Header picture credit: Still from HYPER-REALITY (2016) by Keiichi Matsuda
With December come shorter days and Christmas tales. Time to light up candles and drink mulled wine, to cope with the cold and darkness of this season. As we approach the end of 2017, it is also time to recap the passing year and have a bright look to what is to come in 2018: digital customer experiences.
At the end of 2017, many enterprise organizations struggle to match the speed of their customers. They’re not innovating and digitizing their vision fast enough to keep up. They find themselves typically constrained by organizational silos and legacy technology, often in monolithic architectures. And that prevents them moving forward.
Picture credit: Turning Torso (Malmö, Sweden) Santiago S.V, Flickr
Smaller businesses that emerged during the digital era, are consistently demonstrating their ability to adapt faster to the industry changes. They have taught us that focusing on (digital) experiences is the way to go. Experiences that often are “channel agnostic”: your customers don’t care about your channels, only about the experiences you provide. These experiences blur both the physical and online world, as they complement and substitute each other.
In that sense, we’ve seen interesting acquisitions in 2017. Particular of companies that have excelled in creating strong relationships with their customers, based on club-experiences rather than a mere customer-transaction bond. This was the case with Rapha, acquired by Walmart heirs for £200m.
During this year, technology made a strong headway. The most significant developments are the consolidation of machine learning techniques for personalization and product recommendation, and contextual commerce to decrease friction such as improved search engines by Natural Language Processing (NLP) technologies. And most noteworthy of all, the rise of conversational commerce (like chatbots) and voice assistants:
As a growing trend for 2018 we see “A-Commerce”, which combines smart devices and AI techniques to provide digital customer experiences in our everyday life. For instance, forgetting about having to re-order milk or eggs weekly as your refrigerator does it for you automatically when detects levels are low. The first unmanned stores concepts were also launched during 2017 and we expect to see more next year. The following video is the example of the 7 Eleven cashless store in Korea:
Partner for Success
Collaboration and partnerships have shown to be a great ally during 2017, as opportunities exist for those that are moving forward. When your technology or organization is lagging behind your team and efforts, a lean way to prevent losing market share is to partner with those that can help you stay competitive. You can find partners for technology, marketing or distribution network. The API universe is here to help you bridge your silos, deliver fast mobile apps, share and aggregate information, or connect platforms driving your traffic wherever you need.
An example of collaboration is the one recently announced by Class Ohlson and Mathem.se, the leading e-commerce operator and Sweden's largest online grocery store. As Class Ohlson states: “…the collaboration provides opportunities to reach new customers via MatHem’s digital platform and offer better service to existing customers through convenient and fast deliveries to the front door”. Read the full article here.
GDPR in Full Force on 25th of May 2018
In a move to consolidate the different privacy regulations across member states and to protect European citizens better, the European Union put the GDPR into place in 2016. The reason most businesses were slow to respond, is because enforcement starts from 25th of May 2018.
The impact of the GDPR is severe: it affects all companies who use and collect personal data from European citizens. Failing to comply may lead to a fine of up to €20 million or 4% of the worldwide yearly revenue. The GDPR covers the increase of citizens’ rights, such as the right to be forgotten, increases the liability in the case of a data breach and puts requirements on the use of data. Start implementing whatever measures your company will require to meet the GDPR, so you can safely use customer data.
How do You Improve Your Customer Experiences?
First of all, make sure you know your customers. This means having an excellent understanding of the customer journey and your persona’s. Secondly: measure, test and measure again. Multivariate testing is a good way to try and test your experiments. A much applied strategy for improving customer experiences we see currently, is the use of flagship stores. They add a physical dimension while applying online ease of ordering.
Clicks Going into Bricks with Flagship Stores
The concept of flagship stores is not new. But we’ve noticed during 2017 more adoption of this strategy from brand manufacturers and pure-players. Replacing underperforming stores from high-street with flagship stores that run for a limited time, is an established trend that we expect to see continuing during 2018. It is certainly a great strategy to increase brand awareness and customer proximity. During 2017, I have seen several examples of furniture online brands opening pop-stores in downtown Copenhagen. These stores strongly support the buying journey with the feeling and trying of a well-designed lounge chair.
Picture Credit: Norr11 Pop-up Store in Copenhagen.
From Bricks to Clicks
A similar example is Vitra Flagship Store in Amsterdam. Next to showcasing their beautiful chairs, they are equipped with in-store technologies like “digital signage”, where a big touch screen will help you customize the chair you tried and add it to your basket. Then is the customer’s choice to decide whether he wants to buy it or park it. When buying, the chair will be sent to his home address. If he chooses to park, the product configuration will be sent to his online profile. Here he can retrieve it later from the online website and finish the transaction from the comfort of his home.
Picture Credit: Vitra Pop-up Store.
This flagship model is often supported by the same processes that drive the digital channels. Often it uses the same commerce engine or platform. For example, in terms of stock. The primary role of these pop-up stores is showrooming, so they don’t hold stock in-store to serve customers. The fulfillment for in-store orders is handled as for online orders: ship to home. Essentially, they are an additional touchpoint for the brand experience.
Alibaba’s New Shopping Reality with ‘New Retail’
While Amazon is now intruding into brick-and-mortar in the U.S. with Amazon Go or the acquisition of Whole Foods this year, Alibaba’s speed and innovation is without precedent in China. Back in 2016, Alibaba coined the term “New Retail” for the way how online and offline complement each other to create the so-called seamless customer experience: “…integrating online, offline, logistics and data across a single value chain”.
Since then, Alibaba has been innovating like no other. Probably their best example is Hema, the company’s technology-powered supermarket in Shanghai. Here, everything happens through the mobile app: online ordering for home delivery, in-store product research and even face recognition for payments. It also serves as a fulfillment center for online orders.
Leadership in Retail Innovation Requires the Willingness to Fail Fast
Progressive retailers have been finding new ways of surrounding themselves with the best talent with a proven track record in digital savviness. Shifting the business model to a digital-ready organization is a challenging task that discomforts the status quo.
Our best recommendation here, is to focus on your customers and to be willing to innovate fast. This implies an openness to fail fast, as part of a constant learning loop. This approach will only be successful if you have the right technology in place, with the right leadership and execution team.
Want to know what else lies ahead for 2018? In our next blog we will delve into location based services: the next step for the customer experiences of tomorrow.
- Sr. Business Consultant - Retail Specialist
- Ask Elena
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