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HOW RETAIL TECHNOLOGY CAN BRING CUSTOMERS BACK TO BRICK AND MORTAR STORES
1 BILLIONRetailers are shuttering brick-and-mortar stores by the
thousands as online sales continue to peak. Well-known
brands such as Payless Shoes, J.C. Penney, RadioShack
and rue21 continue to close an ever-growing number
of locations across the globe. Meanwhile, e-tailers like
Amazon see sales blossoming as new tech such as the
Alexa digital voice assistant consistently surprise and
delight customers and provide fresh, innovative ways
to enhance their shopping experiences. If physical
retail space is to survive, businesses of all sizes must
adapt and create new method to “wow” customers with
unwavering in-store experiences.
HOW RETAIL TECHNOLOGY CAN BRING CUSTOMERS BACK TO BRICK AND MORTAR STORES
“There have been nine retail bankruptcies in 2017—as
many as all of 2016. JCPenney, RadioShack, Macy’s,
and Sears have each announced more than 100 store
closures. Sports Authority has liquidated, and Payless
has filed for bankruptcy. Last week, several apparel
Still not convinced brick-and-mortar stores need to evolve? Here are some cold, hard facts to consider:
companies’ stocks hit new multi-year lows, including
Lululemon, Urban Outfitters, and American Eagle, and
Ralph Lauren announced that it is closing its flagship Polo
store on Fifth Avenue, one of several brands to abandon
that iconic thoroughfare.”(2)
Experience over Convenience?
“Credit Suisse Group AG analyst Christian Buss reports
that year-to-date store closings are already outpacing
those of 2008, when the country was at the peak of a
recession. There have been 2,880 closings announced
so far this year, compared with 1,153 for this period in
2016. It’s estimated that there could be 8,640 store
closings in 2017, higher than the 2008 peak of about
6,200.”(3)
Despite the many sobering stats that some interpret
as brick-and-mortar’s swan song, there is hope for
innovative retailers. According to a Pew Research
study, 78% of American shoppers consider it
“important to be able to try the product out in
person,” and 64% of American shoppers say that,
all things equal, they prefer buying from physical
stores to buying online. However, in a landscape
where all things are not equal, it’s up to brick-and-
mortar retailers to leverage technology to keep their
customers coming back.
Clearly, physical retail storefronts face a disturbing upheaval in the face of growing consumer dependence on online shopping destinations, especially now that e-commerce sites make online shopping easier than ever with new inno-vations in location-based apps that utilize deeper data analytics and machine learning to provide an intuitive, immer-sive experience for shoppers that will keep them coming back.
“More than 10 percent of U.S. retail space, or nearly
CLOSEDmay need to be
square feet,
converted to other uses or renegotiated for lower rent in coming years,
according to data provided to Bloomberg by CoStar Group.”(1)
“The number of Amazon Prime memberships in the
U.S. jumped 35% last year to 54 million.”(4) In the fourth
quarter of 2016, nonstore sales topped $145.49 billion,
a 12.8% increase compared with the fourth quarter of
2015, according to data released in January by the
U.S. Commerce Department. Based on the Q4 jump in
nonstore sales, e-commerce sales alone stand to grow
about 16.0% during the same period—a growth rate not
seen since 2013.”(5)
Customers demand customizable, dynamic shopping
solutions that provide them a measured quality (not
quantity) of buy/decision information that recognizes
their preexisting preferences and demographic profile.
This makes shopping anything other than it chore, it
makes the experience fun! Customers expect more
than just a very large space filled with products to
browse. They expect ingenious forms of entertainment
and delight. Innovative retailers must invest heavily in
Internet of Things devices and software that leverages
augmented reality, store associate knowledge base/
relationship and, yes, even virtual reality.
1
2
2 3
You’ve Got a Friend in Me…
Keeping It Real (and Augmented)
Store associates are the first line of defense in brick-
and-mortar customer engagement success. A sullen,
disengaged employee will fill up pages of negative Yelp!
reviews very quickly and can often damage brands.
Engaged, knowledgeable associates will keep consumers
returning as relationships are built. To attract and retain
such associates, retailers often find that equipping them
with the right mix of digital, POS and mobile tools is key.
Developing a customized, user-friendly associate mobile
device and app system can improve sales, reduce stock-
outs and improve promotion execution, by providing
associates with on-the-go price/feature data as well as
inventory movement info will help create an immersive
Augmented reality (AR) has the potential to attract
game-loving consumers to stores in an attempt to
make shopping not just about acquisition but also
about in-store, socialized gaming. Retailers are using
this technology, which integrates elements of virtual
reality to alter how users interact with the real world, to
revolutionize the shopping experience.
In March, liquor retailer Beam Suntory announced a
partnership with the music-finding app Shazam to provide
a “massively scaled augmented reality (AR) platform.”(6)
Using Shazam’s audio and visual recognition app,
customers at high-end spirits stores will be rewarded
with a “gamification experience at point of purchase,”
experience for the customer because they soon realize:
“I matter to this associate. My happiness is their goal.”
Consumers avoid the “I-can’t-find-my-product!” frustration.
In addition, by integrating mobile solutions across stores,
consumers are guaranteed a uniform experience from
Times Square to Main Street. The proper mobile tool can
centralize all digital tools into one solution and facilitate
easy reporting for sales and customer reengagement.
In short, when your customer enters the shop they know
they have a friend waiting to help them experience retail
nirvana with the right tools.
especially for the marketing of high-end tequila during
Cinco de Mayo. The app will be able to scan codes to
access 360-videos, overlaid product visualizations and
3D animation wrapped in a “co-branded AR interactive
memory game.” Consumers will experience exclusive
coupons, contest entries and other bonus content to
make the shopping experience into a game.
While virtual reality (VR) has not yet reached the level
of tech standards to make it viable across retail chain in
general, some innovators are finding ways to leverage the
tech for special retail events. In 2015, London mall chain,
Westfield showcased key fashion trends using virtual
reality equipment on site.
“The installation consists of three elements: interacting with giant video walls
showcasing this season’s major fashion trends; taking a trip into a colorful
dreamscape using Oculus Rift virtual reality goggles; and using Edit Me, a giant
touchscreen, to find outfits of any color or style located in any of Westfield’s
many retailers,” explained the International Business Times.(7)
In the end, utilizing cutting-edge technology depends on a retailer’s willingness to invest in the future – invest in
technology that attracts and retains customers who are seeking an experience that folds relevant data crunching
inside a game-like experience tailored to individual preferences and desires. A partnership with an industry leader in
cross-platform retail solutions can stem the tide of disengagement many storefront retailers are experiencing and build
increased profits, dazzling customer engagement and brand loyalty. While Amazon and the like may be scoring sales
slam dunks, the ball is still firmly in the brick-and-mortar court and it’s anybody’s ball game.
ELEKS provides highly scalable cross-platform solutions that can transform brick-and-mortar operations into immersive
and fun experiences for savvy customers. Contact us to find out more.
However, VR currently has limitations due to equipment
scalability and unfamiliarity. “VR is more exciting, but right
now it faces a higher barrier. That’s because consumers
aren’t yet accustomed to wearing VR devices (even at
home) or to doing anything with it beyond playing games,”
states Dan McKone, Managing Director and Partner, of
L.E.K. Consulting and coauthor of Edge Strategy: A New
Mindset for Profitable Growth.(8)
McKone offers rational advice for retailers considering
AR or VR: “Anyone interacting with an AR or VR retail
application must immediately understand the value
proposition if they are to keep using it. To help that
along, explain how the application solves the consumer’s
problems and naturally extends the brand’s connection to
the consumer.”
“
Sources
1. https://www.bloomberg.com/news/articles/2017-04-07/stores-are-closing-at-a-record-pace-as-amazon-chews-up-retailers
2. https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/
3. http://www.pymnts.com/news/retail/2017/american-retail-stores-closing-at-faster-pace-than-during-2008-recession/
4. http://money.cnn.com/2016/01/26/technology/amazon-prime-memberships/
5. https://www.digitalcommerce360.com/2017/02/08/online-will-grow-three-times-faster-re-tail-industry/
6. http://www.mobilemarketer.com/ex/mobilemarketer/cms/sectors/food-beverage/24609.html
7. http://www.ibtimes.co.uk/london-westfield-inition-uses-oculus-rift-virtual-reality-show-case-future-retail-1494812
8. https://hbr.org/2016/09/virtual-and-augmented-reality-will-reshape-retail