Physical meets digital
- 28 October 2015
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The digital revolution isn’t just about devices – there’s an explosion of innovation for brick-and-mortar operations.
The fragile nature of the UK retail market, coupled with the ever-increasing pace of technology evolution, means that in-store digital innovation is more important than ever for those retailers seeking to gain and maintain competitive advantage.
The customer expectation to be ‘wowed’ has never been higher in the ‘smart’ world we all live in. The challenge for the retailer is in knowing where to focus, given the bewildering array of possibilities that technology brings.
The sweet spot for retailers is how to combine that ‘wow factor’ with useful innovation for the customer that makes their lives easier, driving sales and footfall.
The increasing convergence of bricks and clicks has led to a number of innovations around the ‘click and collect’ space, in some cases involving collaboration between retailers – such as the DPD Pickup Parcel Shop network, which allows consumers to purchase goods from one retailer online and pick them up at another’s physical store.
Or in Cambridge, where Caffè Nero customers can browse and purchase House of Fraser goods on tablets, and then pop upstairs to the House of Fraser branded first floor to collect their purchases and even try them on in fitting rooms. These strategies allow retailers to extend their geographical reach and range in new, more flexible ways.
Delivering strong content, however, remains central. We have seen examples in the world of fashion where catwalk shows have been broadcast live – such as when TopShop dispensed free beauty gifts to customers watching the show at their flagship Oxford Circus store via an in-store vending machine.
Virtual and augmented reality also continue to show value, with innovative apps to help customers in their decision making processes – particularly with respect to health and beauty, where technology offerings from Clinique and L’Oreal show customers how products can look when applied.
Proximity and locational marketing is still a hot topic, and it remains to been seen whether beacons, NFC or image recognition will prevail. Each brings its own challenges and technical limitations.
With so many different possibilities, how does a retailer choose which of these technologies to focus on? As with anything in business life, the key is alignment to business goals and strategy – where does the retailer see itself and what problems is it trying to solve above others? If these are poorly defined then the likely approach to innovation will be scattergun and ineffective.
The real benefit of digital innovation is that budgets hitherto classified as ‘marketing’ can be used to drive revenues through great content and a strong call-to-action, coupled with back-end efficiencies around payments, collections and returns.
Retailers also need to be embed a culture of innovation into their businesses, recognising that there are likely to be many dead ends. Fast tracking innovation by the use of ‘labs’ – a practice employed by the likes of Tesco – can help retailers be agile, but also help them to recognise quickly what is likely not to work without expending vast sums. The ‘lab’ culture can help the larger, more established retailer adopt the mindset of an SME.
The good news is that innovation is easier than ever, thanks to the plethora of technologies and providers. Thanks to the internet, research has never been more straightforward, choice has never been greater and speed to market has never been quicker. Adopting the right problem solving and entrepreneurial mindset, including a healthy approach to failure, is key.
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