Technology is driving the ongoing digitalisation and simplification of the retail industry, as well as being responsible for rapid innovation. Sarah Friswell, CEO at Red Ant, discusses the determining factors for success – particularly since the pandemic – and why understanding your customer is key to personalising their experience and remaining at the forefront of the industry.
Despite slowdown in the European economy, there are indications that the retail tide is turning. There’s an appetite for retail expansion, with major retailers, such as Sephora, opening new stores across the continent. According to Savills, luxury store openings in Europe are up 77%, with Europe’s global share of new store openings climbing to 23%, ranking it ahead of North America and second to China.
As the pressures on retail CIOs and leaders in Europe are evolving, new tech is emerging and customer expectations are changing. Many factors must line up for retail success and retailers are sharing and learning from each other, with strong trends developing rapidly over just a few years. Technology is driving the ongoing digitalisation and simplification of the retail industry, as well as showing up non-adopters who often fail to keep up.
Despite the chasm widening between those retail brands doing it well and not so well, leaders and laggards alike share common challenges, goals and perspectives, one being the widespread acceptance that technology plays a central role in retail success.
Pressures on retailers across Europe
The early 2020s presented health, war and challenging economic conditions that impacted retailers across Europe. Different retailers suffered different challenges due to their category and the state of their digital commerce business. Some retailers survived by adapting to circumstances and introducing new ways of connecting with the customer, such as virtual consultations and ‘dark’ stores which offered kerbside pickup. There was a clear need to pivot tech development to support ‘safe’ retail. Strategies included in-store booked appointments, footfall management and creating opportunities for staff to work remotely.
“The Ukraine war is still ongoing which has had a knock-on impact to the whole region,” said Oliver Banks, Retail Transformation Specialist. “Ukraine was responsible for a huge volume of raw materials flowing into Europe for production and ultimately into the retail industry. Consumers have returned to in-store shopping, shown signs of changing behaviours due to financial pressure and they are ‘tightening belts’ across all categories, yet they are also showing signs of investing in moments or products of luxury. Retailers are facing increased costs on multiple fronts, including energy, labour, distribution and raw materials.
Hyper-personalisation is also a key driver for retail strategies this year, driven by tech innovation and increasing customer expectation that retailers know who they are, their history and preferences. According to a recent Red Ant survey, 68% of retailers claim personalised services is their key driver for retail tech investment in 2023.
But the rising trend of personalisation in retail has also placed greater pressure on retailers to transform their capabilities to stay competitive. Red Ant’s survey revealed that personalising the customer experience is the biggest challenge for 30% of brands.
Changing customer expectations in Europe
As the cost-of-living crisis continues, consumers are looking to make savings and for more personalised deals. There’s an increased trend for shopping across many channels, with a shopping mission increasingly having one or more digital elements included. Customers expect their shopping journey with a brand to be consistent and frictionless, with shared baskets allowing them to pivot effortlessly from social media to the app to browse, perhaps in-store to see the product and back home to the website to checkout.
Customer demand for speed and convenience in purchasing is forcing retailers to streamline their point of sale to speed up transacting in all areas of retail, but especially in grocery. The need for speed is ubiquitous – click-and-collect and same-day delivery has become an expectation. Those retailers that don’t offer customers choices risk being overlooked for a competitor.
The rise of the conscious consumer is forcing businesses to re-think products and services. Banks continued: “Technology and data to give full visibility will help build trust and do the right thing for the planet. Consumers are demanding sustainability but not wanting to pay more for it. It’s quickly becoming table stakes of being in the business of serving people – although it’s also commonly misunderstood by consumers too due to its confusing nature.”
Customers are also craving the physical store experience and as part of this, there’s a level of expectation for in-store technology to be available to them. This allows them to check stock themselves at kiosks, use self-service checkouts with flexible payment methods and have access to in-store technology such as virtual try-on.
The rise of technology for retail evolution
Since the moment shops closed their doors in the pandemic, nothing has fuelled the recovery and growth of retail in Europe more than technology, offering a powerful olive branch for retailers to connect and deliver to their customers. For example, there has been a rise in the number of retailers offering apps for customers. A global survey by mobile app experience company, Airship, revealed that 78% of consumers regularly use retailers’ mobile apps and 74% of respondents said they are likely to use the brand’s app when shopping at its physical storefronts.
In terms of retail tech trends in Europe, overall, countries in the region are capitalising on the increasing appetite for personalisation and face-to-face experiences, but with access to online deals and offers. For instance, German consumers want digital payment options, which is driving German retailers to invest in digital payment solutions. France has a strong retail market and is using innovations such as smart/dynamic shelf pricing to improve customer experience and efficiency. The Nordics are looking for green tech solutions. Whatever the retail investment, investors are looking for brands with a clearer path to profitability and this means proving rapid ROI on any tech investments.
Omnichannel retail strategy is now the accepted gold standard approach to improve customer experience and loyalty as well as building revenue through integrating apps and services and unifying data across all offline and online customer channels. Investing in shiny new tech will not be worthwhile if data doesn’t have a single source of truth and the brand doesn’t know its customers.
New tech such as AI and ML will have huge impact across retail and consumer-facing businesses. Empowering retail teams with the opportunity to use their data allows them to personalise and improve the customer journey and to identify new opportunities.
Through clienteling based on AI, a retail technique which gives store associates equal access to technology to support customers’ browsing and buying experiences, retailers can transform their customer experience. Many retailers are now using AI to support their existing tech and boost store associate productivity, with curated purchases helping to increase basket sizes, repeat purchases and reduce returns.
Omnichannel retail strategy is table stakes for retail success
The basics that UK and European retailers need to get right to stay competitive have shifted. What matters most is prioritising the right tech investments. Integrating all systems and data using an omnichannel retail platform, unifying their stock pool and using customer data will generate business insight and create remarkable experiences that keep customers returning. Those that overlook an omnichannel strategy will struggle to make the most of any retail investments.
Retail leaders will need to make every metre of retail real estate work hard to pay for itself – clienteling, unified baskets, assisted sales etc. all help to make sure fewer people walk out of the store – online or offline – without making a purchase, or if they do, that they can easily pay at home. Therefore, those brands that truly know and have a single view of their customers so that they can offer personalised services will be the most successful.
