Shun digital complacency and prepare to be an experience-oriented retailer

If you’re in a strategic role at a retailer, helping to shape the future of experiences for your company is likely your biggest imperative. As the face of retail continues to change as quickly as athleisure duds and pet health products are flying off the proverbial shelves, “experience” is the cornerstone of conversation—and it’s not just about the customer. At NRF 2020, “Retail’s Big Event,” held at the colossal Jacob Javits Center in New York City, the ideas about evolving retail experiences were as big as the venue. HFS Research moderated a Wipro-sponsored panel that featured Wipro retail leaders and an IT executive from Advance Auto Parts. The panel was anchored in a discussion about meaningful experiences: those that have an impact on retailers’ customers, employees, vendor partners, supply chain ecosystem players, and our environment.

Retailers are finally shedding digital complacency and stepping up their competitive game

A 2019 HFS Research survey indicated that the vast majority of enterprise digital leaders were surprisingly confident about their competitive abilities. Over three-quarters of retailers felt they were ahead of most of their competitors, and they expect to be ahead further in the coming two to three years (Exhibit 1.) This data was surprising because most organizations across industries said that their competition is much different today than it was a year ago, and they expect an even greater difference in the usual suspects for their competition one to two years from now. All of this points to complacency about how much enterprises are ready to thwart future disruption. Discussions at this year’s NRF were promising that retailers are shedding this complacency by jumping out of their comfort zones and using different approaches to experience-planning to ready themselves for disruption and stay competitive.

Exhibit 1: Last year, retailers were confident about their competitive readiness

Source: HFS Research, “Journey to the Digital OneOffice” 2019, n= 392 Digital Enterprise Leaders

In-store shopping is not dead, but if you’re not focusing on creating services and experiences, you’ll go the way of Blockbuster

Doomsayers have been foretelling the retail apocalypse for brick-and-mortar stores, but in fact, physical experiences are alive and well in retail. Best estimates from the US Department of Commerce still forecast online sales at under 13% of total retail revenues for 2020 (total revenues include groceries.) So, while the hand-wringing has focused on the plight of dinosaurs like Sears and JCPenney, legacy giants and digital natives alike are thriving in the new e-commerce- and experience-focused environment. With recent news such as Sephora opening another 100 stores stateside, physical retail is certainly not going away; retail has changed dramatically, and the focus has shifted away from the products and toward drawing customers in by providing experiences and adding on services to garner loyalty.

While many ideas that have been around the last few years at NRF can’t seem to make it to mainstream fruition, such as in-store augmented reality (AR) and virtual reality (VR) (who really wants to walk around sporting a clunky HoloLens?), the demos at booths continue to spark ideas. HFS Research witnessed demos for in-store experiences that featured innovative ways to connect online and in-store experiences, most notably those that connect with their customers’ apps and integrate their data for greater personalization of in-store experiences.

Putting the retail associate first is the most important element of being an experience-focused retailer

HFS has attended NRF for more than four years, and a definite shift in this year’s display was the prevalence of a focus on the employee experience—not just the increase in discussion, but also a shift toward a discussion that focuses more on empowering employees than on improving efficiencies. Employee experience is arguably the most important factor impacting retailers’ readiness for competitive disruption. The technologies demonstrated, such as a visual search in an in-store retail environment where employees use live images along with an imaging capability to show how a particular custom item might look on a retail shopper is particularly enticing, especially for high-end designers and high-value retail shops, such as bridal gown boutiques.  

The Bottom Line: Retailers need to be human experience-focused to stay competitive.

Putting emerging technology in customers’ or retail employees’ hands potentially increases the value of the in-store experience, and it can bridge the gap between digital and physical shopping experiences. As Devi Rambhatla, SVP of Retail Distribution and Transportation at Wipro, said during the panel, “Putting the human back at the center is redefining retail.”  Retailer strategists can keep their heads stuck in the sand with digital complacency at their peril, or explore ways to create experiences that will create an impact on people and business.