Kappu Jaykumar, Senior Director – IT, Lowe’s India
” When developing new products, start with the why. Why are you building this, what problem is it going to solve, and for whom? What are the measures of success for the product?”
What is the future of retail and e-tail sector from a digital transformation point of view?
Digital transformation has become imperative for all processes. It is not about replacing older systems with new technology. It involves integrating technology, revisiting all aspects of the business processes, and redefining how value is delivered to the customer. Beyond the integration of technology to business processes, the key to success of digital transformation is the mindset change, a culture shift where the company is ready to experiment new ways of doing things, thereby challenging the status quo. This may include moving away from processes that have been followed for decades in an organization.
As all industries are moving towards using technology to connect with their customers, retail is no exception. In the wake of the pandemic, as customers are moving towards safe ways of shopping, retailers who have a strong digital presence are way ahead of the curve and thriving. Retailers who have embraced digital transformation successfully have better agility and flexibility in adapting to the ever changing customer demands, deploying new tools and processes to serve them effectively by automating existing systems and processes. They will be able to better engage with their customers through multiple channels, including web, mobile, social media, provide a personalized shopping experience by leveraging tools like AI/ML, respond to supply chain disruptions, resulting not in a higher quality of service but also increased sales and better ROI.
What is your idea behind Omni-channel Retail?
Browse, Search, Shop anywhere, anytime is the mantra of Omni-channel. Omni-channel is about creating a seamless, consistent experience across the various channels – desktop, mobile, social media, and in-store. Examples of omni-channel experiences include brick & mortar retailers offering digital shopping experience providing conveniences to the customers like ‘buy-online-pick-in-store’ or ‘buy-online-return-in-store.’
As shoppers today prefer webrooming or showrooming, enabling multi-channel selling has become a necessity. Webrooming customers are those who research their products online and end up buying in the store. Showrooming customers exhibit the opposite behavior. They go to the store to physically touch and feel the product before shopping them online. Polling shows that 69% of shoppers webroom and over 46% showroom.
It is undisputed that providing an omni-channel experience is essential for retailers to stay relevant. Leveraging the data retailers have about their customers, delivering an integrated experience across channels by recognizing them is vital to the success of a retailer’s omni-channel strategy.
Throw some lights on contactless experience changing the future of the retail industry?
‘Contactless’ has become the buzzword during the pandemic. Every retailer now needs to embrace ‘contactless’ way of operations. While the shift started after Covid-19, this trend will continue long after the pandemic. Some of the trends that are fast evolving with contactless shopping are:
- Curbside Pickup – While buy-online-pick-up-in-store (BOPIS) was a prevalent fulfillment method, in recent times, curbside pickup has become a preferred way for picking up orders that they were placed online. Integrating geofencing technology with curbside experience, retailers can be alerted as the customers are approaching their premises, prompting them to keep their order ready, avoiding wait times.
- Locker Pickup – Lockers are another form of contactless pickup of orders gaining popularity when customers are looking for safe ways to shop. Items ordered online are picked up and put away in lockers. Customers use a safety code to open the lockers to pick their items. Lockers housed in stores provide for a contactless pickup opportunity and increase footfall to the stores.
- Wallet Payments – Though wallet payments have been around for a while, customers are now gravitating towards adopting it more. Customers often have to scan a barcode to pay using a credit card attached to their wallet involving a no-touch payment. While safe, this is an efficient operation saving time during checkout.
- Contactless Checkout – Scan & go technology is gaining popularity where customers pick items they want, scan them using the retailer’s app, and pay using their mobile wallet by scanning a QR code while exiting. While this experience is in its infancy, retailers need to invest in these technologies to continue attracting shoppers.
Retailers need to pick the high-gear on these technologies and start investing in them if they haven’t already started to create a safe retailing environment.
How AR and VR create value in retail?
AR/VR is one of the trending technologies in retail, with smartphones readily coming with AR capabilities. AR allows the customers to use the real world environment in front of them overlaid with digital information. This is becoming very powerful for retailers, especially when they can let customers view their products in its new space creating a real life experience. For example, a customer who is looking to buy a couch can bring life into it by visualizing it in their living room with a AR enabled smartphone. When someone is looking to paint their room, AR can be used to try out different colors on their walls. Not only in home improvement shopping, AR technology is widely used in fashion and cosmetics retail, where the customers can virtually check out how a certain color of lipstick or clothes looks on them without actually trying them on. AR increases customer engagement with the brand but greatly aids the conversion and drastically reduces returns by allowing customers to understand what they are paying for.
VR technology allows customers to have an immersive shopping experience. VR can be used to make the shopping experience more compelling, thereby creating a deep connection for the customer with the retailer. With a VR device, customers can virtually navigate a store, checkout product information and complete their purchase. Combined with AI/ML, customers can experience a hyper-personalized store with products curated specifically for a customer.
These technologies, which are expected to grow over $1.6B by 2025, are gaining further momentum as customers are leaning towards contactless shopping.
How can companies leverage AI/ ML and analytics to serve customers better?
The goal of any business is to attract new customers, retain their loyal customers, and sell more. To do this effectively, retailers need to understand their customers, their tastes, preferences, and offer them the right products at the right prices. Data is at the heart of providing a compelling customer experience. In retail business where seasonality and trends constantly keep changing, data plays a crucial role in defining its success.
Today, all retailers depend on data for making key business decisions. Following are some areas where data analytics and AI play a vital role in retail
- Smart customer experience – Understanding the customer from their previous purchases, browsing patterns, saved items lists, etc., to render a hyper-personalized experience, including showing their favorite brands, giving them personalized promotions and offers. Research shows that 44% of customers are likely to be repeat buyers if they are offered a personalized experience.
- Smart Recommendations – When the product a customer is looking for a product that is out of stock, AI enables retailers to provide the customer with alternatives that cater to their tastes.
- Smart Assortment – Having a customer-centric approach to assortment planning is key to not only to increasing sales and inventory turns but also creating brand loyalty. Aligning the customer data, including lifestyle, buying preferences, and pattern, along with inventory data, AI can power insights to localized assortment plans for a market that will best suit to increase the profit margins.
- Smart Pricing – Pricing not only determines the bottom line of the company but a key factor in the customer buying decision. With AI, retailers will not only be able to predict the current pricing trends for a product but also compute the best prices based on its sales demand, seasonal trends, geographic location, release of newer models, etc.
- Smart Delivery – With AI, retailers can better forecast the right storage location for the right items that match the demand pattern, be it their fulfillment centers or stores. It can also provide deep insights into delivery route optimization, increasing operational efficiency and decreasing delivery costs.
AI and ML offer a huge opportunity for retailers to deliver a compelling customer experience and drive cost efficiencies, thereby disrupting the way retailers do business.
How can retailers use technologies such as chatbots effectively?
While chatbots are seeing a huge surge in usage lately in retail, they are still in the early stages of evolution. Chatbots currently used help customers navigate to the product they want or answer any price related questions; they can ease their anxiousness by telling them where their order is in its journey. Chatbots are used widely in customer service to answer frequently asked questions like WISMO ( where is my order? ), return or refund status, product info providing self-service capabilities to the customer rather than spending time calling a customer service center. It brings out substantial cost savings to the company in customer service staffing.
Chatbots are a very versatile technology. They can be programmed to communicate in different languages while customizing to the specific brand needs. Chatbots are an efficient way to leverage the power of AI to provide a personalized experience to experience increasing brand loyalty and boosting sales while also driving cost efficiencies with effective customer service.
What is your advice to your peers?
Customer obsession! When you are obsessed with delivering value to your customers, there is no stopping your success. When developing new products, start with the why. Why are you building this, what problem is it going to solve, and for whom? What are the measures of success for the product? What are the OKRs – Objectives and Key Results. Once you are clear about all of this, start with the how – features and capabilities need to be built. Measure, measure, measure.. Using data at every step will help understand whether the customer is deriving value from the product and ensuring that the right capabilities are being built.