Learning from Digital Native Retailers

What traditional retailers should know

Industry Trends
May 6, 2019

Despite all the talk of a “Retail Apocalypse,” successful e-tailers like Wayfair and Adore Me are investing significantly in opening physical stores, with digitally native brands collectively expected to open more than 850 new locations over the next five years. And there’s plenty that traditional retailers can and must learn from their digital counterparts to keep pace.

Seize the Data

In today’s retail climate, leveraging customer analytics is table stakes, and this is where digital natives shine the brightest.

Thanks to AI-powered insights gleaned from recent purchases, browsing history, Siri inquiries, and beyond, these online sellers create a personalized shopping experience for customers and unearth key sales drivers. In the case of Casper, the bed-in-a-box giant used geographic sales data to determine that business grew more rapidly in areas surrounding its temporary physical locations, prompting the company to open more than 200 stores in the US over the next three years. [Casper uses Retail Zipline to coordinate all their locations].

To stay competitive, traditional retailers must be just as crafty with their data to maximize profits and pamper shoppers with a custom-made in-store experience.

That means loyalty cards and surveys alone aren’t going to cut it; there are more intelligent options out there. For example, Nike’s new concept store in Los Angeles sells shoes that are popular among online shoppers living in the surrounding area. Nike also employs geofencing technology to offer personalized deals to customers when they enter the store.

From influencing merchandising decisions to cutting unnecessary costs, regularly gathering and analyzing data is a sure-fire way for physical stores to boost customer satisfaction and bottom lines. However, as technologies like facial recognition and geolocation become more advanced, retailers will need to be sensitive to the growing stigma around data privacy.

The Friction Affliction

According to a recent iVend Retail report, the top priority for 83 percent of retail shoppers is quick and easy checkout, and that’s one area where online shopping still holds the upper hand.

E-commerce behemoths Amazon and Alibaba have ushered this “frictionless” shopping experience into the real world, opening up cashierless physical stores that wipe out lines and the paper or plastic? refrain. Meanwhile, other digital natives are tackling points of friction outside of checkout.

Warby Parker, known for pioneering the try-before-you-buy approach for eyeglasses, unleashed a new feature in February that allows customers to try on glasses digitally using their iPhone. This innovative, AR-based technology resolves a common gripe among in-store eyeglass shoppers: the inability to try on styles that are out of stock. Traditional makeup retailers like CoverGirl, L’Oreal, and Sephora have taken notice, and are mitigating similar inventory challenges with their own augmented applications.

But reducing friction isn’t just about rolling out new technology. Smoothing the customer journey also means properly managing inventory, training team members to engage with customers, and capturing data to help establish areas of improvement.

If You Build it, They Will Come

Building customer loyalty is both significant and significantly difficult. A number of e-tailers have done well on this front by using social media, around-the-clock notifications, chat bot support, and seamless personalization. Yet, even with online’s 24/7, tailored marketplace, physical retailers are starting to woo customers by deploying memorable in-store experiences that back-lit rectangles can’t.

In their quest to put some “hop” back in “shop,” brick-and-mortars like Rebecca Minkoff, for instance, are proving to be just as tech-savvy as their online competitors. The Rebecca Minkoff location in NYC is equipped with interactive mirrors in the dressing rooms that enable customers to order different colors and sizes with a few taps. They can also adjust the lighting to see what their outfit looks like in various settings.

Other retailers are installing glamorous in-store pop-up shops to attract customers. Macy’s is testing this approach with their recent Story rollout, which tries to emulate the immersive and ever-changing experience of the original Story location. This follows the store’s launch of The Market @ Macy’s pop-up that showcases popular online merchants.

As technology continues to evolve, it’s imperative for brick-and-mortars to not only adopt the cutting-edge tools of their online rivals, but to ultimately leverage their greatest asset: four walls, a roof, and the people inside. That, after all, is why digital natives are opening up storefronts in the first place.

Ultimately, creating an exceptional in-store experience begins with the employees on the frontlines, not just the technology around them – which is why communications matter so much. Traditional retailers can only match the speed and agility of their digitally native counterparts if the people on the ground understand the how and why of what they’re being asked to do.