Digital Transformation in Retail (Part 1): Measuring the Power of Experiences

With innovation, new technologies are being continually integrated into retail channels. While this is great for customers, the question looming large in the minds of retailers is “how does one effectively measure the impact of this innovation?"

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Digital Transformation in Retail (Part 1): Measuring the Power of Experiences
New age retail is the integration of online, offline, logistics and data across a single value chain. – Jack Ma, Co-founder and Chairman, Alibaba Group

Retail today is heavily centered around providing personalized shopping experiences to customers. The push to provide delightful experiences is driving retailers to adopt new technologies and create experiences that can differentiate them from the rest.

Three trends that are going to drive the future of retail:

  1. Opportunities to integrate offline and online channels
  2. Increase in adoption of new technologies for hyper- personalization, safety, and convenience
  3. Greater control of customers on their decisions

With so much to do, it is important to not get too distracted, and build on the right experiences that drive bottom line revenue. Every new direction taken needs to align to objectives and map to the right retail KPIs.

This three-part series will detail experiences that are great opportunities for retailers, and map them to key KPIs that can help drive investment decisions and measure effectiveness.

Omnichannel experiences

  • Only 7% of retailers currently provide a complete unified commerce experience by allowing a customer to ‘start the sale anywhere, finish the sale anywhere’.
  • Nearly three out of four (73%) of consumers want the ability to track orders across all points of interaction.
  • Three in five (62%) consumers surveyed said they check reviews/ratings before visiting a store.
  • 68% of consumers are more likely to choose a store offering an automated returns process.

Source: 2018 Customer Experience/Unified Commerce Survey, BRP

Omnichannel is about the customer and not the channel. Successful retailers are those who have embraced the idea of personalized omnichannel experiences at the core of their investments and innovation. They collect deep insights about the customer across channels and provided personalized shopping experiences online and offline.

While the discussion around omnichannel started a decade ago, only a handful retailers could implement it effectively. One such retailer is Neiman Marcus (winner of the 2017 retail innovation award) who innovated with the “Memory Mirror” and the “Snap.Find.Shop” app.

Similarly, Disney also successfully launched a highly personalized omnichannel experience with their “My Disney Experience” tool and “MagicBand” program. Customers got a consistent, connected, and seamless experience across all channels.

For a successful omnichannel strategy, it is strongly recommended that product, sales, marketing, customer success, and support teams come together and provide a cohesive experience to the customer at every touchpoint.

What key KPIs can be accomplished using the right omnichannel experiences?

Table showing omnichannel experiences tied to customer journey.

Smart experiences

  • 69% of the 18-24-year-olds would be more likely to shop with a brand that offered a mixed/augmented reality or artificial intelligence.
  • 69% of the 18-24-year-olds would be more likely to shop with a brand that offered a mixed/augmented reality or artificial intelligence.
  • 56% of 18-24-year-olds would be more likely to use AR/MR if it’s used with wearable devices.
  • 74% consumers expect retailers to use ARKit and develop AR apps.

Source: Digitalbridge.

As technology advances, smart experiences are getting mainstream. Smart mirrors and robots are already making retail, restaurant, and online experiences way better than anticipated, leading to quick conversion, better loyalty, and repeat business. Customers will soon expect smart experiences to be the norm when they walk into any store to make a purchase.

One of the major factors that is going to make customers experiences smarter would be Artificial intelligence (AI). It maximizes personalization efforts to create hyper-personalized shopping experiences. Retailers must put into place data management systems that can ingest and feed data to analytics. This helps streamline operations as AI turns data into actionable insights.

What key KPIs can be accomplished using smart experiences?

Table showing smart experiences tied to customer journey.

Superfast delivery experiences

  • 99% of U.S. consumers say ‘fast delivery’ is important to them when making online purchases.
  • 43% of U.S. consumers expect companies to have ‘much faster’ delivery times than the previous year. That’s up from 35% in 2017.
  • 31% of consumers say they opted for (faster delivery) in 2018.
  • 88% of consumers say the ability to track shipments in real-time is important.

Source: Consumer survey, Dropoff.

It’s hard to describe the joy a teenage boy experiences when he receives badminton shoes of his choice in less than a day. This experience can make him praise the retailer amongst his friends. This is the aspect of customer happiness every retailer must aspire to.

Companies such as Amazon, Alibaba, and Walmart are creating thousands of delivery and pickup locations using smart logistics solutions to add more convenience for the consumers.

With Amazon launching 2.5-hour delivery options via drone delivery, the way we shop is shifting. Consumers are even willing to pay extra for these services.

Going forward, free shipping and faster delivery are going to be key differentiators. Retail technologies such as Internet of Things (IoT) and AI will play an important role in improving inventory, logistics speed, and building efficiencies.

What key KPIs can be accomplished using the super-fast delivery experiences?

Table showing super fast delivery experiences tied to customer journey.

Location-based experiences

  • Location based services market will grow to between $40-43.3 billion in 2019.
  • Over two-thirds of revenue increase (will be) driven through highly targeted and contextually aware ad-supported apps.
  • 57 percent of consumers said they would find it cool to be sent promotions, recommendations or reviews for a product they’re browsing in store.
  • 54 percent would like to receive suggestions of complementary items for a product they’re currently browsing in a store.

Source: Accenture and Juniper research.

Location-based technologies such as NFC, Wi-Fi, beacons and GPS have a lot of advantages. Personalized location-based campaigns help consumers build trust and drive valuable engagements with the retailers.

Several early adopters of location-based services are seeing promising results. Some brands have witnessed a 10-20 times increase in interactions with products advertised via a location-based notification.

Store navigation is also going to be very important for inventory processes and operational effectiveness. This allows for real time catalog and retail floor display updates, improving the sales and retail experience value.

What key KPIs can be accomplished using the location-based experiences?

Table showing efficacy of location-based experiences.

Seamless checkout experiences

  • Merchants with loyalty programs rate their business health even higher than average (81%).
  • Nearly all merchants (98%) plan to invest in the checkout experience in 2018.
  • More than two-thirds of people still prefer to shop in-store.
  • More than 70% of surveyed consumers said the checkout experience is their biggest pain point.

Source: Shopify and Vyze.

Quick, fast, and smooth check-out experiences can bring a lot of customers back to in-store shopping, and may keep them from moving to alternative platforms.

“Paypal Checkout” is personalized to each shopper and helps online customers enjoy a hassle-free buying experience with ease and safety. Walmart’s “Check Out with Me” involves store employees carrying Bluetooth devices that carry out transactions.

NFC or Bluetooth technologies are eliminating long checkout lines. Mobile softwares are transforming smartphones and tablets into a POS. Similarly, self-serve touch screen and kiosks are providing seamless checkout experiences. Building on this trend, contactless payment models such as Alipay and WeChat are likely to get mainstream attention.

Much of this investment is focused on “frictionless checkout,” which essentially means technologies that remove ‘friction’ (inconvenience, frustration, inefficiency) from the shopping journey to provide easier, happier shopping experiences inside the store. Implementing contactless payments, going paperless, and floating POS systems are good starting points to adopt seamless checkout experiences.

What key KPIs can be accomplished using seamless checkout experiences?

Table of seamless checkout experiences tied to customer journey.

Below is a comprehensive digital KPI measurement framework for retailers that can help drive investment decisions.

Coming up next: Digital Transformation in Retail (Part 2): Measuring the Power of Emerging Technologies.

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