The evolution of retail

David Holland

Now that the holidays are over, most people are still recovering from their yearly Christmas shopping bonanza. For most of us, we would be happy to say goodbye to over-crowded malls and fighting for prime position on sale day. With the emergence of digital retail, that might soon be a reality. The shopping experience is evolving, and retailers must adapt to stay relevant.

Customer demands are also changing rapidly. We live in a world of instant gratification, access to sophisticated knowledge at our fingertips, and the expectation of personalized service. To create loyalty, retailers must exceed customer expectations.

The role of the store is changing from being about the transaction, to being about the interaction. By focusing on the interaction, retailers can create an emotional connection between customers and brands or products. Understanding that purchase decisions are based on emotion is the foundation for many current trends in retail.

Reinventing the Experience

Audi City Digital Showroom is a virtual car dealership. Customers could customize their car in-store and complete the purchase online at home, or vice-versa. It combines the best of digital, with the best of customer service. The smaller footprint of the virtual showroom would allow dealerships to be located in malls or downtown locations.

The Apple Retail Store is one of the most recognized examples of evolving the retail space. They position their stores as a place for answers, from the genius bar to workshops and hosted events. They have moved the focus from “selling” to “learning” (and increased sales at the same time).

Adaptive pricing is already common in certain industries. Airlines and gas stations are well known for flexible and constantly changing pricing models. Other companies such as grocery and department stores are experimenting with more flexible pricing models. Pricing would be less uniform, and take into account many factors such as user purchase and search history, time of day, product availability, and location.

Tesco has expanded their Virtual Grocery Store concept from the South Korean subway to Gatwick airport. Tesco is taking their traditional stores into a whole new space, allowing shoppers to scan QR codes and have products delivered to their homes after completing the transaction on their phone, all while waiting for the train or plane.

The Physical Environment

When designing a digital experience, it’s important to consider the entire ecosystem. Online retail will not kill the physical retail space. The store environment will continue to be just as important in the future, but it will look different. We will see more stores which a focus on the emotional experience: think pop-up stores, concept stores, and flagship spaces.

Starbucks is already experimenting with new and unique formats: a an eco-friendly Reclamation Drive-Thru store made out of repurposed shipping containers, and the Starbucks Espresso Journey, a temporary store in Tokyo which is a conceptual experience based on a library. Customers can use the books to learn about the coffee making process and choose a drink which suits them best.

The Amazon Locker is the online retailer’s latest push to attempt to establish a physical presence. This adds convenience for the customer and reduces delivery costs for the retailer.

Digital Tools

The influence of digital is increasingly apparent throughout the retail industry. Retailers have found success in the social tools on sites such as PinterestPolyvore, and Svpply. The curated consumption helps filter out the overwhelming amount of choice offered online. Shoppers find value in browsing social recommendations provided by friends, trend-setters, other shoppers, or celebrities.

Tablets and mobile tools are now part of the in-store experience; detailing everything from in-door maps, to checkout, to detailed product information. Macy’s have added in-app turn-by-turn directions for their New York City store.

Trends such as crowd-sourcing are of increasing impact. Flightfox is a startup which is evolving the travel-agent service model. Users can submit their travel plans, and for a flat fee, have “experts” compete to provide the winning itinerary. Expert advice not only includes travel information, but also visa, seat, and city advice.

Augmented reality tools are an emerging trend, allowing shoppers to experience a product in their own environment. Sites such as UPcload are helping break down the current barriers to online shopping; such as not having access to reliable fit information.

The Future

The future of retail is evolving rapidly. The evolution of retail is in full swing and the next decade promises that movement will be exponential. Some interesting data points out of the UK highlight the necessity for retailers to offer highly integrated online and offline approach that adds value for real people.

As shoppers share more personal information, and retailers find ways to access and use this data. The overlap between online and in-store retail will be seamless. Shoppers will have the ability to shop anytime, anywhere. Retailers will further reduce points-of-friction in the shopping experience, and meet the challenge set by tomorrow’s consumer.

David Holland

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