Retail, like many sectors, is undergoing a rapid transition driven by technology. At Techonomy 2017 in November, business transformation expert Mark Bonchek moderated a panel discussion aptly titled “Retail’s Rubicon.” It brought together industry leaders to discuss the future of retail. To kick off the discussion, Boncheck reported that just this year over 8,000 stores will close, and over the next five years, one in four malls will be out of business. He also said that since 2002, department stores have lost 500,000 jobs, with the advent of e-commerce replacing just one-third of them.
As several speakers at the conference noted, this transition is the result of the convergence of multiple forces—changing consumer behavior, new disruptive business models and rapidly evolving digital technologies.
While some may view the current state of the retail landscape as bleak, enormous opportunity remains for retailers to rise up against the influential new online players, most notably Amazon. It’s not just about adjusting inventory or market strategy. Retailers now have the means to better understand how customers shop and a greater ability to capitalize on growth opportunities.
The real battleground in commerce is not centered so much on the products consumers buy, but rather on their overall shopping experience. As shoppers become increasingly savvy, so do their expectations around service. It’s no longer enough just to have the best products—today’s consumers demand the best experience throughout the entire shopping journey. But they’re often not getting it. In fact, Pitney Bowes’ recently released global shopper study showed that nearly half (47 percent) of online shoppers globally reported frustration with their shopping experience during the 2016 holiday shopping season, including everything from shipping, to returns, to lost products and miscalculated duties and taxes.
This is a good part of the reason Amazon has been able to dominate the e-commerce industry—it has an intense focus on convenience and the overall experience. Retailers should not be intimidated by the fast-paced environment and competitive landscape. Yes, Amazon sets a high bar. But in doing so, it is helping make good retail strategies even better. Instead, retailers should use this as an opportunity to seek other ways to expand their business, like expanding internationally.
Cross-border technology is retailers’ gateway to millions of untapped consumers around the world. Retailers are beginning to recognize the growth opportunity in cross-border e-commerce, with 62 percent operating a cross-border e-commerce business today, and nearly 93 percent planning to offer cross-border shopping by this time next year—a potential 50 percent increase in cross-border retailers in just one year.
Emerging technologies also present a great opportunity for retailers to up their game on customer experience. Future retail winners will be those that embrace technologies such as AI, machine learning and voice recognition as a way to take complexity out of shopping. Clothing retailer Stitch Fix is a good example of how to do it right. It is successfully utilizing AI algorithms for personalization to bring the shopping experience to the home.
Similarly, Pitney Bowes is using AI and machine learning to save consumers money on what they pay for international shipping. Pitney Bowes uses past transactional data to predict the weights and dimensions of millions of items, which are then used to select the most accurate shipping rate for the consumer. This saves consumers money and increases the conversion rate for merchants of all sizes.
Technologies like these are speeding the convergence of physical and digital shopping experiences. That blurring of the lines is only expected to accelerate. To keep pace with the rate of change and continue to rise up to the standard set by new market dominators, retailers should turn emerging technologies into a way to drive customer value, and embrace cross-border commerce.
While consumer expectations around shopping experiences will only get more demanding, there are endless ways for retailers to excel by doubling down on the elements of the consumer experience that matter most—delivery, returns, tracking and world-class customer care.