Physical Stores Are Evolving To Meet New Roles For Customers

By Christine Kern, contributing writer

Stores are key and will thrive, but only with transformation of in-store customer experiences.

According to the recent IDC InfoBrief (survey), “Digital Transformation Boosts Retail Customer Experience,” which was sponsored by DXC Technology, stores are key and will thrive, but only if retailers work to transform the in-store customer experience. Stores are not dead, and they remain at the center of solid omnichannel retailing practices, although in a much-transformed entity. Where the store is taking on a new and significant role is at the beginning or middle of the path to purchase. In fact, 98 percent report that beginning or middle of the path to purchase store traffic is up. The brief asserted, “C X DX transformation isn’t a journey to a fixed end state. It’s transforming the end state with every step.”

 The focused survey, which consisted of 62 C-level respondents at leading retail companies in North America ($2.9B mean revenue), suggests that while stores are strategic assets for digital transformation (DX) and support the critical path to purchase, they are no longer the final stop on the purchasing journey. Driven by new technologies and the changing buying behaviors of young consumers, the in-person store is now more of a place where customers explore and experience.  

Survey highlights include:

• Most retailers (56 percent) see the breadth of store formats and chain brands as one of their top three assets for DX, more than any other asset.
• 44 percent rank omnichannel commerce and supply chain as top-three assets.
• Nearly 80 percent of respondents have executives leading their organization’s customer experience DX strategy.
• 98 percent report that more of the store traffic is at the beginning or in the middle of path to purchase. Store traffic is up, according to 85 percent of retailers. Conversion rates, transaction value, and number of transactions are all up, as well.
• U.S. retail third quarter sales increased by $52 billion in 2017, compared to 2016. Stores accounted for 70 percent of that growth, $36 billion, compared to the $16 billion added through e-commerce channels.

The study also demonstrated that omnichannel stores drive retail stores. As the study reveals, the increase in ecommerce sales is mostly split between Amazon (42 percent) and omnichannel retailers (35 percent). They already account for 70 percent of the total retail sales growth through their stores, while pure play ecommerce retailers own just 23 percent of online sales.

Stores that don’t transform to meet the changing landscape of retail are at risk of losing sales. Major obstacles to transformation include employee capabilities, data integration and integrity, and non-integrated business processes. Meanwhile, 86 percent say that abilities in customer data, associated data science, and advanced analytics are one of their top three strategic assets for digital transformation.

As the study states, ‘Digital transformation is driven by actionable insights, quick and informed decision-making, and agile operations. Scarce talent can’t be wasted on data wrangling. Leaders take their advantage in all of these areas. To digitally transform data utilization and realize the value of your data:

• Establish automated processes to ingest and analyze data from all channels.
• Drive actionable insights into processes and customer engagement strategies.
• Remove obstacles including data and analytics staffing/training, data integration/integrity and other legacy business process issues.”

The survey concludes that Generation Z is the future of retail. Thus, brands that wish to thrive must invest in new technologies to provide the personalized omnichannel experience this younger generation expects. Ultimately, it’s about bringing the convenience and amenities of the online shopping experience into stores.