The commoditisation of products and ways of retail, brought upon by global trade and the digitisation of commerce, has devastated the old model of retail.
Amazon disrupting the US retail landscape
It is no where else more evident than in the US, where there is a trail of many retailers left dead in the dust left behind by the great disruptor, Amazon. Amazon, has almost single-handedly redefined the retail landscape in the US with its algorithm-driven personalised online shopping, brilliant membership programs, and revolutionary supply chain and distribution network. Business Insider estimated in February 2017 that Amazon has captured 33% of all US online shopping and its dominant share of the US e-commerce marketplate is only increasing.
If the US is any indicator for global retail, consumers are rapidly shifting towards online shopping and abandoning traditional in-store purchases. Retailers that are unable to rapidly adapt to this changing landscape will no doubt join the ranks of the many that have gone under before them. This sets the scene for the BIG question that every retailer should be asking now: How does one keep customers happy (and fulfilled) in an age, where every man (and his dog, no kidding!) can truly have everything; anytime and anywhere?
The simple answer: great customer experiences!
Retailers are getting customer experience wrong
Now, while no retailer will disagree that customer experience is the very bedrock that their business survives on, one has to truly wonder why the customer experience that we receive whenever we shop is more often than not lacklustre and entirely forgettable?
One of my favourite futurists, Doug Stephens or otherwise known as the “Retail Prophet“, argues that retailers are getting customer experience wrong:
Most retailers assume customer experience is primarily an aesthetic concept and more about how stores and websites look and feel.
This speaks to the Mad Men wisdom that prevails till today, which advocates that customer experience is simply about unique, differentiated branding, advertising and marketing. This strategy used to work in the past when customers had limited channels and tools to learn about and shop for stuff. As such, customers would simply follow the predictable path where a customer, spurred on by advertisements or catalogs, had to be content with going to the shops to browse, search and pay for stuff, which we probably had limited information about, and then waste more time to return items that were less than suitable. This archaic model was just as costly for retailers to maintain with high rents on shopfronts as well as distribution nodes, in addition to low returns on expensive advertising and poor utilisation of retail staff.
What then is true customer experience?
Stephens describes it as “engineered moments”, where disparate moments are engineered to bring together a seamless, cohesive and unforgettable experience of people, place and product that leave customers wanting for more. As Stephens puts it, it is not unlike a great stage production, where it goes deeper than simple theatrics, and instead, customers fascinated by the physical product, develop an emotional connection to the brand’s unique story.
Sephora redefining customer experience
A case in point is beauty chain Sephora, which is often cited as the poster child for digital retailing. Sephora is relentless about improving the customer’s experience, every step of the customer journey and across all channels: digital, mobile, and brick-and-mortar stores.
In stark contrast with traditional retailers, Sephora customers do not go to its brick-and-mortar stores to buy but rather to play. In store, they can either access online makeup tutorials or take group classes with in-store facilitators. Customers can seek personalised recommendations from a device which scans your skin color and provides a “Color IQ“. In addition to personalised content on timely discounts, relevant product information, and post-purchase support, customers can also use the Sephora’s mobile application, which leverages augmented reality technology, to pull up relevant product information by simply hovering over images in store.
The point to note is that Sephora’s innovations are not driven by technology alone, but rather, by a commitment to educate, entertain and inspire customers (and therefore, maximising loyalty), which in turn guides Sephora’s experimental approach of blending digital and non-digital innovations into a seamless shopping experience.
Design for change
Needless to say, it is an incredibly fascinating time to be able to partake in the evolution of the retail sector, as it braces for its survival against the onslaught of digitisation, and dives deep into the design of remarkable customer experience. As Steve Jobs once proclaimed:
Design is a funny word. Some people think that design means how it looks. But of course if you dig deeper, it’s really how it works.