The digital bandwagon is unstoppable. The Institute of Customer Service UK Customer Satisfaction Index recorded, for the first time last July, that 50% of customer experiences were digital. We’ve gone way past the tipping point. But investing in digital is not a silver bullet. Retailers beware.
The evidence is mounting that the technology gold rush is negatively impacting the customer experience in some areas. This is because technology is usually thought about first – as the route to saving costs – with the customer benefits thrown into the mix as a distant second. The result? Customers are suffering from ‘digital saturation’, says Forrester. Home Depot former Director of Innovation, Albert Vita, talks of ‘random acts of digital’. Vita asserts that for the past 15 years retailers have been ‘putting up digital touchpoints without a true understanding on its impact on the customer journey’.
Much of the store technology being deployed is nascent and many retailers are at the pilot phase. How this technology aligns with three of the fundamentals of customer satisfaction: ease, speed and convenience will be a key test. But even then, technology can never replace human interaction. Shopping is still a social experience.
Consumers still want a connected, hybrid experience across physical and digital touchpoints. They want to be seen (and served) as an individual, not as a segment or demographic. They want a personalised experience. Shoppers want to be able to turn to a real person for things they can’t do digitally, or for when they need advice or support. It is this connected 1:1 experience that will shape the store experience in the coming years.
Take a look at the businesses that are being rated as the best CX performers. A customer-centric bank like Permanent TSB, or a pharmacy like Lloyds, is as invested in people development as they are store or branch technology and design. Pharmacies and banks were among the few essential shops and businesses that traded continuously during the past 22 months. The fact that pharmacies are topping CX lists highlights how customers value expert and personal advice when they need it.
What will the store of the future look like?
There is still significant value in the bricks and mortar model. Even the most optimistic forecasts about online growth assume that physical stores will account for more than 50% of the market in 2030, according to Brand Experts.
Shops are a vital route into brand and product experiences. Retailers will continue to invest in our city flagships and the world-famous department stores that cater for domestic shoppers and tourists as they return. Harrods, Selfridges, Fortum & Masons, Bloomingdale’s, Macy’s and others are a ‘must-do’ shopping experience.
But this type of investment won’t be enough to help rescue our shopping destinations. Closures will continue. We will be left with fewer but better stores. Most stores will be smaller. Every store will need to be digitally-enabled.
‘Dark’ stores, whereby a retail space is only used for online fulfilment, are continuing to grow in popularity. OneStock reports that 84% of UK consumers want to continue using these ‘mini warehouses’ post-pandemic. But most retailers will pursue a hybrid store model. The big shift to digital means brands are reallocating store space. This means up to a third of store footage could be used to process and fulfil online orders. What will retailers do with the rest of the space?
The store of the future will essentially be three things: a retail location, an experiential venue or a showroom. It will be a place to surprise and delight. Shops will be built on seven CX pillars: personalisation, emotional connections, empathy, community, discovery, play and digital.
The good news
“The difference in spend between average retailers and truly customer-centric retailers is worth $3.4 trillion in the sector”
Retailers that are truly customer-centric and offer a differentiated experience will earn a bigger share of consumer spend. Average won’t cut it. Kantar calculates the difference in spend between average retailers and truly customer-centric retailers is worth $3.4 trillion in the sector. Store development teams that work with the best CX talent will win through. Retailers big and small that are managing to deliver a consistent experience during Covid are already top of mind and ahead of the pack.
Omnichannel can transform every stage of the retail experience
As we mentioned earlier, the path to purchase will still start and end where the omnichannel consumer wants it to. It may be in store, on social media or online. So the big question for CX and store teams is how do we deliver value wherever our customers want to be? Those retailers already experimenting with value-add technology – AI, robots, apps, augmented reality (AR) and virtual reality (VR) – are mapping key customer journeys that criss-cross multiple touchpoints. They are blending offline and online into a seamless experience, which is easy, convenient, personalised and interactive. This fusion has never been more critical.
The bad news
Fewer than one in five consumers feel retailers are truly customer-centric, according to the Kantar research. Most retailers are struggling to adapt to our new normal and they don’t have a CX plan to meet the needs of changing customers. Here are some of the reasons why some retailers face an uphill struggle in creating stores that customers love:
- Some retailers still want to cost-cut their way to profitability
- Bad service just got worse during Covid and they need to win customers back
- Brand loyalty was rattled during the pandemic and consumers are happy to stick with brands they tried
- Retailers are still held back by online versus offline mindsets. Primark didn’t see its customers for months during lockdown because it didn’t have an eCommerce operation. The retailer is still refusing to go online. Will that hold? Probably not
- Many retailers are investing in digital experiences that add little customer value
- Most retailers still need to improve their data gathering and analysis. Data gaps are hampering their ability to work out how to integrate data in a cross-functional way to improve CX
6 ways retailers are interpreting the store of the future
1. The community store from Nike
Nike has just opened the doors to its new Nike Live store in Williamsburg, New York. Experiences are localised, personalised and inclusive. The store is inspired by the area and tailored to the local community. Consumer insight tells Nike that its apparel and footwear is popular with women in the neighbourhood, that the local community is engaged with its apps, and there is a large number of buying members living in the area. The women-led store offers value-add services like individual bra fitting and styling sessions.
Meanwhile on the second floor, shoppers will find genderless mannequins and gender-neutral apparel with extended sizing, all of which reflect the retailer’s brand values. Partnerships with local businesses offer customers additional products and services as part of Nike’s plan to create a sports and wellness hub. Visitors will also find a restaurant for treats.
2. Climate receipts – Oda
Customers increasingly want to buy from brands that match their values. A commitment to a sustainable future is growing in importance to shoppers. Climate ‘receipts’ that provide information to consumers on the carbon footprint of their purchases could be coming to a store near you soon. The information empowers consumers to make more sustainable choices.
Evidence is emerging from brands like Norwegian eGrocer Oda that the ‘receipt’ carbon information provided on its climate dashboard is driving change in the way its customers shop. Items are ranked green, yellow and red much in the same way as nutritional information. And as Metro reports, sales of meat substitutes and vegetarian meals have increased since the initiative was rolled out as shoppers look to reduce their footprint. The technology is also being tested for delivery services to inform customers about the footprint of the delivery options they choose.
3. Data-driven experiences – Farfetch
Pioneers are working out ways to unlock valuable customer data collected in stores to synch it with online data to make personalisation easier. The new Store of the Future from luxury eCommerce platform Farfetch is a great example of this. The solution includes sign-in stations that collect customer data when they visit.
On entering a store, customers have access on their app to content that is only available in store. Personal shoppers have access to customer profiles and any wish lists that they have saved online. Connected clothing racks will record items that customers pick up and selections are saved in an app for editing. In the fitting room, digital mirrors will help customers request different sizes and colours to try. Payments can be made via a link sent to the customer.
It’s not all about customer-facing technology
In its new London flagship store, Farfetch is also introducing lifestyle and dining services and places to play. The store includes a restaurant, a courtyard, a dedicated area for make-up and styling, and a room for rotating experiences to engage the community. The programme includes a hynotherapist, a celebrity nail artist and a tattoo artist.
4. Immersive experiences – Burberry
Burberry’s latest global pop-up series offer customers from Tokyo to London to Los Angeles to Seoul an immersive experience. Visitors, for example, to the heritage brand’s Harrods pop-up in London were immersed in The World of Olympia to celebrate the launch of its new signature Olympia handbag. The installation space, lined with statues reminiscent of Ancient Greece, included an Elpis statue, which could be brought to life through AR.
5. Check in, but don’t check out – Tesco GetGo
Customers visiting the new checkout-free Tesco GetGo store in Holborn, London scan a QR code to enter. The customer then becomes an Ekoskeleton image as cameras follow their moves around the store. Weighted shelves work out what they’ve picked up. Customers are not identified or recorded by the camera technology. Payment is taken once the customer has left the store and the system works via its app. Tesco is the first UK incumbent out of the blocks and the other big retailers are set to follow suit.
Amazon has already driven its flag into the ground with Amazon Fresh, its checkout-free store concept. Amazon bought forward the opening of its first store in Ealing, London earlier this year to tap into customer demand for contactless shopping. The eCommerce giant has lifted the shutters on six stores so far.
The technology for checkout-free shopping hits the high watermark when it comes to our three drivers of customer satisfaction: ease, speed and convenience. Long queues and wait times in shops are the biggest complaint for customers. But will the novelty wear off? Will shoppers that feel excluded from these types of stores vote with their feet and not bother to register for the apps and loyalty cards on which the technology works? Only time and experience will tell.
6. People development – Nespresso
Nespresso has just opened a new experiential boutique in the Bluewater shopping centre in Kent, with a whole raft of store innovations that are elevating its CX to inspire and excite customers and show them that they are valued and cared for. And the brand knows that customer service is still the beating heart of that experience. Nespresso pays close attention to every stage of the customer journey and it endeavours to deliver what it promises to customers.
Nespresso is proud of its associates. During lockdown, associates shared their expertise on Instagram to inspire customers with recipes and tips. Nespresso is innovative in the ways that it serves customers to make them feel special. The retailer recently found itself as a new entrant among the best CX performers in Ireland. Read more here on why the Nespresso shopping experience and its people stand out.
Some final thoughts …
These are just a few examples of how retailers are experimenting to improve the store experience, to drive customer loyalty and grow their market share. But, there’s no question shoppers are in the driving seat. Take sustainability and ethical commerce, for example. Consumers prefer to buy from brands that match their values and take a stance on issues they care about. This preference is growing. Will some retailers be too slow to respond?
Stores that thrive will no doubt be ‘greener’. But our climate ‘receipts’ example draws out another big question. Will shopper determination to live a ‘greener’ lifestyle drive their purchase decisions when they understand the environmental impact, and the cost, of items in their basket?
How do you see the store of the future? Will retailers find the right balance between human interaction and technology to give customers the frictionless, personalised, omnichannel shopping experience they are seeking? Let us know your thoughts in the comments section below.
