Physical retail is changing, and more so than you can probably fathom. Through technology, brick and mortar stores around the world are slowly but surely getting to know and to understand their customers and how they in turn relate to the physical store, the merchandise and to the sales staff. The added dimension being that this is no longer a “gut feel” based skill, but a digital, data driven and continuous effort, all in real-time. The actionable data sets and tools that have been available for online stores, and which have been the catalyst of their success the last decade, are now increasingly available for physical stores.
The implications of that are too big to be labeled as an evolution. This is the retail revolution.
“90 percent of retail is physical”
This is the 5th time CEO and Co-founder in RetailNext, Alexei Agratchev, invites some of the most forward leaning brands, retailers and solution providers from around the world to network and discuss how to advance physical retail through technology and analytics, and how to employ these technologies in new, creative ways. As Alexei pointed out in his opening remark, over 90% of retail is physical, and although the death of physical retail has been predicted more than once, it is in fact thriving and growing year on year.
RetailNext is one of the leading in-store technology platforms for helping brands and retailers move their physical stores into the digital future, by deploying sensors and software that deliver actionable data and analytics. RetailNext just raised a substantial 125 million USD, led by Activant Capital and including the likes of Qualcomm Ventures and Commerce Ventures, to strengthen the position as a global retail technology platform. For the Monterey seminar, aptly named “Back to the stores”, RetailNext invited some of the biggest and most technically advanced global brands and retailers, including Levis, L´Oreal, American Apparel, Ralph Lauren, Bloomingdales and Lawson, together with leading solution providers like Celect, Myagi, Pikato, Retailigence, StepsAway, Theatro, and Unacast. All of these solution providers solve various retail pain points, ranging from more efficient sales staff training to shopping prediction through artificial intelligence. Unacast was invited to show how we bridge offline and online data at scale, to enable online retargeting based on in-store behavior extracted from data collected by RetailNext.
One of the key takeaways from the Executive Forum is how complementary companies and technologies are invited to integrate with the RetailNext platform, to offer a more holistic solution to brands and retailers.
It is an interesting approach to innovation, and one of the reasons we find it attractive to work with RetailNext.
More on that topic below as we attempt to dissect from our perspective the four main trends discussed in Monterey. We have tried not to focus on the actual hard-core metrics and with that limit the usage of industry lingo and buzzwords, to make it interesting for also the ones outside the inner retail circle. Physical retail is changing, and as an industry we have a need and obligation to broadly communicate the ongoing retail revolution.
1. The convergence of retail platforms
One of the main points raised in Monterey was the tyranny of choice and with that the fragmentation of solutions, platforms and technologies. In the panel “Driving Marketing Effectiveness: Proximity, Personalization, Performance”, moderated by Marc Dietz, CMO in RetailNext, it was commented that one felt sorry for brands and retailers that had to relate to a myriad of companies with a myriad of products; not knowing what would deliver true top and bottom line value. In fact, later in the seminar it was pointed out that there had been several instances where technical components had failed in delivering value by either becoming obsolete or simply not being effective enough, sometimes discouraging the brands and retailers to continue to invest in innovation. One of the participants from a US retail chain also commented that although the desire to innovate was present, the sheer fragmentation of the various platforms deployed throughout the years made incremental increase in performance difficult, and the appetite for adding one more technology to the stack was decreasing with time.
Bridget Johns, VP of Customer Success in RetailNext, concluded that fragmentation is always a danger with rapid innovation, but that the risks can be mitigated with having a central, scalable platform as a hub where additional technologies can be added and removed according to market need and performance.
Omnichannel is therefore perhaps not only a principle that should be deemed as important towards the end users, but also to the retailers themselves. Either way, the clear trend is that retail solutions are becoming true platforms where functions will evolve in line with the needs of the brands and retailers, as was visible throughout the whole Monterey seminar. The strength of platforms like RetailNext is precisely how the core technology stack is designed to evolve through partnerships.
2. The convergence of retail hardware
Cameras, beacons, GPS, Wi-Fi, RFID, NFC, and the list go on. Sensors are now available in many shapes and forms, all with their own strengths and weaknesses. And with the increase in available options, so does the need for each one of them disappear. This seems perhaps counterintuitive, but actually makes a whole lot of sense. It is by relating to all of them, by function, and by building platforms and solutions that let all of them work in tandem that real end user value and therefore top and bottom line value is created. This entails a true platform logic that is described in the above-mentioned paragraph, and is imperative in order to harvest the combined strengths of available hardware. Once brands and retailers are freed from the choice of hardware, one can start to focus on the problems at hand. And how to solve them.
Shelley E. Kohan, VP of Retail Consulting in Retail Next, emphasized on several occasions that whenever she was challenged by brands and retailers on which technologies and solutions to choose, that she would ask the question right back: “Well, that depends. What do you want to achieve?”
George Shaw, Head of R&D in RetailNext, repeated this message in the closing panel discussion on the first day in Monterey. His point was that cheaper and smaller sensors, increased computing power and increased network speed, all stored in the cloud together with some good old fashioned mathematics, would increasingly remove the need to talk about technologies, in favor of talking about “innovations to drive business”.
3. The convergence of retail data
One of the investors participating in the discussions in Monterey commented how he disliked the word “Omnichannel”, and that we in reality are talking about one channel. The point is valid, although we as an industry have to keep challenging ourselves to think how we can utilize all the available channels. In one of the panel discussions the questions of which channels to focus on was raised. As an example, how do one relate to a customer journey that starts in-store and ends online, or vice versa? Thomas Walle, CEO in Unacast, commented that this was perhaps looking at the challenge from the incorrect angle, and that it was more important to facilitate for data to be available in all channels at all times, in a coherent matter.
The modern customer is more demanding and more channel-schizophrenic than ever before and trying to preemptively map out the customer journey is difficult and perhaps also counterproductive.
By anticipating all possible journeys at all possible times, and therefore making sure that the customer data is collected, shared and matched in real-time between the channels, one can be both more flexible and more targeted at the same time.
Some pointed out that achieving this true parity was no easy feat, which is of course true, but that does not diminish the inherent value for the ones that succeed.
Brands and retailers that can create this “one customer view” will have a substantial completive edge as we enter into the coming years of rapid technological progress within retail.
4. The convergence of physical and digital retail
It is fitting to end with what Alexei mentioned in his opening speech in Monterey, and something that was also repeated in a panel discussion moderated by Kenton Chow, COO in RetailNext, in discussion with analysts and venture capitalists: Physical retail is becoming digital, and digital retails is becoming physical.
Of the 10% of yearly turnover derived from digital channels, half of this is in fact from online stores operated by traditional brick and mortar retailers.
The total turnover attributed to physical retail therefore being a massive 95%, and interestingly enough we have in the recent years seen an opposite trend, where traditionally online-only retailers like Amazon are moving into the physical domain by opening branded stores.
With the inclusion of constantly evolving technologies to empower physical retail to make more informed decisions more rapidly, the clear distinction between physical and digital and between offline and online will become less important in the coming years. Customers are customers, and they are migrating between physical and digital channels hundreds of times each and every day. It makes little sense for brands and retailers to remain stuck in a world where they have to choose which one to be present in and best at. Be everything. Be everywhere. At all times.
Your customers will love you for it.
The Executive Forum in Monterey was ended with group workshops to solve real-life retail cases, ranging from how to bring the customer into the store to how to make sure the in-store experience is optimized. What was clear from those workshops is that the actual technical tools to deliver the solutions that solve these cases are available here and now, and the only thing that is really limiting effect is how we as an industry employ these tools in a creative way. By focusing on convergence.
The retail revolution is just getting started, and we look forward to see how far we as an industry have come by the next time we meet in Monterey, in a year’s time. Unacast certainly aspires to be an integral part of that revolution.
Hopefully, some of the points raised in this article can be helpful in facilitating the discussions in the meantime, and we would love to hear from you in the comment section below.