We've seen in a previous post that what retail customers want – as well as when, where and how they want it – is changing with the generational shift from Gen X to Millennials to Gen Z. Retailers must also pay attention to the way technology, media and distribution are becoming increasingly intertwined and how new technologies are reshaping what retailers can – and must – offer.
In her research on internet trends, Mary Meeker of venture capitalists KPCB, outlines a number of challenges and opportunities that technology offers to the retail sector:
- A stronger focus on retailers using data collected from customers to identify and launch new products and brands, with the traditional divisions between brand, product and retailer breaking down.
- While the trend until recently was for physical retailers to develop online channels to compete with purely digital players, we're now seeing a shift in the opposite direction. Online retailers are using data from customers to open carefully targeted physical stores and showrooms, which are often amongst the highest grossing outlets in their sector by square foot. The future is undoubtedly omni-channel and requires retailers to provide a seamless experience across all physical and digital channels.
- Customers who are always online are easier to reach and connected product users can be prompted to buy or upgrade. Meanwhile, social media will increasingly allow hyper-targeted marketing of new products to very specific groups, allowing promotional spend to be focused where it will have most impact.
- Content discovery techniques – think of Netflix or Spotify recommendations – are being applied to physical products, such as fashion. Using data from customers' profiles on social media sites such as Pinterest, along with sophisticated algorithms, retailers can provide a highly differentiated and targeted experience for each customer that keeps them coming back to the same retailer for more.
- Visualisation and image manipulation techniques will also become increasingly important in encouraging customers to stay longer, buy more and come back more often. We'll see a growth in mobile apps that let you preview what products will look like in a particular setting, such as a sofa in your living room. Check out our guide to using geofencing for marketing in retail.
- Social media platforms and web chat will be the preferred channels for customer service going forwards, with nearly half of Millennials picking one or the other as their first choice for contact with businesses.
For retailers, the message is that they will need to deal with storing, capturing and quickly analysing an ever greater volume of data from many more sources – and incorporate it into their sales workflow rather than using it outside the sales process to inform marketing decisions. When it comes to the technology to deliver that capability, they need to look for partners who understand how to tackle issues such as big data, image-based analytics and visualisation, and integration of social media and messaging into business workflow.
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