Whitepaper: How has technology changed the retail experience for shoppers now and in the future?
The experience of shopping has changed enormously over the past decade. The way we browse and buy has, to a certain extent, shifted from a high street focus to purchases online. And this has, in turn, changed the way that we view the brands that we interact with. In this whitepaper we will look at the specific ways in which the shopping experience has changed over the course of the last 10 years. We’ll examine the ways in which technology has revolutionised the shopping experience, as well as the part the high street still has to play in how consumers buy from brands. And finally, we’ll look at a vision for the future of retail experience and what we can expect that to look like.
Shopping in 2008 – 2018
Looking back across the last decade reveals some seismic shifts that have taken place in consumer lifestyles, including the way that we shop. The recession has undoubtedly had an impact on purchasing patterns but is not the only influence. Technology has driven shopping online and in significant volume. According to the Office for National Statistics, the value of e-commerce sales by businesses almost doubled between 2008 and 2016. So, although ecommerce was certainly a factor a decade ago it had yet to reach habitual proportions. We’ve also expanded our use of other digital technologies in the last decade, embracing social platforms and the online world for everything, from dating through to finding a hotel room. This has inevitably also had an impact on shopping, whether that’s regular grocery shopping or one off purchases like clothes and shoes.
What has caused the changes in the retail experience since 2008?
A shift in customer expectations. Technology has put far more influence in the hands of consumers than has ever been the case before. An increasing need for brands to be competitive has forced them to pay attention to what customers expect from their retail experience – and to act on that. Those expectations relate to key issues, such as service and delivery. Consumers expect to be able to find products easily and to be able to get hold of them quickly. A prime example of the way expectations have changed is with respect to delivery – we are increasingly expecting retailers to offer faster and cheaper options. In fact, more than two thirds of people today would switch to another retailer if better delivery was on offer. By 2021 experts predict that ‘instantaneous delivery’ will be the expected norm.
Ecommerce in every day life. 48% of people in the UK now do their food shopping online and retail ecommerce sales are soaring, smashing through the $2.290 trillion mark in 2017. This figure means that ecommerce now accounts for more than 10% of total retail sales on a global basis, which is swift growth by anyone’s standards.
Habitual use of devices. It’s not just ecommerce that has changed the way that we shop but also being able to do that on the move. Devices such as tablets and smart phones are becoming more popular as shopping portals – 62% of smart phone users have made an online purchase via a mobile device. The surge in the number of devices in the hands of humans continues at a significant pace. In fact, by 2019 there will be more than five billion mobile users in the world. So, for retailers, the need to cater to an increasingly habitual use of devices is becoming more pressing by the year.
The personalisation of shopping. While a high street shopping interaction is certainly more face-to-face, it’s the digital world where the personalisation trend is being truly embedded. All the indicators are that personalisation can help brands to achieve better results in terms of sales and reaching a new audience and so this is one of the biggest trends that has begun to gather pace. Personalisation of shopping experiences encompasses the tracking of consumer behaviours that is now common practice and is increasingly employing technology to use past patterns to make personalised suggestions and create a shopping experience that feels bespoke for every customer.
Empowered consumers. 10 years ago consumers had much more limited power but the growth of the internet has changed all that. Today, reviews and ratings online can make or break products or brands, putting power firmly in the hands of customers and buyers. It has also enabled customers to drill down into what a brand is really about. For example, customers looking for a cruelty free skincare brand can find endless information about animal testing and component parts of products online and make a truly well informed decision. We also now use the online world to inform real life purchases – around 75% of young people will do online research before buying in store.
While all of these have had a significant influence over change in retail experiences in the last decade there is one factor that underpins them all: technology.
Technology and the online shopping experience
The UK retail market is one of the most engaged in Europe when it comes to buying online. Around 80% of internet users in this country are engaging in online shopping, which has created a huge market that has achieved one of the highest penetration rates in Europe. It is technology that has created this bold new world and it’s technology that is revolutionising the way that consumers experience it.
- Diversifying channels. 38% of retail purchases are now made via multiple channels. Thanks to the diversity of modern technology we have entered an era where purchasing decisions are made by consumers using multiple channels, as opposed to a single approach or platform. The popularity of social media platforms has evolved into a channel through which consumers can browse for reviews of products or delivery times, for example. And getting information about product quality before you buy is just a quick Google search away. Omnichannel shopping is set to continue as a retail trend as technology gives consumers more and more channel options to browse and buy through.
- Technology and the supply chain. Supply chain management has changed enormously with the influence of technology and this has had a significant knock on effect on the way that consumers experience shopping. The area where this has the most impact is service – cross docking, third party logistics and real time delivery are just some of the ways in which technology has provided retailers with new tools to improve supply chain management so that it gives customers more on the service front. We are only at the start of the efficiency and improvement that technology can deliver when it comes to the supply chain and logistics. Today, it’s real time interaction, order aggregation and fulfillment but tomorrow it could provide the potential to do so much more.
- The integration of Artificial Intelligence (AI). Most people now accept that AI is no longer a Hollywood fantasy or the stuff of horror novels – it has real, practical usefulness for both consumers and brands. In particular, it will provide opportunities for brands to crunch and analyse big data in a way that simply wouldn’t be possible with human brains alone. Gartner believes that AI will also soon begin to lead the way when it comes to customer service. In fact, the firm recently said that by 2020 it’s highly likely that around 85% of customer interactions will be being handled by an AI.
- Shopping on the move. There’s no doubt that technology has had a particularly revolutionary effect when it comes to enabling us to do more on the move. Increasing use of smart phones and tablets gives us the power to browse and buy wherever we are in the world, as long as there’s an internet connection. 86% of UK digital shoppers have made a purchase via their smartphone – that’s a huge proportion of UK consumers and a figure that simply wouldn’t exist without the influence of technology.
- Understanding consumers. As customers have become increasingly powerful, most brands have begun seeking insights into why customers do what they do. Thanks to the influence of technology it’s possible for businesses to get swift perspective on historic interactions, as well as broader customer behaviours. The result is that behavioural analytics are increasingly giving brands the tools to gain a better understanding of their customers than ever before.
- Market insights. Retailers need to have a solid understanding of their market in order to succeed in it and technology has provided plenty of tools for that. One of the most critical is dynamic pricing, which means retailers can make adjustments to pricing strategies based on real time market data on their own products, as well as those of competitors.
So what about the high street?
Contrary to many media reports, the high street is far from dead. While ecommerce is stealing ground from high street stores on an ongoing basis there is still a lot of scope for “real life” retailers to retain and grow a customer base. It’s always worth remembering that there are some things you just can’t do online, including:
- Ask a sales assistant for help and get an instant response
- Try on clothes or shoes
- Handle products
- Get advice from an expert about how to pair purchases
- Replicate the emotional and physical experience of shopping in-store
The key approach for the most successful retailers is not going to be to choose one channel or the other and pour resources into it but to navigate between the two.
For online retailers
- Learn from the benefits offered by in-store customer service. Online customers can’t go up to a sales assistant and ask a question. Responses from customer service emails can take days or weeks and are often very unsatisfying. Retailers looking to create the best possible customer journey online need to ensure that’s it’s as simple and fast to query something online as it might be in-store.
- Diversify delivery. Many customers want doorstep delivery – but many don’t. Offering in-store (or another real world) pick up for an online purchase creates a link between the two.
For “real world” retailers
- Make searching you simple. Whether you like it or not, your customers will probably be Googling your brand and your products as they make their way around the store. You can tie up the digital and physical experiences by offering free WiFi for customers and attaching QR codes next to top products.
- Jump on the mobile bandwagon. Mobile doesn’t just have relevance for online retailers. Technology such as geotargeting means real world retailers can use mobile devices to reach out to shoppers as they browse the store, from offering personalised discounts to delivering useful information.
- Embrace digital behaviours. Whether online or off customers are often simply looking for the best way to find the right product at the right price. You can tap into this and ensure that your customers remain in-store and don’t head for the competition by giving them the equipment to go online and do these searches while still in your store.
- Enable payments of all sorts. The era of mobile payments is coming and real world stores need to be as able to offer this as an online retailer.
- Use consumer generated content. From selfies to product shots, the images and content that consumers generate in-store isn’t only for online use. Look for ways to display that content in-store to help boost engagement and build brand loyalty and sharing. Big screens showing social content have worked for some of the largest high street retailers.
2018 and beyond
Innovation has become a fundamental requirement in retail. The retail world is so lucrative that it is where some of the best brains in tech and industry are focused to create products and services that are increasingly attractive and effective. It’s highly unlikely that even the most recent developments will not be overtaken by new innovation and evolution in the near future – but what can we expect that to look like?
Throwing out the typical customer journey
As we move on from omnichannel retail we will – experts predict – reach a point where it is no longer appropriate to think in terms of an average customer journey. Instead, there will be no typical way of making a purchase and retailers will need to look to adopt a platform-neutral approach in order to be able to reach out to the broadest base of consumers.
Give me a reason
One of the most unlikely consequences of the digital world is how much more consumers now seek authenticity. Authentic brands that have a genuine feel that consistently runs through their products and interactions are starting to pull away from more generic brands that still rely on patronising marketing or assumptions that consumers value only discounts and saving cash. Purpose is set to be one of the biggest trends for 2018 and beyond. Why should a customer choose your brand over any other? This isn’t so much about identifying a “unique selling point” as a purpose that is genuinely derived from what the brand offers. So, this could be an ethical purpose or something as simple as appealing to customers looking to live a more connected lifestyle. Purpose will become the key to creating a path to purchase, something every retailer is going to need to be able to identify and sell.
Increasingly advanced interactions and tech
From social shopping through to augmented reality, increasingly advanced technology is going to continue to change the landscape of retail, online and off. For example, augmented reality will give customers the opportunity to overcome that key obstacle of online shopping: not being able to try anything on. Artificial Intelligence is still very much embryonic in terms of analysis of what its use could really do for the retail world but it, too, is predicted to have a huge impact on interactions and customer experiences.
The rebirth of the physical store
Rising phoenix-like from the ashes, the real world store isn’t suffering the decline in the face of the increase in ecommerce that many doom mongers had predicted. Perhaps the most surprising illustration of this comes from Generation Z, which is the most digitally driven of all generations. 60% of Generation Z prefer to purchase in-store. So, with all the opportunities younger people have to purchase online – and all their familiarity with tech – that desire for an experience has still not been lost. For retailers this is likely to translate into the challenge to convert the in-store experience into something meaningful – a destination as opposed to just a place to purchase – and to enhance the experience with features such as gamification.
The future for retail is exciting and at the RG Group we are on top of the challenges and opportunities this presents. Get in touch with us today on 01732 526 850 to find out more.