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A glimpse at the future of retail was seen at the Digital Retailing panel session taking place during yesterday’s National Retail Federation annual industry show in New York's Javits Center. The CEOs of curated home goods online retailer One King’s Lane and online dress and accessories rental retailer Rent the Runway talked at length about how their companies combine the art of retail merchandising with the science of data brought together in an around the clock online carefully curated and crafted retail experience for their customer.
A retail professional with a solid technology and e-commerce background, One King’s Lane CEO Doug Mack talked about the the need to use data to create persistent customer relationships. However, this is not just the future of digital retailing but the future of all retailing.
After all, retailers are not property owners, so it’s not about owning or leasing buildings, but about selling your own and other people’s products. It is about getting products to market and into the hands of consumers while making a profit.
As the retail customer and as retail technology evolves, so must retailers new and old. We are already seeing the price some retailers have paid for failing to adapt and smartly innovate with the demise electronics retailers like Circuit City and CompUSA, booksellers such as Borders, and the struggles of a grocery store chain like A&P which filed for bankruptcy in 2010. For tomorrow’s retailer, the three Ds of Digital, Data, and Design will become increasingly important to earning a profit selling their own and other people’s products.
When it comes to Digital, it is not only about the virtual storefront, it’s about embedding digital into the retail mindset, about digitizing the supply chain, and expanding their digital footprint to seek new digital retail distribution channels.
Some retailers are starting to innovate in this space by cooperating with partners from other sectors such as media to expand their digital distribution and footprint. JC Penney is working with leading publisher Hearst in a deal which will see Hearst publications become an online point of sale for JC Penney.
In fact, the interplay between retail and online publishing is becoming an important trend -- especially among online retailers. This is perhaps most evident in the online apparel and fashion space where startup online retailers like Gilt Group and Net-A-Porter have used their own branded online publishing to create valued and persistent relationships with their customers.
It may seem that digital retailing is resulting in the demise of main-street retailing since there’s no question that main-street retail is hurting as the for sale and going of business signs proliferate.
However, not all main-street retailers are so pained and those that are embracing Digital, Data, and Design in all aspects of their business and innovating are moving forward. Smart offline retailers are finding ways to make online and offline work for them in an integrated manner creating a compelling proposition for the shopper who values a place to pick up a product and if need be return it but with the convenience and expand choice of online product research and ordering.
Smart retailers are also releasing that have to to be more data driven in their decision making and to choose and embrace the shoppers they want to do business with and focus away from those they don’t.
They also recognize that today’s shoppers increasing expect their online and offline shopping experiences to be exemplary and equal, a retailer can not afford to have a great online shopping experience and a terrible offline one for the customer nor vice versa.
While some brand offline retailers are getting their Digital, Data, Design act together so some of the big names and not so big names of online retail are looking to expand their presence and operations into offline retailing taking in this realm their online learnings from digital online retailing, innovating in the digital supply chain, and how data, digital, and design has worked for them online to inform their offline footprint.
One further area where many traditional retailers can learn from some of their online brethren is digital marketing. Online retailers like Amazon have become masters of digital marketing and, in particular, data-driven direct digital marketing, digital advertising and digital ad placement. A few have become masters at seeking out and engaging the online shopper and bringing them to their online store time and time again.
Traditional retailers can learn much from how the likes of Amazon and other online retailers have used smart digital marketing to acquire customers and once they have been acquired, to build the persistent customer relationships desired by many retailers Mack talked about at the NRF show.
The separation between digital retailing and traditional retailing is increasingly an artificial one as all retailing becomes digital in one form or another. Even more than just digital, there is also data and design as cornerstones of next generation retailing, and, to add a further D to the equation, there are devices. Today, retailing is becoming about devices that engage the retail customer and devices that sell to the retail customer.
In particular mobile devices like smart phones and tablet computers are become point-of-sale tools/places for digital retailers.
Retailers are facing unprecedented challenges in their markets. With an uncertain economy, generations of shoppers are growing up with online shopping as an accepted part of their world, and older generations of shopper are being drawn to online shopping by its convenience, top rated customer service, better appreciation of their needs and often better prices.
At the same time, there is emerging a new generation of design to store brands who, like Apple and fashion brands like Ralph Lauren and Burberry, are creating great products, branded online experiences, and branded physical store offline experiences.
Today’s retailers need look no further than emerging retailers like Amazon, Gilt Group, eBay, Apple, Ralph Lauren, and Burberry to understand the future of retail.
These retailers combine the science of data and analytics with the art of great merchandising and the appeal and aesthetic of great design so that it is embedded in the DNA of their branded products, web stores, and physical stores.
Retailing is all about the customer. Without customers there is no one to sell to and no money to be made. But next generation retailing is not just about the 4Ps but now also the 4Ds of Digital, Data, Design, and Devices.
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