What does digital transformation really mean in the future of retail? It is simply transferring an old, obsolete product-centered model that has been followed for so many years to a customer-centered model. This is somewhat easy to say, but again, what does it specifically mean for the retail industry? Instead of focusing on a supply chain view – cheaper purchase, higher sales, and optimizing everything in all of these – retailers should focus more on the digital value chain view. They must be able to collect data regarding their customers, products and locations, turn those information into useful insights, and then turn those insights into planning and action.
Ironically, this is actually Amazon’s game and earlier this year, Amazon made a bold move launching its long-awaited Amazon Go, a cashier-less store, in Seattle, Washington. The newest store concept allows shoppers to experience shopping in a physical store with the luxury of the latest technology. Amazon’s technology can see and identify every item in the store, without attaching a special chip to every can of soup and bag of trail mix. There are no registers and people enter in and out through a gate that must be accessed by having the Amazon App. Customers can simply scan their Amazon Go application, select any items that they want, and then leave the store without even going through any counter to pay for the items. They search for projects that can generate opportunities to collect all kinds of data, such as the unexpected and expected data.
Beneficial to retailers and buyers
The impact of this digital transformation in the future of retail has a lot more to offer to consumers and retailers.
The retail industry had seen great success for so many decades, with popular brands driving the images of malls and city centers. But with the advent of technological advancements in the industry, the recent status of retail stores is facing an imminent threat. A lot of stores are closing, brands starting to vanish, and shopping malls and large box stores closing – paving the way for traditional store model to go through significant pressure. Last year, the US – being the largest retail market worldwide – had witnessed more shopping stores closure announcements compared to the peak of financial crisis during 2018, and with a yearly increase of over 300%. China, the second largest retail market, had also experienced too many stores closing. In 2016 alone, 185 supermarkets and departments stores were closed and two of the most well-known brands, Marks & Spencer, had pulled out their stores from mainland China. Luxury brands, namely Louis Vuitton and Hermès, had to reduce their presence in China during 2017, as well.
Of course, it is easy to put the blame to e-commerce or online commercial transactions that are being rampant nowadays. Online shoppers cannot deny the higher convenience, larger product variety, and trustworthy transactions that e-commerce is providing them. From desktop to mobile to tablet devices, shoppers can enjoy the benefits of omni-channel experience – a one-on-one involvement and feel of a consumer to the gamut of gadgets he or she uses.
Last year, 1.66 billion people throughout the world were able to shop online. In the next four years, it is estimated to grow to 2.14 billion. Much of this strong momentum can be attributed to the e-commerce market in Asia-Pacific region, which increased by 30% in 2017.
However, even if e-commerce has been doing quite well lately and producing more online stores to open, the surprising truth is shoppers are still buying items in a brick-and-mortar store. What has drastically changed is the way people buy and their expectations from brands – factors that are mainly driven by digital transformation. Technological advancements impact people’s way of gathering information and their way of living. Digital transformation has become widely-accepted that it tends to change society, challenge business structure, and disrupt the entire market. It also provides opportunities to appropriately react to the ever-changing expectations of customers.
If digital transformation is implemented correctly, it can ultimately strengthen traditional retailers. However, technological advancement should never be executed alone for it will not attract shoppers to go into stores. It must also be done with innovation and keeping the customers at its core.
Marxent, Making a Bold Move in the Market
One of the emerging companies that has embraced this technological advancement is Marxent, a leader in Augmented Reality and Virtual Reality that provides furniture, home improvement and home décor retailers and manufacturers the newest 3D Furniture Cloud platform to sell their products. The company also provides furniture buyers their freedom to configure, design, and visualize home furnishings in context. Beck Besecker, CEO and co-founder of Marxent, shared his company’s innovative strategies and bold store concept in his exclusive interview with Bold Business at the Synapse Summit.
For many years, the retail market has been trying to solve different problems in the industry, and Marxent is seeking to address a couple of these problems, Besecker said. One issue is sort of an extension of a problem wherein a customer is buying a very complex purchase, such as kitchens, baths, bathrooms, or even an entire house. This problem can be very complex because of business rules, raising many questions at hand like “How do you design and configure kitchen?”, “How do you get a consumer to be able to do it themselves?”, and lastly, “How do you help a consumer visualize what the end-product is going to look like?”
“So, there’s a statistic out there that something like $70 billion in home renovation projects never get started because consumers don’t feel like they have the confidence to know what the end- product is going to look like. So, using the new space of 3D augmented reality, which means being able to place an object, a digital object into real space or virtual reality where you can design an experience and put on a headset. We’ve created a platform instead of tools that allow consumers to design a space very, very quickly and efficiently. The same time visit a retail store, put on the headset and be able to see their living room, for instance, at full scale,” Besecker commented.
In terms of the Marxent’s impact to the marketplace, Becker described that the existing tools in the industry will be boldly changed for better efficiency and cheaper charges. For example, a professional designer is required to come into a customer’s house, measure the space, make recommendations, and then create a design. This concept is very expensive and only accessible to a small percentage of the population. With Marxent, customers can receive the same thing, but without paying any service fee of a professional designer. They can get also get the designs that they want instantly, rather than waiting for multiple weeks.
“Marxent is the new way to design and visualize homegoods,” said Besecker.
By combining personal service and digital transformation, exemplary customer service can be a great selling point for physical retail stores, providing experience that excites consumers physically, emotionally, and socially. The main goal of physical retail is to present shopping as exciting, surprising, and human. In the next 10 years, customer experience and retail methods will likely improve for the best. Based on the current trend in digital transformation, the future of retail stores look to provide more bold ideas and great services to general consumers.