By Michael McQueen
It is harder to make a buck in retail today than ever before. Indicative of this fact is the raft of retail brands that have had little alternative than to file for bankruptcy. Some affected include Allans Music, Payless Shoes, Mothercare and 100-year old Australian icon Fletcher Jones.
While a combination of factors have contributed to the woes of retailers, it is perhaps the ever-growing threat of technology and online competition that has had the greatest impact.
In the past, consumers had fewer options and would purchase goods from a local retailer. Now in the Internet age, it means consumers can now go directly to wholesalers or suppliers and in any country around the world.
Perhaps the most insidious and confronting element of the online retail trend is the growing incidence of ‘showrooming’. This recently coined term describes when a shopper visits a physical store to see and touch a product only to then go online to make their purchase. This often happens via a smartphone before they've even left the store!
While comparison shopping is nothing new, web-enabled smartphones have made it easier and more prevalent. According to market research firm ClickIQ, about half of all online purchasers have engaged in ‘showrooming’ prior to making their digital transaction. Another recent poll found that 61 per cent of consumers had tried an item on in store only to buy it later online; with almost half this number admitting to doing so more than five times.
Naturally, some form of response to the digital threat facing retail is necessary. Simply ignoring it is naïve and even foolish. As Stuart Harker, global retail and consumer advisor from PriceWaterhouseCoopers argues: “Retailers and suppliers must embrace the internet or face closure.”
Visionary retailers are recognising this reality and are beginning to see digital technologies as the key to future success rather than the enemy.
Smart retail brands are leveraging digital technologies to:
1. Draw in customers
A myriad of established retailers are making extensive use of new technologies to complement traditional in-store formats – a trend called ‘bricks to clicks.’
For instance, Target is sending customised daily deal alerts and exclusive discount coupons directly to customers’ smartphones. American women’s clothing retailer Maurices has started making the most of smartphone technology using a technology known as ‘geofencing’ to attract and engage with its customers. Geofencing allows the store to alert opt-in customers with promotions and coupons as they approach or walk nearby any Maurices store.
Another strategy being used by retailers centers on physical stores doubling as distribution locations for products that have been purchased digitally.
Kmart for instance is encouraging customers to order online and then visit the store for same-day pickup to avoid delivery costs. Naturally, when customers visit the store to pick up a pre-purchased item many will make a supplementary additional purchase, which becomes a win-win for the store and consumer.
2. Enhance the in-store experience
Retailers are using mobile devices to improve the in-store experience for customers.
American retail giant Walmart released a range of ingenious smartphone apps in late 2011. One of Walmart’s apps give customers access to electronic shopping lists and even a gift-finding solution called Shopycat, which allows users to take the likes, shares and interests of friends’ social network profiles and turn them into intelligent gift recommendations.
These apps also enable Walmart customers to be greeted by name when they enter a store and be guided through the aisles with product recommendations and real-time savings. In doing this, Walmart proposes to build a rapport with customers in the same way company founder Sam Walton did 50 years ago.
3. Facilitate convenience
Grocery giant Tesco is a great example of a retail brand adopting new high-tech approaches to create convenience for customers. In 2011, the company installed a virtual grocery store on a South Korean train station wall so that commuters could purchase their groceries on their way home from work using the QR code readers on their smartphones.
Such approaches are an ingenious way of taking the shopping experience and extending a retail brand to where time-starved consumers already are.
While the retail landscape is a challenging and ever changing one, those retailers who are looking to remain viable and relevant in the digital age would do well to remember the words of Charles Darwin: “It is not the strongest that survive, nor the most intelligent. Rather, it is those who are most responsive to change.”
Michael McQueen is a leading social commentator and three-time bestselling author. His newly launched book, 'Winning the Battle for Relevance' is available in bookstores across the country.