Retail’s Watershed Moment: Here’s How to Get Ahead in the New Era

Over the last decade, the retail industry has undergone seismic shifts, from the social media boom to widespread adoption of smart devices. However, nothing has impacted retail quite like the pandemic. New channels and behaviors — e.g., buy online, pick up in-store (BOPIS); curbside pickup; same-day delivery — emerged out of necessity, but are now the norm. In fact, 85 percent of consumers report that they plan to continue shopping behaviors they adopted during the crisis.

In tandem, retailers have been under significant pressure to meet these new behaviors, while employee shortages and widespread supply chain disruptions have added additional industry challenges. For many retailers, existing systems are no longer hitting the mark. While the industry looks a lot different than it did a year or two ago, the importance of customer experience (CX) has remained constant. Today, 80 percent of customers believe the experience provided by a company is as important as its products and services.

From rethinking physical footprints to upleveling loyalty programs, businesses need to act now to bridge emerging gaps and preserve the in-person shopping experience that consumers love. I’ve taken stock of the most pressing CX challenges in retail today; here are three recommended strategies for delivering the level of service consumers now expect.

Elevate In-Store Shopping and Order-Ahead Experiences

At the onset of the pandemic, retailers were forced to rethink their physical spaces to maintain social distancing for both employees and customers, and accommodate emerging channels. Some companies like CVS decided to close a number of physical stores. While it may seem intuitive to downsize physical footprints as digital rises, consumers still want in-store experiences. In fact, Forrester projects that 72 percent of retail will take place in-store in 2024.

Retailers need to balance the convenience and efficiency of mobile with consumer preferences for in-person shopping through their mobile app. Why? Seventy-one percent of in-store shoppers say their device has become more important to their in-store experience. Bed Bath & Beyond’s new store format is a great example of this, featuring personalized store navigation tools and “Scan and Buy” checkout options. The store also offers a designated area for online order and curbside pickup, in addition to same-day delivery.

Retailers can rely on location data to optimize these operations with real-time insights into consumer behaviors. Location infrastructure outlines when and where a customer will arrive, and lays the groundwork for new features to help customers find what they need on their own time. By enhancing in-store experiences with digital innovations, companies will capitalize on the best of the digital world, while offering a better in-store shopping experience.

Prioritize a Differentiated Loyalty Program

It’s no secret that brand loyalty is a key driver of business profitability. Research shows that a 5 percent increase in customer retention correlates with at least a 25 percent increase in profit — a jump that's largely defined by CX. Ninety-three percent of consumers report that they’re more likely to make repeat purchases with companies that offer excellent customer service. Loyalty programs aren't a novel idea; in fact, Walmart became famous for its “greeters” who focused on driving loyalty. Most retailers today have some form of a loyalty program, which begs the question: How do companies differentiate themselves in a crowded marketplace?

The short answer is personalized and contactless experiences with tailored promotions. While Walmart no longer uses greeters, it has created a mobile app that sends the same loyalty messages to customers as they arrive and creates a constant companion to help them make their shopping experience better through location awareness. Another example is the Starbucks Rewards app, which leans on location to provide creative offerings at just the right time. For example, customers walking by a store will receive a push notification enticing them to grab their favorite drink based on past order history. And it’s paying dividends. In 2021, Starbucks grew its 90-day active members by approximately 30 percent.

Retailers have a unique opportunity to differentiate themselves by doubling down on their loyalty program and offering experiences grounded in a deep awareness of customer behaviors and contexts, like how a customer moves through a store or when they’re in close proximity to one. From free delivery within a specific store radius to cross-brand reward collaborations, brands can make themselves the most relevant retailer to a customer to drive loyalty and, in turn, increased profits.

Lean on Digital to Do More With Less Staff

Whether it’s the Great Resignation, higher demand or lingering effects of the pandemic, the retail industry is facing unprecedented labor shortages. A number of large retailers, including Nike, lululemon, Macy’s, and Apple, have already announced plans to reduce hours and even close stores. While there’s no way to predict these rapidly changing events, there is a way to future-proof your CX strategy and operations to maintain service for customers — using mobile apps to offer greater efficiency and more self-service options.

Already, mobile app sales are exploding and are expected to top $600 million by 2025. That’s a huge market share, which has been fueled by innovation to meet demand and new behaviors in a world where habits like curbside pickup continue to boom. Retailers should lean on their mobile apps to optimize and scale their processes to bridge gaps. American Eagle Outfitters (AEO), for example, leverages location services to track customer trips for curbside and order-ahead and notify staff when customers are on their way. This not only reduces customer wait-time, but also saves employees’ time by optimizing the process. With location insights, the app can also offer customers specific directions and pickup instructions so they don’t have to rely on employees. Meanwhile, employees know exactly where a customer will arrive to meet them.

This may seem like a small step, but it saves employees significant time so they can do more with less support at scale. Investing in a location-enhanced app will help retailers streamline their operations and preserve customer loyalty during times of crisis and shortages, or otherwise.

A new year is typically a time to reflect on growth and room for improvement in the future, so naturally, I've been doing that for an industry that has been turned on its head over the last two years. As we look towards continued uncertainty, sophisticated mobile apps powered by a deep awareness of customer behaviors and context will allow retailers to withstand disruption with speed and agility, today and down the line.

Coby Berman is co-founder and chief operating officer of Radar, the leading geofencing platform.