The basic concept of retail has remained unchanged throughout the ages, with retailers providing what people need or want and consumers buying the goods or services that best satisfy their needs. However, the retail industry today is infinitely more complex than it used to be a few decades ago.
Retail is now governed by convenience and choice. In the past, convenience stores rattled supermarkets simply because they were closer and satisfied customers’ needs faster, but e-commerce has completely disrupted the retail industry.
The digital revolution has drastically shifted users’ expectations for interacting with retailers. Retail businesses are in a constant struggle to transform themselves and to adapt to the latest prerequisites in order to survive. Data under all forms became the number one asset that companies possess, and the ability to analyze data and generate actionable insights is no longer a luxury, but a must-have for retailers.
Why Digital Transformation Is Necessary
Companies all over the retail industry in the U.S. are prioritizing digital transformation. Traditional stores are closing down at a faster pace than ever before, with around 12,000 stores closing by the end of 2019, and the ones remaining are struggling to understand how to adapt to the new shopping paradigms.
The digital age has not been the best for more traditional shops. While Thanksgiving and Black Friday remain the busiest shopping days for stores, in-person traffic is declining rapidly.
In 2018, store traffic fell as much as 9% from 2017. The number of people visiting stores in 2017 was 4% lower compared to 2016.
People are starting to use physical stores more as a pick-up location instead of going there to shop, which cuts down on time waiting for their items to ship. More than 50% of Americans who order online say they are choosing the stores as their pick-up location.
Industry analysts have already predicted that the rise of e-commerce and mobile shopping would precede the decline of in-store traffic. Retailers are displaying their best offers directly on the websites, and shoppers are literally one click away from buying what they want.
Retailers’ apps and websites have been constantly evolving, making shopping easier with each interface update. If users are logged into the app or website when they want to purchase something, they oftentimes only need to add the security code of their credit card (and sometimes not even that) to have the transaction go through.
It is clear that brick and mortar stores are struggling while e-commerce is thriving and gaining more traction. However, there are two sides to every story, and this is no exception. You can either see a dying industry or you can see a huge opportunity for growth, for both the analytics and retail industries.
There are thousands of stores and retail brands that have huge growth potential if they choose to go online.
Many retailers rent huge spaces, with tens of thousands of square feet of store space. However, consumer behavior has shifted from strolling around stores to searching for items online, or going directly to the store and quickly buying whatever they need. This is why many retailers, as part of their digital transformation, closed dozens of big stores and moved to prime urban locations with maximum store-space efficiency.
How Retailers Can Transform Their Business
“What should we do?” is the question that most retailers are asking. The answer is a little more complex and can be challenging to implement, but at its core, it’s to embark digital transformation, focus on the user journey of your digital property, and get your organization on track toward becoming data-driven.
These three steps summarize how retailers can better understand their users, how they can anticipate trends, and predict what they have to change to stay ahead of their competition with the ever-changing requirements of users.
“In an ideal world, every organization would connect their offline and online data successfully. However, for most organizations today, the goal of connecting offline and online data is simply out of reach due to a plethora of issues.
Some of the main ones, including siloed data, fragmented processes, a lack of data standardization, and not speaking to your customers in a unified voice, prevent many companies from accomplishing this unification.” – Jon Boone, Senior Digital & Analytics Expert
How Analysts Can Help Retailers
Retailers should start by having conversations with a strategist who will help them understand their direction, identify the gaps that are preventing them from succeeding, and help them build a roadmap for their businesses and analytics implementations. This will give retailers the ability to set a course and determine their timeline with respect to their constraints.
One of the most important goals retail companies need to focus their attention on to maximize revenue is user journey analysis.
Retailers going digital want the best app or website since that leads to more conversions, increased customer retention, and a jump in revenue. However, companies first need insights to help them improve the user journey.
User journey analysis leads to both depth and quantity of insights, which blossoms into A/B testing opportunities and deep-dive analysis. Regardless of what is being sold on your website, through user segmentation, retailers can gain a holistic view of their users and discover where they find value in the store’s digital experience. This helps steer the company in the right direction by focusing on building a product or service based around the likes and dislikes of the customers.
Retailers can begin this process by selecting simple segments, which include the device being used (desktop vs. mobile vs. tablet), the acquisition channel (email vs. social media vs. paid search vs. organic search), tenure, and frequency.
Often times, segmenting users with a combination of dimensions will give you the deepest insights. In this scenario, it’s important to keep the user end goal in mind to help them achieve what they came to accomplish or what you want them to accomplish.
Retailers should also focus on discovering user-specific tendencies to improve their digital property. By discovering who their users are, retailers will begin to gain the insights needed to make vast improvements to their digital property and the user experience as a whole.
The Current State of the U.S. Retail Industry
To learn more about the current state of the U.S. retail industry, download our white paper. You’ll get a comprehensive view of the latest trends and forecasts about the retail industry and how retailers are tackling e-commerce in today’s digital age.