Creating Next-Gen Stores For The 'Revenge-Spending' Phase
The retail industry is going through a transformational period that has many scaling back physical operations, and many malls having to re-think their future strategies, but people still want to - and still will - shop in stores. Digital commerce continues to massively disrupt retailing like never before. To protect and maximise this revenue stream, retailers would need to invest in technologies that blend the physical and digital shopping experiences.
Creating a next-generation store isn’t something retailers can put off for another year or two. The wait and watch game is over - it needs to happen as of yesterday. This challenge is going to be significantly higher for those stores and store brands which fall in the mid 50-60 percent of the spectrum. The top 10 percent are, in all probability, likely to be faster, more agile and more responsive, and the bottom 30 percent may not be able to make the grade.
So How Does One Define A Next Generation Store?
In today’s world, every consumer needs to be considered as an Omni channel consumer. It is extremely important to state that mentioning the word Omni channel several times in a discussion does not mean that the experience would be Omni channel . It’s time to focus on the big picture. The big picture is -giving the consumer a friction-free experience, no matter how they interact with a brand. The store is now a point of inspiration, an experiential zone, a servicing site for orders and returns, a help desk, a service desk, and a shipping centre, all rolled into one, and yet needing to maintain the aesthetics of a 21st century store.
The physical store is merely an extension of the e-commerce experience. It’s not the other way round. It’s a place where a consumer can easily return something they bought online, or see, feel and try a product before buying. And we need to understand the fact that a consumer may do all of this in one store, one ecommerce site, and may still finally end up buying from someone else.
Additionally, stores must, over time, create the ability to pick up where a shopper is left off online, where sales associates and sales officers can pull up data and re-engage with the customer in conversations around abandoned carts or wish lists to complete a purchase. The next generation store doesn’t add complexity to the shopping experience - it removes it.
How Does One Go About Enabling A Next Generation Store?
Delivering seamless experiences that customers expect today, including buy online and pick up in-store, return anywhere, ship from store, requires a very capable cloud commerce platform. When data lives in more than one place, and time and energy is not spent in cleaning it up, it’s inevitably going to be inconsistent. Therefore, a unified commerce solution seamlessly connecting e-commerce and in-store POS to order management, inventory, merchandising, marketing, financials, and customer service is what is needed. That is the reason why the biggest challenge is going to be for the brands or stores which fall in that middle 50-60 percent of the spectrum scale.
A reliable, 360-degree view of customer’s orders, preferences, and inventory data is the foundation for outstanding customer experiences. Imagine a customer walking in and being greeted by an associate who can pull up their order history or their wish list from a brand’s online site. This access gives unprecedented associate insight into the customer’s favourite brands, colours, and sizes. This makes the customer feel like the sales associate actually knows them and can be of value - and not just trying to sell them something.
Next-generation POS systems are a point of engagement systems that empower sales associates with information to offer real value to the customer on the floor. Via their POS devices, associates can also process an order for an item that isn’t available in the store quickly and easily, and at the same time, have it shipped or available to pick up in another location. Integrated POS and order management enables the ultimate commerce goal - buy anywhere, return anywhere, and fulfil anywhere. Instead of cobbling systems together, retailers need to trust the data and leverage it in real-time to interact with customers consistently.
Data Is The New Oil
This is another often repeated, but less strategized phrase in organisations.
To create a successful store footprint of the future, the need of the hour is to capture all preferences, interactions, and transactions of customers at one place to create rich customer profiles. This will provide them with a smooth shopping experience and serve as a great revenue booster for retailers.
As we know, data is the new oil that many modern retailers have started harnessing, but the traditional retail has either not understood the power of data, or if they have, they are not able to capture it and put it to correct use. The need of the hour is for governments and associations to organize the smaller stores and educate them so that they keep pace with the evolving market.
Misuse And Theft Of Data
Which then brings us to the most important issue which is given very little consideration. In today’s world, how does one company or organization protect its own CRM data diligently so as to prevent sale or misuse of data which could also be taken away when irresponsible and unethical staff leave.
If everything is outsourced, including promoters and merchandisers, who work on outsourced companies contracts, if the covid is creating, and likely to create distressed attrition across all levels, along with upgradation of technology, protecting an organisation’s data needs to be a major part of strategy. And while most focus is on ensuring that organization data is not hacked from outside, almost all stealing happens from within.
Cutting One’s Own Feet
Retailers need to be disciplined and not indulge in price wars, or indulging in bulk wholesale deals, thereby speeding up the killing of the overall brick and mortar retail. Retail must be a market where all players prosper and not only a few big ones.
If the online mega players have their own online model, if all major brands create their own ecommerce platforms, and if every single retailer or organization also wishes to create their online ecommerce, it is not very difficult to realise that the slow demise of the brick-and-mortar retail may be inbuilt in what we are collectively doing. And over time, many small and mid-sized ecommerce players may not succeed.
In the consumer electronics industry, for instance, global brands want their distributors or fulfillment partners to invest in a major way in brick and mortar stores, and now with the advent of online ecommerce, the same brands wish to manage that space themselves. For how long will such a skewed business model continue? A time may come when partners would be reluctant to invest in any physical stores.
If overall retail is such a significant part of every country’s GDP, a few pertinent questions arise , and future growth stories depend on the choices we make, They are -
· Do we want to achieve the targeted number with much disparity or all-round sectorial growths/ markets without widening the gap of haves & have nots?
· Are the traditional stores ready for the next technological leap, or should we allow markets to prosper only with a few big players, including, global players thriving on technology?
Frequent and rapid deep discounting needs to go away like the evil Frankenstein. Though deep discounting attracts customers, they eat away margins and it is often seen that the companies offering them make huge losses and vanish in some time in spite of having a market, or sell themselves to bigger companies, or need to get repeatedly downsized.
Revenge Spending
As consumer confidence returns, so will spending, with “revenge shopping” sweeping through sectors as pent-up demand is unleashed. While no one has that crystal ball to accurately predict when this will happen, but that “Revenge Spending” phase is on its way.
That has been the experience of all previous economic downturns.
One significant difference this time is that services have been particularly hard hit this time.
Countries with older demographics, such as France, Italy, and Japan, are less optimistic about the onset of a revenge spending phase than are those with younger populations, such as the Gulf region, India and Indonesia. China has been an exception—it also has an older population but is showing very high optimism.
China was the first country to be hit by the COVID-19 pandemic, and it has also been the first to emerge from it. On Singles Day, November 11, the country’s two largest online retailers racked up record sales. That wasn’t just a holiday phenomenon. While manufacturing in China came back first, by September, so had consumer spending. Except for international air travel, Chinese consumers have begun to act and spend largely as they did in pre-crisis times
2021 will be the year of transition. Barring any unexpected catastrophes, like the second wave we are all witnessing - individuals, businesses, and society can start to look forward to reshaping their futures.
People who travel for pleasure will want to get back to doing so. The top 5 percent of the world are itching to start spending on their lavish experiences. Sadly, due to their impatience, some of them are also contributing the start of the second wave of covid.
By definition, leisure travel is discretionary. Business travel is less so. According to a Mckinsey report, in 2018, business-travel spending reached $1.4 trillion, which was more than 20 percent of the total spending in the hospitality and travel sector. During and after the pandemic, though, there is a question about business travel: Exactly when is it necessary. A lot of organizations have, and will get used to streamlining costs through use of video calling, with trips being done initially only when absolutely necessary.
History shows that, after a recession, business travel takes longer than leisure travel to bounce back. After the 2008– 09 financial crisis, for example, international business travel took five years to recover, compared with two years for international leisure travel. Regional and domestic business travel will likely rebound first
Interestingly, disruption creates space for entrepreneurs—and that’s what is happening in most major economies. Look out for this area to grow exponentially.
All in all, with a little more patience and precaution, exciting times are definitely in store.
In the Covid period, downsizing and attritions are an essential part of keeping costs in check. While this is absolutely essential for survival, all global and regional organisations need to find better ways to manage this process. Surely we are intelligent enough to realise that, in today’s world of social networking and influencers, all these millions who lose their jobs are also consumers of several products and services. The Covid phase is not going to last forever. Post Covid, when things return back to normal, many of them would decide which products or services to use, and which to drop from their shopping list.
Short terms gains should not end up killing long term existence for some brands and companies.
The author is Niranjan Gidwani – Director and Former CEO of Eros Group Dubai
