It's an old adage that you must speculate to accumulate, but in today's technology-led age, that doesn't always mean spending more money. In fact, digital transformation can often be the key to saving money and growing revenues, by identifying which costs to cut and increasing productivity among employees.
An agile and flexible business in the digital economy must be able to adapt to changing consumer habits and all the evidence points to the main issue to tackle being a reduction in footfall to bricks and mortar retail stores in favour of online shopping. So how do you even start to reverse that, or at least slow this trend, when online sales during 2016 were up 16% year on year, according to IMRG and Capgemini?
It is all the more difficult when you know they predict further growth of 14% in 2017 for e-retail. Sales made on smartphones rose 47% in December 2016 compared to the year before, its research says. All the statistics tell a tale of digital becoming the dominant retail force but many brands are finding ways to use it apart from offering direct purchasing. These include harnessing digital means to lure people into stores.
Argos and Sainsbury's in the UK have teamed up with eBay. Customers can pop down to their local stores to collect a product bought through the auction site, delivered there fast and for free. It's a win-win all round both for the consumer, eBay and the retail pair who may benefit from impulse purchasing from those who may not have otherwise visited. Such partnerships could be one third-party way to reuse spare capacity in retail spaces more effectively to drive extra revenues.
In the US, Target is doing this by using its stores as fulfillment centres for online orders, with bosses reported as saying this has proved to be a major push behind its digital growth. This is one example of realigning costs to the best revenue streams. Why have costly out-of-town warehouses filled with products when you can adapt your under-used retail stores as collection points or send deliveries out from them?
But research by Shoppertrak also suggests omnichannel shoppers have got so used to the personalisation of their shopping experience through online and digital that they would like similar experiences to be offered in-store. This could be a simple way to bridge the growing digital divide and make customers feel that retail bricks and mortar stores are worth visiting once again.
App-based promotions are also now being used to bring people through the doors, rather than customers purely having an online-only relationship with the brand. Waitrose was one of the first UK retailers that adopted the combination of an app and Bluetooth technology to improve shoppers' in-store experience, by alerting them via their smartphone to promotions when they are walking near the relevant aisle.
American retailer Target also has the Cartwheel app, which alerts shoppers about deals at their local store and allows them to combine Cartwheel deals with other coupons, thus incentivising them to pop to the store. The result of this winning strategy was soon clear as in 2016, Cartwheel generated $3bn (£2.4bn) in promotional sales for the retailer.
In the US, Starbucks has taken an interesting opposite move by using QR codes in its stores to drive customers to trial its app, with 27% of visitors who didn’t have the app already installed, downloading it. The app allows people to order drinks in advance and pay for them too, meaning they can just turn up and collect their drinks. Such an example is the perfect blend of the digital and physical.
Other ideas have been varied in scope. Carphone Warehouse in the UK has refitted retail spaces into concept formats, making products more readily available for customers to have a hands-on experience with them. This perhaps is a way to emotionally drive purchases there and then, immediately tugging on their senses, rather than seeing people simply pop in to check and compare prices. Apple has long-taken such an approach.
Many of these changes are being driven thanks to the rise of the Chief Customer Officer, which is bridging the gap between IT and the Chief Digital Officer, ensuring there is a focus on identifying how changing consumer demands can be met using technology.
One other idea being imagined is the creation of specific in-store versions of an app, as suggested by this Huffington Post contributor. He quotes a suggestion that people who use a retailer’s app are far more loyal. It says they are likely to visit a retail store once a month more than those who don’t engage digitally on their phone with the same company. Therefore, having dedicated app features that can be accessed in-store for promotions, loyalty, gamification or discounts would appear to be a way to drive footfall back to stores. This is set against news that Amazon is to launch its Go stores in the UK, showing apps may now become the only real driver for revenue and in-store footfall in the future. These retail spaces promise no queues or tills or even people serving; customers simply pay for everything on their phones.
If this does prove to be the future of physical retail, then getting started now on creating the right digital offering that works fast, easy and intuitively, is a path every retail brand cannot afford to ignore taking.