I recently attended the NRF Retail Big Show in New York, an overwhelming smorgasbord of retail technology and new store concepts. Whilst incredibly stimulating, I came away with the distinct notion that the biggest challenges facing retailers in 2019 are less about technology, and more about innovation and customer focus.
The rapid growth of online sales has driven a glut of bricks-and-mortar store closures – leading some to proclaim that stores are dead – with household names like Macys, Kmart, Sears and Lowes shutting the doors on dozens of stores throughout 2018. However, the humble retail store is not dead, merely shifting into a different beast. The best retailers are innovating to provide a common customer experience across their online and offline channels. Stores are becoming online fulfilment hubs, with Target USA now filling the vast majority of its online orders from the back of its 1800 stores, maintaining that most items are already within an hour of customers at the time they are ordered. Nordstrom has cleverly placed its in-store pickup areas adjacent to fitting rooms, finding that more than half of customers try on their items before leaving the store, dramatically reducing returns. Online behemoth Amazon is embracing bricks-and-mortar with a concept store which ranges best-sellers from its online operation, allowing their customers to touch and feel their products.
Innovation is the key. The most effective technology is that which supports innovation, especially in enhancing the customer experience. Nike has joined Apple by offering app-based purchase and pick-up in store. Fast food operator Shake Shack has a new concept store in New York where 100% of orders are taken via app or tablet. Sporting venues even offer app-based orders for beer and hotdogs! Yes, these retailers are all using innovative technologies, but it deployed in the single-minded pursuit of solving customer problems (time, product availability, fit and convenience).
Speaking at an event at NRF, a group of retail executives was asked what are the most important factors to consider when assessing and implementing technology solutions. Their answers surprised many: business alignment and clear direction, with a clear change management roadmap being equally as important as a technology roadmap. The ability to break down organisational silos, develop internal team expertise, and harness insights-driven metrics will continue to underpin retail success – perhaps even more so in an environment of heightened focus on convenience across online and offline channels.
GNC Group Consulting works with a number of leading Australian retailers dealing with the challenges of a rapidly-growing online retail environment.