The term ‘Phygital’ is derived from the existing and emerging technology which employs the concept of bridging the gap between the physical and digital world, through convenient and interactive experiences.
In retail, phygital signifies the convergence of the physical and digital marketplace which helps brands and enterprises to engage customers on a broader spectrum and create a retail ecosystem which is truly seamless.
To cite a couple of examples, Tesco’s Homeplus pioneered the virtual supermarket where consumers scan the QR code of the product they’d like and the item is automatically added to an online shopping cart. Post payment through the secured mobile app, shoppers can continue towards home to find a bag of groceries on their doorstep. Brazilian fashion retailer C&A created a store with real-time “likes” counters on its clothes hangers. The like data was taken from C&A’s Facebook page where the clothes were listed for people to interact with, allowing customers at the store to see how many people online think that a particular product was a good buy.
The last couple of years have shown us the phygital marketplace is teeming with opportunities and retailers have just begun to explore and execute the same. In many ways, it is the organic evolution of the omni channel retail space with a multi-dimensional approach to not just increase customer reach and revenue but also create experiences that weave themselves perfectly into the customers’ lives.
Charles Darwin said, “It is not the strongest or the most intelligent who will survive but those who can best manage change.” Shoppers today have adapted to change and traversed onto the interchangeable, interdependent and integrated multiple channels of retail.
Global leaders in retail will engage and exchange their perspective and ideas on the evolution of phygital retailing at the Retail Congress Asia Pacific 2015. ETP Group is proud to be the Key Partner at the Retail Congress Asia Pacific 2015.
Global reportsindicate that the APAC economy will increase its slice of world GDP to 43% by the year 2020. This comes as no surprise as the retail industry has been witnessing and in fact been equipping itself for active participation throughout the last decade. APAC wins in the retail arena not just by sheer numbers but also due to their speedy demographic transition and agile adaptive economies which are tuned to the needs of the new age customer and global market conditions.
In 2015, the key emerging retail markets within this eclectic region:
The Philippines: One of the major growth markets in Asia, with over 250 brick and mortar establishments set up in the country in 2014. Its GDP growth is further fuelled by the rise in tourism which is expected to increase by 5.7% year-on-year from 2010-2020. An additional 220 million square feet in shopping center construction is expected to be added by the end of 2015.
South Korea: The country is already APAC’s third largest ecommerce market with sales in South Korea further expected to reach $36.76 billion in 2015. Bloomberg ranked the country second, closely following China, as the Best Emerging Market in 2014.
Vietnam: Vietnam’s population of approximately 90 million is the main driver of growth in the retail market. 70% of the population is currently aged between 15 and 64 years, and this is projected to continue to increase by 2017.
Other APAC countries that are steadily accelerating their mark in the market are Cambodia, Myanmar and Laos. Today, it is truly a global market with equal customer reach, open sourcing and liberalization on direct foreign investment. And thus, we find the APAC retail universe is filled with possibilities and promise.
Disruptive innovation, a term of art coined by Clayton Christensen, is described as an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology. The retail business is experiencing tumultuous change and instead of fortifying a singular approach, retailers are adopting multi-dimensional technology through disruptive innovations which are fast establishing themselves within the industry. Emerging retail technology like Mobility, Digital Wallets, Big Data, Geo-fencing, etc. has helped retailers explore and expand to a global market. Simultaneously, it is providing the right system fitments that help reduce costs through optimized operations, gain profitable growth with better business intelligence and increase brand equity which becomes proportional to the rising customer connect and satisfaction.
The best example to support the above statement would be the continuing ascent that Apple has charted and secured for the future. In 2014, Apple retained its position as the world’s most valuable brand, increasing its brand value by 21% to $118.9 billion. The company trail blazed an era of disruption starting with mobile technology in 2007 and powering on with business apps and devices like iPod and iPad which fast became trendsetters in device technology.
Mobility in retail is changing the way customers interact with brands and consume products, services and information. Most retailers have gained and sustained increased productivity enjoying the ‘first mover advantage’ with mobile internet. The internet of things has made it possible for retailers to build assured ROI within the business. These are not device centric innovations but rather a universal solution that realizes projected growth and fulfills customer experience and the brand’s USP. Adding to the same, digital wallet technology is quickly catching on to become one of the key payment modes, especially in industries like retail, banking, entertainment, etc. Forrester research data reveals that 50% of US smartphone owners are open to using their mobile phones for in-store payments. While this technology lends access to finance and payment related functions on handheld or desktop devices, it also manages a behemoth of value added services like offers, discounts, loyalty credits, etc. and even one-click comparison shopping.
Big Data technology has changed retail market dynamics for good. Retailers are now targeting individuals rather than demographical sub-sets, building relationships and awareness over ‘sales pitches’. Recently, Walmart launched the social, mobile and retail-focused Walmart Labs in Silicon Valley, and it acquired a handful of tech startups, including Kosmix and Vudu. Walmart Labs developed the search engine, Polaris, which uses semantic search algorithms to understand what someone is searching for and thus boost sales. On top of that, the lab’s Social Genome Product culls through millions of tweets, Facebook messages, blog postings, YouTube videos and more to detect purchase intent and drive ecommerce.
Geo-fencing is the software application which uses Global Positioning System (GPS) or Radio Frequency Identification (RFID) to create a virtual geographic fence. This can be dynamically defined and tracked as per requirement. Although this technology has multi-dimensional uses e.g. hospitals, human resources, high security, etc., it is being quickly adopted in retail to creatively engage and inform customers – attract them to the store at the most opportune time when they are within the location parameters. Retailers can also use the registered and opt-in customer data to further provide relevant content, as per their previous buying or payment history. For example, the Walgreens app has adopted Apple’s Passbook feature which uses geo-fencing to remind users to refill or pick up their prescriptions when they enter a Walgreens store.
The above examples represent a snippet of how disruptive technologies are making it possible for retailers to infuse advantageous sophistication into their overall brand experience. It represents profound opportunities, especially considering the potential of varied fast emerging retail markets worldwide.
The retail industry is a competitive arena where mature players try to maintain steady growth and new players attempt to gain a stronger foothold. It’s no surprise that the customer regularly finds himself surrounded by promotions of all shapes and sizes! Also, gone are the days when these campaigns were linear and narrowly thought. Daily, scores of brands contest for the attention of the customer – who is getting increasingly demanding.
Retailers need to delve deeper into customer behavior and understand the three Ts – Temptation, Triggers and Turn-offs. The temptation route can be utilized for a promotion strategy with considering and evaluating the past purchase history of a customer. They are attuned to a more personalized offering style, as the products and services being promoted cover the ‘comfortable’ and ‘familiar’ ground. The trigger strategy contains a more philosophical approach – from basic human nature to specific target demographic group. As the term suggests, turn-offs are the promotion-product/service mix that have been, through a set elimination and deduction appraisal, deemed unsuccessful. In an overcrowded market place, where mismatched or irrelevant promotions may result into opportunity loss or customer defection, it is equally crucial to determine what is NOT working.
At this juncture, it is safe to say that analytics – both descriptive and predictive, form a big part of promotion strategy and management. Technology in various forms is the biggest carrying force to gain insights on customer preferences and expectations. At the retailer’s side, there are multidimensional tools like Business Intelligence modules, feedback programs, etc. and customers are quickly adopting smartphone technology and social media platforms. The latter feeds the former in this case, with customers sharing, visiting, buying on mobile phones and discussing, reviewing, connecting through social media. Data is collected across all these channels to collate and convert into logical patterns and advantageous acumen.
Post implementing the promotional campaign, retailers should create set processes to track the productivity and effectiveness of the campaign. Setting KPIs to key people, processes and products involved is a proven practice that ensures the different promotions running simultaneously are meeting their respective objectives. Adaptive contingency plans help support, sustain and streamline any changes required to deal with expected and unexpected situations. This saves time, operational costs and possible damage to the overall customer experience. It also creates necessary fail-safes to avoid hemorrhaging campaign expenditure, add to the bottom line and deliver value that boosts sales.
Market leaders in retail have been effectively using ETP Accelerator, across all their stores. They agree to have acquired better insight into customer demand and a covetable promotions trajectory. ETP Accelerator is a powerful marketing and promotions engine. It manages marketing campaigns in sync with customer/market trends – reducing implementation time drastically. It supports promotional strategies and business rules to be set and rolled out across operations instantly. This proactive solution allows multiple promotions and business rules to run concurrently without affecting process efficiencies. More importantly, the retailer can monitor the performance of each promotion strategy and redefine them as required.
Your omni channel presence, and not just your product, makes or breaks your brand image today. Market reports estimate online and web-influenced retail sales (US) to reach $1.8 trillion by 2017, showing sustainable growth from the $1.3 trillion mark in 2013.
The Omni channel adoption and conversion will continue to grow as customers embrace emerging technology and its multiple access points. These same customers will expect even faster response time, regardless of how and when they connect with your store. The emergent ‘show rooming’ trend also shows us that consumers still wish to “go out shopping” and value quality brand experience within the retail store. The only difference is that the retail store needs to shed its physical limitations and further contact, communicate, engage and convert customers across multiple channels, as per their convenience. This strategy hits the mark in terms of keeping customers happy, increasing acquisition volumes and reaching closer to the projected business growth. For example, large brick and mortar retailers like Macy’s and Best Buy are adopting omni-channel technology to stay connected and relevant to their growing customer base. Macy’s encourages shoppers to scan products via the retailer’s mobile app while shopping in the stores. Its annual digital plan focuses heavily on mobile and seeks to “close the gap between store, desktop and mobile.” After Best Buy lost $1.2 billion during 2012, the world’s largest consumer electronics retailer looked like it was headed towards oblivion. Its turnaround happened post the decision to invest in omni-channel innovations that reached customers wherever they are—in a store, online or via their phones—and use technology to turn costly physical stores into an advantage.
The advantages of Omni channel are many but the most prominent of the same are as follows:
Brand Connect – Technology has intertwined with our lives and formed the core of how we relate to things and people, including brands. Most of us are always online and “connected” through smart mobile devices. According to Forrester Research, mobile payments will amount to nearly $90 billion in the coming years. This is largely due to the fact that an impactful omni presence will help brands capture the most coveted real estate in retail – the customer’s mind. According to global reports, mobile phone penetration will rise up to 69.4% of the global population, in 2017. As smartphones and tablets continue to become cheaper and 3G and 4G networks more approachable with enhanced security, mobile wallets and captivating additions like wearable technology and new age applications etc. the hyper speed upward trajectory of m-commerce shall remain on track.
Social Network – The above point lends itself to the social network invasion. When brands create an engaging niche for themselves in the popular social networks, they gain much more than possible customer conversions. This platform has become a dialogue center between companies or brands and the enormous and growing number of people on the network. Companies are exposed to real-time problems, perceptions and potential of their products, programs and services. This is invaluable first-hand data that not only bolsters their databanks but also helps retailers with insights unblemished by process churns. The right steps undertaken thus to create a better brand experience shall result in favorable reviews and improved brand equity. Positive word-of-mouth will also lead to desired revenue generation and customer loyalty.
Target Marketing – Omni channel marketing allows highly targeted approach towards introducing brand products, services and company USPs, inducing interest to understand and then buy or recognize the same. Business Intelligence and integrated CRM technology provides retailers the information regarding customers and prospects preferences, needs and desires. Analytical computing takes into consideration various factors like socio-economic and demographical components to fine-tune the learnings. Now that you have the ‘what’, Omni channel paves the next step with the ‘how’ at this juncture. How do we personalize our offerings through the marketing channels most frequented to encourage or incite positive buying behavior? This customized experience is becoming the norm in both B2B and B2C enterprises where the marketing strategies are created to implant a familiar and relationship based communication with customers, prospect and suspects.
The crystal ball shows Omni-channel technology to carry on putting enterprises on the map and level the global playing field of retail.
The retail industry is continuously evolving with increasing complexity and momentum. Fluctuating demographics, domestic downscaling, savvier consumers, multiple information and business channels, and trends require nimble, flexible and intuitive models and processes to manage customer expectations, stay relevant and increase profitability. Retailing is rapidly and perhaps irreversibly becoming an industry that must tailor its offerings to its customers, in order to win them over and foster greater loyalty. Well, the future is here and here are its most important retail trends:
Personalized In-store Experience: A recent Infosys survey reported that 78 percent of consumers are more likely to be a repeat customer if a retailer provides them with targeted, personalized offers. The burgeoning competition and the homogenous products and service market space has resulted in customers cutting ties and ending long-standing loyalty, post even a single unsatisfactory shopping experience. Delivering the right store experience has become and will continue to be vital in order to differentiate one’s brand from the competition and also increase repeat sales and overall productivity. Falling short of customer expectation in this regard leads to negative word-of-mouth, which is often more freely dispersed amongst family, friends and co-workers.
Right Business Intelligence: The retail analytics market is estimated to grow from $ 1.88 billion in 2014 to $4.4 billion by 2019. Business Intelligence technology helps retailers effectively reach consumers, reduce operational time and costs and allocate their resources more efficiently. Most importantly, it lends the marketing and operational ingenuity to make better strategic decisions, accurate targets and devise fail-safes. Gartner recently revealed that “Leading business intelligence (BI) vendors will shift the emphasis of their new product investment from IT-authored production reports to business-user-driven data discovery and analysis tools.” This trend shall gain more impetus through increasing adoption of Cloud Technology, Mobile and Big Data applications for analytics which contribute to the mass implementation of IT in retail.
Chuck the “Hard-Sell”: In the year 2015, brands will employ processes and people that impart likability and approachability to induce a solution-based dialogue and build relationships. The cool clinical expertise approach is swapped with regular staff training to arm all customer-facing employees with the right tools to be more perceptive and engaging. Business is done between people, not companies – customers first learn to trust and be comfortable with the person representing the brand or the company. This is followed by building enough customer inclination to venture understanding brand offerings, consume products and services and become loyalists.
Omni Channel Shopping: Consumers expect a consistent and seamless shopping experience, regardless of the channel they choose to engage, at any given time. Forrester Research expects $ 1.8 trillion in retail sales via online and web-influenced channels in the year 2017. The line between physical and digital touch-points will continue to blur. Today, the customer’s retail journey is non-stop – dynamic, accessible, and constant. According to Teradata, by 2015, a company’s digital strategy will influence at least 80% of a consumer’s discretionary spending. While retail stores remain relevant and the nerve-center for the industry, accurate omni-channel strategies will help retailers increase volume of sales and revenue via other channels.
Emerging Markets: Retail organizations are beginning to understand the brimming potential of markets within Brazil, China and India. To give an example of how these hyper-growth markets are geared to change the world’s retail landscape – By year 2020, 53 percent of the world’s retail consumption will be from Asia alone. Companies from the emerging world are increasingly becoming major players in global markets—the BRICs now account for 75 of the Fortune 500, compared with just 29 in 2005. Retailers will expand operations to these countries, exploring unique opportunities of each market.
The retail industry is being beckoned by booming opportunities across continents, despite cultural disparities and local limitations. Each retail enterprise needs to set their own course and business trajectory which will determine eventual success. From the above trends, it is fairly easy to establish the large role technology continues to play in our lives. Retailers who adopt, build and integrate stable, scalable IT in their business shall remain resourceful and ready to unlock the market potential.
Customer Relationship Management (CRM), as the name suggests, is primarily a customer-centric tool. But, it does have a multi-pronged effect on key business functions, proving to be the catalyst in organically evolving and optimizing retail planning and processes. Retail CRM helps retailers service, retain and grow their customer base.
The foremost and elemental expectation from a Retail CRM tool is to create more demand. It provides the necessary insights about the customer – her buying capacity, behavior or her preferences on products and promotions. It is no surprise then that many retail companies have begun implementing CRM programs in to the business. The promise of retaining and growing customer base through CRM is realized by these methods:
Loyalty programs: Global reports have shown that retailers can raise profits by 75% by retaining just 5% of the current customer-base. So, loyalty programs, if effectually planned and sustained, can be a substantial growth driving tool within the business. These programs can be planned to stay nimble as per the business objectives – to acquire more customers and make them stick, to increase transaction value from current base and to cultivate brand loyalty as a prestige token through preferential treatment.
Promotions: CRM based metrics help retailers evaluate their marketing campaigns and promotions. It applies the base of a seamless rewards and recognition program that can be automated and promoted through multiple channels. Determining the right channels for the promotions forms part of the strategy which can be allocated as per promotion phase, budget or target demographics. The promotions can be analyzed real-time to be revised or reinforced, basis customer feedback.
Personalized Offerings: This is perhaps the most significant part of retail CRM technology, albeit used inadequately, due to high dependency on external factors like trained staff, complete stock visibility, back-end system integration with real-time CRM information, etc. If these dependencies are adequately resolved, the retailer can break down his customer data and identify servicing factors which distinguish him from the competition. He can understand the product, payment, timing preferences and demographic details based on location, age, gender, race, etc. This information is worth its weight in gold, if employed successfully and executed perfectly towards providing superior shopping experiences.
While increasing the demand side of the business remains sacrosanct, the course of action to achieve the same is subject to further correction. Most retailers reward the wrong customers and deprive the right ones by presenting equal or average service value to both.
With a powerful Retail CRM Software integrated across all operations, the retailers can have a 360° view of all business functions such as Omni-Channel and E-commerce, intuitive POS, Mobility, Daily Reports & Analytics, Social Media, Customer Support, Loyalty Programs, Promotions and Marketing Campaigns, which hold the potential to creating the desired demand from the right customer community.
At the same time, the customers’ expectations for a more delightful and better rewarding, personable experience and value will only increase through their consumption cycle with a retailer, making the transaction of knowledge and experience a two-way street.
Emerging technology is making it possible for retailers to match performance with desired pace in all channels across the globe. Cloud computing and marketing ensures that the process data shows the ‘one version of truth’ with real-time ease. Mobility in-store and online applications further provide the convenience and incentive to simply click, choose and buy. Through a powerful and engaging social media connect, brands can capture the most coveted real estate in retail – the customer’s mind. All these technological measures help improve the shopping experience, increase the brand equity and also keep feeding additional data to the CRM solution equipping it with the ability to harness potential with strategic speed.
The above points illustrate how CRM is a comprehensive tool, which can be used to not just grow the business but also to support it to stay competitive, apply sharper focus and merge the art of customer engagement with the science of derived business value.
Historically, the retail market has often run scarlet with a string of skewed trajectories, to favor either demand or supply. And as with any unsteady, volatile relationship, it has remarkably rebounded from one side to the other, with major economic implications. The most weathered and prominent page from the book of market misadventures would be the period of the Great Depression in U.S.A between 1929 and 1930. An overconfident market outlook without airtight economic policies lead to a swift and sudden stock market crash. The abundance of manufactured goods and materials with little or no demand led to investment prudence born from panic.
This led to the makings of the very first economic bubble the country had ever experienced. The market crash exposed its anemic financial composition and ensured that the public’s investments were washed-out by the federal banks.
The universal and most basic theories of demand is what determined World War II playing a crucial role in U.S.A’s recovery. The ongoing war and its increasing scale induced a large amount of government expenditure being routed in manufacturing of military weapons and technology. It also helped mobilize manpower, creating more jobs and rekindling the economy. Before the American entry in the war, its market once again stabilized with defense spending and military deployment, satisfying global demand and thus obliterating the last traces of the Depression. The U.S. went on to experience the greatest industrial and economic boom till date, growing by 37% in 1950s.
The above example represents the purpose and tumultuous two-sided effects of the proverbial coin. In this case, the coin would be the retail market and its consumers, the two sides are demand and supply. It teaches us the perils of flying blind without understanding the consumer motivation to satisfy his need and desire. On the other hand, it reminds us that strategically developing supply channels can swiftly turn the tide in your favor, leaving competition panting leagues behind you.
The deep penetrative expansion of the global market, producing varied product / service options from different geographies, has rendered today’s retail business to be more customer-centric. For retailers, the necessity to adopt and apply technology has magnified multi-fold. It arms them with the right Business Intelligence (BI) to easily capture and read complex customer data. This information is further broken down and analyzed to asses various customer behavioral, conditional and economical patterns and potential.
It helps them determine accurately the DEMAND:
What are his customers buying?
When and how much are they buying?
Why are they buying and for whom?
What are they buying from competition and why?
When will they come back to the store and for what?
What are their product preferences and how receptive they are to product modification?
What is the present and future wallet size of the customer?
What are the new customer demographics that can be targeted?
What promotions strategies and channels work for my business?
Basis the answers derived from the questions above, the retailer can optimize resources and his SUPPLY chain:
How many product lines will he need to manufacture/source in the upcoming season/cycle?
Which are the best vendors for particular materials or project?
What should be his pricing strategy and how best should he plan the mark-downs?
How much is the old stock and how soon can it be processed or sold?
How much is the dead stock and how best to utilize it?
Which are the fast moving locations and how many distributors will suffice?
When, how, where to restock at store, warehouse level?
Retailers can themselves or through expert buying teams amalgamate the science of determining economy growth, government policies, sanctions and market growth, risks and recovery methods with the art of understanding customer’s motivation, aspirations, likes, dislikes, future needs and market trends.
Proven to be the catalyst of this process – ETP V5 Retail Software Solutions successfully establish the balance between the demand and supply of a retail business. These can be implemented comprehensively or modularly, in premise or on the cloud, on virtually all platforms. This makes it easier to integrate the right Business Intelligence tools that optimize present and future market conditions, with respect to customers and competition both. ETP V5 Retail Solutions help retailers get it right in retail with stable, scalable innovations that drive operational excellence and increase profitable growth.
The term ‘Millennial Retail’ seems to gather popularity and confusion in equal parts. Suddenly one finds themselves floating neck deep in ‘quick-fix-home-grown’ millennial solutions which threaten to make necessary relevance rhetorical! But the right retail technology applied through the right business practices can help navigate these choppy waters and turn the tide to one’s advantage, harnessing the industry potential that lies within this world-wide phenomena.
Industry experts project one-third of the global retail revenue to be contributed through the millennial generation by Y2020. The good news is, this number will permanently be on an upward trend hereon. But the challenge lies in managing expectations.
Millennials expect quick service, this is often the key distinction between a sale and no sale situation. Apparently, patience is not a virtue to hold dearly in the new age. Retailers are beginning to understand that their in-store experience is only as good as the customer wait-time it reduces. Quick Billing and express counters ensure the instant gratification millennials seek. Your POS stations are battle grounds combating the biggest deterrent to your conversion ratios. This means there is no down-time and service continues even in offline mode.
A personalized shopping experience has the multi-fold effect possible almost exclusively through millennials. Since they are more open to share information about their preferences and often know exactly what they want, you populate your CRM database with more accurate data. This leads to better promotions and developing key value-add services that make your brand personable and closer to your customers. Also, help spread the love! 19 out 20 millennials (globally) own smartphones and are active on social media. That makes for a lot of first impressions, daily, through multiple networking and information sharing sites.
As a group, millennials favor engaging with companies and brands on social media and also prefer receiving hyper targeted content. With sales soaring as a result of positive social media influence, it is no wonder that most marketing budgets today are skewed towards building an omni-channel presence for their organization. So when your customers exit your store, they still carry your brand experience (quite literally) with them, on their smartphones, tablets and laptops. Within the store, the staff uses a similar mobility to lookup customer info, frequency-regency of purchase, buying history like preferred products and payment modes. They now hold the right information to help customers make better choices, deliver value through applicable promotions, up/cross-sell and conclude the transaction from anywhere in the store. Again saving their time and fortifying customer loyalty which induces and influences more people to try your products and services.
It is important to note that although the retail market is a dynamic arena, the millennial trend has pushed to permanence certain course correcting measures which were inevitable. They include striking a better balance between demand and supply, optimizing supply with better visibility and control over production, process and people to satisfy and supplement existing demand. A centralized data management system enables you to analyze better, faster and get that much closer to your yearly projections. The necessary operational overhaul, in reality, has led a more enlightened practice and pace of doing business. And you are sure to be the quickest to the draw, with those young guns at your side.
