"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Joe Apprendi, general partner at Revel Partners.
In the world of retail, brick and mortar still dominates. Yet trouble is clearly lurking and there are serious questions about the fundamentals of brands wholly reliant on in-store shopping.
Salvation for these retail chains may come from the very thing that’s been seemingly holding them back: their physical presence – particularly if it is combined with all the data and user insights these physical locations provide. The path to omnichannel revenue begins in-store and translating data-driven marketing techniques honed online is key to the future.
Instead of trying to beat Amazon and others at the ecommerce game, legacy retail outlets must evolve into smart stores. To do this they must combine location, data and human interaction with community, technology and automation to create the kind of personalized shopping experience that ecommerce cannot comparably replicate.
Best Buy has become the poster child for legacy retailers sidestepping the ecommerce freight train by re-engineering its business with relatively minor, but impactful, design and customer experience changes.
Beyond Best Buy, opportunities exist in several other retail sectors. Gross numbers for 2017 and 2018 show net gains in the number of retail outlets, particularly in grocery (670-plus stores), convenience (1,700-plus stores) and mass merchandise (1,900-plus) where best practices in data, technology and automation, coupled with design and customer service, can enhance customer experience and lift sales volume.
“Imagine technology where you walk in and the retailer app starts to engage with you based on all of the data it has about things you like,” said Jeff Glueck, Foursquare’s CEO, during a recent interview with Yahoo Finance. “It’s able to make much smarter recommendations very quickly. And that technology in the physical context is where retailing’s future will lie.”
Some retail brands have already grasped this paradigm shift. They are focusing on integrating online and offline customer data to create highly personalized, omnichannel shopping experiences that drive top-line revenue and develop their brands in the most relevant ways, in real time and real-world.
Walmart, which in March announced the introduction of 500 FedEx stores within existing locations, laid clear the benefit of leveraging physical locations and foot traffic for channel partners. Innovation in channel development like this will become the norm, not the exception, as leading retailers look to leverage every inch of real estate and develop complementary partnerships.
On the virtual side the future is rapidly evolving. Projection mapping and interactive magic mirrors drive virtual try-ons allowing customers to immediately view hundreds of products and color combinations. This and similar technologies have been deployed for close to five years now, allowing industry leaders to collect massive data sets on customers while meeting the demands of a new generation of shoppers.
Perhaps the biggest key to introducing next-generation personalized shopping experiences while retaining valuable human capital is through improving employee engagement. By using apps and platforms such as eLoops, Quantum Workplace and ShiftMessenger, brands can best leverage their workforce by creating environments and community that center on the in-store experience. When employees are engaged and excited consumers feel it, sales are positively impacted [PDF].
Also at the center of next-generation retail is a new set of devices, advanced analytics, AI and robotics. This arena is exploding with innovation and investment. Dynamic visual displays, combined with sensors and powerful databases, drive applications ranging from in-store traffic analysis and customer recognition to stock and shelf compliance.
At Lowe’s Home Improvement, the LoweBot is now deployed as a virtual assistant. Similarly, Pittsburgh startup Bossa Nova is creating service robots for the global retail industry. Its mission: “Make large-scale stores run efficiently by automating the collection and analysis of on-shelf inventory data.”
The common denominator in all of this is retailers reimagining the shop floor instead of playing catch-up in ecommerce. Amazon is increasingly recognizing the value of the physical – from checkout-free technology to retail M&A – and it has even spurred a debate about whether Amazon’s exclusive Fire TV partnership with Best Buy is really a precursor to an acquisition.
Clearly, retail is going through convulsions and a strong measure of creative destruction. Now, more than ever, retailers must aggressively think beyond the current limits of their stores and innovate swiftly. Success lies in using available technology, partnerships and data to create hyper-relevant retail experiences and replicate the Amazon stack.
If you’re not fully leveraging the value of retail locations you’re not employing a true data driven marketing strategy. After all, the best brands are the ones that are felt. Physical stores should serve as the gateway to customer acquisition, profiling and engagement. From here, the path to omnichannel revenue is clear.