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The customer is the only channel: The next step in retail evolution

  • Posted on December 15, 2021
  • Estimated reading time 5 minutes
Next Step In Retail Evolution

Bricks-and-mortal retail is on a roll, having grown $400 million above 2019 levels. Retail overall grew 13% in 2021, with in-store retail sales speeding past online sales to contribute 61% of the increase, according to The NPD Group.

The most successful retailers have found ways to integrate their in-store and online operations to delight their customers with engaging experiences at scale. Native online retailers have noticed, which is why more and more of them are building physical stores that extend – and create synergy with – their cyber stores. Think Amazon, Warby Parker, Alibaba, Bonobos, Zivame, Primark, and many others. Even Wayfair is opening physical stores. These retailers know that physical stores legitimize a brand and customers show loyalty to brands that understand their needs and expectations.

Neither in-store nor online is the customer’s channel of choice. Omnichannel – an all-things-to-all-customers-at-all-times approach – isn’t the most effective nor most efficient way to go, either. Instead, successful retailers are recognizing that the customer is their only channel. Meeting their customers when and where they are when they’re ready to buy – or even when they just want an answer to a question – is the retailer’s strategy for success.

The search for continuous, frictionless cross-channel engagement
What complicates this point of engagement is that today’s savvy, connected customers don’t go shopping at predictable times or places. Many of us now expect to shop when, where and how we want, with fast, cheap and convenient delivery to our home, store or pick-up point. And as customers we don’t have single sets of preferences; our preferences can change from moment to moment. While today I may opt for curb-side pickup, tomorrow I may look for an experience expertly curated by a knowledgeable associate. The following week, delivery to my home may be my only concern. In many instances, that choice of channel determines where we seek out our next engagements. And if our choice isn’t available from our existing retailer relationship, we will find another retailer who offers it.

Recognizing this continuum across the customer journey is a key first step to ensure the ability to engage appropriately. This said, and as exemplified recently by the rise of curbside delivery, customers will shift channels, even permanently, if their moment of truth makes it necessary.

It’s true that retailers that lack a given channel may still have enough brand strength to carry them through in the short-term. But in the long term, where retailers compete to maximize customer lifetime value, failure to meet customers where they are will only benefit the competition.

Reignite retail through the power of connected systems
Acting on the idea that the customer is the only channel means more than offering in-store, online and curbside points of engagement. Instead, retailers should consider interwoven, connected journeys where these touchpoints work together in innovative ways to create engaging, interactive customer experiences at scale. However, this journey – with new, engaging experiences that go beyond a few concept stores – is not an easy one. Retailer after retailer has attempted to scale point-based experiences across its locations but usually end up building out just a few new concept stores.

Communication is key in every relationship
Customers are making it clear that convenience and transparency aren’t their only requirements across the points of engagement. Customers also expect retailers to “show me that you know me,” leading to higher expectations for seamless engagement with curated experiences across channels. Customers expect to be treated in a personalized and preferred way regardless of how they choose to engage with their favorite brand, so why should the physical engagement be different from the online meeting?

For example, customers want full transparency into the supply and delivery chains. Where, how and when can they get the products they want? If those products aren’t in stock, when will they be? Where are products in the shipping process and what updates are there to anticipated delivery times? If a customer’s existing retail relationship does not allow for this type of communication, and other retailers can provide it, those customers may decide to seek out the competition.

Engaged employees can give their best
Customers aren’t the only ones affected by this evolution in retail expectations; so are a retailer’s employees, because greater customer expectations place more pressure on employees to meet them. Some retailers show awareness of this as they increase their investments in employees, in the tools for insight and engagement they provide to them, and in operational efficiencies to ensure the right people take on the right tasks at the right times.

Admittedly, it’s a tall order for retailers to meet their customers wherever they are at their moment of truth, supported by a workforce that is always at its best. Retailers should keep many dependencies in mind. A central question is: How are your business functions aligned to deliver highly engaging customer experiences across channels? There’s a crucial technological aspect to this question, but technology alone isn’t the answer. You also need to consider your workforce, their new roles and responsibilities in this new world, and the culture and change management you need to drive success.

It’s a brave new world – let’s face it together
Customers are making it clear that their need for convenience and transparency is equally important across their channels of engagement. The customer journey no longer has a definitive start, middle and end. It’s a journey that never ends, with connected and relevant experiences throughout. Think of the customer journey as the path along a figure eight – or along the infinity symbol. This continuous path holds defined areas of crossover. Staying connected and relevant is key and many retailers are seeking out the “channel-agnostic” customers along this path, since they hold greater potential value.

To help solve for this at Avanade, we scale experiential retail by ignoring the traditional boundaries of physical and digital; the store is not an island, but a connected product. We develop experiences that stand alone and connect to existing store infrastructure, almost like installing software into an operating system. This enables our clients to unlock value at scale in an accelerated manner.

Ready to learn more? Contact us or come visit us at NRF.

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