Anand J Mehta is the Director for Retail Industry at Motorola Solutions for SEA, India, Japan and Korea. Backed by 15 years of firsthand experience in key roles with the region’s top retailers, he has set his priorities which include driving thought leadership about enabling technologies for retail business results, strategizing within the senior management members of the global retail community and collaborating with partners.
We are all aware of the statistics that identify the exponential growth of online sales but the fact remains that even in the most mature markets they account for below 10 percent of aggregate sales. The profitability and scalability of this business model is another separate discussion in itself – it is clearly evident to me in my discussion with leading retailers that most companies are pausing to evaluate the differences between fashionable concepts and functional business models.
Financial results of online retailing aside; an equal force in driving this cause has been the impact of smartphone penetration in all countries globally. eCommerce is clearly being replaced by mobile commerce (mCommerce), largely due to the fact that mCommerce is complimentary in harnessing the power of "Clicks", which results in transactions within the "Bricks".
The shopping journey can be divided into three parts – discovery, selection and transaction. Savvy retailers are aware of the discovery and selection components being increasingly initiated online / on mobile and are using this omni-channel engagement hook to ensure that the final and most critical component – transaction – is executed in store, where retailers invest their rental, salary and advertising dollars day in and day out.
In the past, technology enabled and streamlined the back-end infrastructure of a retailer, but today, it has emerged as the key front-end enabler of connectivity with customers. The scale is transformative and is compelling retailers to either evolve or perish.
The relationship that a retailer had with the customer has come full circle. It all started off as a personal relationship between a local merchant and customer. This relationship was founded on trust and offered the expectation that the merchant would, over a period of time, know a customer’s likes and dislikes, help them with what they needed and educate them about new items on the shelf. This relationship then underwent depersonalisation and grew into organised retailing.
The reality of mCommerce is that online and in store strategies are no longer mutually exclusive, however, if structured right, completely complimentary.
In the past, technology enabled and streamlined the back-end infrastructure of a retailer, but today, it has emerged as the key front-end enabler of connectivity with customers. The scale is transformative and is compelling retailers to either evolve or perish.
The relationship that a retailer had with the customer has come full circle. It all started off as a personal relationship between a local merchant and customer. This relationship was founded on trust and offered the expectation that the merchant would, over a period of time, know a customer’s likes and dislikes, help them with what they needed and educate them about new items on the shelf. This relationship then underwent depersonalisation and grew into organised retailing.
Organised retailing is about the scale of operation and the use of technology extensively to make shopping a lot more "self-service". While retailing was getting organised, a whole new revolution of wireless connectivity through smartphones was underway and transforming the way customers connect and make informed choices. Today, smartphones have enabled a whole generation of consumers to be "always on". They have fused the virtual with the physical world, delivering ubiquitous connectivity with the internet and permanently changing consumer’s purchasing behaviour.
Consumers have come to rely more on their mobile devices than their desktops/laptops for their shopping needs. In fact, social media and mobile devices have shifted power in the retail industry from suppliers and retailers to well-connected shoppers.
These new consumers are equipped with a strong sense of entitlement and the expectation of consistent, high-quality service across multiple retail channels. The depth of product features, prices and alternatives discovery that drove online visits is now expected on-the-go with a consistency between click & bricks. The single most critical consistency in being able to deliver is that a smartphone with an individually branded retailer application that can deliver this dual functionality.
This was evident at the recent Retail World Congress held in Singapore from 19 to 22 March 2013, where some of the brightest minds in the retail industry met to discuss the future of the business.
Omni-channel, the new retail paradigm
The proliferation of smart phones and tablets, coupled with the ubiquity of Wi-Fi networks, is urgently demanding a change in retailers’ traditional go-to-market model. The traditional attributes of retail being location, product, price, quality and service are simply a prerequisite now rather than a differentiator. Retailing in the connected world is about understanding the impact of mobile, online and social media.
This irreversible trend is "omni-channel" retailing. Omni-channel retailing is no longer just a concept and is now best defined as multiple and individually-relevant touch points equipped with unfailing memory and the intuition about consumers’ preference available both digitally and physically. This is helped by the game-changing ways in which wireless technology and applications are coming together to form solutions that are empowering sales associates and connecting with the already connected customer with their personal tastes, at their preferred locations, through their preferred media.
A traditional retailer’s move towards omni-channel is an organic shift and a "must", but what is striking is that some of the pure-play internet vendors are shedding their online purity and moving into the setting up of a physical outlet. Even Amazon has installed lockers in shopping malls from where customers can pick up deliveries. Could this be the baby steps towards brick and mortar?
Embrace the converse
In June 2012, Motorola Solutions in New York called out to the retailers to embrace omni-channel retailing to sustain and grow their businesses. The future is not about the number of stores added, but about connecting with the customer, understanding what they want, when they want and where they want.
Today’s global retail leaders are embracing technology to do away with these perceived occupational hazards, thereby garnering massive competitive advantage.
With digital space and smartphones, no longer does one size fit all. There is a compelling need for mass personalisation. Failure to change and to deliver an integrated shopping experience across all channels puts a retailer at risk of becoming irrelevant.
Customer experience revolution
There is a radical shift in the consumers’ purchasing behaviour due to the fusion of virtual and physical worlds. This was a sentiment clearly echoed by the retail community at the World Retail Congress in Singapore, held in March 2013. The collective voice at this key global industry event (constituting approximately 20 percent of the GDP of the top 52 countries), was that digitisation, personalisation and localisation are mandatory aspects for success in retailing globally, and especially more so in the Asia Pacific region due to the diversity of cultures.
This is further validated by a Consumer Study recently concluded by Motorola Solutions in Singapore around the end of 2012. The study revealed that:
- 61 percent of the respondents said out of stock items or the inability to spot promotions added to their discontent
- Sales staff interaction & product knowledge emerged as the main deal breaker, with 51 percent of customers identifying that as a key pain point in their shopping experience
- 31 percent of consumers encountered unhelpful staff at least 5 out of 10 instances
- The survey also revealed that the top pain points for retailers are out of stock items – this constituted 40 percent impact, while long checkout lines constituted 29 percent impact
The way forward
Never in the history of retailing has a customer been so central to future success. It is imperative for retailers to deliver a seamless customer experience across all channels and provide the right services and products at the right time to the customer. The good news is that future facing mobility solutions are available today. It is up to the retailers to embrace such technologies and align their businesses around the theme of the evolving customer. Constantly analysing customer behaviour is the way to get ahead of the customer and lead the experience game with the connected shopper.
Taking Stock is Retail in Asia’s fortnightly column dedicated to showcasing opinions from experts in the retail industry.