, but most existing backend systems cannot be built out in a way that allows them to fully perform at the level necessary to deliver to customer expectations. For now the patches work well enough, and most companies are content to stay focused in the present rather than to look forward to what will happen when the volume of commerce and their customer base expands beyond the capabilities of their backend systems.
Not all retailers and brands are equipped to handle the promises being made and the expectations being created by this emerging omnichannel technology. Not only is the physical functionality of retail (the supply chain and product movement) being threatened, but also the customer satisfaction promise is as well, as the expectations and demands are set high and will only increase.
Creating backend systems that can fully support and adapt to new and ever-changing frontend technology is now the necessary next step to long-term customer satisfaction and overall business success.