How technology is reviving brick-and-mortar retail in 2020
Written by Debra Weinryb, Content Strategist at diff agency
Retail is a competitive landscape, where business owners are often competing at the expense of their weaker peers. This past year, over 7,000 retail stores in the US closed, including chain brands such as Forever 21, Gymboree and Payless.
Though it often feels like ecommerce is overtaking brick-and-mortar, there is still significant demand for physical shopping experiences. According to the National Retail Federation, for every retail company that is currently closing stores, five are opening stores. The reality is that retail is a dynamic, constantly evolving and highly competitive industry that is growing.
While 2019 saw increased attention in the direct-to-consumer market, industry experts at IAB Direct Brand summit predicted the online-only business model is going away, with brands like Glossier, Away and others opening brick-and-mortar shops.
The way we do brick-and-mortar is changing through the use of technology and new marketing trends, and in turn, these changes are shifting customer expectations. As customer expectations evolve, retailers have to invest heavily to improve the in-store experience in order to ensure shoppers keep coming back.
Welcome to the emerging experience economy
Retailers that thrive in 2020 will be the ones who reshape their business strategies around their customers’ behaviors and expectations in the ecommerce space. By elevating experiences over products, physical stores can provide customers with stimulation, meaningful interactions, and unique offerings that will help them play to their strengths and succeed.
Today, retail businesses need to come to an understanding that their online stores can coexist with their brick-and-mortar shops. Stores that practice an omnichannel approach to commerce by offering seamless experiences across a brand’s channels will engage best with customers, whether through a physical store, website, social media account or a promotional event.
Stores like Warby Parker, the American online retailer of prescription glasses and sunglasses, have expanded their customer base by opening brick-and-mortar locations to attract new customers they never could access if they were online only. Warby Parker elevates its shopper experiences with authentically personable and engaging representatives who use customer-visible technology to streamline the purchasing process. Not incidentally, these associates are very effective at making a sale.
Technology can elevate in-store customer experiences
The most successful retailers will be those that innovate by creating experiential physical environments that align with their growing online presence. By doing so, competitive brands can provide value, create a human connection, or build a community that will elevate their customer experience above just their product offering.
Based on the above trends, here are 5 innovative technologies that retail brands can leverage in 2020 to revive the brick-and-mortar customer experience:
1. Smart mirrors
The core of Augmented Reality (AR) is to integrate digital information with the shoppers’ environment. Originating from gaming, augmented reality has shifted to retail and ecommerce where it can be used as a tool to acquire new customers. While there are mobile apps that provide users with similar functions, many brands are now bringing augmented reality experiences to brick-and-mortar locations.
Coty’s ‘Magic Mirror’ is one revolutionary example that launched in 2018 at their Bourjois boutique in Paris. The Magic Mirror is powered by products and shopper-product interactions, and demonstrates an augmented reality makeup shopping experience. Whenever a shopper picks up a lipstick or eyeshadow to “try on”, the color will immediately appear on their face in the mirror. Customers can shop products without needing to actually apply makeup. Putting the physical product in the shoppers’ hand resulted in increased attitudes and intentions of purchasing the product, driving a more seamless path to purchase.
2. Checkout-less shopping
A poor checkout user experience can lead to an abandoned cart online. Likewise, slow lineups or chatty cashiers can keep customers waiting in line to make a purchase at a brick-and-mortar location. Keeping customers waiting not only causes them frustration, but some will leave your store and may not ever return again. That’s why companies are now looking to eliminate the checkout experience altogether with checkout-less shopping that eases the speed of the buying process in an effort to make transactions faster, easier and more enjoyable for customers.
Amazon Go is a prime example of frictionless checkout which eliminates the “friction” or pain points during the checkout process. When you shop at Amazon Go, you enter and take the products you want, and leave again, without having to interact with a cashier. Sensor technologies and deep learning detect when products are taken or returned to the shelves, and keeps track of them in your virtual cart that connects to the Amazon Go app. When you leave, your Amazon account is charged and you are sent a receipt. By eliminating customer pain points like having to wait in line, Amazon Go provides a fast and simple way to checkout.
3. AI-driven personalization
Personalization is critical at the point of sale, whether you are selling online or in a brick-and-mortar store. By designing your customer experience to meet your shoppers’ needs more effectively and efficiently, you are more likely to increase customer satisfaction, make a sale, and increase the likelihood of repeat visits. Personalization has gained momentum online, but if brands don’t apply it in real life, they can miss out on building customer loyalty.
McDonalds is an example of a company that has tested personalization strategies in their brick-and-mortar locations. Through its acquisition of Dynamic Yield, it’s using AI-driven technology to change drive-thru menus based on factors like the time of day, current restaurant traffic, trending menu items and weather. McDonalds is also working on making technology that can read license plates and make recommendations based on previous purchases. By using in-store personalization, McDonalds can meet their shoppers’ individual requirements to increase the likelihood of customer satisfaction and repeat sales.
4. In-store use of apps
According to eMarketer, more than seven in 10 US app users at least “occasionally” access apps while shopping in-store, according to a 2019 survey from RIS News. And more than a third of those respondents do so at least once a week. Retail apps are another way to engage mobile users, where a store can offer coupons, product information and in-stock availability while customers are shopping in-store to reduce shopping pain points and provide enticing incentives.
The American Eagle App is an example that lets shoppers connect to their brand in a convenient way. Customers can snap and scan with their phone camera in stores to see similar styles to anything they see. They can also see whether their favorite item is in stock at an AE or Aerie store location, and reserve it to try-on in a fitting room, eliminating the hassle of searching for an item. Favorites allow users to scan and save the styles they love so they can shop later. By keeping customers connected to what’s happening in stores, American Eagle engages their customers on a personal level.
5. Loyalty programs
Loyalty programs are one of the most effective tactics for increasing revenue and customer loyalty. According to Yotpo, 52% of American customers will join a loyalty program with a preferred company. By understanding the needs and motivations behind your shoppers’ purchase decisions, you can implement strategies and tactics that offer the greatest value, and which will get customers to stick with your brand.
Sephora’s loyalty program provides options and perks to customers both in-store and online. Customers earn rewards per purchase on a traditional point system with three tiers depending on how much a shopper spends at the store: Insiders, VIB, and Rouge. The higher the level, the more free products shoppers receive, and the more choice a loyalty member has to choose their birthday gift. Sephora’s loyalty program retains profitable customers by offering incentives like lower cost shipping, and minimizes the considerable cost of acquiring new customers.
Experience is the future of commerce
It’s clear that brick-and-mortar stores in 2020 will continue to evolve and look different than today. Retailers who want to survive in this highly competitive space will need to implement an omnichannel strategy, with seamless programs that prioritize shopping experiences over products across shops and online stores.
To succeed as a retailer in 2020, you’ll need to understand your customers behaviors, attitudes, needs and desires. By doing so, you can design elevated online and in-store experiences that provide value, create a human connection, and build a community around your brand.
You’ll need to continuously invest in experiences that their consumers actually want to share. Whether you leverage smart mirrors, checkout-less shopping, AI-driven personalization, in-store use of apps, loyalty programs, or other technologies, elevating the customer experience will be the most lucrative strategy that your brand can keep up with.