What Matters Now: Retail

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What Matters Now: Retail

  1. 1. What matters now:Retail.Marissa GluckDirector, Huge Ideas
  2. 2. 2The retail landscape is changing rapidly, driven by factorsranging from mobile ubiquity to changing customer expecta-tions to the rise of social media. The rapid pace of digital andmobile innovation is shifting the retail landscape in ways bothfuture of retail. Some are near term, while others are fartherout on the horizon, but all will deeply impact a retailer’s oddsof success.Users expect an integrated experience betweenonline and in-store.A digital experience shouldn’t be merely transactional. For aretailer to succeed the online experience needs to match thein-store experience. While online shopping is convenient, itlacks key elements of real world shopping: the ability to touchproducts, try on a pair of pants, or walk through the aisles.Smart retailers invest in bridging the physical experience withthe digital – connecting visitors to a personal shopper via livechat (as seen on J. Crew) to duplicate their in-store customerservice, or streaming videos of clothing to get a sense of howa garment moves (as Asos has done), or even providing anonline store soundtrack (Valentino).For retailers, combatting “showrooming,” (the practice ofchecking out products in the store then buying them onlinefor less) is a challenge but some are addressing it by addingpickup locations, web return centers and payment booths.As a result, retailers like the Container Store allow consum-ers to buy items online and pick up the same day in-store.The company has also added drive-through services for busyshoppers. Both Nordstrom and Macy’s have aligned theirstep of enabling customers to search an individual store’sinventory.Key Takeaway:bring customers into the store. Digital interfaces and capabili-ties should mirror the in-store experience, which means repli-cating not just the look and feel but also integrating inventorymanagement and merchandising.Today.
  3. 3. 3The border is breaking between physicaland digital spaces.The physical and virtual are no longer distinct entities. Theemergence of touch-screen interfaces and mobile POS arerevolutionizing the in-store shopping experience. Additionally,augmented reality apps on smartphones (and the not-quite-ready-for primetime Google Glass) will bridge the gapbetween these worlds.Today, Sephora has rolled out a new technology within someof its stores that allows salespeople to scan someone’s faceDepot have followed in Apple’s footsteps, providing employ-ees with mobile POS devices to check out customers fromstore in Portland, Oregon, a touch-screen interface allowscustomers to design their own sneaker and walk out with it ina matter of minutes.Key Takeaway:Customers are increasingly expecting seamless shopping andpurchasing experiences within physical retail stores. Retailersshould invest in POS technologies today to provide superiorcustomer service and unique browsing experiences.Mobile devices are now ubiquitous, driving thegrowth of mobile shopping.Mobile commerce is quickly gaining traction. A recent PewInternet and American Life Project report says that a majorityof American adults (56 percent) are now smartphone owners.Likewise, nearly a quarter of Americans own a tablet. Notsurprisingly, the growth of smartphone ownership and tabletshas also bolstered mobile commerce. According to PayPal,mobile payments on their platform rose from $141 millionin 2009 to $4 billion in 2011. Likewise, eBay’s mobile GMV(gross merchandise volume) grew from $600 million in 2009to $5 billion by 2011, an 800% increase in just 3 years.With this kind of growth, retail brands must integrate mobileinto all aspects of their business, keeping in mind that shop-pers will be using mobile devices both inside a physical storeand sitting on their couch at home. Retailers should strive forsimplicity for the user and ensure that the digital technologyused is lightweight and scalable.And they should have a comprehensive mobile strategy thatconsiders their customers’ behavior and use of smartphonesversus tablets. Above all, their approach to mobile should bedriven by a desire to serve the customer’s needs and experi-ence.Key Takeaway:Mobile should lead, not follow, the desktop.Today.
  4. 4. 4Content drives users.Retail success today requires more than a functional, easy-to-use e-commerce site. The digital experience shouldengage users beyond simply shopping, with a steady streamof compelling and relevant content. For lifestyle brands inparticular, content drives engagement and loyalty. Blogging,lookbooks, Instagram, Pinterest and Tumblr provide multipletouchpoints for customers eager to consume great content.For instance, Vans has built a robust content platform for itslifestyle brand that includes news articles, events focusedon skateboarding, art and music, background on designerpartnerships with musicians like Metallica, episodic videos,constantly updated stream of content is always on message,supporting the skateboarding lifestyle that is strongly associ-ated with Vans.It’s critical for retailers to prioritize their content efforts sinceit’s impossible to be perfect on every social and distributionchannel. Retailers need to make sure they’re tracking acquisi-their analytics packages - just as they would with the rest oftheir digital marketing.Key Takeaway:Retailers need to develop the ability to create and distributean ongoing stream of content across multiple channels, andtrack the impact of these efforts.Today.
  5. 5. 5Tomorrow.Millennials will reshape retail.Millennials (born between 1980 and 2000) represent atrillion-dollar demographic and are poised to transform retailexpectations. They are a generation 79 million strong, andby 2030 the number of Millennials in the U.S. will outstripnon-Millennials. They are platform-agnostic and expect aseamless shopping experience in every channel, including thedesktop, mobile and in-store.all, second. They’re looking for a sensory, shareable and ex-pressive shopping experience. For Millennials, their purchasesexpress that with their peers. Finding a deal is less importantthan participating in a social event. Retailers need to createan immersive shopping experience for this generation – theyprefer browsing over buying and local items instead of mass-produced goods.Key Takeaway:To attract Millennials, even mass retailers need to think likeniche brands, developing unique shopping experiences andfostering ways for younger shoppers to express their personalbuying preferences.Retailers are drowning in data. Big Data has the potential toprofoundly change the way retailers innovate and developproducts and services. They have good reason to invest inBig Data – a 2011 McKinsey study estimated that retailerscould increase their operating margins by up to 60 percentby using data-driven insights. Retailers stand to improve theirmerchandising, streamline their supply chain and inventorymanagement, optimize pricing and product placement, anddiscover better ways to personalize the customer experience.The problem today is that retailers are still struggling to unlockactionable insights from the massive amounts of data theycollect. One of the more promising trends is that data visual-ization tools are getting better and will be able to help retailerstrack the activity on their sites in real time and improve mer-chandising. But that is just one part of the Big Data equation.Retailers also need to invest heavily in building an analyticsteam, since data is meaningless without human intelligenceto make sense of it.Key Takeaway:actionable insights. Investing in analytics – both a team andtools – is key to unlocking intelligence.
  6. 6. 6Alternative payments are gaining traction.PayPal is now nearly 14 years old. In the past few years,multiple alternative payment companies have tried to revo-lutionize how users pay for products. In addition to PayPal,upstarts both new and old, such as Square, Google Wallet,Amazon Payments, Clover, Dwolla, and Chirpify, are tryingto simplify payments online (and sometimes off). Accord-ing to a recent Forrester report, by 2016 nearly a quarter ofonline spending will happen through an alternative paymentprovider.While most of these companies are linked to bank transfersor credit cards (no wonder Visa has invested in Square, Trial-Pay and its own V.me service), for consumers the advantagesare easier checkouts, greater convenience and potentiallybetter security. For retailers, alternative payment methods canhelp improve conversion rates and lower transaction costs.As mobile commerce continues to grow, providing alternativepayment options such as PayPal reduce cart abandonment.Key Takeaway:Allowing consumers the option and convenience of alterna-Alternative payment options should be featured early in theSubscription models remain a retail niche for now.In the past 18 months, there has been an upswing insubscription-based retail, ranging from pet items (Bark Box)to children’s clothing (Wittlebee) to jewelry (JewelMint). It’s nota new model – media including magazines and music havelong relied on subscriptions to generate revenue. But thekinds of retail categories that have jumped on the band-wagon is new. Investors love the model because it providesa recurring revenue stream, a long-term relationship with thecustomer, and better inventory management. Manufactur-ers love the opportunity to get samples into the hands ofpotential customers. For retailers, there is an opportunity tocreate a secondary revenue stream that includes not justthe subscription but also captures promotional dollars frommanufacturers who pay to be bundled into the package.not of their choosing? The appeal to customers is conve-nience and curation. The biggest opportunities lie in catego-ries that are recurring necessities (such as pet food) or havea passionate consumer base (such as cosmetics custom-ers). Successful subscription services are mostly pure-playstartups today but expect larger retailers to invest or acquirethese companies as they grow. One of the advantages toestablished retailers is the ability to gather consumer intel-ligence on product preferences. For now, though, thesemodels only augment traditional retail business models ratherthan replace them.Key Takeaway:Subscription retail provides multiple advantages to retailersincluding recurring revenue, lower inventory managementcosts, and opportunities for learning. However, retailers needto ensure the value proposition is also there for potentialcustomers before investing heavily in the model.Tomorrow.

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