The tech revolution has given retailers a big new competitor in Amazon, but it has also given stores tools they’re only starting to understand and use.
And Anand Raghuraman, principal and Americas, leader, consumer products and retail at Ernst & Young, told executives that the new technologies bearing down on retail can be used to attract and convert shoppers into buyers at stores.
Raghuraman noted that foot traffic at stores has been declining and that many big retailers, including Sears Holding Corp. and Macy’s Inc., have been shutting stores while e-commerce sales are expected to double between 2015 and 2020.
He described Amazon as “the elephant on the Internet,” but said the online giant performs best at lower price points and has had shown weakness in certain areas, such as luxury goods and wine.
“Amazon works best for those searching for specific items and not as much for general browsing,” he said, noting other companies have an opportunity to compete in categories that lend themselves to browsing.
Retailers need to seize opportunities to reach and interact with customers on a one-to-one basis.
“Social media is an echo chamber where customer advocacy can make a brand,” he said. “Consumers need to be incredibly engaged on the co-creation of products. We have the opportunity to adjust our strategy and branding based on the behavior of every individual.”
Raghuraman said it is key to engage customers online and to get them into the store to interact with the brand and product.
“Customers who use dressing rooms are almost seven-times more likely to buy,” he said. “The issue is you can only get them to use dressing rooms if they’re actually interested in coming into your store.”
He said some brands are doing a good job using tech to compete, and pointed to Uggs’ use of RFID tags to manage inventory in its stores or Sephora’s workstations with large digital screens.
But there’s room for improvement.
“No single brand has done everything right on a large scale,” he said.
And digital additions to the store should have real purpose.
“The technology you implement must be directly used to help the customer make the decision to buy,” Raghuraman said. “In this new retail era, you really don’t want to just use pricing and promotion to make people buy.”
And expect to keep trying to hit a moving target.
“Ever-evolving technology is here to stay,” Raghuraman said. “There’s no going back. It’s time for brands to completely rethink the role stores are going to play.”
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