6 Things Retailers Must Do to Thrive in the New Digital World 

A perfect storm of demographics, economics and technology is taking direct aim at the retail industry. Demographically, millennials have become the largest consumer group. And this group has expectations and habits that retailers must accommodate.

Along with this demographic change, the physical economy of retail is quickly shifting. Clearly, the brick-and-mortar store isn't dead. In fact, McKinsey estimates that in 2020, more than 80 percent of U.S. retail sales will still occur in brick-and-mortar locations. This is an astonishing statistic, considering the massive increase in online shopping over the last couple of decades. Regarding technology, retailers are facing change from the back office to everyday consumer technology — the very technology that now controls their brand through user-generated content.

All retail companies must manage this shift, all while the familiar challenges in design, supply chain, labor and marketing persist. The challenge may seem overwhelming to retail operations management, but the following practices are keys to thriving in the new retail landscape:

1. Have a consistent brand throughout all physical and digital properties. The brand in question must be able to be intuitively understood by a shopper when they walk into a physical store. The same is true when consumers navigate to the store’s website or log into its mobile app.

Sephora is doing a great job of branding itself. Once a consumer walks into a Sephora store, they immediately understand the brand — the layout, look and employee interactions at each store are consistent. Sephora also maintains the fun, whimsical image of its brand within its digital interactions. The new "swipe it, shop it” feature on Sephora’s app mirrors Tinder, the popular dating app.

2. Have a refined retail store analytics strategy. Once reserved only for e-commerce, analytics has increasingly become part of the in-store experience. Analytics fed by technologies like Wi-Fi, Bluetooth and GPS can give retailers information to optimize store layout, ensure the best customer service and attribute marketing efforts. However, retailers must balance the benefits of this data with potentially intrusive behavior toward customers in attempts to gather the data. The retailers that successfully strike this balance will enhance the effectiveness of their stores and increase their brand value.

3. Leverage virtual customer panels. Market research shouldn't be seen by retailers as a cost of doing business. Loyal customers love to be listened to, and including them in virtual panels can itself be a form of marketing. In a study by Professors B.J. Allen and Suman Basuroy of the University of Texas (San Antonio) College of Business, and Utpal Dholakia of Rice University's Jesse H. Jones Graduate School of Business, virtual customer panels have been shown to not only provide good data, but also increase buying behavior of panel members by 17 percent, in addition to increasing cross-buying.

4. Incorporate new methods of marketing and buying. The majority of millennials use social media like Facebook, Twitter and Instagram. The e-commerce of the near future is less about virtual shopping carts on retailers’ websites and more about instant shopping on sites with user-generated content, like Pinterest. Retailers that take advantage of this buying behavior need more than a change in technology; they need to change their attitude around controlling their brand. The power is moving from marketers to the hands of consumer champions (or detractors!).

5. Improve worker experiences. Retailers understand the importance of a good customer experience, but often ignore the effects the employee experience has on their bottom line. Putting good technology in the hands of workers can speed up onboarding, help employees better serve customers and help managers effectively motivate their teams.

Onboarding and retention alone are major expenses for retailers. According to Bloomberg, it costs a retailer an average of $3,400 every time a worker defects. Increasing pay can help to an extent, but better technology for workers can raise their average productivity and help increase their personal investment in the brand's mission. Engaged, empowered employees ultimately lead to happier customers.

6. Focus on personalized customer service. Customer service is a key differentiator for retailers. In the age of the customer, 89 percent of companies report that they're competing primarily on customer experience, according to Gartner. Creating an exceptional customer service experience, therefore, is the new battleground for retailers.

Brian Chambers is vertical product manager at Appirio, a global cloud services company that creates next-generation worker and customer experiences.