The retail apocalypse is upon us. Or is it? Though the recent headlines about Sears and the litany of other brick-and-mortar store closure headlines lean in to the apocalypse theory, the data tells us otherwise. In fact, the National Retail Federation recently increased its retail sales growth forecast for 2018 to 4.5%. That’s a $159 billion increase on top of 2017’s $3.53 trillion in retail sales. Just as a consumer’s desire and need to buy things isn’t going anywhere, neither is retail. Rather than succumbing to apocalypse, the retail landscape is undergoing a massive transformation. The opportunity to seize the future of retail is upon us.
Today’s retail CMOs are tasked with making crucial decisions about how to pivot their organizations toward the future. The question that faces them: What does the next generation of retail look like?
Executives don’t need to fear the approaching zombies. They need data — lots of data — and not data exclusively for media buying. In particular, retail executives must tap into deep consumer insights that unveil the why behind how people shop. Why are their shopping behaviors evolving? And how can organizations adjust to meet these consumers in their new retail reality?
Physical Retail Redefined
Much of the coverage of the so-called Retail Apocalypse has placed Amazon squarely at the center of the destruction and positioned the company as a digital grim reaper of all things physical. But the current transformation isn’t really about digital swallowing physical. It’s about a fundamental shift in how consumers shop. Although digital might play an increasingly large role in the retail landscape, physical stores still do and will continue to have their place. But the customer experiences within those stores must evolve to meet the needs of today’s consumers, whose motivations for heading out to physical retail locations have drastically changed.
As evidence that physical retail is still important, look no further than Amazon itself, whose cashier-less Amazon Go and new Amazon 4-Star store concepts are already making waves. Amazon has kept quiet on the full scope of its plans for the concepts. But because it’s Amazon, the world’s most proudly “customer-obsessed” brand, one can deduce that these concepts and customer experiences sprang from deep analyses of the company’s troves of consumer data. Amazon is adapting to customers’ expectations. The 4-Star model takes brick-and-mortar retail one step further by not just offering a physical store experience, but by curating that experience according to product feedback from real-world customers.
One might easily imagine the extension of this model to other brands’ in-store experiences. Take apparel, for example. A retailer like Nordstrom could use its knowledge of customers to curate their in-store shopping, directing them to sections most suited to their tastes while still providing a wide array of products for perusal. This combination would harness both the curation that consumers enjoy with online clothing subscriptions as well as the choice and exploration of physical shopping excursions.
Leveraging Deep Insights to Create Hybrid Retail Experiences
Digital isn’t consuming physical. It’s informing it and, in successful cases, underpinning it. Data represents the bridge between the two. Unfortunately, the data traditionally housed in a retailer’s CRM is insufficient to inform the tough decisions that retail executives need to make when crossing the chasm.
Data on past purchases, interaction with media campaigns and basic demographics are important pieces of the marketing puzzle, but they do not provide transformative insights to marketing leaders. The questions facing retail organizations go much deeper than mere path-to-purchase optimization. Retail CMOs are struggling with fundamental questions like the following:
- What part of the physical shopping experience is still valued by customers?
- What motivates shoppers to go to physical stores?
- Why do customers make the decisions they make when deciding where to shop?
- What values are important for a retail brand to espouse?
- What products and store features are most desired by customers in physical locations?
- What unique customer experiences would appeal to new and existing customers?
The answers to the above questions aren’t simple, and they will greatly vary according to the consumer and retailer in question. But deep insights like these are attainable, and the key to creating the future of retail lies in a retailer’s ability to obtain, understand and execute on them. Regardless of brand, the data required to make decisions around a company’s customer experience transformation will need to delve deeply into the human element – the why that drives the consumer. Typically, brands have sought to answer questions around consumer values and motivations through costly, time-consuming customer research. The problem is that such research is often limited in scope and instantly outdated. Given how quickly the landscape is changing beneath retailers, static snapshots into the consumer mindset have limited value. As with other types of data, retailers must seek a continuous, dynamic window into consumer desires and behaviors.
While the headlines paint a bleak future of retail, the reality is that companies that seize this opportunity to create a customer-driven, digital-physical hybrid model have the potential to claim a respectable portion of that $159 billion increase in 2018 retail sales. Deep, dynamic consumer intelligence represents the compass by which today’s retail executives can chart their course.
Ericka Podesta McCoy is Chief Marketing Officer for Resonate