BookNet colleagues Tim Middleton and Lauren Stewart attended the Retail Council of Canada's STORE conference on May 28 and 29 in Toronto, Ontario. Here's a quick wrap-up of what we talk about when we talk about retail in 2019, as experienced at STORE 2019.
Customer experience is the name of the game in modern retail, where creating memorable, lasting impressions is the goal for the modern retailer. Connecting customers with your brand and reinforcing that connection is the challenge for retailers in 2019. Modern consumers have high expectations. They crave authenticity and a seamless interaction with their favourite brand and products from online to in-person in a bricks and mortar store. While digital is still a vitally necessary investment, modern retailers are finding that a lasting investment in bricks and mortar locations can provide their most valuable, dollar-for-dollar, marketing investment. A focus on creating "moments" for their customers rather than conversions, are attempts to build an emotional connection that will increase revenues, as loyal customers are more lucrative in the long-run. Take, for example, the Roots Cabin store and showroom at Toronto's Yorkdale mall, which features a recharge station for customers to unwind and take in the space.
The square footage for this section of the store is not monetized in any way yet it's perfect for customers to unwind, take pictures, and of course tag Roots Canada on social media — inspiring store visits from new guests and positive brand reinforcement online. Or there's the Staples transformation into The Working and Learning Company enabling consumers' side-hustles, providing workshops that arm individuals and organizations with new skills and knowledge to help increase productivity and efficiency.
Frictionless retail is the natural descendant of the harmonized retail strategy (see below). A shift to frictionless retail assumes that retailers are integrating ways to remove friction on the path to purchase for their customers, or friction in the brand and company discovery process. One simple example of a change that should be incorporated to create a frictionless experience is to "untether" the point of sale. It's generally accepted that people are willing to spend up to eight minutes in a queue before abandoning their purchase. Taking the POS to the customer is one simple way to avoid this lost opportunity.
Gen Z is the demographic cohort appearing after Gen Y, the much maligned millennial group. Just as millennials offered opportunities and challenges for retailers to court and convert, Gen Z is poised to offer retailers an unprecedented moment in time where all the lessons learned from the generations before will be disrupted. Gen Z is the first cohort of digital natives: they grew up in a world with technology, the internet, and AI available to them from birth (compare this with millennials, who are the last generation to remember a world without computers and who witnessed the rise of the smartphone and mobile computing). In 2019, they're roughly 13 to 23 years old, their parents are Gen Xers, and they're progressive in their views of diversity, inclusion, and authenticity. Statistically speaking, 28% have suffered depression and 52% have an anxiety problem, which means brands have an opportunity to serve as anxiety relief. Tell this cohort a story and provide them this anxiety relief, and their loyalty will grow. Moreover, this is the first generation that feels their quality of life will be worse than their parents'. They're grappling with looming ecological and environmental catastrophes and their impact on the physical world. Accordingly, they know they'll buy less and own less and they want to buy and own less. This means they'll value experiences over products and brands. Retailers will need to respond accordingly to capture this new breed of customer.
In our wrap up of 2018's STORE conference, we wrote about omnichannel replacing multi-channel as the retail strategy du jour. Harmonized retail takes this a step further, and proposes an all-encompassing business strategy that balances factors across the spectrum: digitally-enabled, human-centered, mobile, personal, connected, memorable, and radical. This approach considers all participants in balance: the needs of the employees working for the retailer as well as those of their customers.
Digital and data were essential to bringing customers to retail brands, now retailers must amp up their efforts and look at that data thoughtfully rather than just hoarding it. What can you learn about your customers' needs? Wants? Habits? Can you flag trends before they launch, and set your supply chain in action to be ahead of the curve?
Return on experience (ROX)
ROX is touted as a leading metric to be included on the same level as return on investment (ROI). The reasoning behind this is that while price and convenience are still important, the fact that technology has allowed consumers to curate their own experience — including social approval, quality, ethical and environmental impact — means that companies need to focus on and measure the impact of the experience around their brands. Retailers should be approaching this new reality by enabling a company culture that will be invested in designing and delivering better digital and physical experiences.