If you told me ten years ago that I’d be able to do all of my Christmas shopping in my pajamas without ever stepping into the war zone (also known as “the mall” between February and November), I would have looked at you like you were telling me that phones would one day replace cameras. As consumers, we’ve all seen retail’s transformation in the last decade—and for most of us, we are just starting to get comfortable with these changes.
Retail continues to evolve today, but just when you think things are settling down, more changes surface ahead.
The dynamic nature of the retail business is front and center in a recent white paper released by IBM and New York University Stern School of Business. Retail 2020: Reinventing retailing—once again recaps the history of retailing and provides a preview of what retailing will look like in the future. Focusing on the implications for retailers today, the white paper makes a compelling case for the growing importance of customer insight for retailers.
Here are three changes in retail predicted in the paper and tips on how your brand can keep up:
- Your competitive advantage will not stay competitive for long.
New forms of retailing continue to disrupt retail. New competitors with catchier campaigns and more innovative products continuously pop up.
Companies that evolve quickly and efficiently are the ones that thrive in this evolving landscape. But the lengthy corporate decision-making process puts timeliness and relevance in jeopardy. Trends in retail are fleeting—peplum is so 2013!—and in the same way that many shoppers never want to be caught in last season’s trend, retail brands also need to keep up with what’s hot.
How do you stay relevant when your competitive advantage has an expiry date? It’s by talking to the same people who drive the popularity of trends: your customers. And to strike while the iron is hot, it’s critical that you do so in a timely fashion.
By listening to what your customers are saying in your online communities, you’ll be able to generate feedback on anything ranging from testing new marketing creative, new packaging and new promotions in as little as 24-48 hours. Checking with your customers takes the second-guessing out of the process as you’ll have usable, actionable data to base your decisions on. Becoming a true trendsetter in the marketplace requires acting on an idea quickly—that’s why the speed at which you get customer insight back is invaluable.
- Consumers are now the ones in charge.
Similar to what’s going on in many industries, the retail business has seen the emergence of the empowered customer. “Today’s consumer is calling many of the shots,” according to the white paper. The wide availability of information on the web has empowered retail customers to compare prices, check customer reviews and switch brands.
The authors of the white paper add:
“Maintaining customers’ loyalty and trust has become harder, but more important than ever, as consumers can shift providers in a moment, if unsatisfied. Knowledge of the consumer, their shopping behavior and how to influence them has become a science. Successful brands and retailers will have to learn to adapt to this reality. “
In a world where an accurate picture of your customer can make all the difference, it’s not enough to treat people simply as names and email addresses in your database. You really have to nurture a long-term relationship with your customers to better understand their shopping habits, loyalty drivers and share of wallet over time. It’s not enough to engage people just when you need the information—brands today need a more holistic view of their customers.
To get a more complete picture of today’s retail customer, stop asking the same questions and start tracking information they’ve already given you in the past. The longitudinal insight you get from your online community of customers will help link the “what” and the “why”—an important step in a time when things can be purchased, returned and exchanged without ever uttering a word.
- Innovation has left no room for complacency.
“Creative destruction has transformed the retail industry over the past 100 years and is doing so once again,” according to IBM and NYU. Indeed, mobile platforms, online and interactive forums and in-store shopping gadgets are changing the way consumers shop both in stores and online.
As technology destroy traditional retail business models, retailers have the difficult task of thinking outside the box to compete. And increasingly, many brands are achieving this by tapping into the knowledge of the people outside their own four walls.
There are so many potential ideas brewing outside your boardroom. Through co-creation and innovation tools, companies cultivate next-generation ideas from a creative segment of their customers and employees to avoid “corporate tunnel vision” where execs call all the shots. Rather than the traditional means of crowdsourcing and receiving wild, unusable ideas back from millions of consumers, these tools allow you to leverage a targeted group of your online community to help you come up with, develop and refine your next big idea.
As a Business Development Associate, I often chat with big brands about how a proactive rather than reactive approach to decision making can help them succeed in their markets. Seeing this idea outlined in a white paper from some pretty big names in the business world was a nice sanity check that Vision Critical is not the only one pushing the need to adopt this preemptive mentality.
Shopping in pajamas is increasingly becoming the norm today, but IBM and NYU’s report is a reminder that the future of shopping could look drastically different a few years from now. Retail’s transformation isn’t over—is your brand prepared for the changes ahead?