Thanks to the perpetual evolution of digital technology, the retail sector has experienced profound changes in the past two decades in Hong Kong. As the lines between technology and humanity continue to blur, there are substantial challenges and opportunities for retailers to address.
In this article, we’ll explore current trends in an increasingly competitive retail sector, characterised by digital technologies that enhance customer experience and drive profits, as well as the tricks that retailers need to know to remain successful.
Embracing Omnichannel Marketing
While a multichannel approach involves different roles performing different functions and working towards the same end, the omnichannel method streamlines the marketing process, with all facets doing the same job for the same end. This improves integration and so provides a consistent experience throughout the customer journey.
For retailers, the omnichannel approach is primarily concerned with linking online and in-store shopping experiences. This means consistency at every turn: from marketing campaign materials to customer support.
Omnichannel marketing has become a popular technique within the sector. Adobe research found that 25% of respondents from the retail sector indicated that they would make omnichannel marketing a priority in 2019.
But what does this mean in practice?
The omnichannel approach encourages retailers to map the customer’s journey, identifying touchpoints that can make the difference between a sale and a missed opportunity.
Retailers are encouraged to undertake this exercise and decide how an integrated approach can be encouraged throughout the business, both online and in-store.
Take customer support, for example. Customers might seek in-store customer service if they’re looking for an immediate resolution, or they may prefer the convenience of accessing support online or by phone.
There should be no inconsistencies between the various channels. Offline and online teams must present a unified message and identical standards.
Finding Novel Ways to Integrate AI and Voice
Artificial intelligence technology has gradually been established and embraced by retailers. One of the most widespread applications has been customer service chatbots.
AI bots are used to resolve simple queries quickly, and when an inquiry requires a human touch, bots can direct them to the appropriate channels.
As chatbots become more intelligent – and more useful – they are growing in popularity with customers. Research has shown that the top three benefits are 24-hour service, getting an instant response, and answers to simple questions. In short, convenience.
For brands that have not yet embraced AI as part of their customer service portfolio, this is an exciting opportunity. Starting small, such as setting up automated responses to simple questions from a brand’s Facebook page, can really improve customer service and give companies the confidence that comes from seeing technology in action.
But AI is not limited to customer service chatbots. Real-time personalisation makes the customer journey more relevant and personal. These are qualities that consumers are actively seeking. And so, harnessing the power of machine learning to nurture customer relationships, make timely offers, and provide ongoing support is essential for the modern retailer.
While voice technology has made great strides in the home market – thanks to Amazon’s Alexa, Google Home, and Apple’s Siri – it’s still not entirely on the radar of retailers. Just 6% identified voice interfaces as the most exciting opportunity in their sector.
This is surprising, given that voice commands, according to Will Hayllar of OC&C, act as a conduit of “frictionless retailing.” With convenience consistently cited as a priority for consumers, it would be reasonable to expect retailers to jump on this trend with more vigor.
However, the future prospects for voice remain favourable. The same research shows that 40% of people with a virtual assistant–enabled device currently use it to make a purchase. It’s expected that this number will jump to 48% by 2022; therefore, there’s scope for retailers to get ahead of the game by developing and finessing voice technology for retail now.
Using Data to Enhance Customer Experience
Retailers recognise that they have access to a substantial amount of data, and are actively working to use it to better target prospective customers, optimise customer experience, and bridge the gap between online and in-store.
Making use of this data depends on having the right people in place to analyse it. Retailers must be willing to invest in hiring data specialists and facilitating continuing education, to ensure that their insights are actually useful.
The next step is to apply data where it’s needed. Research has shown that for more than a quarter of retailers, customer experience is the number one priority for differentiation from other brands. The data that retailers hold – and analyze – is extremely helpful in tailoring the experience to individual customers.
For example, by knowing when a customer is most likely to browse a website, visit a store, and ultimately make a purchase, retailers can send offers at times and in situations that have the best prospect of encouraging an action.
If a customer has a tendency to visit the store on a Friday afternoon, there’s no real point in sending offers on a Tuesday morning. Grab their attention on Friday morning instead, when they’re most likely to be in the area and willing to make a visit. It’s a simple scenario, but it demonstrates how a joined-up approach to data as part of omnichannel marketing can yield results.
Integration with IoT
The Internet of Things will also prove important here. Amazon’s Dash buttons made their debut in 2015, allowing customers to restock on a variety of household items with just one tap. They were phased out in 2019, but their disappearance doesn’t equate to a complete failure.
Although their commercial viability diminished over time, as an experiment, it was something of a success. The behavior of customers using Dash has helped to inform the continued evolution of Amazon’s Alexa. Instead of searching in kitchen drawers for pesky plastic buttons, customers can simply call out to Alexa and order items in a matter of seconds.
And this principle isn’t limited to online retailers. Macy’s embraced the Internet of Things with the introduction of beacon alerts a few years ago. When using the Macy’s app in-store, customers receive recommendations and special offers based on their existing purchases, browsing habits, and even their position within the store.
For example, if you’ve been checking out watches online, when walking into the jewelry section, you might receive a ping containing special deals or coupons for you to use while you’re there. This creates an experience that’s customised and relevant, which can present customers with a compelling incentive to part ways with their cash!
Investing in Digital Skills Across the Business
Adobe’s research discovered that almost a quarter of respondents planned to make little or no investment in digital skills training for their staff in 2019, while only 29% were intending to make significant investments.
Of course, there will be instances where staff have already had the necessary training to keep them up to speed with the latest digital developments. But there remains scope for further professional development, particularly for retailers planning to introduce new processes or system updates.
Prioritizing Experience-Led Sales
Digital disruptors have made waves in the retail space. Online-only brands, such as ASOS, Boohoo, and Modcloth, are popular, profitable businesses that hold substantial influence over the market.
In response an alarming number of traditional bricks-and-mortar brands have struggled to compete in the digitally focused retail space; even some former retail giants have ultimately been lost.
This is understandable as brands with costly physical locations will never be as efficient as online-only retailers with warehouse networks. But while the price-focused ‘race to the bottom’ has thinned out the mall and high street presence, it has presented retailers with a new – and possibly unexpected – opportunity.
As well as a fair price, customers are looking for an optimised experience. A hybrid physical and online presence provides consumers with the best of both worlds: the convenience of smart shopping alongside a smooth and consistent VIP experience. At least, when it’s done well.
A reduced physical presence allows brands to refocus resources. Retailers are able to invest more in each store, tailoring the space to the needs of the target customer.
Concept stores have transformed from a small-scale, experimental offering to one of the most exciting opportunities in the in-store retail space. It’s likely that the number of concept stores will continue to expand, so retailers should be ensuring that they use the format to test which features really enjoy, and which can be ditched.
From there, retailers can expand their portfolio of concept stores, or integrate successful facets into their regular retail units – or both.
Creating a Customer-Centric Culture
Today’s retail sector has been completely revolutionised by digital technology. But for all the innovation and progress, the most important factor will always be the customer.
A customer-centric culture is absolutely essential for any retailer, whether they’re online-only, just about making their way into e-commerce, or anywhere in between. It pulls together all of the technical aspects and injects a sense of humanity back into retail.
Understanding the customer journey, and all its key touchpoints are the first step. From there, retailers must create a multi-departmental continuum between the digital and offline customer experience.
This can be as simple as ensuring that the basic principles of modern retail, such as contactless payments, are all in working order. Retailers should also finesse their digital output; for example, if it doesn’t add anything substantial to the customer experience, either chop it or change it. Showing up isn’t enough; it’s how a retailer interacts with customers that matters.
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Source: Digital Marketing Institute