One is the emotional component, the human element. Buying lingerie on Amazon isn’t all that experiential, for example, but buying lingerie from Victoria’s Secret can certainly be so.
“The shopping experience matters,” said Chen. “[You] want to transform and modernize shopping so it’s seamless and anticipatory and personalized.”
That means the need for “a higher level of engagement,” said Steve Mello, VP of selling and merchandising at IBM. When a customer comes into a store, “your store associates need to know how that customer engaged with the brand across channels,” he said.
Luxury fashion brand Rebecca Minkoff has done a good job of that with its “store of the future” concept. At its Manhattan location, all products come equipped with RFID tags and screens at the front of the store that let visitors select the items they want sent to the dressing room. If someone isn’t ready to buy in the store, they can automatically add the items they tried on to a virtual shopping cart so they can complete the purchase online later.
That’s in stark contrast to Macy’s, which recently announced its intention to shutter 100 store locations.
But physical stores still account for more than 80% of revenue, and millennials are driving a lot of that traffic, contrary to the notion that millennials buy everything online.
According to Accenture, millennials prefer shopping in a store, but 68% say they want an integrated experience across channels.
“To secure your destiny in retail, it’s about 20- or 30-year-olds aging into your core customer and being relevant to the average age,” Chen said. “Retail is going through tremendous pain right now but the future will be seamless shopping which includes physical stores and online.”
That’s the capability Walmart arguably just paid $3.3 billion to acquire from ecommerce startup Jet.com in August. Walmart is “thinking hard about millennials,” Chen said, and millennials are Jet’s specialty. It’s a hefty price tag, but it might be worth it from Walmart’s perspective to try and solidify its ecommerce position against Amazon.
“Will Amazon beat Walmart? That’s the big question in retail,” Chen said. “Symbolically, Walmart had to go out and buy this capability [from Jet] rather than build it because of the challenges of Amazon … but we think it was a good idea.”