Curb appeal, store design, location, location, location. These are all determinants of a retail store’s success that are becoming less and less relevant. Unfortunately, many retailers have failed to adapt to new consumer behaviors.
This year alone, major retailers such as Bon-Ton department stores and Toys R Us permanently closed, while J.C. Penney, Sears and Macy’s announced major store closures. With e-commerce stealing more and more business, brick-and-mortar locations are struggling to stay relevant.
Are these the first signs of the retail apocalypse? Far from it. The signs have been around for years. Some retailers saw these signs and adapted their business models years ago. These retail chains understand the biggest advantage e-commerce retailers have is their ability to collect and leverage insights into consumer behaviors gained by technological innovations like big data. They are adopting technology and processes to achieve the same advantage and adapt to today’s retail landscape. Others are slower to adapt and now face an uphill battle to avoid extinction.
The truth is, brick-and-mortar retail is not dead. According to Market Track, U.S. shoppers still prefer to make most of their purchases in-store.
What Does The New Face Of Retail Look Like?
The real impact e-commerce has on the retail industry is in consumer expectations. Consumers now expect a more convenient, tailored omnichannel shopping experience, whether they are online or in-store. The new face of retail involves consumers engaging with a brand seamlessly across their e-commerce, brick-and-mortar, social media and every other channel to create unified, consistent encounters.
Creating an omnichannel retail strategy allows stores to compete with online retail, but they will only succeed by leveraging actionable customer data. This is why 62% of retailers say the use of big data and analytics is creating a competitive advantage for their organizations, according to a study by IBM. More importantly, nearly 80% of big data users surveyed by Accenture agree that companies must embrace big data or else risk facing extinction.
Retailers that are able to leverage big data to optimize their customer experience and operations are seeing:
• An Optimized Customer Journey: Using big data to provide a 360-degree view of the customer journey allows retailers to optimize in-store experiences, improve customer service and boost retention.
• Improved Margins And Supply Chain Management: With the ability to analyze available sales and customer data, retailers can optimize pricing, predict trends and forecast demand to help gain a 60% potential increase in operating margins.
• Personalized Marketing: Leveraging more data on customer behavior and integrating the information with social, mobile and e-commerce allows marketers to create more targeted promotions and personalized marketing campaigns.
• Better Business Decisions: A recent survey by NewVantage Partners found that after decreasing expenses, the most value big data provides enterprises is the creation of new avenues for innovation and disruption.
Luckily, most retailers already have access to the data necessary to make changes and provide a better customer experience. They simply need the ability to combine data from multiple sources, analyze the data to identify trends and opportunities and process data in real-time for immediate improvements. That is the main problem for 42% (registration required) of retail CIOs who say turning massive amounts of data into usable business analytics is their greatest concern.
What Retailers Should Have Done Five Years Ago
The retail apocalypse has been a long time coming. The companies that are truly thriving now are the ones that made changes five to 10 years ago in response to the growing trend of big data and customer experience.
Costco is one store that understood the value of the data generated by their shopper cards long before big data was prevalent in retail. The chain now uses their data to customize the customer experience, better target marketing and even notify shoppers of possible contaminations of the food they purchased. In 2010, they were even able to use their customer data to help the Centers for Disease Control trace the source of a salmonella outbreak.
One company working to combat the retail apocalypse and compete against its rival Amazon is Walmart. The retail giant has always used technology and data to optimize its supply chain and operations, and it took major steps over the past decade toward using data to provide a better, omnichannel customer experience. Walmart’s online store competes with Amazon by offering in-store pickup and other ways to streamline the in-store experience by first starting online.
Walmart is also using radio-frequency identification (RFID) and machine learning to optimize stores. RFID is being used to track product movement, and facial recognition software offers the ability to analyze customer satisfaction in real time.
How Retailers Can Leverage Big Data Now
While the retail apocalypse is closer now than it was five to 10 years ago, there is still time for brick-and-mortar stores to make the most of big data and adapt to the new way consumers are shopping. In most cases, retailers have the tools and data sources they need already in place; they just need a better way to leverage them. Here are a few steps you can take right now:
• Audit Existing Big Data Assets: Determine what data sources you have access to now and ensure you are able to create a 360-degree view of your customer experience across all of your digital and in-store channels.
• Leverage Analytics To Interpret Data: Integrate a solution that can provide real-time analytics and visualization of all available data. You should be able to view all relevant data on a single dashboard to identify trends, track critical metrics and visualize the customer journey.
• Use Insights To Inform Business Decisions: Use these big data insights to optimize supply chains, forecast demand, improve pricing, customize the shopper experience and improve every area of your business operations.
Big data will only work if you are willing to make drastic and significant changes to your business. The retail apocalypse isn’t coming; it is already here. The businesses that are thriving adapted over five years ago. If your retail business is going to survive, it needs to adapt now.