Technology in retail stores must address the problem of conversion to be impactful
10 Aug 2018 Technology in retail stores must address the problem of conversion to be impactful
Even if eCommerce is convenient, fast and often offers the best prices, stores still dominate in terms of customer preferences. According to a survey conducted by Ipsos and Inshorts, couple of years back, 54% urban Indians said if the cost is same, they would prefer to visit a proper retail store to buy a product. Since, most shoppers want to see,feel and get the product instantly, stores must reposition themselves as the core of the
Given the changing demand of omnichannel shoppers, brands have realized the effectiveness of in store technology in determining the growth of brick and mortar. The fact that consumers are already familiar with technologies such as artificial intelligence (AI), augmented and virtual reality (AR and VR) has made brands adopt these technological advancements in in-store implementation strategy. However, the approach has been more towards elevating the experience of the buyers than improving the core function. If we draw a parallel of a retail store with a restaurant, we would agree that if the cuisine is not good enough in an outlet, any amount of add-on fringes to provide a better ambiance would not work. Similar perspective applies to the retail stores. If the core functionality of making the customer buy a product is not sufficed, then all the effort of augmenting customer experience through virtual reality and AR will be in vain.
There are three parameters that determine customer satisfaction in a store – whether he or she is getting the right style, right size and off course the preferred colour. The challenge for the retailer lies in getting all three of these parameters fulfilled for a customer, every single time, which can then optimize store conversion. This is primarily because, it is absolutely impossible for a retailer to stock the store with all possible combination of inventory due to varied factors as the size of the stores are finite, merchandise planning as per catchment analysis would not lead the brand to carry all styles, demand supply mismatch, etc.
Reports suggest that only 9.4% of global retailers offer a detailed view of a particular brand’s inventory. If the inventory exposure of the brand can be increased then there is a direct correlation to increase in demand for the available merchandise. Consumers desire instant gratification, and that is one of the biggest reasons to buy offline. Hence, the sheer availability of the desired product will be able to drive demand., thereby increasing the conversion and creating a fulfilling experience for the customer.
One of the key retail tech innovation which can solve this is – Endless Aisle (EA). EA enables brands to showcase its entire inventory available to the customer, irrespective of where the product is physically available by increasing the amount of ‘virtual merchandise’ that a store provides, Endless Aisle provides an opportunity for retailers to increase their store conversions, showcase their entire product range, optimize their store sizes, and even look at reducing the footprint of their stores. However, implementing this technology will require brands to have a single view of their inventory in real -time. The traditional order management systems that most retailers use were basically configured to link the stores primarily to the warehouses which reduces the exposure of the complete inventory Without comprehensive visibility of store and warehouse inventory, including delivery and service requirement it is nearly impossible to provide an accurate promise date to the customer, or schedule orders to alternative fulfillment locations. An Omnichannel Order management system needs to have the ability to manage Distributed Order Management (DOM) thereby aggregating order from multiple sales channels and fulfilling from the most optimum stock point – stores or warehouse. This can further be enhanced for the customer by offering click n collect or home delivery as fulfillment options. From a technology perspective, cloud based distributed order management provides retailers a platform capability, enabling the selling, replenishment, and logistics processes for multi-party business transactions across multiple echelons in a supply network. Additionally, the best DOM applications combine multi-channel order aggregation with global visibility to inventory, including delivery and service availability, enabling the “complete” order promise.
For retailers to compete in this age of empowered customer and pure play online competitors, they need to leverage physical stores as fulfillment centers. Physical stores give the brands and the retailers an advantage their pure play counterpart doesn’t have and are attempting to replicate with regional distribution centers and delivery lockers. However, many brands and retailers have not seized the opportunity to mobilize their physical stores to embrace today’s Omni channel shopper. A network of brick and mortar stores can put brands one step closer to their shoppers, both figuratively and physically. By using these stores as a fulfillment center, retailers can localize fulfillment, keep up with increasing customer demand and, most importantly, exceed customer expectations. This practice also leverages inventory efficiently. With access to available stock and company wide “sharing” of merchandise in near real time, retailers now have a means to avoid lost sales due to out of stock inventory. With the average store conversion being less than 25%, this could lead to huge financial gain for any brand which is struggling to increase its company sales growth.
By rethinking the role of the store — from putting mission-critical data into associates’ hands and improving in-store operations to transitioning stores into mini-fulfillment centers — retailers are revamping the last mile of delivery and changing the way shoppers think about their store network. Retailers that adopt the right conversion strategies are four times more likely to increase store turnover than retailers that do not. The success of brick and mortar retailer depends largely on how they adopt winning conversion strategies.
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