The retail transformation imperative

SapientNitro's Mark Anthony on the mindsets retailers must adopt to stay competitive.


By Mark Anthony

Across the world, the retail industry is being disrupted. Consumers expect personalized experiences aimed directly at their needs and desires. They expect to be able to engage with a brand anywhere and at any time, and technologies like mobile, social, responsive environments and cloud are creating new models for customer interaction. As a retailer, now is the time to shift your perspective to leverage these changes to your competitive advantage.

It’s not about adding digital channels to your current model, or digitizing parts of it. It’s about leveraging technology and always-on customer behaviours to provide greater relevance in every customer interaction. Future winners in retail will power and connect the full customer journey by providing platforms that realize customer desire and solve needs throughout the path to purchase.

Here are the four mindsets to adopt to win in retail now and in the future.

Understand that “digital in-store” is neither your mobile app, nor your website formatted for a touchscreen

The harsh reality is that few retailers have app download numbers worth boasting about. The opportunity to extend consumers’ experience through in-store digital touch points cannot be ignored. Solutions should be created to solve the problems customers face. The Appliance Finder from Home Depot (a SapientNitro client in the U.S.) is a great example of this. This in-store digital touch point has significantly increased the company’s highest-margin category sales by delivering an experience focused exclusively on the challenge of selling appliances, a complex product whose sheer size makes it hard for shoppers to assess online, and for Home Depot to maintain a full assortment in-store. The Appliance Finder interface allows customers to get a realistic sense of how an appliance will look and feel in their home and allows Home Depot to merchandise a broader assortment of appliances without having to expand physically or invest in products for every location.

Embrace the customer ecosystem, not just your own

The assumed driver of competitive advantage in mass retail of the past was scale of footprint, but connection into the larger ecosystem is the bigger opportunity moving forward. With the advent of APIs (tools that allow developers to build on other companies’ software for the purpose of creating added features and new integrated experiences for consumers) retailers can easily expose their product catalogues, carts and other e-commerce services. These services can be consumed and integrated by a wide variety of partners like Google, Pinterest and Facebook, providing a path for growth minus the need to scale physical infrastructure.

Best Buy, for example, uses its API to integrate with CitiBank’s reward program, allowing CitiBank customers to redeem points for Best Buy products directly from the CitiBank reward site.

And it’s not just a one-way proposition. Retailers can integrate third-party services, such as shipping and directions to store, through the same mechanism to create a more valuable offering for customers.

Realize that stores serve roles beyond conversion

The store is no longer only the end point of the journey. As foot traffic in retail decreases globally, the role of the store should be rethought. Smart retailers use stores as a foothold for all of their activities, not just the final frame. Bricks and mortar can act as content ecosystems, an opportunity for decision support, or as a way for customers to get extended care. Nordstrom, for example, drives customers in-store by acting as a physical store-front for many e-commerce retailers like Baubblebar, Shoes of Prey, and Bonobos in select locations.

Don’t think of loyalty as your father’s loyalty program

Traditional loyalty programs that focus on cards, tiers and points aren’t going to create devoted brand enthusiasts. There are simply too many retailers vying for attention. Loyalty should be about connecting customers to the store beyond the physical location through pre- and post-purchase connections – for example, by increasing the time customers spend with the brand and introducing complementary products and services. Starbucks’ wildly successful app acts as its loyalty program. It not only reduces friction for purchasing, stores customers’ favourites and reduces wait times, but increases conversion and helps up-sell. This is the future of loyalty.

The bottom line for retailers is that the imperative to change is in the air. More than ever, consumers are in control and demanding integrated omnichannel experiences. This requires us to move digital from being an extension of our business to being the core. The time to transform is now.

MarkAnthony-1Mark Anthony is VP and retail practice lead at SapientNitro Toronto.

Featured image via Shutterstock