Retail responses to technology disruptions require action, ‘Golden Gate’ thinking

Despite all the buzz and jargon around omni-channel retail or mobile and digital applications to enhance shopper experiences there has likely never been a better time to be in retail, according to Kenny Tomlin, founder and CEO of Rockfish.

Tomlin said if retailers 20 years ago would have had the total transparency of price and access to information about shopping behaviors and personalization that’s readily available today they would consider these positives.

“There is a transformation of retail underway. Will the store eventually be replaced by virtual experiences, in some cases it has already has,” Tomlin said during a question and answer segment at the recent Northwest Arkansas Tech Summit in Rogers.

Tomlin said there is also a social side to shopping that transcends the business transaction. He said while some things can be ordered on subscription, there will likely be brick and mortar stores that can cater to shopper experiences through personalization techniques like those used in a Burberry store in London.

“It’s rather cool to know you can go into the Burberry store and when you try on a coat and look in the mirror, you can see it paired with other outfits. When you walk outside the dressing room applause can be heard with congratulatory messages about how great the coat looks on you,” he shared. “This is all about creating a personal experience like none other.”

Tomlin said retailers have an opportunity with new hardware and software to engage their customers experientially. He said the rise of smartphones and other mobile devices has made it a much easier task in many cases.

The connection between brick and mortar retail and internet connectivity is well documented. Today as much as 55% of in-store purchases have in some way a digital connection, whether its comparing prices ahead of time, checking for availability or reading customer reviews, according to research from Deloitte.

The top way consumers (55%) use their mobile phones while shopping in-store is to search for the best deals. This is up from 36% in 2014. Another behavior category growing quickly year-over-year is product ratings and reviews. Rockfish reports that 47% of consumers use their mobile devices to check ratings while they are in a physical store, up from 30% a year ago. Online purchases made for products while consumers are in a store have risen to 24%, up from 13% last year.

Tomlin said e-commerce sales completed by mobile devices were $40 billion annually in 2013 and estimated to be just under $80 billion this year. By 2017, e-commerce sales via smart phones and tablets are expected to top $110 billion.

While the path from initial search to purchase is not yet mainstream on mobile it is moving in that direction. Experts at the recent technology summit said retailer’s must have a mobile strategy if they hope to survive the changing landscape.

But even having a popular mobile app won’t be enough. Jon Stine, global director of sales and strategy at Intel, said smart phones have become the remote control for life and consumers will continue the evolution of living through screens, whether it’s a smart phone, laptop, desktop, smart television or some wearable device such as an iWatch. He said retailers will have to continue investing for the future, while also catering to consumers who are slower to adopt. Stine calls it the Golden Gate approach. He said it takes three years to paint the Golden Gate Bridge. Workers begin on the north end and begin painting and after about three years of that they must begin the process again. 

“The bridge is never all newly painted, it’s always a mixture of older and new. Retailers will have to follow this same premise through these years of transition,” he said.

Stine said retailers must also align themselves with services that help consumers solve problems. He said as products become more commoditized, gross retail margins will continue to shrink into an abyss. This is already an issue with electronics in general as prices are always declining amid hyper competition and continuous innovations. He claims the real value proposition for retailers in the future will likely be through the services they can perform. He cites Walmart’s care clinics and Home Services provided by Home Depot. Stine said services are a real opportunity for retailers looking to provide a value proposition. 

Stine said there is no time for inaction on the part of retailers all chasing the 800 pound gorilla known as Amazon. He said as retailers continues through this time of change perhaps they might take note from Taylor Swift, who “gets it.” 

“Everybody’s complaining about how music sales are shrinking, but nobody’s challenging the way they are doing things,” Swift wrote in a Twitter post.

Stine said Swift didn’t sit idle, she’s blazed a trial of her own through external partnerships, curating a loyal fan base with more than 42 million Twitter followers, exclusive products and boldly exiting Spotify, a music streaming service. Swift, he said, reshaped her business model to adjust to the changing times. 

“Retailers and all of us must do the same,” Stine said.