Few decades in history have brought more change to retail shopping than the last 10 years. A few years ago, many feared the retail apocalypse would ruin the industry- claiming retail to be dead. Luckily, the landslide of large chain retailers forced to close their brick-and-mortar stores over the past 10 years had much more to do with those companies in particular versus the industry at large. In fact, 90% of purchases are still made in physical stores and the top ten retailers are mostly brick-and-mortar operations. More encouraging is the numerous online retailers (Warby Parker, Casper, The RealReal, Wayfair, etc.) that have opened and plan to expand their physical presence. Retailers are finding that opening a physical store has a halo effect on web traffic. A study from the International Council of Shopping Centers shows that a new store increases traffic to that retailer’s website by an average of 37% and drives up the share of web traffic within that market by 27%. With all these changes, both good and bad, it is clear that retail is an industry in transition, rather than demise.
What’s fueling retail’s transition? No doubt the changes are due to shifting consumer habits. Whether it’s the embrace of experience-spending versus material goods or the rise of e-commerce, consumers have more ways than ever to explore and engage with retailers. To keep consumer’s attention and win their loyalty, it’s more important than ever for retailers to actively manage the ubiquitous, personalized experiences consumers expect from every brand.
To help retail companies differentiate on experience, here are our top 5 predictions for the trends that will impact the retail industry in the decade ahead.
1) Enhanced focused on the journey experience
We have seen a significant shift in the retail landscape over the past couple of years as consumers seek more convenient ways to research, purchase and receive products from retailers. Big-box retailer Target embraced a strategy to become “America’s easiest place to shop” which has been wildly successful. Competing in a true omnichannel world calls for an understanding and delivery of a seamless experience that crosses channels and touchpoints. In the coming year, we expect more and more retailers to put in place systems and analytics that help them identify and resolve friction points across journeys that cause customers to fall out of the purchase funnel at different steps as they cross channels.
2) Seamless connections
The rise in importance of experience over product for successful retailers, especially in brick and mortar stores, is compelling retailers to provide more services, events, customizations, etc. Foot traffic and repeat visits are critical metrics for retailers to hit comparable-store sales goals. With the convenience of online grabbing many of the “mission-focused” shoppers, successful retailers are finding ways to continuously connect with their customers. Weight Watchers, as an example, relies on events and workshops to keep their customers on-track and engaged leading to better retention rates and ultimately increase product sales. To remain connected with their customers, they have employed a method that goes beyond texting to two-way, real-time engagement, monitoring and management keeping their members motivated. We envision connected communications to continue rising with retailers to avoid missed appointments, improve delivery effectiveness, and help consumers connect with the brand.
3) Ideas sourced from associates
It is well understood that the consumer now has enormous power to accelerate or disrupt growth and earnings. Their expectations continue to change and evolve making it extremely difficult for retailers to both understand needs and adjust to expectations. Enter the voice of the employee. Brick and mortar retailers have hundreds, thousands or tens of thousands of employees interacting with customers every day. Not all employees have good ideas, but highly engaged employees often think not only about serving their customers but how some ideas could be leveraged across all stores. Walmart, as an example, recently introduced “In-home delivery”, “Ask Sam”, and “Sam’s Garage” and more leveraging the energy of their associates. There have been two major challenges in the past to sourcing ideas from the field: 1) how to solicit, curate and prioritize, and 2) how to ensure the associate voice doesn’t go into a black box—fueling animosity. Tools now exist that can help solve these problems and they can be connected directly into voice of customer systems, ensuring alignment between the customer need and the employee idea. We expect to see crowd-sourced ideas for retailers to emerge in the coming year helping retailers innovate and evolve at the pace of change.
4) Leveraging predictive analytics
The promise of AI and its role in advancing a retailer’s ability to leverage mountains of data to get in front of specific customer expectations and needs is creating considerable waves. Much AI today is centered on marketing activities, combining operational and tracking data to put the next best action in front of the customer. However, experience data, often in the form of solicited feedback, is enhancing the contextual understanding of each specific customer. Although a customer may love a brand, they may have had a really bad recent experience and provided feedback. Frustration can erode loyalty and pushing another offer can exacerbate their frustration. Experience-based AI can help retailers recognize and account for their recent experience with automated responses. Extending this further, feedback from a relatively small percentage of customers combined with other data sources can help identify critical at-risk customers, allowing proactive outreach. With many retailers recognizing the future sales value of proactive outreach via closed-loop feedback methods, the demand is growing to expand this process to more and more customers. We expect to see strong adoption of experience-based predictive analytics beginning with contextual outreach and extending further into customer-based suggested actions sourced from powerful Text Analytics solutions.
5) Elevated role of associate in experience delivery
Retailers have always talked about the importance of frontline associates and their role in delivering an exceptional shopping experience, but rarely has the investment in people been on par with investments in technology and marketing. Although we don’t foresee commensurate spend, we do see an increased focus on associate training, recognition activities and journey-based feedback for the full employee lifecycle. The drivers behind this are simple: highly engaged employees can be more productive and stay longer. Retailers can no longer afford high turnover especially when trying to compete on experience vs product. Employees who are knowledgeable and skillful about the products and services offered are key to make strong customer connections. Successful retailers today are leveraging both the voice of the customer and the voice of the employee to ensure new technologies are being useful, that new products are understood and that the extra effort put forth by each associate is getting proper attention.
Learn more about Medallia’s retail solutions and discover how to actively manage experiences today.
