2016 will be a year when many niche innovations in customer experience will become mainstream as consumers expect more out of their shopping experiences, forcing traditional retailers to step up or risk becoming irrelevant. Marketplace buzzwords and emerging trends, such as personalization and seamless mobile access, will become table-stake elements of the customer experience.
Here are ways retailers will take their customer experience to the next level:
For personalization to become more than a buzzword, tailored offers must become the norm in digital customer interactions. Consumers are getting over the “creep factor” of brands knowing their preferences, and they are more willing to share personal information in exchange for benefits.
Loyalty programs will continue to become more robust as a result. Seventy percent of consumers modify when and where they shop to maximize points, so retailers can leverage that information to drive even more traffic and sales. Providing tailored offers effectively establishes an on-going dialogue, and reinforces the one-on-one connection that keeps customers coming back. The convenience and curation aspects of a “just-for-you” approach gives brands an opportunity to show that they know their customers. As the technology behind customer behavior tracking, personalized offers, and more sophisticated loyalty programs becomes more affordable, we expect to see many more retailers adopt these capabilities to keep up with the competition, particularly more traditional brick-and-mortar retailers like grocery and drugstores, which are facing increasing competition from online players.
Self-service mobile payment is appealing for consumers because it’s convenient and can provide offers, personalized content and discounts, letting purchasers maximize their relationship with the brand. As comfort with the security and reliability of mobile payment platforms increases, we expect it to become fully mainstream among retailers in the near future.
With the rise of wearables, the mobile wallet, and increased spending on mobile, more brands will provide seamless payments to capitalize on this. The success of apps like Uber or Starbucks Mobile speaks to the importance of integrating consumers’ experiences into their daily routines, and that users are becoming even more reliant on technology to facilitate their lifestyle.
Customization of Mass
From a retail perspective, the mindset and model for mass production and consumption is shifting. Traditionally perceived by consumers as expensive, niche, and inaccessible, customization is becoming a way for people to co-create and engage with their favorite brands. And it’s a move that benefits both brand and user. From a brand’s perspective, customization is a marketing tool, loyalty builder and new source of profits.
For retailers that provide customization services in-store, such as Pottery Barn Kids’ on-site custom embroidery or New Balance’s custom shoe design lab in its Fifth Avenue flagship, it’s a new way to create a unique destination experience. Allowing customers to design their own products creates a deep sense of brand loyalty, while justifying higher prices and providing data that can reveal trends for product R&D.
Retailers in the food space will increasingly feel pressure to conform to a customization model. McDonald’s has begun the shift towards customization with its new concept stores, like its open-kitchen McDonald’s Next in Hong Kong, or its installation of digital kiosks in Canada, the U.S. and Europe for consumers to create custom burgers. The fast food giant’s digital kiosks in France resulted in customers spending an average of about 30% more per transaction than traditional stores.
Mutually Beneficial Partnerships
We’ve already seen strategic partnerships across the retail marketplace, and we expect to see more this year. These relationships create a halo effect for both businesses. Brands aligning with those that have similar values and target customers is the story-building exercise that expands the reach of both. The results?
• A boost in awareness and brand perception (H&M x Balmain);
• A gain in relevance with existing customers and access to new shoppers from a different channel (West Elm’s partnership with Etsy);
• A powerful tool for entrance into new markets (Herschel’s collaborations with Apple and J.Crew’s Crewcuts);
• Alignment with social causes, business ventures or lifestyle ((PRODUCT)RED’s alignment with Nike, Gap and Armani; J.Crew’s In Good Company fashion incubator for entrepreneurs); and
• Tech-enabled, more rewarding and convenient experiences (The Westin’s partnership with Uber on its SPG program).
In 2016, brands will move beyond gimmicky experiences, and instead create multi-purpose spaces that act as a physical hub for consumers to engage with the brand beyond transactional events. Classes or tutorials featuring the brand in-store provide an emotional benefit to customers, and the exclusivity aspect can foster affinity and belonging.
We’ve already seen successful executions by brands like Frank & Oak, which sells coffee and houses barbershops in its locations. These spaces are successful because they create a lifestyle-based community, elevating the offering itself and value perception.
There’s a drive, with Millennials in particular, for consumers to live more purposeful, simplified lives, which puts pressure on companies that make and sell high-cost, low-usage goods like luxury formalwear, sports equipment and cars to convince consumers to invest in their products.
We’ve seen a boom in start-ups that facilitate the sharing economy — from AirBnB to Rent the Runway — which have challenged traditional models. The sharing economy is poised for strong growth and further scale, as these businesses continue to serve a greater social purpose and boost convenience for consumers. The next frontier will be for hard good makers and retailers to anticipate how their single-ownership model will evolve and how they can avoid being another casualty of innovation. In the long run, companies that trade in expensive, low-use hard goods will have to develop new models for shared ownership and/or usage of their products — as Avis and others have begun to do.
Inclusiveness and Next-Level Transparency
Brands like Everlane have forced a new kind of transparency by openly sharing pricing and production practices, including inviting the public into their manufacturing process using Periscope and Messenger.
In the food category, there’s a new push for brands to keep it real. Hyperawareness of food quality and expectations in food transparency are rising as people look to make healthier, more environmentally friendly choices. It’s no longer an artisanal craze or an exclusivity play — consumers understand the impact of what they eat, and want to make sure it’s net positive. Whole Foods Market and Starbucks were founded on this positioning, not only by sourcing fair-trade and organic/natural food, but also educating their customers about why it’s important. As consumers become more educated, they will expect legacy grocery and restaurant players to follow suit.
Article originally posted in Chain Store Age.
2016 will be a year when many niche innovations in customer experience will become mainstream as consumers expect more out of their shopping experiences, forcing traditional retailers to step up or risk becoming irrelevant.