The retail industry is undergoing a digital transformation.
An increasingly global mobile population has led to a surge in the use of smartphones for online shopping. Combine that with improved logistical infrastructure worldwide and convenient modes of payment and delivery and it’s no surprise that online retailing is becoming more popular.
On the retail side, savvy companies are recognizing that the more seamless that they can make the online to offline shopping experience, the more customers they can gain. In fact, many retailers are opting to only offer certain products online to save money on physical costs.
In 2013, 191.1 million U.S. citizens were online shoppers and had browsed products, compared prices or bought merchandise online at least once, according to data from Statista. These figures were projected to reach 201.7 million in 2015 and 215.1 million by 2018.
The digital explosion doesn’t mean that consumers are abandoning the physical store for good though, noted a recent report by Accenture Consulting. Rather, it means that
"physical and digital commerce are converging, and that consumers expect retailers to be in lock step with the change."
Yory Wurmser, retail analyst at eMarketer, said there are three ways to look at the digitization of retail: from perspectives of the shopper, the associate and the retail brand.
He pointed out that for shoppers, mobile apps are increasingly including in-store functionality - which can include bar scanners, beacon-triggered messaging or augmented reality features, as well as in-store mapping. Also, various digital signage can create dynamic messaging that can be either personalized to the particular shopper or turned into a streaming feed of consumer-generated content.
For example, “rather than having a coupon available in-store via text message, a retailer can provide technology that will show a consumer more information and more rich content about items on a mannequin such as identifying complimentary accessories or what sizes they are available in,” said Rob Howard, partner and practice leader at Kurt Salmon Digital.
From the associate perspective, clienteling apps on associate’s iPad or phone “can massively increase the expertise and customer knowledge of store associates” by giving them detailed knowledge of inventory, buying trends, and even the purchase history of the particular shopper, if they opt in, noted Wurmser.
Meanwhile, retailers are recognizing the value of digital tagging products via RFID and integrated POS systems in giving retailers “a far better sense of real-time inventory, which is crucial for traffic-driving digital advertising,” Wurmser said.
“That is, if a chain wants to drive a shopper to a nearby store, it’s important that the offers match what the store has at that moment,” he added.
“What we’re seeing is almost a resurgence in RFID technology,” he said. “While it’s been around for decades, it’s becoming exciting again as retailers realize they have to have improved better in-store inventory accuracy given all the initiatives we’re seeing.”
He said one day in the near future retailers might be able to provide an Uber-like app for consumers that can pinpoint in real-time inventory visibility at the in-store level.
In Wurmser’s opinion, the most realized, fully integrated online/offline experience is the RH Gallery- a luxury brand in the home furnishings marketplace also known as Restoration Hardware.
“They really have turned the physical store into a showroom for the online experience,” he said. Other good examples are the big department stores, such as Macy’s and Nordstrom’s and cosmetic giant Sephora.
“They’re all testing things like beacons, in-store mapping, and interactive displays,” Wurmser said. “Also, what Amazon is doing with the in-store reviews (taken from online reviews) is an interesting twist. It takes online information and turns it into analog signage in-store.”
In November 2014, luxury fashion brand Rebecca Minkoff unveiled its first interactive store.
According to Digital Signage Today, shoppers check in on arrival, via a "Connected Glass" shopping wall, a large mirrored interactive display. Once a shopper has made their selections, they press a button to have their products sent to a dressing room, each of which is also outfitted with the mirrored touchscreens. Once in the fitting room, a shopper can still browse the online catalog, and request that more items be brought to them.
Digitization for retailers is not without its challenges.
Scaling a pricey solution such as an interactive mirror to hundreds or thousands of stores can be a very large expense for many retailers, points out Howard.
“So you’re starting to see more scaleable smart fitting rooms – equipped with an iPad for example, as opposed to a full-length mirror,” Howard said.
Harry Wang, director of health and mobile product research at Dallas-based Parks Associates, agreed that some retailers are wary of spending big bucks at this stage because they are uncertain if the return on investment (ROI) will be worth it.
“It is a chicken and egg scenario where retailers want to see the results before committing more budget - but results won't be meaningful if only doing it in small scale so the learning curve will be steep,” Wang said. “We are not over that experimental hump yet.”
Besides managing the cost, it is crucial that retailers integrate their data systems to execute a successful digital strategy.
“This is a much bigger project than it sounds, since things like merchandising, ecommerce, inventory and marketing are often running on different systems and managed by different teams,” Wurmser said.
It’s also important that retailers create digital strategies based on likely consumer use-cases.
"Digitization isn’t about keeping up with others or using the latest technology. It’s about enhancing the consumer journey,”