There’s no question about it – managing a retail operation has never been so tough.
Along with the challenges retailers have always faced (keep motivated, driving sales, dealing with the general public), the changing retail landscape has presented a whole new set of challenges.
In a time when consumer confidence is low, sales are sluggish and technology is constantly moving, how can retailers succeed?
Today I want to look at 3 of the biggest tech developments that retailers are embracing at the moment, and how these trends are helping to improve their bottom line.
Cash(less) is king
Earlier this year, I left my bank card in an ATM. Fortunately, I noticed pretty quickly and managed to deal with it before any of my money went missing. Unfortunately, it meant I was without a card for a few weeks, while the bank sorted a new one out for me. This meant for those weeks, I had to deal entirely in cash – which is something I, like many I know, just don’t do anymore.
Over the years, point-of-sales (POS) technology has steadily moved away from cash-based transactions. Most major banks offer ‘same-day settlement’ for credit card and EFT transactions, incentivising businesses to offer these payment methods. Contactless payment systems such as PayWave and PayPass have become staggeringly popular, with around 60% of card transactions in Australia (which equates to about 70 million transactions each month) using contactless systems.
Customers can order Dominos Pizza using Paypal. More and more businesses are turning to mobile POS solutions such as Square to process credit card payments – particularly small businesses, where this is a far more accessible and affordable option compared to traditional credit card processing systems.
Consumers want more options when paying for their goods and services, and businesses who are responding to this are seeing significant increases in sales, even in what is currently a tough retail climate.
For a long time, ‘showrooming’ has been something of a dirty word amongst brick-and-mortar retailers, referring to the tendency of consumers to check out a product in-store somewhere, then buy it online from a different, cheaper retailer.
“Store-based retail sales are not growing – virtually all growth in consumer spending is being captured by e-commerce,” says Jon Weber, head of retail and consumer products practice at L.E.K Consulting.
E-commerce isn’t going anywhere any time soon, and smart retailers know they need to embrace it, not fight against it.
Innovative retailers are making their bricks-and-mortar stores more relevant to the way consumers shop now, by viewing bricks-and-mortar and e-commerce as complementary parts of the customer experience, rather than disparate, competing elements.
Conversely, brands that have historically been online-only are now opening physical retail stores to enable customers to engage with products and brands before committing to a purchase.
Shoe retailer, Shoes of Prey, which began as an online store where customers could design their own shoes, recently secured funding that will enable the brand to expand into physical locations, with a number of stores set to open throughout 2015 across Australia and the US.
“We still sell most of our shoes online, but we have realised that there is life left in physical retail,” said co-founder Michael Fox, adding that the brand’s expansion into bricks-and-mortar retail, “offers a great opportunity for customers to come in and interact with the brand.”
Driven by data
Smart retailers have been utilising analytics for years and years to make decisions – even the most basic POS systems are able to provide simple KPIs like average dollar per transaction, units per transaction or sales by hour.
For a long time – well, as long as e-commerce has been around – online retailers have had a huge advantage compared to bricks-and-mortar retailers when it comes to analytics. A purely online transaction can be tracked from start to finish, enabling online retailers to collect an enormous amount of meaningful data on the way their customers purchase.
The ease of capturing and analysing data in e-commerce has helped retailers of all types and sizes realise the value of solid analytics – and now a number of innovative companies are looking at how to provide the same level of analytical data to bricks-and-mortar retailers.
Take, for instance, Malaysian startup Tapway. Tapway uses heat map technology to help retailers see where the highest levels of foot traffic are in a store, allowing them to optimise their layout and visual merchandising. Tapway also allows retailers to assess walk-by traffic, capture rates, average visit duration and a number of other metrics.
Retailers are also looking at ways to measure their own behaviors, not just those of their customers. Rostering software (like Ento) makes it possible for retailers to correlate rosters with store KPIs to better understand the results they’re getting.
As e-commerce changes the way retail operates, staying on top of technological developments is key to staying competitive. We know we’ve barely scratched the surface of how technology is shaping and changing the retail game here, and we’d love to hear your take. What retail trends have you been noticing lately? How is tech affecting your own store? Let us know in the comments!