Looking back on 2013 (and as always, it’s amazing how quickly “look back” time arrived), the biggest single trend in retail IT has been customers using connective technology to take control of the shopping experience. And retailers should be thrilled.
At first glance, retailers taking the seasonally appropriate emotion of joy at relinquishing control of how customers research, select and buy merchandise may seem counterintuitive. But advances in mobile, social and online technology that have put customers firmly in control of their shopping destiny have also unlocked a huge trove of brand new potential for retailers. Here are three reasons retailers should be extra happy about customer-driven retailing as they close out the year.
Knowledge is Power
The same devices and solutions that give customers so much more control also create an incredible digital data trail that retailers can follow to increased levels of customer service and profitability. Although retailers must carefully adhere to basic privacy guidelines, every time a customer posts a social comment, checks in at a location, or views an online product description, they leave behind digital evidence that retailers can collect and analyze to solve the mystery of how to perform one-to-one retailing on a mass scale.
Reach Out and Touch Someone
Now that every customer touchpoint has potentially been moved to the digital realm, for the first time retailers can engage consumers at each step of the customer journey. It was not previously possible to send customers a personalized chat invite when they browsed your product catalogue or jump in when they asked friends for advice on purchasing a product you sell. E-commerce sites and social media platforms make this kind of personalized interaction throughout the customer journey a reality. And more personalization means more sales conversions.
No More Guesswork
Pull retailing, where the customer drives assortment, requires a much more agile and integrated supply chain than push retailing, where a retailer’s merchandisers largely determine assortment well in advance of sales. However, pull retailing adds the distinct advantage of providing much better insight into what customers actually want to buy much closer to the sale.
And the type of customer-driven sales retailers are now experiencing are both a major challenge and a major opportunity. If retailers can align their supply chains to provide the near-real-time fulfillment connected customers are starting to expect (no easy task for sure), they can avoid markdowns, overstocks, liquidations and all the other profit-draining unpleasantries associated with inaccurate demand forecasts.
The customer is telling you exactly what they want, but also telling you how, when and why they want it and who told them about it. A pretty reasonable tradeoff of data for control as retailers enter 2014. Next week, we will look at even more transformational change on the way in 2014, and how retailers can use it to full advantage for themselves and their customers.