The next frontier of customer experience
Like many buzzwords in the industry, from cloud to big data, the term “digital” is evolving. Coining something as “digital” has always implied that it’s better or more advanced than the status quo. Remember when we moved from vinyl to compact discs? CDs had logos on them with the words "Compact disc DIGITAL AUDIO." Digital in this sense was the byword for ease of use, reliability and interference free music.
In the retail realm, the term “digital” is creating a trend focused on customer experience that is easy to use and also highly reliable with no manual interference required. Gartner has said that in order to survive, retailers must adapt and transform themselves to adopt a digital business model. But what does becoming a “digital retailer” really mean?
Contrary to the views of many commentators, it’s not just about selling online or having an omni-channel presence. Digital retail is about using technology to bring together and streamline every aspect of business operations. From front-end customer interactions – which may be web only, store only or in most cases a combination of both – to the internal operations that ensure that the customer’s requirement – such as an order, inquiry or refund/exchange – is actually being fulfilled reliably and cost-effectively. More importantly, embracing digital retail is about providing competitive advantage. There are two sides to this that will evolve as “digital” creates its place in the retail industry.
The ability to streamline so that operational costs are kept as low as possible. For instance, minimal human interaction to save time and cost, perfect orders that flow from step-to-step and system-to-system with no issues and creating accurate inventory to avoid customer disappointment. Over time we will see this aspect of digital retail evolve to possibly include elements such as:
Combining automated technologies like additive manufacturing and omni-channel ordering to design a custom product that is manufactured, packaged and shipped to the shopper without ever being touched by a human hand. Combined with technologies like drones, this is the ultimate in digital retail – no human other than the shopper is involved in the process.
Package tracking via a low energy blue-tooth device that tracks where the package is in the supply chain process.
Shelves that automatically advise when they need to be replenished.
Prediction technology that automatically schedules product deliveries for a time the customer is home.
Simple product returns that allow for the item to be picked up at a time when the customer prefers.
The ability to enable differentiating initiatives. A few years ago differentiating initiatives were websites, online order tracking, click and collect and smartphone applications. Now, these initiatives are evolving to include in-store technology such as actionable footfall analytics, smart signage and location-based marketing. All of these initiatives start as a differentiator, and over time become normalized as all retailers come to have them. Because of this, retailers will continue to push themselves to stand out from their competitors and we may see additional consumer friendly features such as:
“Click and collect” ordering that makes items ready for pick up before the customer walks through the door.
Real-time offers and promotions that consider inventory in store and in transit, customer purchase history and customer shopping data.
Shorter order cut-off times, facilitating same day delivery of items such as groceries.
Augmented reality using smartphones, creating a virtual shopping assistant helping customers navigate the store with GPS, find specific styles, find products and see enhanced product information.
In-store staff that act as advisors enhancing customer intimacy that currently only exists in luxury retail. Advisors will have instant access to customer profiles, purchase history and likes/dislikes to further enhance the custom shopping experience.
Competitive differentiators for many years to come will all fall under the umbrella of “digital retail.” As new competitive differentiators evolve, the definition of digital retail will do so as well. Retailers will move towards digitalization out of ease and business model necessity. And as the digital side of the retail industry grows, customers will come to know and expect a more customized shopping experience. The digital retail trend will build and one thing is certain – digital will keep its reputation as better and more advanced than the status quo.
Oliver Guy is Retail Industry Director at Software AG.