The Store of the future is “Phy-gital”
ETRetail Bureau:The vultures have been circling ever since Marc Andreesen predicted the death of traditional retail(i) online purchases only represent 10% of all retail spending in Europe and even less than that in the U(ii).But that doesn't mean retailers can sit back and stop worrying. E-commerce is expected to account for $1.5 trillion in sales worldwide in 2014, a 20% increase over 2013(iv) India, the growth is even stronger; online retail grew by 67% in 2013 and is expected to reach $16 billion by 2018(v)Not surprisingly, online retailers are responding. Flipkart just raised $1 billion in one of the largest funding rounds for any e-commerce company globally - and the single largest round by an Internet company from India(vi) announced that they would invest $2 billion in India(vii) to write, "According to Amazon, at current scale and growth rates, India is on track to become the fastest country ever to reach $1 billion in gross sales."
So we know that retailers will need to adapt in order to thrive, but how? The answer is to focus not on just a digital strategy, but on a "phy-gital" strategy - one where shoppers are offered the best of both the physical and digital worlds at all times. Becoming phy-gital is at the heart of omni-channel retailing, and at Mindtree we believe that, like a traditional brick-and-mortar store, a comprehensive omni-channel strategy should have four cornerstones:
Omni-Channel Marketing:Supporting consumers across the purchasing journey with personalized and relevant content, across all touch points and all channels.
Omni-Channel Commerce:Connecting online and offline touch points in a way that creates a seamless shopping experience for customers: order anywhere, fulfill anywhere, and portable shopping carts and user accounts.
Omni-Channel Merchandising:Creating a unified backend data store that provides real-time data on all product information, inventory and order tracking across all channels.
Omni-Channel Customer Relationship Management:Consolidating consumer data to create a 360-degree view of individual customers that enables '1-to-1 Relationship Marketing' - leading to long-term relationships with individual shoppers.
All of this is easy to say in theory, but in practice retailers are at varying levels of readiness. For instance, many have adopted "buy online, pickup in store" and have a consistent presence from online to mobile but fewer have a unified backend data store or a consumer data warehouse.
Meanwhile, there are some specific technologies that we see as potential game changers. Two in particular are gaining traction in the west with large retailers like Waitrose, Nordstrom and others taking the plunge:
Indoor Positioning System (IPS) Technology- Technologies like iBeacon can help retailers know when a specific shopper is in the store (or even in a particular aisle within the store), and allow the store to communicate with her in real time. It's the kind of technology that stores will want shoppers to opt into voluntarily, but once they do it will create groundbreaking opportunities. Retailers can deliver promotions for specific products right when the shopper reaches that product in the aisle, and the promotions can be customized based on purchase history.
Loyalty/Service Apps- The IPS features should be bundled inside a comprehensive store app that also serves as the shopper's loyalty card and virtual shopping aide. The app can allow a customer to build a shopping list at home and be sent to the store for pre-packing. While a staffer is doing that, the shopper can browse for other items, and the app can help her. If she needs a bottle of wine, she can let the store app quickly guide her to the proper aisle, and once there it can generate a list of available bottles, with reviews, prices and promotions. When all of this comparative information is available for products on every aisle in the store, the comparative advantage that mature e-retailers have had will dwindle significantly.
Of course there's more. Ultimately, retailers should look to make their stores a place where people go not just to buy things, but to have experiences. What those experiences are will vary depending on the retailer and its customers, but the ideas and technologies mentioned above are cornerstones that should apply to all retailers who want to go into the future ready for success.
(The article is contributed by Radha R, EVP and - Retail, CPG, Manufacturing and Travel & Transportation, Mindtree Limited)
(i) Andreessen predicts the death of traditional retail. Yes: Absolute death, PandoDaily, January 30, 2013
(ii) Forrester Research, Online Retail Forecast, 2012-2017 (European and US), March 2013; Smart Insights, Forecast growth in percentage of online retail / Ecommerce sales, April 2013
(iv) Global B2C Ecommerce Sales to Hit $1.5 Trillion This Year Driven by Growth in Emerging Markets - eMarketer, Feb. 3, 2014
(v) India's Online Retail Spending Will Reach $16 Billion By 2018 - Forrester, March 4
(vi) Flipkart Raises USD One Billion in Fresh Capital; One of the Largest Funding Rounds in E-commerce Globally, July 29, 2014.
(vii) Amazon Announces Additional US $2 Billion Investment in India, July 30, 2014