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What Really Drives Engagement, Excitement and Incremental Sales? It’s Complicated

Consumers are demanding more and more from their retail experience whether they are shopping online, in store or a combination of both.

Customers are looking for convenience as well as an experience that speaks to them and helps solve their pain points. Retailers that successfully adapt to their customers’ changing wants have a greater chance of increasing both revenue and loyalty.

Especially resonating with today’s consumer are technology and services that address this need for convenience. “Technology that makes the shopping experience easier is what delivers higher spends and more shopping,” said Tal Zvi Nathanel, CEO and co-founder of Showfields, a four-story retail concept shop that brings digital natives into physical stores. “A simple example of this is mobile payments. It’s reduced friction when it comes to purchases, in turn driving more shopping trips and greater loyalty.”

Tech tools

Retail experts agree services such as buy online, pick-up in store, reserve in store and smart dressing rooms are critical components to the retail mix that can drive loyalty and increase spending. “We have found buy online, pick-up in store is key,” said Murali Gokki, a managing director in the retail practice of AlixPartners, a management consulting firm. “In fact, 37 percent of online shoppers in a recent survey we did value this service and have used it in their recent purchases.”

Other ways retailers are addressing the need for convenience and better access to product is through subscription-based rental programs. Ann Taylor and Rebecca Taylor are among brands that rent out apparel via monthly subscriptions. “We find that consumers who use these programs tend to spend more,” noted Gokki.

Whatever technology retailers use, it should serve to enhance the shopping experience for the customer. “Some of the things that are working well are virtual racks,” said Jamie Sabat, director of trends and consumer forecasting for Streetsense, a multidisciplinary design and strategy firm.

Rebecca Minkoff was one of the first to do it. You can take photos of yourself in the outfits you’re trying on and it will suggest items that match,” Sabat said. “So if you’re trying on a dress, it will suggest a purse or shoes. You can also call your associate to bring you different sizes or to bring champagne and snacks to your dressing room.”

Not only has Rebecca Minkoff’s “connected store” created a unique experience for the brand’s consumer, but it has also provided the retailer with such vital information as what items are being taken into the fitting room, what’s being purchased and what’s being left behind.

However, technology for technology’s sake is not going to cut it. It needs to be executed well and aimed at your customers as they continue to look for a more personalized interaction. In fact, according to a recent survey by Salesforce, 50 percent of consumers will switch away from a brand that does not anticipate their needs.

“The key thing to focus on when it comes to value-add services is asking if the intended service solves a problem,” said Richie Siegel, founder and CEO of Loose Threads, a retail analytics company. “Oftentimes they do not, especially the expensive ones, while some of the more affordable and simple ideas—like reserve in store—can make a big difference. Different customers have different problems that require different solutions.”

It’s about enhancing the experience and making things easier, Showfields’ Nathanel said.

“Technology should always be a means by which to reach a goal, rather than a goal itself,” he said. “Augmented reality is an example of a technology that’s good in theory—as a means to help consumers visualize what products might look like in their own home, for example—but hasn’t advanced enough to be executed in a way that’s useful. Most AR apps don’t provide a realistic visualization.”

Service stations

While well-executed technology is one tool that can address the convenience aspect consumers are demanding, there are a number of ways retailers are luring customers back into stores.

Creating unique in-store experiences and offering exclusive product can entice shoppers to go offline and purchase more. “This online-offline paradigm that we’re beginning to see is very interesting,” Sabat said. “To get the consumer back into the store, retailers are creating this idea of scarcity and exclusive items in store.

“For example, Diptyque, the luxury goods company that makes candles, has locations all over the world, but you can only get the ‘New York’ candle in the Manhattan boutique,” Sabat added. “It creates this idea of collector’s items that you need to go to each of their locations to get.”

Some retailers are striving to make their stores more experiential. For example, Glossier, the cosmetics retailer that began online before opening brick-and-mortar locations, refers to sales associates as offline editors and stores as showrooms. Glossier also has an Instagram room in all of its retail locations.

Athletic behemoth Nike has opened up Nike Live locations in Los Angeles, Long Beach and Tokyo. These stores cater specifically to users of its apps, with a focus on mobile purchases and a two-week merchandise rotation.

These in-store experiences are creating a sense of community, which is another element today’s consumer is looking for, especially Gen Z and millennials. “A community can make or break your brand and there is definitely a formula to it,” said Nathanel. “Cult beauty brand Glossier built a true community among and between Glossier users—even launching a physical space to further build its community.”

No matter the brand, customer service is always a foundational retail value, especially with a perpetually plugged-in consumer. “Customer service is essential, both proactively and reactively,” Siegel explained.

“Oftentimes brands are better at doing it reactively than proactively, which is not ideal,” Siegel added. “Instead, brands need to anticipate problems before they arise and have solutions at the ready in the event that they do. Since every consumer has an audience to complain to now, this is increasingly important.”

Of course, nothing replaces knowing your customer and understanding what they expect from you as a retailer. “There are many ways to get the consumer’s attention, but what retailers need to truly understand is what is it that customers value and tailor their offerings to meet the customer’s expectations,” said AlixPartners’ Gokki.

“It is fundamental not to try and replicate other retailers such as Amazon or Alibaba,” Gokki added. “If you’re trying to copy them and beat them at their game, it’s going to be a very tough strategy to execute. Retailers should structure the greatest possible interaction to what their customer is looking for as opposed to blindly following a trend set by someone else.”

This piece originally appeared in Retail & The New Consumer. Click to learn how to crack the code on customer loyalty, and the technology and services that will help you do so.

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