The market transformation happening right now in retail is faster, more sweeping and more profound than the many changes that have come before. Mobile, social and digital has dramatically amped up consumer expectations and options for how, where and why they buy. As a result, venerable brands that successfully navigated past periods of social and economic turmoil are suddenly struggling. Continuing on as middle-of-the-pack or laggards when it comes to technology adoption is proving to be a recipe for fast decline.
Witness the current fortunes of long-standing UK brands such as Debenhams and House of Fraser. Continuing to rely on reputation, brand recognition and long-held practices has led to declining profits and customer disinterest.
According to analyst firm RSR, 59% of retail “winners” – those with average comparable store/channel sales growth above 4.5% — say they are more innovative than their vertical market, and 51% are more innovative than those with similar revenue. Winners are much more likely than non-winners (66% vs. 49%) to measure innovation by return on investment. These successful brands are embracing practices such as innovation labs and fail-fast processes to try, learn and refine, moving ahead with ideas that boost the bottom line.
In today’s market, it’s no longer enough to sit back and watch what other retailers do with new technologies. When digital capabilities are what differentiates the customer experience, retailers of all sizes must jump in and try things much more quickly than ever before. Here are four techs where retailers should already be active:
Winners are much more likely than non-winners (66% vs. 49%) to measure innovation by return on investment. Click To Tweet
Currently, sales and marketing applications dominate. Shop Direct, for example, uses AI to determine individual preferences and behaviours around customer communication, then predicts why and when a customer will stop shopping with them so the retailer can take preventive action. That has delivered conversion rates of 4%, well over the retail average 2.8%. Among Tesco’s AI applications is one helping shoppers with special dietary needs better identify relevant products online.
But Capgemini says supply chain AI is ripe with untapped, fast-ROI opportunities, including using AI for procurement tasks (averaging 7.9% ROI), applying image detection-led algorithms for detecting in-store shrinkage (7.9%) and optimizing supply chain route plans (7.6%).
According to Retail Perceptions, 55% of shoppers agree that AR makes shopping more fun and exciting, and 61% prefer to shop at stores that offer AR over ones that don’t.
Online grocery delivery company Ocado, for example, relies on an internal chat platform to enable instant, direct communication within its workforce. Far-flung developers now collaborate in real time for better quality interactions, increased productivity and a sharp reduction in the use of email.
Consumers increasingly expect to be able to engage one-on-one with retailers on whatever platform they’re using at that moment — and then pick up that conversation via a different channel. A survey of 1,000+ UK consumers found 62% want companies to focus on launching, “simpler, flexible and more affordable customer service options.”
Simply waiting to see how these technologies work out for these retailers is not enough. To stand out, retailers must leverage emerging technologies while they are still emerging. That means adopting an experimental mindset, devoting resources to innovation and being willing to fail fast and move on.
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