The Future Of Digital Transformation In Retail
A Q&A with Ravi Kanniganti, Director Vertical Marketing Strategy, Retail and Hospitality, Zebra Technologies
New, emerging models indicate that, overall, retail is growing at a decent rate of 3 percent while online shopping is growing by 20 percent. Interestingly enough, online growth isn’t only being attributed to online players, but also to brick and mortar (B&M) retailers which are increasing their online offerings.
Ravi Kanniganti, Director Vertical Marketing Strategy, Retail and Hospitality for Zebra Technologies recently took time to talk about how technology is aiding the comeback of B&M stores. Read on to find out what Kanniganti thinks about the present and future status of retail’s digital transformation.
Q: Where some see the demise of B&M, others see transformation brought on by focusing on customer experience and investing in technology. What investments in technology are the best and how will they enhance the customer experience?
Kanniganti: It’s important to focus on the current state of retail before diving into which investments are best suited to enhance the customer experience. There’s a great deal of negative news about the demise of B&M stores and the retail apocalypse. Retail is not dying, it is transforming.
According to a recent IHL report, 4,080 online shops opened stores in 2017. Online growth is often cited as a reason for the decline of B&M but it’s not widely discussed why pure play online retailers are now opening stores. Amazon buying Whole Foods is a prime example and there are several others as well such as Warby Parker, Bonobos, Harry’s, Rent the Runway, Franks+Oak, and Techstyle.
Online and physical stores are no longer distinct channels; they’re transforming into a unified format where an equal amount of webrooming and showrooming is occurring. Consumers shop when they want, where they want, and how they want all while increasing the demand for retailers to serve customers across all touchpoints. Physical and online is coming together to create what can be called a unified commerce or a “phygital” environment.
New stores are opening physical shops in smaller formats that offer a digitally engaging experience. As consumer expectations increase, so do the growth of e-commerce and technology such as mobile, augmented reality, and virtual reality. Technology is playing a critical role in the transformation of the retail industry. Stores are now looked upon as experience, entertainment, and instant gratification centers where customers expect to receive a higher level of engagement with sales associates on product information, inventory, and advice.
Inventory control and visibility are fundamental elements for retail operations and are increasingly being used as fulfillment centers. Click and collect is also becoming a standard implementation in stores, where customers can do their shopping online and then pick-up their items at a local branch.
In Zebra’s 2017 Global Shopper Study it was found products being out of stock in-store was one of the biggest factors for customer dissatisfaction. As retailers become aware of this and increase investments in RFID and other technologies, they will see a significant increase in inventory accuracy and improved sales. Investments in self-checkout technologies, self-help kiosks, and personal shopper solutions are also growing with Asia and Europe leading the way with the adoption of mobile payment. Retailers need to invest in empowering their stores and sales associates with the innovative technology now available to address these pain points and those who don’t adapt to the new reality may suffer in the long run.
Q: What sub-verticals of retail are growing and how will their growth impact omni-channel retailing?
Kanniganti: Growing sub-verticals include discount, convenience stores, digital grocery formats, off-price retailers, specialty retailers, and retailers offering curated, personalized merchandise. In addition to online-only retailers realizing they need a physical presence to prosper, traditional B&M retailers are also taking the opportunity for cross-over and to focus on omni-channel strategies. Grocery and convenience stores are also adapting click-and-collect tactics, adding to the growth of omni-channel retailing in the food and beverage sector. Interestingly, the industry is slowly phasing out the word omni-channel as it no longer a differentiator or special service — it is the new way of retailing.
Q: How is enterprise mobile playing a role in enabling sales associates for customer success?
Kanniganti: The sales associate is transforming from a back-end worker into a business development role that enables both in-store and online sales. They’re the first line of interaction and have the power to deliver an awesome customer experience, and they’re also product experts that can advise shoppers and help convert inquiries into sales. Store associates also play a significant role in increasing online sales by helping shoppers order out-of-stock items for delivery at home, resulting in fulfilled online sales. Their roles are becoming more complex and critical for ensuring customers have positive experiences both in the physical and online world.
Enterprise-class mobile computers are all-in-one devices that improve the effectiveness and productivity of sales associates and can improve the customer experience. Mobile computers provide the associate with the right information at their fingertips so they can share sound product advice, help the customer find the correct item, and facilitate the checkout experience. Mobile computers are also critical for quickly training new hires and increase employee retention as they enhanced employee satisfaction. Zebra’s 2017 Global Shopper Study indicates 86 percent of retailers intend to invest in handheld mobile computers and 85 percent will invest in tablets by 2021 to empower their workers with better customer engagement through product inventory knowledge and detailed product information.
Q: How does enterprise mobile allow sales associates to act as business development associate?
Kanniganti: Enterprise-class mobile computers are a platform for retail operations and clienteling — allowing sales associates to better assist customers and work at a higher level. They provide product information and inventory data on demand so store associates can provide better advice and assistance with products through how-to videos, ratings, and reviews.
While engaging with customers, store associates don’t need to step away since they can send alerts to the backroom for products to be brought out to the client for fitting (shoes are perfect example) and then complete the payment on the spot. Customers using loyalty device check-in apps can also benefit from sales associates already knowing their preferences resulting in an interactive, customized, and more personal customer experience. These improved processes can help retailers never miss a sale.
Q: How are smart retailers transforming their existing stores to meet customer expectations?
Kanniganti: By investing in solutions that provide convenience, interactive experiences, product education, and frictionless shopping to their customers. Some retailers are reverting to a smaller store format to offer greater convenience and a more engaging experience while others are offering the convenience of drive-through or curbside pickup of merchandise.
Most customers begin their shopping journey with online research on their mobile phones, pushing retailers to invest in a digital presence that provides the customer with access to product and inventory information online so they know which store to visit. Personalization is another key area of specialization. Retailers using advanced analytics and machine learning that can provide shoppers with customized offers and coupons based off their preferences and past purchases. Using beacons, augmented reality, and smart interactive mirrors at fitting rooms, retailers can provide a greater level of customer engagement and interaction. Smart retailers are also ensuring the check-out experience is as seamless as possible by providing a personal shopper solution or using Mobile POS (MPOS) or self-checkout lanes. The future is bright for retail and we’re only scratching the surface of how stores will continue to transform to meet customer expectations.
Q: What level of lift is involved in transforming stores from these three perspectives?
- Technology investments and implementations:
Kanniganti: Instead of focusing on traditional ways of incremental investments such as multi-year rollouts or using a fixed percentage of IT investment based on the previous year’s revenue, the IT spend must be based on strategic priorities that are transformational in nature and focused on digitalization but not limited to it. Digitalization, as defined by Gartner, means using digital technologies to change a business model and provide new revenue and value-producing opportunities.
Retailers must leverage their rich ecosystem of technology partners and consider the total cost of ownership (TCO) rather than putting too much focus on the initial purchase price. For example, using an enterprise-class mobile device is going to be much more cost-effective and secure than a consumer device in the long run. Some forward-looking retailers are also investing in new roles such as a Digital Officer and Customer Experience Officer who focus on looking at investments holistically across the physical and digital worlds.
Some ways retailers are spreading their technology investments for maximum returns are through innovation, co-development with technology partners, having in-house incubation centers, running accelerators, and opening global R&D centers.
- Use of existing space:
Kanniganti: An innovative way of transforming retail stores is by using the existing space to create a store-in-a-store concept. Retailers such as Target that include a Starbucks in the store or beauty retailers like Ulta and Sephora offer various other “store brands” in their space, giving customers more variety and a more complete shopping experience.
Another strategy is expanding the back room and reducing the front of the store footprint to helps provide additional space for fulfilling online sales, click and collect orders, and reducing costly last mile deliveries.
In the long run, store formats will continue to shrink and retailers need to think about right-sizing their store. For example, the growth of mall shopping centers in suburban U.S. locations is under threat by mobile and Internet-led consumers. The need to drive out to them is no longer a necessity as the ability to shop online and receive packages quickly increases. The size of the store does not matter anymore, what matters is the experience and the value offered by the store.
- Associate involvement:
Kanniganti: Happy employees lead to delighted customers. Today’s younger workforce looks for a more interactive way to excel in their performance. Retail managers can “gamify” work goals though enterprise mobile solutions and set a point system to create healthy competition, or a game in which employees and managers can track stats in real-time.
Employee morale goes up when associates are given the right tools to work, resulting in a more efficient workflow and a better customer experience. Some retailers still operate under the old model and have separate processes and rules for online and offline business. Sales associates should get credit for fulfilling online orders at the store which will help the retailer’s overall business performance.