Is Technology Today's Answer?
A Lowe's video this week on their first deployment of a robot in a retail store to enhance customer service sparked this blog post. The narrator stated that shopping in a retail store has not changed in the past 100 years. On multiple levels he is correct.
Summarizing the fundamental changes to the retail industry in the last 100 years:
- The invention of the supermarket which started the journey to retail sub-segmentation and self-service.
- The cash register which introduced data as an important element to measure the success of the business.
- Mass production and the computer which allowed manufacturers to drive production efficiencies, better information on what is selling, and lowered overall cost of goods.
- The bar code as the first item level visibility technology and the consequential explosion of retail chains in major industrialized countries.
- Globalization which proved that consumer markets do not have national boundaries.
The Retail Paradox
The retail paradox is very simple.
Billions of dollars have been invested in technology over the last 100 years in optimizing the retail industry for the consumer. The investments have led to productivity improvements, lower cost of goods, and more choices for the consumer. Yet, today's finicky shopper seems unsatisfied. Loyalty is limited to a few retail chains. Devotion to a brand seems to ebb and flow based on the latest trends.
Technology and the Consumer
Technology is today's answer to strengthening the bond between the consumer and the retail store. Deployment of new solutions can bring retail merchants closer to their customers. The key to any new technology implementation today is their direct link on understanding and adapting to consumer behavior.
Smartphones, RFID, and the Internet of Things are the latest examples of potential technology solutions that can strengthen the consumer experience. The key questions to ask in any new emerging technology deployment include:
- What's the vision for the brand? Is the technology deployment delivering value in strengthening the brand?
- Has a multi-year strategic plan been developed that links the core Unique Selling Propositions (USPs) of the brand to cumulative differentiation? Are you staying ahead of your competition?
- What problem are you trying to solve? Is the "use-case" unique enough that it will deliver incremental value?
- Is a positive consumer experience at the center of the technology implementation?
In today's disruptive technology environment it is inevitable that evolutionary changes will take place in retail. The innovations towards an updated retail model are actually overdue.
Consumer Needs versus Wants
Retail started as an industry where consumers sought to fulfill basic needs to survive and live comfortably. Technology has transitioned the industry into a variety of sub-segment specialists that now deliver wants versus needs. Self-service has made it an open merchandising tactile feast of potential buying opportunities.
The future of retail is all about consumer experiences. Technology will play a major role in transitioning the sterile in-store environment into an interactive showcase linked to the specific customer preferences. Ninety four percent of retailers believe that the customer experiences of the future will be driven by technology.
Linking Technology to the Consumer
In the latest Boston Consulting Group (BCG) list of the "Most Innovative Companies 2014", all of the top 5 spots, 7 out of the top 10, and 21 of the top 50 are from technology and telecommunication companies, the most since 2010. Consumer industries capture 10 of the top 50 spots, the second largest share. Consumers, technology, and retail are forever linked.
Solving the retail paradox requires closer linkages to the consumer. New emerging technologies will make this possible. Balancing privacy concerns, deeper understanding of consumers' needs and wants, focus on positive customer experiences and the introduction of the innovative interactive retail channels are keys to the next 100 years of retail.