Over the last and the next few years, retail has and will continue to change. There are many dimensions of change. The role of the store is changing. The fundamental needs of the customer and the nature of competition are also changing.
That’s why, retail transformation is a widely discussed topic. Management consulting firm Boston Consulting Group has identified some of the underpinning drivers of retail transformation.
“As we clear the noise and delve deep, some of the main drivers of retail transformation stand out. First is digital connectivity. At the heart of digital connectivity lies fast devices, cheaper bandwidth and customers who are comfortable using technology,” stressed Arun Bruce, partner and managing director, Boston Consulting Group.
“One of the things that stands out as a smart example of digital connectivity is American home improvement brand Home Depot tying up with Google to drive internal navigation within its stores. It wouldn’t have happened in the absence of the rise of a plethora of tech start-ups and had digital not been cheaper,” he added.
“There is a clear push for convenience,” Bruce emphasised. “Almost a decade ago when Amazon, among others, started its same-day and next day delivery service, it made waves. That delivery window gradually dropped to hours. Now brands deliver goods within half an hour. Alibaba’s futuristic supermarket Hema and JD.com’s high-tech supermarket 7Fresh offer a 30-minute delivery timeline to customers residing within a certain radius. These brands are changing the future of shopping.”
Then comes personalisation. “It always existed but riding on the digital wave it has become even more powerful,” Bruce observed. “Think about it – based on performance, Nike sends out ‘outdo you’ videos with product recommendations. That’s the level of personalisation that consumers are looking for.”
Finally, the experience is vital, he stated. “In an age where consumers can buy almost anything online, stores are shifting focus towards experiences. That’s a no-brainer! Retailers with experience baked into the business model have been successful in retaining loyal customers. For example, yoga classes in Canadian athletic apparel brand lululemon athletica stores are a big hit that creates an entire brand loyal community.”
Read the full article in the December edition of RetailME