Last year in Europe, e-commerce turnover increased by 15 percent, to €530 billion. Despite this promising figure, retail businesses today still face numerous challenges, and fierce competition.
In a world full of digital natives, online shopping has become the norm, and retailers must adapt and evolve if they wish to remain competitive, especially with the growing influence of millennials.
And yet, while 80 percent of business leaders believe that their industry will be disrupted by technology, most don’t have a transformation plan in place.
At an event based in its Milan-based headquarters, Microsoft brought together media, influencers and retail experts from around the world to discuss the future and trends of the retail industry, and the role that technology can play in it, showcasing how the power of technological transformation can help retail business evolve, thrive, and grow.
Every customer wants to be a VIP
With 72 percent of businesses stating that improving their customer experience is their top priority, in todays’ hyper-connected world, meeting the expectation of shoppers is crucial for success – and a difficult challenge to overcome.
Consumers now not only expect the 24/7 convenience and support that online shopping offers, but they are also hungry for the personal touch.
For Luca Giornofelice, Group Head of CRM and Retail Digital Transformation Projects, Prada, this is one of the most important developing trends in the retail industry:
Speaking as part of a panel at the event, Giornofelice explained how “Customers want a personal relationship, to be treated in a specific way, to be engaged as a person, as an individual” – typically a service that only physical brick and mortar could stores offer.
Customers have a clear desire for a deeper connection with a brand, beyond simply handing over money in exchange for a product or service. They want their custom to be appreciated, they want to make a connection with their chosen brands. Ultimately, all of this leads to loyalty, and repeat business – two of the most important goals of any successful business.
How then, can a company merge the convenience of the digital world, with the personal touch of the physical? The answer, is data.
By compliantly collecting customer data, retail companies can use tools such as Artificial Intelligence (AI) to analyse their behaviour and preferences, providing bespoke experiences and suggestions which will improve their shopping experience, and increase their loyalty.
Nina Lund, Microsoft’s Retail and Consumer Goods Sector, EMEA Lead, believes that “Customer loyalty is the measure of a retailer’s success. It’s the number one thing that keeps a business alive, that keeps them up at night. How do you get the repeat purchase?”
By intelligently utilising data, retailers could create bespoke offers on products each individual customer is most interested in. They could improve their customer service experience with dedicated chatbots, powered by machine learning, to help consumers find the answers to their questions faster than ever.
Retailers could also use machine learning and intelligent predictions to manage the demand for stock, ensuring that fewer customers are left disappointed when something they’re likely to want is not available.
The possibilities that data offers, is endless.
Communication is key
Another important emerging retail trend that has emerged, are the number of consumers who have a desire to be more informed about the products that they purchase.
Luca Setti, Ecommerce Manager COOP Italia – a company who demonstrated with great success its vision of the supermarket of the future – echoed the fact that customers want more information, but interestingly outlined how millennials tend to want even more:
“In the food business, customers are asking more and more about our products. For wine for example, they want to know about the producer, the region, the location etc. Millennials have more questions about the consumption of food, or how to cook it. They are asking for more information about how to make more sustainable decisions.”
Today, consumers are driven not only by price and quality, but also by their morals. Does a particular product come from an environmentally-friendly source? Are the workers being paid fairly? These questions, and more, are becoming more and more important – especially to millennials – and retailers who can present this information clearly and easily to consumers, will have their transparency rewarded with loyalty.
Karin Söderlind, founder and CEO House of Dagmar, describes how her and her sisters’ fashion brand wanted to focus on creating sustainable products; “We want to educate our customers and inform them – to reach out and tell them about the products. Sustainability is very important to us – using other people and influencers is hard today, so we wanted to have our own channel connecting us directly to the consumer.”
Thanks to a new app created in collaboration with Microsoft, House of Dagmar is now able to reach its customers directly, in a more personal manner, informing them of their products and its sustainable mission, while building up a community at the same time.
A store with no stock
Andrey Golub, founder and CEO of ElseCorp, presents a unique, forward-thinking view on his belief in the future of retail:
“Our mission is to bring mass customisation, to the masses, with no stock or products in stores. The products will not exist, until people buy them.”
Golub’s vision, although initially almost cryptic in nature, is actually something rather ground-breaking.
Imagine a physical shoe store. As a customer, you walk in, and are immediately taken aback by its small size, and sparsely filled walls.
There are no more than five plain shoes on one shelf, alongside a book of material samples. Before you even get to the shoes, a sales assistant uses a machine to accurately scan your feet, saving a perfect 3D representation of them to your store profile.
A display then provides you with the best base shoe models for your feet. From here, you can customise everything from the heel, the material used, the design, accessories and more.
Once saved to the cloud, your order is received, and the bespoke shoes, made specifically for you and your tastes, will be ready to pick up in a week’s time.
This on-demand approach to retail not only reduces wastage in the sense that manufacturers won’t have thousands of units of unsold stock left over, but it also offers a mix of the personal touch and digital worlds, resulting in a product that will foster fierce loyalty, and a sense of uniqueness.
The future of retail
These trends have shown how adopting and implementing the right technology in the correct way can help ensure the growth of businesses in the transforming retail industry.
Microsoft’s Nina Lund touched on an important point, in this regard: “We are living in a time where we’ve never had, prior to today, four different generations in the workforce – four very different mental generations making decisions on behalf of businesses.”
“These four generations have very different relationships to technology, and this sometimes helps, and sometimes hurts. If you’re afraid of technology, or doubtful, then you will potentially, as a manager, be driven by that attitude. Microsoft is here to help customers to demystify technology, and see the art of the possible.”
For more information on the digital transformation of the retail industry, please visit our Future of Retail Hub.
Tags: Digital Transformation, Future of Retail, Italy, Retail