By Michael Webster
The popular reference to “the new norm” in retail understates the significant transformation underway.
Even as the economy improves, consumers will continue to be driven by the search for value and the need to save time. At the same time, growing numbers of consumers are embracing not only the Internet, but also mobile and social networking technologies.
Today’s tech-savvy shoppers have more information and advice at their command. They have more choices in where, when, how and what they purchase. Their expectations are higher and they are less loyal to any particular brand or retailer.
Consumers also face an exploding assortment of retail interactions that often are confusing and chaotic. In addition to store associates, merchandising displays and other shoppers, consumers interact with kiosks, digital signage, the Internet, their mobile devices, social networks and more. The march of technology promises even more to come, from computer vision to location-based services. With this growing bombardment of information, much of it disconnected and not relevant to the individual, the shopping experience can be frustrating.
Evolving business model
Retailers who succeed in this environment -- defined by digitally empowered, yet accessible, shoppers -- are those who continue evolving their business models in ways that acknowledge and tap into the new consumer-driven reality.
Retailers that fail to evolve could see their brick-and-mortar locations become mere “browsing centers” where consumers verify product functionality and then finalize their transactions online to save costs. Multichannel consumers are changing the retail landscape.
The Internet provides a model for this evolution. What began as a content-sharing tool with the World Wide Web and email grew to become a driver of commerce. According to Forrester Research the web influenced $937 billion in U.S. store sales in 2009, a figure projected to reach $1.3 trillion by 2013, or about one-third of total retail sales. More recently, the Internet has expanded further, providing an environment that promotes and enables communities.
The Internet evolution has been driven by enthusiastic consumer acceptance and participation. All the while, the business community has evolved its business model to leverage, enhance and profit from this phenomenon.
Similar evolution is occurring in retail. First, point-of-sale solutions improved “assisted-service” shopping and operational management. Then online shopping and self-service entered the scene, providing more convenience and control for consumers. Now, mobility -- or m-tailing -- has joined the mix, allowing consumers anytime, anywhere access to information and offers.
To some extent, retail business models have evolved along with technology and consumer behavior. But the unfortunate fact is that for most retailers today, consumers remain completely anonymous -- or at best, a loyalty number or a household identifier. More work is needed -- by the retail community and solution providers -- before we can fully take advantage of the changes that are occurring.
This effort begins with recognition that the new retail business model is consumer-driven. We are moving from a conventional business-to-consumer model to one where consumers increasingly dictate the terms of their relationships with retailers. In tomorrow’s consumer-to-business (C2B) world, the successful retail model will have two significant characteristics.
First, the C2B model will be one where interactions are personalized, based on consumer presence and preferences.
The new C2B retailing model also will be defined by convergence.
Converged retailing brings structure to the chaos and confusion of consumer interactions. It will allow consumers to easily communicate their presence and preference via the channels of their choosing. It will deliver timely, personalized transactions, information and promotions. And it will do this seamlessly across all channels, including assisted and self-checkout, informational and transactional kiosks, digital signage, e-marketing sites and mobile technologies.
I believe the next few years will be a time of significant movement toward the promise of converged retailing -- made possible, for example, by NCR’s c-tailing solutions -- as once-separate technologies and channels converge. As we make this journey, we can maximize operational efficiency while we drive greater brand loyalty and enhance the consumer shopping experience.
Michael Webster is senior VP and general manager, Retail and Hospitality, NCR Corp.