Top Five Retailer Strategies
Earlier this year, RIS News released their 16th Annual Store Experience Study which this year was aptly titled, Doubling Down on Transformation. I had the opportunity to sit down with Lee Holman, lead retail analyst at IHL Group, and Joe Skorupa, editorial director at RIS News in an RIS webinar to discuss the top five strategies to watch for in retail from the study. After six months, let’s see if these top five predictions were valid and narrow our sites on what the rest of 2019 holds for retail as we enter the holiday season.
Store Experience Study 2019 Top 5 Strategy Predictions:
1. Growth and optimism for retail in terms of store openings, rising sales and a strong macro economy.
The economy is generally thought to continue a strong showing with many of the major retailers recently releasing strong numbers. Target, Walmart, Costco, and Lowe’s all reported solid financials and overall retail spend increased 0.7%, which is better than expected.
Yes, there have been many store closings and bankruptcies reported in the news, but the feeling in the industry at these closings are often overblown. IHL reports Department Stores have closed 20% of their stores since the end of 2016 and Specialty Apparel has seen a drop of 13% of stores in that same period.However, these closures are more attributable to poor business practices like over expansion and too much debt, than a product of consumer behavior. Additionally, while those two segments of retail have closed 9,651 stores, the rest of retail opened 18,226 new stores in the same period.
However, the additional Chinese tariffs planned for December could certainly slow retail sales, at which time many retailers will be truly stress-tested.
2. Retail tech budget spend trends, specifically in mobile, POS and emerging technology.
The three specific areas discussed during the webinar were Internet-of-thing, machine learning, and microservices. While all three are important technologies, only ML seems to have taken off. IOT is still lacking strong use cases, and microservices don’t seem to be cast as a must-have. However, it does appear that leading retailers continue to invest in the customer experience, often by adding in-store networks, faster checkout, and support for omni-channel transactions.
3. Personalizing the customer experience by empowering employees and through deeper use of CRM data bases, loyalty marketing and unified commerce.
There seems to be a resurgence of loyalty programs and experiential marketing meant to cement the customer relationship and increase lifetime value. For example, Destination XL, a men’s apparel brand, has embarked on a CRM transformation that includes new CRM, Loyalty, and campaign management programs. Target has also recently announced a revamp of their loyalty program to incorporate deeper personalization, including birthday rewards and other customized coupons.
4. Last mile fulfillment, including BOPIS, ship from store and direct consumer.
This is a huge area where retailers are investing to improve the customer experience. Retailers, especially those in grocery, are looking to streamline product pickup and offer home delivery in an effort to better compete in the Age of Amazon. This appears to really appeal to time-starved consumers.
Just yesterday I ordered some items from Target to test their home delivery. My items were ordered at 9am and I was informed delivery would occur between 11-12pm that same day. The Shipt representative, who handles home delivery for Target, contacted me at 11am to say all items were available and no substitutions were necessary, then my goods were delivered at 11:40am.
Enabling buy-online-pickup-in-store, ship-from-store, and home delivery are key ways in which retailers can better satisfy busy customers.
5. Transformation of the store and enterprise through POS evolution and embedding AI and machine learning.
Machine learning is in its prime, with new offerings built for retail popping up on the market every day. For help navigating these new offerings, read this Retailer’s Guide to Machine Learning. The big advantage of machine learning is that as the market changes, ML technologies available to retailers continue to evolve and provide optimized answers, whether its forecasting, pricing, or other retail-specific algorithms. Retailers realize that augmenting human process with automated ML yields better results and have started to take real advantage of the technology. Nike realized that and acquired Celect, a machine learning company based in Boston. Amazon is even offering its ML-based pricing for use by third-party Marketplace sellers.