The challenge of old truths when the playfield changes
In an ever-changing world, we are continuously reevaluating our ways of thinking, being and doing. When walking around in stores and shopping malls today, we have different expectations, behaviors and needs, compared to only ten years ago. Sometimes, we don't even leave our home to go shopping. This puts totally new demands on retailers in terms of communication, accessibility and customer service. We are simply heading towards a crucial shift, where physical stores must change to keep their customers.
We know that the adoption of new technology change people's behavior weather one like it or not or weather one think about it or not. This puts totally new demands on brands on how they interact with consumers, how they inform, how fast they are but also how products and services are designed. Technological advances will drive shopper expectations and the evolution of the physical store and brands need to adopt to these changes.
Regardless of size and segment, brands need to be agile, think digital-first and strive for an ever-faster speed to market. It is all more complex and less predictable today. On top of everything, things are changing with the speed of the light.
In Sweden more than 6,5 million Swedes use the mobile payment application Swish to transfer money in a very easy way. It was launched just 6 years ago and today we almost have forgotten how we had to go to the ATM to get cash if one owed a friend for a lunch or make a transfer at the Internet bank. Today it's just a few clicks. So easy. So fast. So convenient and such a nice customer experience. Today only 13 percent in Sweden use cash. What does that mean for future payments in store? No wallets, new types of POS (Point Of Sale), no cashier etc. It changes not only the physical display of a store but also the technological solutions to support the change. Just have a look what is happening in China. At several places you can "pay with a smile" through face recognition. It's so simple and convenient. Of course, brands in China don't have to worry about GDPR and similar rules. We are ready to launch the same solutions in Sweden and Europe but we have other rules around GDPR etc that makes it difficult at the moment. But the thing is, it's not rocket science and the technology works, it is not the future, it is here. We just need to be prepared and follow the trends.
Annelie Gullström wrote for Puume about her views of the retail field.
Photo: Paulina Enqvist Westerlind
The experience from the customer angle
Just before Christmas 2018, I popped into a well-established fashion brand in the city center during my lunch break. I was not looking for anything in particular. I was just curious and in an inspiration mood. Suddenly I found a dress which I thought had my name on it. I really liked it and wanted to try size, M. I couldn't find my size and decided to quickly try L to get an idea if size M could fit. I decided M would be perfect. Hence, I asked someone from the staff if they had it in my size. She said "ok, I will have a look at the storage, it will just take about 5 minutes". I was really surprised this famous brand had to go to the storage to check. Obviously not equipped with modern technology to faster and smoother meet the customers need. When she finally got back she said, "I'm sorry, we don't have any more in that size". I then asked, "but do you have it online?", convinced she had found out. To my surprise she said "Oh, do you want to know that? Hello, didn't I just give you a buying signal...? She continued: "But if you follow me we have a computer near the fitting rooms, I can check there". I honestly could not believe my ears. But then realized that this is an excellent example of what is happening. What media is discussing, what brands are struggling with today. Why they are lagging behind and loose business.
I didn't follow her to the computer. Before I had left the store, I had put an order of the dress in my mobile. 5 min later when I came back to the office I paid for it with my credit card. A week later I picked it up at the post office.
This is how I imagine the process to fulfill my expectations of a good customer experience, not even a great and extraordinary experience. Just on the level of expectation, nothing more.
First of all, she shouldn't have had to go to the stock herself. She could have solved it easily through a mobile phone. Secondly, she should have been able to help me to make the purchase at that moment in the store in the mobile, even online. Thirdly, I should have been able to pay in an easy way, perhaps through a QR-code, not having to pick up my credit card in her app. And finally, I should have had the possibility to pick it up in the Store and not need to wait for 7 days...
Like McKinsey and Business of Fashion wrote in a recent report: For fashion players, 2019 will be a year of awakening. The ones who will succeed will have to come to terms with the fact that in the new paradigm that is taking shape around them, some of the old rules simply don't work.
Customer Experience is the new black and everyone is talking about it. Companies are becoming customer obsessed. And you need to be that to succeed today.
Brands need to realize the importance of a great customer experience. A bad experience can drain the business and destroy any brand. For instance, Retailers lose out on billions of dollars a year because products are out of stock, or customer can't find what they want. To solve these kind of problems Walmart for instance is trialing inventory-scanning boots in 50 out of its US stores. They check for empty shelves or items in the wrong place and alert staff. Robots are much more fast and accurate than humans.
The physical store is becoming more and more of a customer experience that sells the brand and not primarily a sales channel. And given the increased shopping online the physical stores most often need to reinvent themselves today and think about the purpose. How can the physical store contribute to the overall business and perhaps strengthen the online business? Should it be a showroom for inspiration? Add other values, offer something else, events, interactions with the brands, services etc.? There is no secret sauce and all brands need to find their way.
The playfield changes
Footfall in the physical environment continues to decline, which is driving the need for brands and retailers to develop their omnichannel strategies. At the same time, we start to see brands talking more and more about Omnipresence since consumers don't think in terms of channels. It's simply not about digital or physical shopping, it's about shopping. And you need to be present where the customer is and expect you to be. Further Speed-to-market and responsiveness to consumer needs are becoming critical success factors. Demands for ultra-transparency in terms of production, sustainability and political standing is becoming more and more important and the lifespan of the fashion product is becoming more elastic as pre-owned, refurbished, repair and rental business models continue to evolve. In the mobile customer-journey, the gap between discovery and purchase has become a pain-point for the impatient fashion consumer who seeks to purchase exactly the products they discover, immediately. Players will focus on bridging this gap through shorter lead times, improved availability of advertised products and new technologies such as visual search. Mass players will begin to experiment more and more to be able to respond more rapidly to trends and consumer demands, achieving just-in-time productions and reducing overstock and making short, small-batch productions cycles the new norm.
The Lobby, a new kind of retail space in Stockholm
To be able to meet the new types of needs and to adopt to these changes AMF Fastigheter, one of the largest property owners in Sweden, decided to launch a new test platform for the future of retail. Given we own five large market places in the center of Stockholm it is important to learn and understand how this evolves and what is expected from the landlord. The first beta-version of The Lobby was launched in April 2018 in Stockholm. From a real estate perspective, it is a test platform. But from the consumer perspective it is a new type of showroom where you will meet different types of brands and get inspiration, interact with brands, participate in events but also to shop. The focus is on news. New brands testing a new market, e-commerce brands boosting the online sales in a physical space, or brands launching a new product or collection.
From a retail perspective it is a new type of media channel. In that sense you can compare The Lobby with a lifestyle magazine. All brands stay there for minimum a month up to two or three months in average. In the Lobby it is not about square meters. There are service packages that spans from 2-10 sqm and includes lovely service minded staff, interior and alarm, security, wi-fi, cleaning etc. Everything is taken care of for the brands who actually doesn't have to be there. However, it is encouraged for brands to run 1-2 events per month to interact with their customers and followers on Instagram for example.
From April to December 2018 145 different brands and 101 events such as fashion shows, yoga sessions, meet the designer-events and breakfast seminars took place in The Lobby. After the first nine months we have noticed that the most satisfied brands are the ones that take the opportunity to invite customers to interact. It could be a Yoga session in the morning, a talk about trends during lunch or a shopping event after work. It's very simple but works.
Read more about The Lobby here: https://www.thelobbystockholm.se/
No one said the transition is easy, but one thing is for sure. It's not the end of retail, but it's definitely the end of retail as we know it, and brands need to challenge the old truths since the playfield already has changed. The concept "New Retail" was coined by Jack Ma to describe the melding of the real world and digital shopping experience. Welcome to New Retail.
Annelie Gullström is an internationally experienced professional in digital customer experience and business development. She works currently as Head of Business Development for the Swedish real estate company AMF Fastigheter.