Leveraging Human Touch and Technology to Create a Differentiated Shopping Experience

The death of the physical store has been widely discussed for years, and many in the retail industry have predicted its demise. The retail industry, however, has survived disruption cycles in the past, including the “original” threat to Main Street’s brick-and-mortar stores — the catalog — followed by retail’s move to and the sprawl of suburban malls, Walmart and the emergence of the “big box” channel, and, most recently, the rise of e-commerce and mobile. Personalization and rising consumer expectations created by the digital channel are challenging the value of the physical store and retailing’s long-standing business model. However, the reality is the store is still the foundation of retailing.

The Death of or Evolution of the Physical Store?

With the disruption created by the digital world, retailers need to offer consumers something extra in their physical locations to remain relevant. Ensuring brick-and-mortar stores remain relevant to consumers is essential for survival. If a retailer can’t give consumers a compelling reason to shop in-store, it will very quickly become redundant.

In the absence of unique product, retailers can redefine themselves by focusing on creating distinctive value — e.g., providing excellent customer service, employing staff with expert product knowledge, delivering a luxury shopping experience, offering new in-store innovations, etc. Each has the ability to fundamentally redefine the retail store experience, which requires a balanced blend of physical and digital working seamlessly with any customer touchpoint to deliver a complete brand experience.

Saks Fifth Avenue is a great example of a retailer achieving success with this approach. Saks recently unveiled its new main floor at its New York City flagship, as it aims to reshape the department store experience. Saks moved the typical first floor offerings of lipstick and perfume to the second floor, and the store's new first floor focuses on handbags, gloves and other leather goods, tripling the size of that department and offering more than 100 exclusives. Shoppers will browse handbags made by luxury designers, walk a floor made from imported Italian terrazzo tiles, peruse aisles designed to mirror a fashion runway, and pass metal tables inspired by origami.

And with the move of the cosmetic counters to the second floor, Saks is betting it can better compete with popular beauty sellers like Sephora and Ulta, as well as e-commerce sites. An atrium now connects the first and the second floors, including a 60'x20' LED screen, and shoppers entering the new beauty space are met by a concierge who can recommend the right cleanser for their skin or book them a makeover. There are also 15 treatment rooms where customers can get facials or services from high-end skin care lines.

The Key to Survival

As well as understanding what they are, retailers must be open to adapting their business models to incorporate new technologies to remain competitive. Disruptive technologies such as artificial intelligence, virtual reality, and the Internet of Things (IoT) being integrated as part of the in-store experience are clear examples of the convergence of physical and digital environments.

Nike NYC, for example, offers spaces and experiences that are both personal and responsive throughout each floor of its massive flagship location. Consumers will find technologies like Scan to Try, where a shopper can request an item to be brought to them for a quick fitting. With another technology assistant, Shop the Look, consumers can scan a code on an in-store mannequin, browse every item that the mannequin is dressed in, check to see if specific sizes are available in-store, and request for a store athlete to send the items to a fitting room. Nike Instant Checkout, meanwhile, is just as it sounds. Customers can skip the lines and scan their items, bag their purchase, go and receive a payment receipt.

Securing the Future

Despite recent high-profile collapses of well-known retail brands, having a physical presence is the best way to be able to deliver unique customer value. In a highly competitive environment, it’s now imperative that retailers concentrate on defining core purpose and focus the business and technology strategy on what makes them stand out from the crowd. This is no small undertaking and requires a holistic cross-business approach, but it’s clear that retailers that successfully leverage technology to achieve their business goals will be the ones that remain relevant and profitable into the next decade.

In fact, putting technology at the heart of a retail business will be fundamental to survival. Finding an objective, trusted partner that specializes in digital transformation is essential to follow this path. The right partner will guide you to select the processes to automate as well as identify the best technology products for your business without losing focus on the core requirement to generate customer value.

Mike Witty is director, retail/CPG digital practice at ISG, a leading global technology research and advisory firm.