The retail industry is in revolution. A model that’s worked for decades is being reshaped before our very eyes, as people change not only how they buy, but what they buy and where they buy it. No-one knows this better than the retailers themselves, but many of them have been slow to respond and others are overwhelmed by the sheer complexity of the task.
In our most comprehensive Total Retail survey ever, we asked nearly 23,000 online shoppers around the world about everything from mobile shopping to social media to innovation. What they told us was sometimes predictable, sometimes a revelation. And one thing we know for sure is that the trends emerging here will drive the next wave of change in the retail revolution.
The retail market is getting bigger and more complex all the time, and digital technology means the barriers to entry are now virtually non-existent. At the same time, consumers have never been more demanding: they know what they want, and they want it now. In other words, unprecedented levels of convenience, variety, and personalisation. The consequences for retailers are enormous, and involve their entire operating model from brand to logistics. Managing through this degree of complexity is unbelievably tough, and we believe that in many cases it’s the operating model itself that needs to change.
The good news here is that consumers actually want simplicity. They may be able to manage - and enjoy - an increasingly complex online environment, but they still want shopping to be straightforward. The challenge is to create systems, processes and channels that are as simple to manage for the retailer, as they are to use for the consumer. Both the experience and the operation have to be smart, seamless, efficient, and quick. Because these days, price and quality are a given: the real competitive advantage is ease.
Innovation is an imperative for retailers now, not an optional extra. Competitive advantage in the 21st century is about a whole succession of ideas – it’s the capacity for continuous innovation, executed fast, and deployed nimbly, but all must considered in the part they play in the Total Retail vision . And innovation now covers not just what, but how, and where: not just new products, but new store layouts, new channels, and new approaches to service and experience.
Customers expect the latest technology in all their transactions, and will happily switch retailers to get the service or product they desire. Customers expect retailers to use innovation to create an easier, faster and a more engaging experience.
Innovation is also about what goes on inside the business – new ways of thinking and collaborative working that harness the creativity of the whole workforce, not just those with R&D in their job title. That’s even more true in consumer-facing sectors like retail, where your own people can be your first and best source of new ideas an emerging trends. Technology is vital of course, though it needs to support strategy, not dictate it: IT is not a substitute for imagination, and information doesn’t turn into insight without human intervention.
Technology may be changing the rules of retailing, but the store is here to stay. People still love shopping – whoever they are. In every demographic the store is still the most popular way to shop. Over a quarter of the consumers we spoke to would switch from their favourite retailer if another one had more knowledgeable staff. Retailers need to run an operation that looks seamless on the outside, and runs seamlessly behind the scenes. From the brand experience, to the nitty-gritty of stocking and returns.
We can’t over-estimate how important experience is. One of the reasons people still love the store and are loyal to it, is the physical experience of shopping - the atmosphere, the energy, and the interaction with store staff and other shoppers. The cannier mall owners know this already, and they’re turning their locations into day-out destinations, with eating and entertainment, as well as shopping. What Total Retail means is achieving the same brand buzz across all your channels, including mobile, and that’s not easy. Some of it’s about smart new technology, but there are some good old-fashioned virtues you can’t afford to lose in the dash for digital – like product, price, and delivery.
As the world gets bigger, trust gets more important. That’s one reason why small niche players are doing so well in their own segments, and why many are actually beating the multinationals at their own game. But trust is fragile and it can be elusive. It takes years to build, and yet one bad day on Twitter can obliterate it altogether.
86% of the consumers we questioned will only shop with brands they trust, and trust ranks as the third-most important reason why people choose a brand, rising to the most important for older shoppers. These days, trust comes in many forms, from trusting the supply chain of your favourite food retailer, to trusting that your data will be safe online - two-thirds of our respondents worry about data protection on the internet. And trust is another of those factors that are as important internally as they are externally. Retailers need to build relationships based on trust, both with their customers and their wider stakeholders, including suppliers, investors, regulators and the media, as well as their own employees.
Download the Global report
UK Leader of Industry for Retail & Consumer
Tel: +44 (0)7802 882562