The global retail industry is struggling. That’s a fact. Falling in-store sales, increasing pressure to reduce costs and increase efficiency combined with online stores making shopping extremely easy and convenient are eating into the physical store business.
Premium jeans label, Diesel has already announced Bankruptcy in March 2019 citing mounting losses from all of its 30 stores in the US. Besides, during the year 2018, more than 30 brands announced Bankruptcy in the US alone. Roberto Cavalli, one of the best and most renowned luxury brands, finally closed down its stores in April 2019. A Milan court granted the ailing Italian luxury fashion brand creditor protection with up to 120 days to present a turnaround strategy in a bid to prevent filing for bankruptcy. 2018 wasn’t a great year for the British luxury brand Burberry either, the brand has announced it is shutting down 1 in 10 stores across the world in an effort to restructure the brand, its finances, and operations.
With such high-profile retail brands filing for bankruptcy, and the growing popularity of online e-commerce platforms, retailers have now started re-evaluating how and where their brick-and-mortar shops fit in a market where online continues to outperform.
The industry recognizes the threat and is already looking beyond the traditional strategies for radical solutions. The third edition of the LVMH Innovation Award aims to craft the customer experience of tomorrow. And if you look at what the 30 finalists are doing, there’s a clear theme for the adoption of technology that analyses and predicts in-depth consumer behavior. For very long Retail industry has known that it needs to adopt an online+offline strategy which means including digital strategies that enhance the physical in-store experience. With AI and machine learning finally taking shape as formidable tech, new ‘Phygital’ strategies will allow retailers to truly use the power of data and the deep insights it offers to provide a truly omnichannel experience that customers want. Burberry revolutionized the luxury industry by adopting digital strategies that allowed it to track customer behavior better.
Adoption of New-Age Technology
Ultimately, a true omnichannel strategy bridges that divide between offline and online. Various fashtech startups are enabling this merger, the most prominent being Vue, which is an AI-Powered image search solution for customers that offers end-to-end retail automation for brands. A win-win for both parties. Customers get to search for products via a search-by-image, brands get critical data from products and customer behavior on a global scale. This allows retail teams to automate key functions and deliver personalized experiences to each shopper increasing the RoI on every transaction.
The partnership between Alibaba and Guess merges human fashion expertise with digital technology. The partnership created smart racks and next-generation fitting rooms.
A shopper can log into a store using a mobile app, browse, and then view a nearby mirror presenting information based on what she takes off the rack. Really powerful integrations for a unique shopping experience.
Deeper Insights For Personalized Offerings
(Image source – news.nike.com)
Nike has truly mastered the art of offering a highly personalized experience to all its customers. The brand’s multiple apps have helped Nike to create a huge sea of data which it now is utilizing to open stores in cities that cater to the customers in the area based on that data. Nike’s store on Melrose in Los Angeles, CA has been personalized to fit the neighborhood in which it is located, which is based on the data mined from the brand’s Apps.
Since the Apps already have a great fan following, Nike knows what its customers want even before they have stepped in to store. And based on the data received from in-store experiences collected by the App, Nike can further enhance the shopping experience by removing any friction points. Nike by Melrose is just a pilot store which the brand will model all its future stores on. With an ocean of customer behavior and other data available, opening such stores in the future will be super easy and actually in the brand’s favor.
Bespoke In-store Shopping Experience
(Image source – forty five ten)
Taking a leaf from the Luxury industry, with stores losing out to online retail, brands are now retraining their in-store employees on offering a truly bespoke shopping experience in the physical stores. Dallas, Texas-based luxury multi-brand retailer Forty-Five Ten is one such store that has done immensely well with this strategy. The in-store design bridges the worlds of high fashion and contemporary art which is then combined with an amazing shopping service that customers simply love. Building a communication channel at an individual and a personal level with the customers is something that online shopping will never be able to offer.
Social Media Data
Realizing the need for the retail industry, Facebook has also announced a new ad product called Store Sales Optimisation. Earlier known as Offline conversion tracking, the new & improved version ‘Store Sales Optimisation’ is a machine learning tool to target users most likely to head to a store location to make a purchase. Using Facebook’s Pixel and mobile data, the social media platform had already built products that accurately interpret online customer behavior. With the added resources of retailers’ in-store conversion data and third party offline data, Facebook can now help retailers connect the dots, analyzing customer patterns with online, mobile, and in-store behaviors.
Impactful O2O Rewards
A strong rewards program can really go a long way in turning customers to loyal fans. In 2018, Walgreens launched a rewards program that gave additional rewards points through collaborations with fitness trackers such as MapMyFitness. The rewards program gave shoppers extra points to spend in-store for making healthy choices like exercising, eating well and quitting smoking. Since launch, the brand’s rewards program has led to a 13% increase in reward points based spending behaviors.
Phygital or the merge of Offline and Online is the need of the hour. Brands need to adopt new technologies and strategies. As with all omnichannel strategies, analyzing customer and sales data will always be key to a brand’s success. Ultimately, the way we see it, retailers have no choice but to look at the offline and the online retail business as one, even though it is fluid and evolving. A retailer’s only choice is to cater to the customer’s choice.