The Revolution of Retailers

By July 26, 2017Marketing Today

The Revolution of Retailers

After witnessing record breaking sales during Amazon Prime Day 2017, it is clear that online shopping has monopolized sales in the retail industry. It begs the question, have brick and mortar stores finally met their match? In 2017 alone, consumers have witnessed retailer after retailer raise white flags due to bankruptcy, mass layoffs or store closures in their last minute efforts to stay afloat. Although the initial impact of online shopping hit in-store sales like a tidal wave, it does not mean that physical stores have no place in the retail industry or in consumers’ minds. Although difficult to execute, the pressure for retailers to adapt to new, digital trends ultimately encourages corporations to continue to innovate their business processes. In order to combat the retail crisis, companies need to integrate technology into their stores and focus on staying relevant by engaging the customer through memorable in-store experiences.

Although online shopping provides customers with more convenience and potentially more product offerings, internet platforms lack the “visual and tactile experience” (Grieder et al, 2014). The inability to “test out” products through online shopping provides an opportunity for physical stores to gain an advantage. Instead of shying away from investments in digital improvements such as kiosks or artificial intelligence, retailers now must embrace technological advancements in order to succeed. The best way to execute this is to incorporate elements of the online experience in stores. To stand out amongst e-retailers like Amazon, brick and mortar stores  need to ideate and execute creative initiatives to generate traffic flow and enhance customer satisfaction. An article released by McKinsey notes that retailers who incorporate technology into their stores see a “significant sales impact, a higher conversion rate for customer promotional efforts, and a reduction of inventory days on hand” (Grieder et al, 2014).

After examining tech-friendly retailers, Indigo and Sephora stand out with their ability to integrate different aspects of digital technology when creating an unforgettable shopping experience. Indigo and Sephora have proven they have what it takes to compete against retailers and e-retailers alike.

Indigo: Masters of Multifaceted Channels and Merchandising

Last year, Indigo opened its first “cultural department store” at their Sherway Gardens location. Unlike the traditional Chapters model, Indigo is designed to captivate customers with an engaging shopping experience.  Themed “boutiques” within the store provide an opportunity to showcase products in a more realistic manner, while a grand piano instills an interactive atmosphere for customers to enjoy. Additionally, Indigo is in the forefront of utilizing digital technology and integrating an omni-channel presence in the retail industry. From their new store layout, to their website and mobile apps, Indigo is committed to surpassing the current retail crisis. The CEO, Heather Reisman, said it perfectly, “It’s the challenge to all of us in retail: If the store is not going to be more exciting than shopping online — legitimately leveraging what you can do in three dimensions over two dimensions — then it’s harder (to survive)” (Reisman, 2016).

For years, Indigo has valued interactions with their consumers both in and out of their stores. For example, in 2009 Indigo revamped their self-serve kiosks which are now a staple resource used by customers to locate products within the store. Using a kiosk, customers can order products, read reviews and discover similar Indigo products. Indigo has also launched two mobile applications: Indigo Mobile app for shopping, rewards and wish lists and Reco, their book recommendation app. When a kiosk is unavailable, Indigo Mobile is a perfect substitute for finding products in-store and Reco allows customers to “Share, Discover, Capture and Discuss” their favourite books. Indigo recognizes that the future of reading and retail is digital, so they have prioritized creating a customer experience which enables them to compete against industry giants. From the aroma of Starbucks coffee to the dazzling displays of merchandise, the Indigo experience has allowed Canada’s largest book store to survive the crisis its industry is currently experiencing.

 

 

Sephora: Transformational Technology

As of Spring 2017, Moët Hennessy Louis Vuitton (LMVH), the conglomerate that owns and operates Sephora, announced it is “reinventing the customer experience… with digital apps to test products, shoppable connected terminals and a table for beauty tutorials” (LMVH, 2017). Sephora excels in delivering luxurious products and incredible customer experiences through their interactive and digital focused model. The secret to their success boils down to the fact that the full Sephora experience can only occur in-store. While the initial in-store experience of trying on new make-up drives first time customer traffic, Sephora recognizes all in-store experiences are crucial to convincing customers to make subsequent visits. Deborah Neff, Sephora’s Vice President of Marketing said, “The majority of our new client acquisition comes through the bricks-and-mortar before they turn omnichannel. Our experience and what we provide to the clients, there’s nothing like that. It’s only something you can really feel if you visit a store”, (Neff, 2017). To continue the customer journey beyond the store, they started offering beauty classes, tutorials on iPads, as well as the use of “The Beauty Board, Sephora’s shoppable gallery” to access reviews and ratings (Singh, 2017).  

In 2017, Sephora Canada completely revitalized and digitized their locations. The secret to Sephora’s success is interaction. Whether through ad-hoc beauty consultations or their successful efforts to connect customers with Youtube stars, Sephora truly delivers an irreplaceable experience.

Now, customers will have access to the perks of their website in stores through digital initiatives. Sephora has created ‘The Beauty Hub’, which boasts a virtual catalog and a Virtual Artist. The Virtual Artist technology allows customers to take a picture of themselves and “try on” different makeup products without having to use the actual product (Singh, 2017).

Sephora seamlessly integrates the in-store and digital components of their business model. One example, in line with the Virtual Artist, is Colour IQ.

For anyone who uses foundation, finding that perfect shade can seem impossible! Colour IQ scans your face and configures an individual product code that perfectly matches your complexion. Other forms of Sephora’s in-store technology allows customers to have access to in depth product information. Customers can bring products to the iPad for scanning, which allows them to see additional information, read product reviews, or add the item to their shopping list” (Grieder et al, 2014).

The strides Sephora has made digitally to provide the most interactive and memorable customer experiences are paying off — as other retailers struggle to generate store traffic and sales, Sephora has seen a 12% revenue growth in their first quarter! (LMVH, 2017).

Moving forward, the retail industry must create a customer experience that cultivates the right digital technologies with enticing in-store benefits to drive brand loyalty home.

 

Megan Latham is a third year commerce student at Smith School of Business and this year’s Content Manager for the Queen’s Marketing Association. Megan has a passion for influential marketing and women’s rights. When she’s not searching up new content for The Nucleus, you can find her with her nose in a book!