Customer expectations, which dictate the customer experience, are changing faster than ever, especially in the retail sector, driven by the availability of new digital products and services. It’s the US that leads the way, so we can be confident that disruptive retail trends that are emerging there will be heading our way sometime soon.
During a recent trip to Boston, carrying out a project for one of our US clients, we observed a number of things that could have a big impact on the way we do things in the UK in the future.
Here are three of these retail trends and some thoughts on why brands should care:
1. With extreme levels of mobile use, customers are relying even more on Amazon and Google for convenience and could eventually lose the habit of browsing retail sites altogether.
What we saw
For a while now the majority of product searches in the US have started on Amazon, which has become the default choice of customers who have a clear idea of what they are looking for. Of course their exploration or discovery phase still starts with Google when they don’t.
Today though, a large proportion of US customers (who haven’t ordered on Amazon) are happy to complete their entire browsing journey on Google Shopping, engaging only with retailers once they have made a product selection. They literally don’t browse retail websites at all.
Why? Well, with an extremely high mobile mix (up to 90% in some cities) and the prominence of Google Shopping on mobile, it’s simply more convenient for customers to browse like this, so that’s what they do, but it creates more than a few headaches for brands.
What this means
On a practical level, as this retail trend grows, retailers will have little choice but to increase investment in Product Listing Ads (PLAs) to stay visible and make onward exploration easier for customers, to avoid high levels of bounce.
More importantly though, this process is entirely transactional and almost entirely devoid of engagement with any brand or merchandising content. It means that brands must find ways to connect with their customers much earlier in their purchase journeys – starting way, way before the point of transaction – the alternative is brand oblivion.
This requires a much broader understanding of those journeys, the trigger events that start them, the need-states that shape the problems customers are trying to solve and the creation of solutions that provide the help, advice and inspiration they need – long before they take the plunge and buy.
Brands that become the trusted authority, create and nurture engaged communities and provide the content and tools their potential customers are looking for and do so across channels and platforms (not just their websites) will be those that will remain relevant to customers in the long-term.
2. Niche experiences that focus on satisfying a specific need-state continue to be adopted quickly by customers and these will soon become both the expectation and the norm.
What we saw
Go into Starbucks in a US city to order your morning coffee and you will quickly notice you are the only person queuing. Every other customer will have pre-ordered on the Starbucks app and will arrive to swoop in and collect their drinks, barely pausing as they do so. No queuing at all.
You’ll find store colleagues busy and fully engaged, keeping up with the pace of the constant stream of incoming orders and preparing, labelling and arranging / rearranging drinks on a tray in name order to facilitate this grab and go process.
If it sounds like a depressing and depersonalised customer experience, it isn’t at all. The process is fast, the store is full of energy and every customer gets a cheerful personalised morning greeting, which is usually reciprocated (headphones plugged-in or not). Here we have Starbucks providing ultimate convenience, combined with a quality product and warm personal service.
What this means
It’s a great example of an experience created to satisfy a specific need-state, in this instance the needs of customers who are rushing to work and just want to grab a coffee on the way are met in perfect balance. Return to the same store mid-morning and it’s full of people working and taking time out in a calm and relaxing environment – the Third Place, as Starbuck’s call it. Same store, different time of day, different need-state.
As this trend continues, customers will come to expect experiences that are tailored to their need-states in a specific context, so brands will need to understand what these principle need-states are and engineer new “niche experiences” to meet them. The days of offering the same experience to all customers all day long may well be over. Who wants to queue when they’re in a hurry?
3. Super-experiences are emerging that can satisfy multiple customer needs in a convenient and compelling way, these could transform retail. Amazon gets this.
With one visit to Amazon’s flagship Boston Whole Foods Market store, it’s clear that it’s a potential gamechanger. Technically it’s a supermarket, but with an atmosphere you’ve never felt before and with the customer at the forefront of everything.
At the centre of the proposition is an almost overwhelming choice of organic and locally sourced groceries at surprisingly good prices – “food so local you can taste it”, freshly baked breads, artisan cheeses and chocolates, natural remedies, cosmetics and bath products, as well as prepared foods for home cooked meals on-the-go.
Add in a few Amazon-style touches, such as lockers for your online orders and groceries, as well as delivery within two hours (free to Prime Members) and you’ve already got something pretty impressive. Can’t wait two whole hours? Then there’s a quicker, one hour option for $7.99.
But there’s so much more to what Amazon have created here.
They’ve used the store to extend the benefits and convenience offered to Prime members, including a 10% discount on all purchases, plus exclusive discounts on specific items. The process is simple too, Prime members can download the Whole Foods Market app, link it to their Amazon account and scan to get their discounts and pay – or just give their phone number to validate their eligibility.
Then there’s the Hot Foods bar, serving a vast selection of reasonably-priced hot food that changes from breakfast at 7am to lunch through to dinner. It’s zero frills – you serve your own food onto recycled cardboard trays and are charged by weight, regardless of what you’ve selected, but it’s fresh, organic, tasty and incredible value. Grab a coffee or organic freshly-squeezed juice and eat-in, or take your food away. It’s busy all day long.
It’s a vibrant, fast-changing and welcoming environment with lots going on. All of the elements on offer are great in their own right, but they meet several customer needs at once, so somehow it all comes together in one cohesive and convenient experience.
What does this mean?
When you think about it, it’s all part of the evolution. By providing a bigger range and better value, combined with the convenience of everything under one roof, supermarkets killed off the local corner shop. Here we see Amazon completing the cycle, using technology to restore the personalised local services and levels of convenience that those corner shops used to provide. A reinterpretation of the same principles for the modern era.
It’s a great example of how digital transformation within physical retail can deliver a better customer experience, combined with great service and better value-for-money (especially if you’re a Prime member) and how several different experiences can be combined in a single physical environment – what I’ve called “super experiences”.
It’s also proof positive that stores can (and will) play a big part in the future of retail and that there is a huge opportunity for any retail brand to take a similar approach to meeting the needs of their customers, by understanding what their needs are and, crucially, responding to them appropriately.
How to Respond
Clearly, not every brand has the resources, and the appetite for experimentation, that Amazon has. But every brand has the capacity, and the ability to design these kinds of super-experiences. It starts with a clear understanding of your customers’ need states - what triggers them, what customers do next, and how to meet those needs through a single, multifaceted, yet coherent retail experience
As I intimated in a previous blog in this series [link], understanding those need states is more science than art. Some of the practical techniques we've been using to discover the customer need-states - and translate that insight into an experience strategy - break down like this:
- Identify your customers and their most common need-states when they engage with your brand and understand how they respond to your overall brand experience.
- Map the overall customer journey for each of these need-states, supported by quantitative and qualitative data, in order to identify customer pain and unmet needs.
- Shape a strategy to meet these unmet needs by optimising or creating new digital products and services and prioritise these.
- Create improved or new digital products/services and experiment with, validate and test them to ensure they make a difference to your customers. Then iterate - it’s a never ending quest.
- Never stop experimenting – improving customer journeys across both online and offline channels is difficult (even if the problem itself is simple), yet highly rewarding.
So finally..
Make no mistake, these developments are on the way to us soon, but there are practical ways in which brands can anticipate them.
This will involve a change in mindset though – with a focus on finding out who their customers really are, the principle need-states that they have that the brand is able to address and experimenting with new experiences that will meet customer expectations now and in the future.
It’s not easy, but it’s a proven process and the retail brands that embark upon it will be those that will thrive.
For more information on how to tweak your CX strategy to prepare for digital transformation in retail, get in touch.