Technology Driven Evolution in Retail
Computer, Internet adoption and the Emergence of E-commerce
Commoditization of computers came as a dawn of a new era for retailers. The cash registers got replaced with computerised automated systems that present information precisely. It became easier to get a hold on inventory levels, compare sales with respect to some past time and forecast demands. Little did the Mom & Pop stores realize that this was just a setting stone for an era that would pull curtains over many of them. The adoption of the internet completely disrupted the market with the emergence of online commerce or e-commerce. Customers are drawn to the convenience offered by e-commerce players. It has helped customers tackle most, if not all, of the challenges posed by traditional commerce. On single tap, they get access to endless aisles of products, review from other buyers and liberty to compare prices. Back in November 2016, online sales surpassed the brick & mortar sales during the Black Friday Weekend for the first time. It shows e-commerce has definitely come off age. But as per a Euromonitor report in 2017 e-commerce accounted for only 8.5% of the total retail trade worldwide and in emerging economies like India, it is still hovering at around 5%. It indicates the majority of sale is still happening in-stores. What is still driving the customers to these stores?Omni-channel and technologies improving user experience
It has much to do with the customer experience and their behaviour. For these customers, convenience has become a key factor now. Increasingly, customers are blending online and offline, most of the times they research the product online and ultimately buy it from offline stores, vice-versa is also true. The legacy stores like Walmart, Costco and Starbucks have opted for designing a cohesive customer experience at every touch point. The e-commerce giants have equally felt this need. Vice president of Amazon Pop-Up stores, Cameron Janes said, “We have a great website, but sometimes, people want to test our products out themselves and talk to a real human,” It validates omnichannel as just not a buzzword rather business critical too. However, it is easier said than done. Not having a consistent approach across channels will again hurt the business. The Walmart CEO Doug McMillon emphasised its importance while addressing the shareholders, he said, “I want us to stop talking about digital and physical retail as if they’re two separate things. The customer doesn’t think of it that way, and we can’t either.” To improve the user experience, physical stores are offering digital kiosks in the store which again gives an impression of endless aisles as customers can place an order for out-of-stock goods and can even choose to get them delivered. They are also solving another issue of the millennials. As per a Deloitte report, 70% of Indian shoppers prefer digital devices over sales associates for in-store activities like product pricing, product information, etc. Through online interactions, the customers are leaving digital footprints and having an omnichannel presence helps retailers to formulate a holistic approach to target them. Retail analytics has proved out be very decisive in taking these decisions. For example, a customer, who spent weeks parsing smartwatch reviews, adding, then abandoning items in his/her cart, both on mobile and desktop, finally purchased because of an enticing email offer. We asked Mr. Binoy Subba, Head – Sales Operation and Planning at Orient Electric, for comment on technologies that would have the biggest impact on retail, he remarked:“Intriguing, comprehensive and precise! I concur that the value generating consumer interaction is the essence of retail business; and the technology to capture and analyse these interactions will be as important as the consumers themselves.”Retail analytics is also changing the way retailers are managing the supply chain, empowering vendors and incorporating the insights received from the customer-facing employees in providing a better experience. The traditional supply chains lacked transparency, which used to infuse inefficiencies at each stage of the value chain. The modern supply chain is agile, transparent and connected. Smart devices like RFID tags and sensors feed information like product location and description automatically into systems. This information is stored centrally, so everyone is on the same page. It is then used for data analytics and predictive insights that help in decision making.