Editorial note: The story of a teen’s pregnancy being discovered as a result of analytics has been essentially refuted – see this article
The retail sector is no stranger to change and transformation. In the early days, the average consumer was shopping from ‘mom and pop’ stores in communities. As retail evolved, first to arrive were the department stores in the bigger cities. Then came the mega shopping centers in suburbs, where everything can be found under one roof, causing smaller local stores to bow out to the success of giant, one-stop shops.
Three main areas where technology is transforming retail include supply chain, in-store operations, and customer outreach. The technology footprint leading this transformation is impacting many stages of the retail chain; from back office and enterprise systems, to many customer-facing functions such as payments, loyalty programs and customer services.
Walmart is a case in point of how using technology in the supply chain can set apart a discount retailer competing in a division with razor thin margins; by accurately forecasting demand, tracking and predicting inventory levels. Walmart employs the largest IT infrastructure of any private company. Walmart also leverages its online presence to penetrate large cities that don’t allow a traditional Walmart big box store.
The technology advancements in the supply chain are also enabling new business models in the retail sector. Until now, physical stores had the protection of immediacy compared to online. Customers want things cheap and they want them now. E-commerce could compete on price, but not speed of purchase and availability. However, technology giants such as Amazon, with Amazon Prime and Amazon Fresh, or Google, with Google Express, and even Uber are slicing away the advantage from bricks-and-mortar retailers by piloting same day delivery services which provide a further threat to physical stores by catering for immediate needs.
Similarly, in-store operations have been transformed by new developments such as interactive kiosks, mobile payments, BLE technology, RFID tagged products and smart shopping carts. Most of these aim to reduce the friction of in-store customer experience; from minimizing wait times at the register to making sure customers can find out which products are in stock, while still managing an efficient inventory. Smartphone penetration in particular is creating pressure on physical store sales, and trends such as “showrooming” are causing physical stores to become the means for customers to see or try the goods they want, only to find a cheaper alternative online. Battling this phenomenon requires stores to be up to date with their inventories as well as other alternatives available to their customers from their competitors. Alternatively, retailers should find ways to leverage technology to improve in-store experiences. Innovations such as virtual mirrors and interactive kiosks can also refuel customers’ desire to shop in store.
Perhaps the biggest transformation is happening in customer outreach on the back of Big Data and predictive analytics technology. The customer experience is no longer limited to browsing or purchasing of certain goods in physical stores. It now extends to an end-to-end customer journey, starting with the customer researching the goods online, coming into a store or ordering online to purchase the goods, and continuing well after the purchase has been finalized by vocalizing feedback about the product and the brand.
Throughout this journey, customers are leaving breadcrumbs of information that some retailers ignore and sweep away, but others leverage Big Data/Predictive Analytics to make sense of this information, and use the insights to encourage customers to spend more at their stores. The infamous Target example of a father discovering his daughter is pregnant thanks to a personalized flier from Target advertising pregnancy and baby essentials is a great demonstration of the power of using Big Data. It is also a reminder of the responsibility of protecting customer privacy in light of this new-found power.
The impact of technology on retail shouldn’t be seen as the writing on the wall for remaining incumbents and physical stores, but rather a wave of change that if caught, can be as lucrative as it is for innovative tech-based retail companies. It’s no secret that many retailers are already harnessing the benefits of technology: according to a survey carried out by Samsung among retailers, 94 percent of retailers believe the customer of the future will be driven by technology and 41 percent are already using it to implement a strategy to enhance the customer experience. The best path forward is to embrace the technology advancements as tools to build and strengthen a customer centric omni-channel presence.
By: Izge Cengiz
Originally published at www.toptechnews.com
This excerpt is from Top Tech News. To view the whole article click here.