The growth of e-commerce indicates a change of roles for the future of the retail industry. Deloitte’s Retail Report states that as online sales continue a relentless growth, the function of stores will be focused more on experience. Store concepts are implementing technology to “enhance the buying experience by offering a great product showcase or … bridge a gap between the digital and physical to make it more convenient for the customer.” (2017) Mintel Research similarly suggests that the clothing retail sector will continue to face challenges that lead companies to focus on differentiation through a better shopping experience and a seamless physical and online experience. (Carroll, 2017) While the British Retail Consortium estimates that there will be 8,073 fewer physical stores by 2020, (Armstrong, 2017) traditional retailers that offer a unique shopping experience are thriving.
According to Doug Stephens, the shift from products to experiences will overturn current retail business models. “The store is evolving from being a distribution channel to becoming a media channel”(2017) Through evolving store models we are seeing an intrinsic journey to purchase where online shops collect customer data for customization. This is a characteristic that is lacking in a brick and mortar model. The application of technology like RFID, the Internet of Things, wireless sensors, facial recognition and analysis of data through Artificial intelligence would allow a physical store to have the same functionalities as an online store. In terms of the high-end, luxury experience expected from fashion labels where the shopping environment is dependent on personalized sales assistance , the application of the same technology is used to not only collect data but to deliver an enhanced version of a shopping journey. (Fassler, 2017) The optimal manifestation of online and physical integration is defined further in the Omni-channel business model.
The Omni-Channel Model
The Omni Channel retail model is defined as a synchronized operating model where a company’s channels are integrated to present a cohesive customer experience. (Carroll, 2015) Consequently, this model is also identified as a more complex concept that just channel integration. (Sumner, 2017) The concept also relates to the consistency of the customer’s shopping experience and retail environment offered through tech integration in both channels. Sumner argues that in order to execute an effective Omni channel initiative it is required to focus on a data-driven model that integrates experiential technology. (2017) Viewing the physical store as its own product “through data creates a niche … Having data at one’s fingertips to inform the tactile, the colorful and the textural presentation of a brand” informs on the fact that physical stores hold great importance. (Walton, 2017)
Technology that upkeeps the omni-channel approach offers solutions for effective, targeted and quantifiable customer relations. The business model enhances the shopping experience on the consumer’s point of view by homogenizing aesthetics, processes and environment. On the other hand, the omni-channel combines internal business operations for a superior procedures on distribution, inventory, customer services, data collection and design. (Intel, 2013) These technology implementations in the omni-channel retail model provide with customer data collection that informs shopping patterns, demographics, customer history, targeted marketing and other behavioral information usually collected through online platforms. The experiences delivered by model integration through technology have the ability to deliver an immersive involvement and an ability for consumers to connect with brands. This immersion is “so powerful that many exclusively online retailers … have opened physical locations in efforts to increase the strength of their brands among customers. (Hutchinson, 2018)
Technology in Retail
Part of the revolutionizing process of the retail industry is the implementation of the IoT in physical stores. The Internet of Things is defined as the network that connect ‘smart’ devices with one another through the internet in order to share data. (Miller, 2015) The combination of mobiles, RFID and data analysis improve operational processes (Drinkwater, 2017) While 70% of retailer state that they are going to implement the IoT in order to improve customer experiences (Columbus, 2017), this technology is still in the adaption phase.
“Augmented Reality (AR) is a technology enriching the real world with digital information and media, such as 3D models and videos, overlaying in real-time the camera view of your smartphone, tablet, PC or connected glasses.” (Shin, 2017) The rapid expansion of innovation in eCommerce allows for augmented reality to provide a physical presence to the online experience. This technology is allowing traditional retail to offer a customized, immersive journey that is changing the purchasing behavior and methodology. Retailers’ implementation of AR features to physicals stores are introducing a digital experience to in-store products and working towards a homogenous engagement and satisfaction through all channels. (Williams, 2016)
Artificial Intelligence automates choices through calculations educated by machine learning, a technology that allows machines to forecast and rationalize decisions from substantial sets of information. Retailers apply AI technologies in order to examine information so as to reach to a better appreciation of customer behavior, to adjust the practice of customer interaction and demand. Ai supports retailers in developing “highly accurate, individualized promotions” (FGRT, 2017)