Online Stores
Internet
has brought paradigm shifts in all the industries. Internet enables companies
to increase their connectivity while reducing the overall costs. In retail
industry, online stores have an advantage over brick and mortar stores with
their lower overhead costs. This makes players like Amazon extremely
competitive in cost leadership segment. With the development of
internet payment gateways and consumer acceptance over the credibility of
stores, online purchases are likely to grow significantly over the coming
years.
Even
in emerging economies, where credit cards and internet payment gateways are not
accessible to mass, “cash on delivery” services enable online stores to foster.
E.g.: Flipkart in India.
According
to technology and research firm Forrester, we can expect
e-commerce to increase (in US) by 13 percent in the year 2013, to a whopping
$262 billion.
Mobile Stores
Smartphones
have presented a new market to the retailers. Enabled with rich applications[1]
and QR code integration, smartphones have fostered the development and
incorporation of virtual shopping screens and even robotic store displays in
the retail industry[2].
Consumers have
been empowered of being able to buy things online straight from their phone and
being able to buy things in store with their phone[3].
Companies like Square are further pushing this trend with devices and
applications to make purchases from phones a commonality.
Store within a Store
One
of the major issues faced by physical retail stores like Wal-Mart is the
growing staffing costs. Retailers like J.C. Penney have found innovative
concept of “store within a store”. The retailer sub-lets the space to the
product maker and the counter is staffed by an employee of the product
maker, not the retailer. Whether it is Chanel
or Lancome
or some other brand, each product maker is “showcased” at its own counter[4].
While
competing in the cost leadership segment, reduction in the overhead costs gives
an improved competitive edge to the retailers. Thus, acceptance and appliance
of this model in the future by more retailers is a reality.
Shopping Experience: New Types of Value for Customers
It is going to very difficult for traditional retail
stores to compete with online stores in terms of price. To pull the customers
from comfort of their home to the stores, retailers have to create and sell
shopping experiences[5].
Strategic alliances with brands to develop retail stores as brand and product
showroom could be the way ahead[6].
Online stores still lack browsing and discovery
experiences that satisfy curiosity. Retail stores can work on new types of
value addition for customers. Retail spaces can relax
customers, offer refreshments, and provide entertainment while creating the
conditions to engage in a conversation that builds brand loyalty.
Customization
As retailers expand across the globe, there will be a
need to customize strategies as per the customer’s behavior. Wal-Mart accepted this fact in 2006
and developed merchandising strategy to reflect each of six
demographic groups. As retailers
plunge into international expansion, one-size-fits-all strategy will not work.
The successful retailers in the future will incorporate customer preferences
across geographies and ethnicities, and customize accordingly.
Data Analytics
As the world is becoming more and more digitized, there
will be hoards of information available for retailers to analyze and better fit
their strategies to the needs of the consumers. More insights on consumer
behavior and strategizing accordingly will ensure better performance. Use of
social media will be a key to the extraction of this information. Retailers
will increasingly use omni-channel
approach to track customers across all channels.
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