How digital transformations impact the customer experience.
Sometimes it takes reality a while to catch up with technology. But when it does, markets can change fast. That dynamic may well be in play for the retail industry in 2017.
Cloud computing, mobility, omnichannel commerce, customer experience: these technologies and technology-enabled trends have been on retailers’ minds. At the same time, retailers are looking ahead to new digital capabilities. All these factors are about to converge.
IDC refers to the application of digital technologies as digital transformation (DX). For retail, the goal of DX is largely to improve the customer experience (CX). Which investments will move the DX-to-CX needle going forward? IDC identifies 10, from cloud computing to cybersecurity services. (See Figure 1.)
Signs of the Times
Digital signage is emerging on two fronts: the fronts of shelves and the fronts of stores. Recent research2 has shown that digital signage can:
- Capture 400 percent more views than static displays.
- Generate 33 percent more in-store traffic.
- Encourage customers to remain in stores 30 percent longer.
- Reduce perceived wait times at checkout by 35 percent.
- Grow brand awareness by 48 percent.
- Increase average purchase price by 30 percent.
- Drive up sales volume by 32 percent.
On shelves, electronic labeling can replace time-consuming paper labels with digital displays of product information and pricing. Networked shelf labels can be updated in real time, within a single store or across multiple stores. That can help retailers keep pricing consistent across multiple channels. It can also allow them to dynamically adjust pricing based on product availability, or present real-time offers based on customer location.
In storefronts, digital signage is becoming table stakes, replacing printed promotional posters. As prices drop for flat-panel screens, retailers are rolling out large displays and even giant video walls. Digital signage can be updated in real time to present a wide array of content in rich-media formats. The same approach can be used in end-of-aisle and point-of-sale displays. Some retailers are even experimenting with interactive touch-screen windows that allow consumers to browse products.
Shining Light on Customer Behavior
Beacons are small, inexpensive devices that can be attached to walls and shelves in retail locations to interact with apps on consumer smartphones. The devices typically use Bluetooth® to send push notifications of offers based on customer interest or purchase history. While only 6 percent of consumers have used beacons, 70 percent of those who haven’t say they’d opt in with the right incentives, such as coupons or discounts.4
Many retailers see the promise of beacons, which are already influencing billions of dollars of sales. Beacons might be especially effective in the consumer packaged goods (CPG) sector. In part that’s because CPG shoppers are already more inclined than others to use mobile devices to research products and redeem coupons in-store. In addition, CPG products are typically inexpensive, frequently purchased items that allow retailers to track buying behaviors.5
Shopping in a Virtual World
While beacons will influence retail, VR could transform it. From smart mirrors in dressing rooms that let consumers virtually try on clothing, to headsets that let prospects virtually experience travel destinations, VR is allowing retailers across categories to better engage customers. It’s also helping them burnish their image as tech-savvy brands and attract a younger demographic.
VR could be especially effective in furniture and home improvement, where customers can be placed in an immersive environment, giving them confidence to make big-ticket purchases. A growing proportion of such VR will be made possible by holographic computing, which uses headsets such as Microsoft® HoloLens® to display 3-D images in real space.
Retailers can expect customers to embrace VR. The number of active VR users will reach 171 million by 2018,7 and active VR users will grow at a compound annual rate of 147 percent between 2016 and 2021.8 In retail, more than half of consumers say VR e-commerce will influence buying decisions, and 62 percent would like to try VR shopping.9
Artificial Intelligence, Real Insights
While VR lets consumers experience products in new ways, AI gives retailers new insights into consumers. Across industries, AI spending will leap from $8 billion in 2016 to $47 billion in 2020, a compound annual growth rate of 55 percent. Industries that will invest the most in AI include retail and banking, following by healthcare and discrete manufacturing.10 Consumers are also open to AI. In fact, 70 percent of millennials say they’d like retailers to use AI to show them more interesting products.11
Retailers can deploy AI in a variety of ways. They can provide electronic personal shoppers that ask a series of responsive questions to zero in on products that meet consumer needs. They can enhance call centers with natural language understanding to predict customer satisfaction. They can use algorithms to analyze text and photos on social media to learn what consumers are sharing about their brands. In fact, 47 percent of retailers say they’re beginning to use AI for customer interactions, and 50 percent are using it to automate IT tasks. Among retail executives, 78 percent say AI will significantly change or completely transform the industry in three years.13
Of course, as retailers move forward with AI, they’ll keep a lookout for other emerging technologies — all with a goal of leveraging DX to improve CX. “The best retailers don’t really differentiate physical from digital shopping,” said Ed Nardoza, editor-in-chief of Women’s Wear Daily®, in a recent report.14 “They need to offer whatever experience and convenience the shopper demands, when they demand it.”
1 “Top 10 Retail Predictions for 2017 From IDC Research,” IDC, December 2016
2 “Digital Signage Statistics,” Digital Signage Today, November 2016
3, 4 “Future of Retail 2016,” Walker Sands Communications, June 2016
5 “Why the CPG Category Is Poised to Become an Early Leader in Beacon-based Marketing,” Business Insider, May 2016
6 “Future of Retail 2016,” Walker Sands Communications, June 2016
7 “Statistics and Facts About Virtual Reality,” Statista, 2016
8 “Virtual Reality Market Outlook,” Orbis Research, September 2016
9 “Future of Retail 2016,” Walker Sands Communications, June 2016
10 “Worldwide Cognitive Systems and Artificial Intelligence Revenues Forecast to Surge Past $47 Billion in 2020,” IDC, October 2016
11 “Frontier(less) Retail,” J. Walter Thompson, June 2016
12, 13 “Accenture Technology Vision for Retail,” Accenture, 2016
14 “Frontier(less) Retail,” J. Walter Thompson, June 2016
Accenture® is a registered trademark of Accenture. Bluetooth® is a registered trademark of Bluetooth SIG, Inc. IDC® is a registered trademark of International Data Group, Inc. J. Walter Thompson® is a registered trademark of J. Walter Thompson Co. Microsoft® and HoloLens® are registered trademarks Microsoft Corporation. Statista® is a registered trademark of Statista, Inc. Women’s Wear Daily® is a registered trademark of Advance Magazine Publishers, Inc.
All data cited in this article is used by permission.