Retailers must harness the power of digital
The retailers that were able to adapt the fastest to consumers' increased digital demand prior to last year's global turmoil are today's clear winners.
But digital-first players arguably won biggest over the last 18 months. This is largely because they did not have to shutter stores and rapidly make any stock held instore available online.
So, what now of the role of physical retail in a largely digitally transformed, post-pandemic world? Most in the industry accept that those digital-first competitors will be unable to sustain recent unprecedented growth as stores and malls reopen.
At the same time, I note that online growth hasn't slowed as fast as some were predicting, while store footfall is struggling to make up lost ground and return to pre-2020 levels. It is reasonable to assume - like Black Friday and Cyber Monday - the genie is out of the bottle.
To cope, I argued that all retailers must harness the power of digital to unlock the differentiating power of knowing their customers in my last Aptos blog. This was to run their businesses better and to be able to cut the cost of acquisition by looking for more like them.
But, in the context of the impact of digital on the store, I also urged retailers to go digital 'by design' and adopt a mobile-first approach to customer engagement in order to better tie the store experience to the online one. Such an online-to-offline (O2O) strategy is not new.
What is new and will sustain, however, is that mobile is now playing an integral role in facilitating increased demand for O2O store-based services, such as click & collect. Here, again, the idea of the store as a last-mile fulfilment hub is far from novel.
To my point about the genie though, many more consumers have discovered the convenience of being able to buy online and pick up instore (BOPIS) or collect their orders kerbside (perhaps after ordering from a retailer online for the first time only recently).
Consumers report high intention to continue using models such as BOPIS (56%) and grocery delivery (45%) after the pandemic, according to McKinsey. But how many retailers are looking to utilise mobile check-in or geolocation services to speed such fulfilment?
There are also new mobile-enabled capabilities the store must facilitate: who would have thought that Amazon would be able to position its checkout-free convenience store UK debut as meeting the consumer need for low-touch shopping environments, for example?
Perhaps more significant, the need for safer, low-touch transactions has rapidly accelerated retailer adoption of contactless payments. A recent FIS study found that mobile wallet payments surpassed cash payments globally in 2020 as consumers avoided handling cash.
In fact, a World Bank policy research working paper also found evidence that accepting contactless payments during an epidemic shock helps merchants attract more new consumers, who also like the faster checkout speed and ability to digitally track payments.
Another mobile-enabled trend is the resurgence of the QR code. Once thought of as a 'solution looking for a problem to solve,' most consumers now know how to scan and open a URL embedded in a QR code - not to access marketing offers, but for contact tracing.
Other innovations requiring tighter, mobile-first digital store integration are the in-app traffic light queuing systems trialled by the likes of Sainsbury's in the UK; and, Target's voice-based order collection confirmation service for handsfree store shopping mission convenience.
The point is, love or hate it, many of us have become accustomed to living our lives via screens in recent months. Take, for example, Zoom. Its video conferencing app was downloaded nearly 27 million times in March 2020, up from 2.1m only two months' prior.
Shopping online is no different. As a result, App Annie predicts time spent in key "at-home" categories is expected to top 1.3 trillion hours on Android phones alone in 2021. But we have also examined how this mobile habit is having a seismic impact on the store.
Some retailers are embracing this and facilitating more customer interaction and engagement via mobile in their stores. But this requires a robust and secure public-facing wireless communications system, as well as the endpoints needed to digitise the store itself.
In this context, store-based digital touchpoints - such as electronic shelf labels or digitally assisted selling tools, including clienteling and queue-busting checkout systems - are all more relevant now that customers are accustomed to using their own mobile devices instore.
Placed in the hands of store associates, mobile devices can help to save a sale or speed service. But the increasing popularity of livestreaming is also giving the store and its associates new roles to play online that will be worth $11 billion in the US alone this year.
I've previously pointed to the benefit of engaging customers via mobile instore in this way. Incentivising customers to engage, identify themselves and interact digitally when they pay a store visit can help tie their identity back to their online activity to unlock omnichannel insight.
Given so many retailers have seen exponential online sales growth, it will pay to find out which of those new or existing online customers also shop instore. A major study found that a customer shopping across multiple retailer's channels is worth 4% more per store visit.
So, to encourage consumers back to the store, retailers need to redefine its role in a post-pandemic era so it is digitally enabled and data-driven, with a strategy that puts mobile first when it comes to customer transactions, interaction, convenience and engagement.
Whether it's low and no-touch systems, appointment booking, queuing systems, concierge and clienteling systems, livestreaming, loyalty or personalised pricing - delivering such services via mobile is becoming table stakes for the modern store customer experience.
One recent initiative I love is Zara's store mode initiative, which connects the fashion retailer's website and app to its brick-and-mortar presence. The 'Click & Find function' uses geolocation, for example, to help customers locate items in nearby stores.
I wish every retailer had to offer a mobile app and accompanying 'store mode'. It would perhaps force them to ensure their total offer, much less their stores, were digitally fit for purpose in this 21st century and able to personalise any store visit, just as we can online.
Some retailers have asked me, 'what's the next big thing after mobile?' To which I suggest they read the excellent blog by mobile and digital media analyst, Benedict Evans, who compares mobile innovation to the advent of the car.
He writes: "The innovation in cars became everything around the car." Indeed, you could say the out-of-town, suburban shopping mall and retail park wouldn't exist without the ability for the average shopper to access it without the dawn of the automobile age.
We don't need the next new thing after mobile in retail. We need more innovation that takes advantage of the native contextual functionality around time, place and space that mobile offers to ensure the store can maintain its relevance in the digital age.