We’ve all heard the news of a “retail apocalypse,”and we’ve seen the reality of it across emptying malls, struggling department stores and failing brands. Headlines say Amazon will dominate them all, and that the advent of the new consumer — digitally-savvy, convenience-seeking and e-Commerce-loving — will eventually mean an end to brick-and-mortar.
There is no question that retail is under threat, but the idea that we are heading towards the extinction of stores altogether is inherently incorrect. While Amazon is the threat, they are also the reason why we should not be counting out the physical channel. They’ve launched Amazon Books, experimented with Amazon Go and acquired Whole Foods.
Retail is due for a massive transformation, one that must start from the inside out. Beginning with the realization that the offline and online spheres are not competitors; rather, they are part of the same interconnected consumer journey. Together, they must work to synthesize and improve the holistic consumer experience. Offline is one part of this experience, and therefore essential.
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The advent of the digital age has caused a paradigm shift in retail toward what I call consumer-centricity. E-Commerce, mobile phones, the Internet of Things (IoT), the cloud and big data — all are new technologies that have fundamentally changed the consumer shopping experience. All of the sudden, the physical store was no longer the only place where a consumer could make purchases. Over time, it came to be just one of many, many channels. This has required the industry to create an entirely new architecture in response — not just multichannel or omnichannel, but something more complete than that — connected commerce.
In a world of connected commerce, the consumer journey starts much earlier, with many purchasing decisions made before a customer even walks through the door. It’s therefore imperative to establish consumer touch points at the initial engagement stage — the point at which consumers become aware of the brand. This way, when consumers build their shopping lists, whether by mobile or on their connected home devices, brands are not only in consideration, but top of mind throughout the remainder of the journey. As they enter the store, they should receive personalized recommendations, curated based on an analysis of their needs and interests from past shopping purchases and patterns, as well as real-time input based on the products they are currently evaluating in the store. As they check out and leave the store, there should also be additional follow-ups for rewards and continued relationship-building in between every physical visit. As you can see, the entire journey is longer and much more interactive.
In order to achieve this model, brands and retailers must move beyond operating within self-contained systems. Previously, there was a limited retail IT vendor landscape, which included traditional back-end players and simple channels. Today, it is a much more fragmented and competitive landscape. There are analytics-driven tech players such as Facebook and Google, payment innovation players such as Square and PayPal, digitization specialists, e-Commerce players and more. For the retail store to achieve high-connectivity, just as the consumer has, the retailer must be able to sit at the center of all these players to realize consumer-centricity.
My advice for retailers is that as we increasingly live in an API-driven economy, and to be future-proof, stores must learn to allow and even encourage third-party providers to become part of the store solutions ecosystem. This allows brands and retailers to meet the consumer on the platform they’re on, whatever it might be.
To successfully implement connected commerce and consumer centricity, the future of retail lies in its ability to be a true service. We must recognize that equal to the consumer’s love for the convenience of online shopping and next day delivery is their continued desire for the physical experience and validation of purchasing decisions. Retailers must re-engage the new consumer where it matters. If the online experience is seamless, then ensure the offline experience is effortless. If the online experience allows for personalized recommendations, then offer perfected curation in store. The new retail experience will be about guaranteeing a customized experience in a physical location rather than leaving it solely to the digital sphere.
Mark S. Brewer joined Diebold Nixdorf in January 2018, and currently serves as SVP and ManagingDirector, Global Retail. In this role, he is responsible for leading the company’s retail connected commerce strategy and operations, including business development, customer relationship management and global sales. As a member of Diebold Nixdorf’s senior leadership team, he reports to Juergen Wunram, Diebold Nixdorf interim Co-President and Co-CEO.