If you are interested in retail, at some point, you are sure to have made a pilgrimage to Euroshop, the first-rate international trade fair held in Düsseldorf every three years. Which gives us an opportunity to take the pulse of international retail.
With the sector currently in the throes of a profound transformation, perhaps comparable to the introduction of self-service, it may well be a good idea to share our feelings about this year’s edition (from 16th to 20th February). I use the verb ‘to feel’ because it is more inextricably linked to the brain than verbs such as ‘to see’, ’to hear’ or ‘to touch’.Consolidated aspects
To understand what is going on now, one method that is often useful is comparing the latest developments with trends that were detected some time ago. We can then identify aspects that were previously at the embryonic stage that have now matured. Take these four examples:
- LED lighting is no longer a left-field sideline, but rather a mainstream leader in terms of the majority of uses. It has advanced so much technologically that many of the technical obstacles have been resolved and its price has been kept lower. Its ascendency not only improves sustainability in environmental terms, but also economically. The lower consumption it offers is a key aspect, as retail businesses tends to consume high levels of electricity.
- Another former newcomer that is now a big league player is the multimedia screen. Not only has their definition been enhanced and their price lowered, but they have also spread throughout all areas. Ranging from screens with simple one-way communication with the customer to those showing information about the display, and from functional screens to those used at the checkouts, their interactive use as touchscreens is now omnipresent.
- Another factor that has been consolidated is the multisensorial aspects of physical stores. It seems that, finally, even the discounters have realized that beauty sells. I have seen a new model of the Primark store that is more pleasant and looks less like a cold warehouse. The results can be huge when all the senses are integrated with a blend of the lighting arrangement, textures, sounds that are more than suitable for a public place, and smiles on the faces of the sales assistants. Aromas still remain somewhat of an untamed beast, as I am yet to see them reined in and used in a controlled way.
- Back-office tools have taken root and spread like wildfire, attracting a significant amount of interest from visitors. Retail requires large helpings of productivity, functionality, rigour, automation and cost control, although these aspects are not witnessed by customers. Fortunately, there are several companies that take on these challenges. Such aspects include fraud prevention, semi-automated picking carts for internet orders, more sustainable refrigeration systems, performance monitoring, IT integration, etc.
The next big thing
Certain other aspects are all set for generalized adoption, such as the following three features:
- The growing presence of NFC technology continues to spread throughout more areas. However, it does not yet seem to have reached critical mass (or the famous tipping point). Nevertheless, it can increasingly be found in more and more places, applied to makes payments easier.
- Another aspect that is primed for take off in terms of retail is virtual reality, above and beyond its use solely for entertainment, as a practical tool for enhancing customers’ imagination by helping them to visualize the end result of their purchase.
- Customer traffic counters are now all set for widespread implementation, whether this involves sensors that detect the movement of human bodies or, more efficiently, antennae that capture smartphone IPs. I would predict that the latter system would see the biggest growth. In both cases, privacy is guaranteed and we can learn how customers interact with the store.
Newly emerging trends
Certain aspects, such as the following pair, were practically nowhere to be seen in the last edition, three years ago:
1) Multi-channel has a strong presence and is widely discussed. In fact, it has steadily become the main ‘hot topic’ at international retail congresses over the last three years. Complete hardware and software solutions are now on offer, which enable customers to buy a product that is not currently available in stores. Alternatively, they can order from the comfort of their sofa using their tablet (e-shop).
However, I get the sensation that this multi-channel approach is generally conducted from the physical store, rather than placing the customer at the centre. For instance, there were a lot of interactive screens to be used in-store, as though they were large tablets.
But there were not many solutions to be seen that are developed from the starting point of the customer looking for a piece of furniture on the internet, for example, who then checks it out at the store before finally making the purchase away from the store.
2) One of the biggest surprises has been to see how several companies are playing a type of ‘game of Lego’, mixing various pieces, none of which are new, but which, when arranged together, achieve some really interesting results. For example, resolving a key challenge: how can customers get more detailed information, when they want it, above and beyond the simple trinomial of brand, model and price. This has been achieved in an extremely practical way by interlinking elements from very different sources: sensors (RFID, movement, etc.) placed on products, multimedia screens on the displays, databases with multimedia content, social networks and e-mail connections, links with the CRM for the customer card, in-situ payment methods, etc.
On the flight home, two main doubts came to my mind.
The first was a concern that, with so many tools to grab attention at the point of sale, are we not in danger of tiring out the cortex, creating an ‘enlightened commotion’, a more attractive sensory contamination, efficient at that instant but ineffective in the long run?
Research has shown us that customer loyalty is achieved more through the reduction of effort than the ‘wow’ effect (Dixon, Freeman & Toman, 2010). We also know that the human brain is suited to habits and making non-conscious purchase decisions. Not much has been seen from this perspective.
The second concern was that, with amazon.com making headway in so many sectors, as invisibly as it is convincingly, is it not the case that Euroshop and we ourselves are focusing too much on improving physical stores, rather than creating On-Off type integrated systems without gaps? The online sales departments of retail chains will probably tend to vanish from the organization chart, to become just another service offered by the store.
Dixon, M.; Freeman, K.; & Toman, N. (2010) Stop Trying to Delight Your Customers.
Harvard Business Review. July Issue.
Source: Código 84, nº 177.