We’re all aware of the huge digital revolution that’s taken place in Western society recently. Ever since computers made their way into homes in the 80’s, the digitisation of our daily lives has been occurring exponentially.
The ‘digitisation’ of our daily lives.
Internet and email emerged in the 90’s. The noughties brought complex digital devices, not to mention the smartphone. Wearable technology, flexible/portable screens and geolocation devices are predicted to become commonplace soon, and the soon to be launched iWatch is expected to transform not just the watch category but also wearable tech. It’s already being trialled in the US as a near-field payment device. In true revolutionary style, it’s a case of out with the old and in with the new in increasingly shorter timeframes.
Retailers need to understand the digital revolution’s impact for business. Specifically, how consumers’ wants, needs and expectations have shifted. Retailers who want to be a part of the brave new digital world need to re-evaluate their product offering and services to ensure they remain relevant – or risk being dethroned.
Who rules in the brave new digital world?
Gen Y consumers were born into the digital world. They automatically incorporate new technologies into their lives as they emerge and expect retailers to do the same. They’re currently a quarter of the world’s population and growing. Non-Gen Y consumers are also increasingly engaging in digital technologies. The bottom line is: the number of digital consumers is growing; traditional consumers are in decline.
What the digital consumer wants.
Digital consumers want more. They expect to interact with retailers in any way (be it email, social, live chat, in-store) with any device (be it smartphone/tablet/desktop) at any time of the day or night. They also want to be able to chop and change the way they interact at any stage of the customer journey and get a consistent experience throughout. They want all information required for a purchasing decision upfront (e.g. user reviews) as well as timely and useful responses to their queries. If a retailer can’t deliver, digital consumers switch to those who can. Online or offline.
How can retailers join the revolution and continue to reign?
The core principles of selling still apply in the brave new digital world. But some traditional retailers may need to reframe their offering. Retailers must ask: “Are my products/services desired by digital consumers? Are my prices competitive compared to my international competitors online? Are digital consumers hearing about us online?” If the answer is “No” to any of these questions, change is required. Many traditional retailers will find it a challenge to remain relevant to digital consumers as technologies and society evolve at an ever-increasing rate.
Some of the most notable victims of the digital revolution to date are Kodak, Dymocks and Blockbuster. Digital consumers no longer desired their products, and they represented a large enough market share to cripple revenues. Retailers with products at risk of becoming irrelevant should be innovating products, services, instore experience or ranging that will be desired by digital consumers of the future.
A great example of a recent retail launch that has harnessed the digital revolution is TopShop. They’ve opened a traditional store on Queen Street and witnessed massive queues because they’ve got so much right, i.e. range, brand, digital buzz, a perceived differentiation from existing offerings, and a store experience which people want to enjoy.
Price is a reducing differentiator for many.
Competition is making it harder for retailers to use price as the hero differentiator, as it is easier than ever to find it cheaper elsewhere, even when instore by using a smartphone to price check. Retailers should look to offer services valued by consumers if they can’t match competitors on price. Nike has justified its higher prices by offering personalised sneakers through NIKEiD. TopShop currently has so much buzz that any need to discount will most likely be led by excess unwanted stock rather than a traditional mark up to mark down approach, and the store experience itself is a differentiator. Product that is unique obviously is a key differentiator.
Out with the old and in with the new.
While the digitisation of our daily lives is a challenge for retailers who aren’t robust enough to adapt quickly, it does present an opportunity for those who are, and for those who aren’t currently in the marketplace but have what’s required in the brave new digital world. One thing’s for sure: in the next couple of decades, consumers will behave in ways currently unimaginable. A flexible business model that predicts and reacts quickly to changes in consumer behavior will be most beneficial to retailers in the future.