How on-trend is your retail business?

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  • April 18, 2019
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How on-trend is your retail business?

New insights from Visa highlight five evolving trends emerging from savvy retailers around the world. We’ve taken these global trends and looked at how they are playing out with merchants in New Zealand,and we’d now like to hear what you think of them.

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News from the US of “mallmageddon” and the demise of the UK’s high street is enough to make any retailer nervous, but with its latest trends for 2019, Visa offers a counterview. 

The trends point towards not a decline, but a repositioning.

1: Transactions are everywhere.

Traditionally, no retail store was complete without a counter. However, the ubiquity of smartphones mean customers can now make transactions via ecommerce anywhere, at any time. 

Visa’s Head of Product for New Zealand and South Pacific, Riaz Nasrabadi, says technology has changed the way we interact.

“The ability for Visa to connect billions of devices with payment capability in the world to our network is unprecedented. In many ways, we’re at the beginning of a new era where digital payments are unconstrained by wired infrastructure and any connected device could be transformed into a Visa digital payment device – making payments convenient for everyone, everywhere.”

The Warehouse Group has adapted rapidly to the smartphone era. As well as offering standard ecommerce and click and collect, in 2018, it used its partnership with Google Cloud to offer a high-tech initiative called ‘Snap and Shop’. This addition to its app is powered by artificial intelligence, allowing customers to photograph products they like and then shop matching offers from The Warehouse’s catalogue. 

Not only does Snap and Shop allow The Warehouse to please its customers, but the data created by Snap and Shop activity allows it to optimise pricing across its catalogue.

Across the retail sector, convenience-driven initiatives like click and collect, social commerce and the ability to check in-store availability online have made transactions seamless.

2: Physical retail space is reborn.

Research released by Marketview last year showed Millennial consumers in New Zealand aged 25-29 spent more in 2017 on takeaway food than clothing, footwear, health, beauty, pharmacy and cosmetic stores combined. They also more than tripled their online spend, allocating 10 percent of their spending budget to online purchases.

It’s true that ecommerce has removed the traditional motivation for shoppers to enter bricks and mortar retail stores, and younger shoppers are increasingly prioritising spending on experiences instead of products. Five years ago, these twin forces were thought to mean that bricks and mortar stores were dead, but today, retailers understand that stores which educate, inspire and entertain consumers can become an experience in their own right.

Liquor King has this year launched a new flagship model in Carlton, Christchurch, intended to “delight customers through deeper design and entice them to return”. It sees Liquor King move away from in-store deals and promotions and towards “fun, memorable and targeted zones tailored to real-life customers”.

Pop-up collaborations with other retailers, virtual reality experiences, workshops and events held in-store, ‘experience now, buy later’ and exclusive approaches to loyalty offerings are also helping bricks and mortar retailers bring their brand to life in the physical world.

Visa’s Nasrabadi says this new approach to physical space is supported by evolutions in mobile technology.

“The payments ecosystem is becoming ever more complex. Mobile is a great example of that innovative evolution. Mobile technology is rapidly enabling new ways for Kiwi merchants to engage with their customers.

“For example, imagine tapping your phone to pay for a coffee. Instead of a paper receipt, you get a message on your phone confirming the transaction. And at the bottom, there’s a digital scratch card that you can swipe to uncover a discount on your next coffee. These kinds of mobile game-based rewards put engagement at the absolute top of the priority list in terms of delivering value. It doesn’t matter if your customers are loyal; it matters that they’re engaged.”

3: All channels get connected.

Savvy retailers around New Zealand have been offering click and collect for some years now, butinnovative retailers are embracing the power of customers to remain connected online, in-store and in social media, to drive sales and brand preference.

This seamless connection is powered by customer data. The success of large-scale loyalty programmes like Countdown’s Onecard and AA Smartfuel mean retailers now have access to a bigger pool of more detailed customer data than ever before, and shoppers are seeing the benefits in the form of more personalisation across different platforms. 

Visa’s Nasrabadi says clever use of customer data is now essential for many aspects of retail.

“The term ‘Big Data’ has recently become the latest ‘buzz word’, but in reality, leveraging data is essential to address today’s engagement paradox: how do you personalise for the masses? Customers expect a one-on-one personalised relationship and prefer a product that is custom-built for them in every way. They want the product or service to adapt to them, not the other way around.”

“If the last decade was about digitisation, the next will be about personalisation. At Visa we see this as an opportunity for New Zealand merchants to utilise data to create bespoke and customised payment experiences for consumers.”

4: Staff is empowered.

When New Zealand’s first self-checkout machines were launched at a Christchurch Pak’n Save in 2006, a few Kiwi voices joined the international chorus of concern that robots could take away human workers’ jobs. Thirteen years later, self-checkouts have become common and the latest Stats NZ report shows a historically low unemployment rate of 4.3 percent.  

Besides self-checkouts, customer-facing automation isn’t yet common in the New Zealand retail industry, but a handful of pioneering retailers are experimenting. One example comes from Auckland Airport, where global retail company Aelia Duty Free unveiled the world’s first duty-free robot.

The robot is named ACE (Automated Collection Experience). It consists of a claw-machine-style arm in a glass-fronted box lined with pre-packed duty free orders. Customers order their goods online, then on their way through the airport’s duty free section, scan a barcode which triggers ACE to select their order and drop it into a box for collection. It all takes just 30 seconds.

Instead of monopolising tasks that human workers might wish to do, it seems that new robotics and machine vision (MV) technologies are automating many low-value tasks, forcing a broad shift to in-store staff training to deploy retailers into higher-value activity, such as sales and customer service.

5: Distribution becomes a differentiator.

The ‘last mile’ of a purchase is becoming increasingly important, continually morphing into a key determining factor for choosing one retailer over another.

Even as online shipping grows ahead of bricks and mortar, customers still want the instant gratification of buying something in person and being able to have it immediately. Retailers such as Glassons, Hallensteins, The Warehouse, Onceit and The Iconic have all been experimenting with super-fast delivery in the Kiwi market.

Last-mile isn’t just about speed, but about trackability. Courier tracking services are now standard issue with online purchases, and while Dominos’ 2016 experiments with automated robot pizza delivery in New Zealand caught attention around the world, the market-leading Live Pizza Tracker and GPS Driver Tracker that followed mean customers can now see where their pizza is at every stage of the delivery process.

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