Remember the video of how an employee driving a fork-lane misses the spot and drops all the packaging on an unmarked area, leading all the shelves to fall one by one? Slight discrepancies in your retail marketing plan can cause the same domino effect, instead of your consumers falling one by one.
Ensuring a gratifying consumer experience is how one can gain loyal customers – the backbone on which retail businesses thrive. Harvard Business Review (HBR) estimates that getting a new customer is 5 to 25 times more expensive than retaining an existing one. The customer lifetime value of a loyal customer is higher and hence it is beneficial to provide a memorable experience further leading to word-of-mouth marketing for the brand.
Drivers Affecting the Retail Market
The Covid-19 pandemic has caused a deep-rooted change in consumer buying behaviour. With the economy going down, rising unemployment and not-much policy support taking a toll on spending patterns of the consumers, it now falls on an efficient and enriching consumer experience in helping make the purchase decisions. Customers are more demanding than ever.
Another notable change is how the consumers have been more concerned about in-store and product safety which has seen increased adoption of contactless services, digital payments, in-store sanitization and distancing practices, as well as expanded assortments of certified origin coming from safe production.
Generation Z accounts for 24 percent of the global population and is now unfolding its spending power as it breaks into the prime spending years. This digitally native cohort, with fundamentally different shopping habits and expectations, is now replacing the more traditionally-minded baby boomers within the working population. Growing up at a time of economic instability, social change and rapid digital innovation, Gen Z expects values and transparency and prefers a digital-first experience.
Now that technology has become the way of the world, it is not surprising that all enterprises, from start-ups to tech giants, are leveraging technology to enhance the customer experience. Technology continues to provide new possibilities to how businesses can communicate and engage with their customers.
The Role of Technology in Enhancing Customer Experience
As COVID-19 accelerated an already-dynamic shift towards e-commerce, retailers will seek out automation to expand e-commerce capacities and improve last-mile economics. Rising customer expectations on speed, convenience and frictionless shopping experiences will drive the adoption of new technologies in numerous ways. Here are some of the key technology trends to watch out for –
Digital Payments - With the availability of multi-dimensional features on smartphones, enabling users to make payments through mobile phones has become critical. As zero-touch retail and contactless shopping become important to the consumer experience in light of COVID-19, retailers will accelerate the rollout of digital payments. Checkout queues will be shortened at the advent of 'scan and go' options.
Retail Automation - According to a research report 2020-21 conducted by Ascential - a leading data analytics company, “Retailers using automated warehouses can increase their weekly online order capacity by up to 200 times.”
Retail Automation is fast becoming a core component of supply chain strategy, reducing labour cost, maximizing fulfilment capacity and driving speed and efficiencies across the value chain. Automation will be increasingly adopted everywhere from automated warehouses to shopping floor robots. Additionally, 5G will breed a new generation of on-demand consumers, driven by the need for immediacy and personalized engagement. It will further accelerate omnichannel models, fostering more digitally-enabled store experiences.
AI-Powered Retail - Artificial Intelligence (AI) overarching benefit is its ability to drive retail efficiencies – for this reason, retailers are increasingly embracing it across their operations. AI has the potential to transform the retail experience in many ways, from elevating personalization, to supporting product innovation, through predictive analytics, and optimizing supply chains through automation. Big players like Amazon and Walmart are already using automation to stock-up. AI will create more personal and convenient experiences for individual shoppers, fostering deeper engagement.
Augmented and Virtual Reality - Augmented Reality (AR) and Virtual Reality (VR) have got the potential to transform product discovery and shopper engagement. In a retail context, the adoption of these technologies has expanded with the shift towards online shopping. Ascential research report 2020-21 indicates that AR/VR adoption is still relatively low in retail, although the market is set to grow at a CAGR of 26.2 percent between now and 2025.
The retail industry is well-positioned to benefit from the evolution of technology, with its ability to track and trace products and transactions and create greater transparency and efficiencies across the entire consumer value chain. Given that purpose has now become a key part of consumers’ decision-making process, it’s imperative that brands and retailers re-adjust products and practices to ensure they align with consumer’s expectations and offering an enriching experience.