Retail Shopping
All retailers recognize the importance of having a digital strategy to mobilize a community around their brand and inspire customers to discover, purchase, and talk about their products. But how have digital strategies evolved following the pandemic, and what can retailers do to effectively transform their operations in an incessantly fluctuating market?
Shannon Ryan, Executive Vice President of North America at Valtech addressed these questions and more during our recent conversation. From leveraging data to adopting a composable architecture – there are many options for retailers to implement a successful digital strategy.
Valtech is a global business transformation company that delivers innovation with purpose, reimagines the customer journey, and builds new connected experiences in both digital and physical spaces. The company works with some of the world’s top leading brands, including L’Oréal, Toyota, Volkswagen, and P&G.
Gary Drenik: Digital strategies have been a crucial success factor for years. How have they changed for brands post-pandemic, particularly following the e-commerce boom? Will a potential recession drive further digitalization in the retail industry?
Shannon Ryan: In early 2020, every retailer had a playbook, and by around April, that playbook was thrown out the window. The pandemic sparked a new understanding among retailers of the terrifying reality that the world can instantly speed up. It created the need for executive-level muscle memory to push to go fast, try new things, and be bold. Successful companies started improvising on the fly, and this approach became a necessary conceptual framework, which many management teams began to operate under. We shall see if this sticks during a recession.
It’s well-known that technology can bring efficiency, optimization, and streamlined costs to a business – all of which become critically important during economic decline. The question will be how quickly we find ourselves in a recession relative to the time required to build out some of these advanced digitization strategies for retailers. Those organizations that invested in digitalization early will weather the storm more successfully.
If the beginning of 2023 brings economic turmoil, then the “scramble strategy” of the pandemic will likely continue, and it becomes a matter of how quickly retailers react. During the pandemic, we saw Nike accelerate faster than its competitors because it had already spent a significant amount of time and resources laying in the digital plumbing around technology and community.
It's also important to recognize that, for the most part, the technology we’re talking about has existed in at least some form for the past 5 to 10 years. For example, buy online and pickup in store (BOPIS) is not new. What’s prevented companies from pursuing them is a lack of internal and external motivation.
Drenik: What digital strategies are retailers implementing to successfully drive traffic back to in-person shopping? Can you name any specific examples?
Ryan: According to a recent Prosper Insights & Analytics survey, in-store shopping significantly declined during the pandemic, but it’s slowly on the upswing. 58% of adults said they were shopping in stores less in October 2020, 43% in October 2021, and 33% last month.
Prosper - Shopping Behavior Change
At the same time, the number of adults who shop more online has remained consistently high over the past 2 years. To continue encouraging customers into stores, some of the more common innovative technologies being used include personal AI concierges, touch-free interfaces, virtual reality, mixed reality, and more.
Which technologies will survive is still in the air. However, augmented try-ons in particular are here to stay as they push the boundaries in product discovery. When MAC realized they needed to offer a stronger and more modern omnichannel experience, they turned to Valtech. We helped them upgrade their virtual try-on (VTO) feature with AR, so customers could test various makeup looks in no time, save their favorites, share with friends, and add to cart. The feature was hugely successful.
Drenik: So, the future of shopping will be hybrid. How are retailers balancing the pent up, post-lockdown desire for in-person community and socialization with the increasing need for more digitalization? What future-proof technologies and architectures are necessary for retailers to take advantage of innovation, advance their businesses, prepare for inevitable changes, and avoid falling behind their competitors?
Ryan: I think there’s a fundamental shift among retailers as they try to tease out the difference between fulfillment – or a customer walking into a store and knowing exactly what they need – and shopping – where the customer is more open to experiences. Historically, most stores were focused on inventory and transactions. Today, most brands don’t care where the transaction happens. So, we’re starting to look at the purpose of physical stores in a different way. The store needs to become a way to explore and discover new products. They need to essentially fulfill the role that advertising historically played. This changes how brands think about physical locations and floor space.
Retail leadership teams must be bold enough to realize past measurements of success like same-store transactions or revenue per sq. ft don’t matter as much anymore. At the same time, community, socialization, and the collective experience that shopping brings is something I see coming back quite vigorously. Before deciding on technology, retailers must first start with an ambition, asking themselves what experience they want to provide their customers, and figure out what works.
The last few years have taught us that the future is unpredictable. Therefore, having the flexibility to pivot around new experiences and opportunities is truly going to be one of the separating factors between losers and winners moving forward.
Drenik: How are companies leveraging data to innovate the total customer experience in today’s complex commerce economy? How will data strategies and deep knowledge of customers help retailers manage through the next year?
Ryan: It's funny, because two or three years ago, everyone was talking about building a “data lake.” Today, it’s a “data foundation” or “data driven mindset.” Meaning, companies are starting to realize that just because you can collect data, it doesn’t intrinsically make you any smarter.
Data is the foundation for building personalized experiences and ensuring hyper-relevant product offerings for customers. At Valtech, we always recommend organizations foster a “growth-hacking” mindset, and where feasible, instill a cross-discipline, multi-function team that can quickly take insights driven from data, turn them into experiments, and run a series of test-and-learn strategies to drive outcomes around optimization. Companies are just beginning to understand the value of this skillset.
Drenik: Why are we seeing more retailers adopt composable architectures into their commerce strategies?
Ryan: When dealing with increased competition, unprecedented industry disruption, the need for continuous innovation, and especially a potential recession, brands are starting to realize the importance of a modern architecture.
The only answer to ambiguity is adaptability. Composable, or headless, is a set of philosophies and frameworks that go beyond technology. It’s the ability to think in new and less structured ways, and it provides the flexibility to be more responsive and agile to new technologies and opportunities.
Drenik: It’s been a pleasure chatting with you, Shannon, and thank you very much for sharing your insights. We look forward to staying in touch as the retail industry continues to inevitably evolve.
