Our world is crying out for more digital experiences, whether they happen through our smartphones, computers or in real-life situations. And the same is true for commercial brands trying to satisfy existing clients and reach new ones. While companies see the benefits and drawbacks of such strategies, a consensus seems to have arisen: more digitalization does not have to mean full digitalisation. Hence, retailers face the tricky question of how to balance innovative initiatives and traditional methods to improve the process of shopping.
China’s Hema chain of supermarkets (not to be confused with the Dutch chain of the same name) focus on selling fresh products and, as clients do their shopping, “they can simultaneously order a meal that will be made on-site by a cook,” explains Michelle Lau, the Business Development Manager at Alibaba. This service is part of a growing trend in distribution entitled ‘New Retail.’ The whole purpose of this concept is to merge offline and online worlds so that clients get the best possible experience. As Jack Ma has stated, the future of retail shouldn’t be built on pitting physical stores against e-commerce platforms but through the coexistence of these two channels to generate a better experience for the shopper. This plan seems straightforward on paper but it is actually more complex than it first appears. Digitalization, as well as maintaining brick and mortar stores, can be a tremendous source of cost. And therefore, just as with a classic merger of two businesses, marrying online and the offline channels should be driven by synergies which are not only positive for the consumer but for the distributor as well.
The store is home, home is the store
“Today, 67% of retail clients want to have innovative experiences in stores,” remarks Jeremie Herscovic, retail strategy expert at SoCloz. In cities especially, if a person is willing to go out and brave traffic or overcrowded public transport, then slalom down the aisles of a stuffy supermarket at peak hours, that person should at least get a reward. That reward could be speed, quality or made-to-measure related.
Frederic de Castro, the chief financial officer at Etam, notes that “the online shopping experience features as little human contact as possible.” Obviously, this has led to a general acceptance of self-checkouts in physical stores, which are widespread nowadays. But what if going to the store to pick out and try on the products ̶ the core reason for such an undertaking ̶ was also possible from home? The lingerie maker has created a system, called “Try at home,” through which a shopper can order and receive items without paying a cent upfront. If they like them, they just pay and keep them. This ground-breaking idea was thought up to enhance the consumer experience by granting more time and a more comfortable location (one’s home) to try on intimate garments. More traditionally, Etam employs useful digital solutions to spot clients with fidelity cards, send orders straight home when not available on-site or leave the order at a pick-up point.
Chinese e-commerce giant Alibaba is even more enterprising when it comes to technology. Where most retail actors stop at the digitalization of goods, it has started the digitalization of clients. Not only does the company use facial recognition units for payment, but it has also pushed the use of QR codes. These make a connection between the online and offline worlds of the customers, who can pay by scanning the black and white barcode-like matrix ‒ but there is way more to it than that. As Michelle Lau says it, “Alibaba is also in the big-data business” and this allows the company to study a consumer’s behaviour and adjust its offer accordingly. For example, people can use their personal QR code to receive product recommendations or to get a resupply of their most used items. Alibaba’s Magic Mirror connected mirror can even help people choose the perfect makeup in real time.
Mightily impressive they may be, at the end of the day these features alone may not be enough to persuade someone to make a trip to the supermarket, yet nobody can deny they have a strong effect on the shopper’s loyalty as they create a world designed entirely for them with the products they want to see, where they want to see them.
Fewer people, better interactions
If the progression towards more technology implies less human contact, it doesn’t mean the remaining human interactions should be disregarded. On the contrary, they could be of a greater importance than ever. The main risk is clear: “Digitalization is so strong that clients become transparent,” warns Frederic de Castro. Etam’s CFO goes on to explain that “staff in shops are paying less attention to the physical client in front of them because they busy are on phones or tablets fixing self-checkouts or processing online orders.” It begs the question how much attention do customers entering a store expect? The answer could be generational. Baby Boomers might require a lot, while millenials might not need any.
Companies must, then, impress on their sales staff that although they have fewer customers, they must be prepared to pay maximum attention to those that require it. Moreover, as data flows in at incredible rates to big e-commerce brands and chain-stores, there is the issue of customer privacy. How much should a group know about a shopper? And how far can it go in exploiting the information it gathers? For the experience of shopping to get better, not worse, the customer must not lose trust in the retailer. They cannot feel that they are merely a cash cow, to be milked for information.
On behalf of Bryan Garnier & Co, @Firmin Sylla