Special Report: The Future of Retail
Susan Dickenson -- Home Accents Today, 3/1/2013 2:00:00 AM
"There will be more changes in how consumers shop and pay in the next three to five years than there were in the last 20."
This statement, made by eBay CEO John Donahoe to The Financial Times last October offers perhaps the best summary of what lies ahead for retail. New technologies are changing buying behaviors which, in turn, are calling for even more technology, and there are some new buzzwords for it all. Multichannel retailing has evolved into omni-channel retailing, the customer experience must be delivered seamlessly across all those channels, and "big data" analytics is how it's to be done.
The omni-channel shopper is more connected, and she wants to be able to access any or all of her channels (mobile Internet devices, computers, bricks-and-mortar, television, catalog) at any time.
The omni-channel retailer will offer merchandise, promotions and a brand message that are consistent across all those channels, using data such as the shopper's purchasing history, product preferences and personal information, to make that delivery as individualized and personally relevant as possible.
In its 2013 Trend Report, marketing research consultancy JWTIntelligence describes the changing retail landscape as a momentous shift toward a digital age that is forcing brick-and-mortar stores to examine new buying channels and technologies for a different kind of consumer. "At the end of the day all these things are replacing what existed a century ago when formal retail began to take shape," JWT's Ron Magliocco said. "You'd walk into a shop, the shop owner or shop keeper would come out from behind the counter, he knew your name, he knew what you bought, showed you new things you might be interested in. You felt special, loved and welcome there. That went away with chainifying of the world and now the big chains are trying to replicate that using electronic, digital capability."
For brick-and-mortar stores, Walter J. Salmon, Harvard Business School professor of retailing emeritus, says the continuing growth of online retail will translate to big changes in formats, pricing structures and staffing in the years ahead. Gifts & Decorative Accessories Editorial Director Warren Shoulberg, reporting on Salmon's address to the February monthly gathering of the Retail Marketing Society, said Salmon expects online sales of durable goods to represent as much as 30% to 40% of all volume within a decade.
These online gains will necessitate fewer and smaller (brick-and-mortar) stores that will need "excellent people who are well-paid and can answer questions," Salmon said. He thinks more stores will move away from commission-based compensation and toward higher initial salaries, citing The Container Store as an operation that has already adopted that model. "The average salary of an employee there is $48,000 and they received 260 hours of training. And they have a 10% turnover rate."
Retailers interviewed by Home Accents Today at this year's winter markets said social media, blogs, showrooming, HGTV's design shows and internet search engines have resulted in a much more knowledgeable consumer: "Today's tech-savvy shopper is smarter ... has more product and design information at her fingertips." She knows what you're selling, what it should look and feel like, and how much it should be selling for. She expects high quality, bargain pricing and convenience, and if she doesn't get it, she can broadcast her disappointment to her social media community.
On the flip side, however, today's technology and information-gathering provides more opportunities for retailers to know their consumers, capture their attention and seal a deal instantaneously. As shoppers' purchasing and personal data becomes more available and less costly, it will become easier to predict shopping behavior, needs and desires, and to tailor offers and communications. JWTIntelligence calls this "Predictive Personalization," and says it is one way retailers can gain an edge in the complex new retail world. New technologies and more precise data analysis will also provide opportunities for retailers to better manage and allocate inventory, provide individual attention and concierge service, and be within arm's reach at the right moment.
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