Reinventing the retail industry: key technologies of Retail 3.0
In our previous article, we presented an overview of what Retail 3.0 is – you can view it here – and we promise to present the key technologies to make this new and revolutionary ecosystem work.
But first we need to clarify one point: we use the term “key technology” in a very broad sense, including not only applications and other computer programs, but the entire set of instruments, methods and techniques necessary to ensure that a company can focus on the individual customer.
As we said in another article, Retail 3.0 is built through real-time marketing and supply chain synergies, built on a database of identified transactions. And this requires the integration of online and offline channels, logistics and data throughout the value chain.
Enabling Retail 3.0
To enable Retail 3.0, it is necessary not only to have the right technological tools, but to structure all processes and routines based on a new mentality, in which the customer is king and his will is sovereign.
With that, let’s move on to what we call key technologies.
1. Multi-channel approach
The multi-channel shopping experience extends from the physical store to mobile browsing, e-commerce, local storefronts, social/digital media and other cross-channels. This means that all sales and marketing channels are integrated, so that regardless of where the purchase is made, in the store, on the website, on the mobile phone, it always takes place smoothly and consistently. According to a study published on Customer Think.com, companies that implemented an omnichannel approach realized key benefits for their long-term success – increasing customer retention by 89% and annual revenue by 9.6%.
2. Chatbots and other tools based on artificial intelligence and ML
Retail must be ready to deal with voice assistants, robot assistants, drone delivery, etc. And especially with so-called customer chatbots that offer instant and 24/7 support for information searches, order tracking, complaint management and after-sales. Additionally, they can be linked to a company’s CRM to provide a personalized experience.
The results are amazing. Cars24, which sells used cars online, uses a chatbot to answer frequently asked questions, such as the age of the vehicle, to reduce stress in contact centres. The initiative reduced call center costs by an impressive 75%. Also, chatbot interaction results in 1/3 of sales.
In another example, CEAT, India’s largest tire manufacturer, achieved a 21% conversion rate thanks to its AI-driven chatbot that understands user intent. It recommends tire models based on customer preferences (eg tires with a carbon footprint) and improves the company’s communication capabilities.
3. IoT-based devices
The term Internet of Things (IoT) describes a network of physical objects embedded with sensors, software and other technologies for the purpose of connecting and exchanging data with other devices and systems via the Internet. Retailers are currently already working with security sensors, sensors to monitor the condition of the inventory for sale (temperature, strength, etc.) and network monitoring. Now they also have to deal with other devices with digital customer journey tracking technology and beacons, tailoring the purchase process to each individual customer. As a result, customers can get personalized offers, help finding products and easy checkout – and increase their propensity to spend more by about 40%, according to consultancy Built.In.
Amazon Go is a prime example of physical stores connected to an IoT system. We will talk more about the network in the next article.
4. Location Based Services
From previous devices, it will be possible to know when certain customers are in the store and trigger, for example, real-time alerts for an employee to go to the store location to help the customer. Another important service can be an alert when a customer walks in the door or is in the parking lot to pick up an online order. In London’s Regent Street, around 100 retailers – including Karl Lagerfeld, Armani Exchange and Brasserie Zedel – have installed sensors that trigger personalized offers via the co-op app. This combination of “geofencing” and artificial intelligence (to personalize offers) increased sales by 7.4%.
5. Independent checks
Also called assisted checkouts (ACOs) or self-service checkouts, these are machines that provide users with mechanisms to complete transactions without the need to use traditional checkouts. The key is to deploy mobile app-based checkout, facial recognition and other technologies to streamline the purchasing process. A Raydiant study of self-checkout experiences found that nearly half of customers will almost exclusively use self-checkout when it becomes available. When asked how often they would use a self-service kiosk, approximately 48.7% of respondents said “mostly all the time”. The survey also found that about 30.6% of respondents said they sometimes use self-service kiosks and generally change their checkout habits based on the nature of the items they purchase and the length of the checkout line. During the research, only 3% of the respondents said that they never use the bank for self-checkout.
6. Click and download the model
Retail 3.0 has as one of its pillars this model which basically enables the following:
- Buy in the store and send from the store to your home.
- Buy online and collect in store.
- Buy online and return to store.
- Buy in store and return by mail with a return label from the retailer’s website.
- Shop online and pick up at third-party locations such as stores and lockers.
- It is no coincidence that in 2022, sales of the model in the United States are expected to grow by 19.4% compared to 2021. After an increase of more than 100% during the first year of the Covid-19 pandemic, Click and Collect should continue to grow, albeit at a slower pace .
There has been a paradigm shift in the world of retail with the debate shifting from online versus brick-and-mortar to the need for full engagement and ongoing customer experience management. Whether it’s an online or physical store, digital transformation must be at the heart of every strategy and business model.
In the next article, we will show some examples of companies that are already fully immersed in Retail 3.0. Until then.