Over the last few months, I’ve been fortunate to attend several conferences throughout North America, including Retail Innovation Conference, Store Conference, and Future Stores. At each event, we learned about the most important trends impacting retail – from an increasing need for highly personalized experiences, to customers that aren’t giving up on brick and mortar stores, and premium and price-based retailers becoming the fastest growing segments. In this post, I’ve outlined these three important trends and how retailers are finding new ways to compete in this rapidly changing environment (hint: it starts with equipping your employees with the necessary tools and support to deliver a great experience).
3 trends impacting the retail industry
1. The emergence of the blue dot generation
“Why does the save button have an icon that looks like a microwave over a stove top? I don’t get it.” Sharing this comment from his 12-year-old son, Ken Hughes, an industry thought leader, explained to a room of retail executives that the next generation of consumers is far different than any other. They are truly digital natives who have their own set of cultural norms and artifacts (which, evidently, does not include the floppy disk icon).
The biggest challenge for brands today is being able to serve the four distinct generations of customers in the market: Boomers (1945-1964), GenX (1965-1979), Millennials (1980-1994), and GenZ (1995 – 2009). Hughes explained that to engage these different generations, brands must think about creating blue dot experiences. Using the metaphor of a digital map, where a flashing blue dot indicates your location and is always at the center of the screen – he explained that everything else is orientated around that point, regardless of where you go. This is how customers are expecting to be engaged: with experiences designed specifically around them.
2. Physical retail isn’t ending anytime soon
Much has been said about the current economic state of the retail sector. The sky is falling; malls and big-box stores will become ghost-towns; no one will ever leave their home to purchase anything, ever again. While everyone acknowledges that Amazon continues to represent an ever-growing piece of the e-commerce world, all is not lost in the broader retail industry. According to eMarketer, 90% of worldwide retail sales still take place in physical brick and mortar locations.
3. The middle segment of retail is declining
Research conducted by Deloitte indicates that the retail sector can be viewed in three segments: premium (e.g. Tiffany’s), balanced (e.g. Toys R Us), and price-based (e.g. Dollar Tree). As you look at industry trends, we are now seeing a split in the marketplace, with the largest growth coming from the premium and price-based segments, with the balanced segment responsible for the majority of the industry’s decline.
How are leading brands responding?
Through these trends we’ve seen the industry undergo a massive transition, but there’s no cause for concern about a retail apocalypse. The new retail landscape is defined by today’s four generations of customers and the divergence of successful retail segments. With this in mind, it has never been more important to exceed customers expectations. Two key areas retailers are focusing on to meet the changing needs of today’s customers and create exceptional in-store experiences:
1. The secret sauce of service aptitude
Today’s leading brands have begun cultural transformations to realign their business around their customers. Retailers, including Victra, Verizon’s recently formed retail operations arm, have realized that empowering their frontline associates is a critical step for success. For example, to bring their “Guest Services Revolution” to life, Victra has revamped their hiring practices, enhanced their training programs, and started to use analytics to optimize their staffing model. Leveraging an extensive Voice of Customer program, they’ve determined five unique journeys their customers are on when they enter a store, which is now the focus of their employee training programs.
2. The rise of the employee experience
Many industry veterans have highlighted a renewed focus on ‘people doing business with people’ as the key to future growth. With all of the focus on driving customer experience, the missing piece is to empower the frontline associate – the people actually interacting with customers and the ones tasked with delivering on a brand’s promise. To get it right for the customer, we need to first think of the employee experience. When employees feel valued and empowered, they have more positive interactions with customers, and that is key to creating “blue-dot” experiences.
Or, as leading thinker and business author Tom Peters so eloquently put it:
Paradoxically, to achieve an emotionally connecting customer experience, employees come first, ahead of the customer.
Author: Ryan Poissant, COO Nudge Rewards