Four powers that will save the future of retail

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From digital to phygital, a step towards bringing life to brick and mortar stores

Retail has always gone through life cycles, and technology has played a major role in most of them. The whole “video killed the radio store” scenario will continue to repeat itself because of the new products that will take over the old ones, but what happens when the actual store is disrupted and not the product itself?

 

Phygital: Disrupting e-commerce with mobile and the Internet of things

E-commerce has managed to take a big chunk out of retail and will continue to gain market share as it targets a more mature audience. Retailers who don’t want to lose their physical store should offer all of the benefits of online shopping in-store. Disney, Lego and Tesco have all innovated in their locations by bridging the digital and physical experiences. The term “phygital” is being slowly introduced to retailers as a way to engage with their customers. Retailers will have to innovate in order to regain their physical space by bringing digital technology to brick and mortar. Competing with e-commerce will mean bringing people back to the store without losing the perks of shopping online.

Bookstores will have to act if they want to survive. Online shopping has overtaken physical retail in the books sector market share in 2013, accounting for 52.9% of sales. Bookstores have tried to get a piece of the online cake by launching their own e-commerce platforms, but with Amazon and Play.com dominating the customer’s top-of-mind, traditional bookstores might end up shooting themselves in the foot.

Consumer facing technology can save in-stores sale when combined with data rich behind the scene technology. Data is money, and physical retailers will have to learn its importance and apply it in-store whether by utilising mobile, wearable technology or the Internet of things.

 

Price: Driving customers away from “Showrooming” for cheaper products

Although clothing and footwear are showing 2.0% of growth this year, consumer trends show alarming behavior that seems to be growing as well. “Showrooming”, which is trying products on then buying them online, is a big threat for clothing retailers and malls alike. Amazon has seen this as an opportunity to further disrupt retail in physical space by providing several services that cater to this trend. As more online retailers realize this opportunity, the more damage is done to physical retailers. The disruptive retailer however, will need to redirect the customers’ attention and bring them back to the store where they can find the best buy. Mobile is able to highlight prices and is able to recommend the best product for a certain budget. It is a great medium for using coupons, where discounts can be given out to engaged customers in stores.

 

Convenience: Why can’t I Google “my lost keys”?

Well it can find you some nice shoes if you want, and it’s able to recommend according to your taste and interests. Shops in the real world can do the same if they wanted, Magic Mirrors let us try on clothes without even wearing them, and items can be recommended according to personal criteria. By knowing the customer’s interests, the purchase decision becomes easier and faster. Amazon knows what you like, recommends it and follows up with an advert when you go to another site, and there’s no reason why mobile cannot do the same for physical retail.

E-commerce will continue to be perceived as convenient as it acquires a more mature, less active and savvier 55+ audience, according to a study by SAS. But as smart phones become cheaper, such as the much anticipated colorful and youthful iPhone, a new generation of young engaged customers will emerge, and it will be up to the “phygital” retailer to make use of this opportunity to engage via mobile in the real world.

On another note, we can provide more convenience by eliminating queues while checking out. The average British shopper is not willing to wait for more than 4 minutes in a queue, according to a recent study. Retailers can learn a lot from airline companies who acknowledge the importance of time to their customers and have given them the option of remote check-in through mobile. For retail, eliminating queues will mean more happy customers and faster transactions.

 

Mindset: Disruption

Retailers will have to be crafty and tech savvy in order to strategize convenience, “phygitalization” and pricing, but they will need one more thing in order to disrupt e-commerce, and that would be a disruptive mindset that slows down competition, redirects traffic to the advantage of the physical store, and repositions the competition in a favorable corner. It is always wise to steer the business in a way that adapts to customer preference. Disruptive retailers will have to innovate in order to rewrite the rules of the game, with the customer as co-author.