Retail Industry Trends
Digital transformation and climbing consumer expectations are forcing retailers to rethink their IT infrastructure. Not only that, retailers today must deliver better customer experiences, improve supply chain management, and elevate in-store interactions.
Retail reinvents itself.
The retail industry is in the midst of completely reinventing itself. The digital revolution of recent decades has reshaped consumer expectations and behavior. It’s driving some household-name retailers out of business, creating opportunities for new entrants and business models, and driving all retail organizations to rethink their people, processes, and technology from the ground up. To remain relevant, and to survive, traditional retailers need to provide a highly tailored omnichannel customer experience (CX), update the function, role, and appearance of their brick-and-mortar stores, and vastly improve supply chain efficiency—all at the same time.
To meet these challenges, retailers are moving rapidly toward agile, primarily cloud-based IT systems. Retailers depend on these systems to support basic business infrastructure—ERP, database, analytics—as well as essential retail-specific functions such as merchandising, inventory and fulfillment, and customer relationship management.
The new customer experience.
A key focus for retailers is providing personalized customer experiences seamlessly across channels, both digitally and in-store. Customers find a personalized experience not just appealing—90 percent of them, according to Epsilon—now expect it. Nearly half of shoppers are even willing to share data with retailers—from their personal information to their location—to gain these improved experiences across all channels.
Omnichannel consumers—customers who shop both digitally and in-store—are far and away the most important portion of the contemporary retailer’s customer base. According to a recent global survey of retailers, although omnichannel consumers represent only seven percent of the overall universe of shoppers, they account for 27 percent of total sales. On an individual transaction basis, omnichannel shoppers spend about four percent more than the single-channel consumer per trip into the store, and 10 percent more online.
Brick-and-mortar stores find new life.
While a rash of store closings in 2017 and 2018 led to predictions of a “retail apocalypse,” the reality is that 90 percent of worldwide retail sales are still made in physical stores. But even if there is no widespread demise of brick and mortar, there is a fundamental change underway in the nature and role of the store. Today’s consumers, especially younger ones, expect more than merchandise on shelves—they expect an adventure. Retailers are transforming the physical store into a destination, blending the digital experience into the physical location for an enhanced and entertaining shopping experience that consumers can’t find online. Retailers that fail to reinvent their stores and create these unique and elevated customer experiences risk irrelevance—and extinction.
Embracing this change means adopting technologies like augmented reality (AR) and virtual reality (VR) to enhance the in-store experience. IKEA, for instance, has recently introduced an AR app that lets customers see how its furniture would look in their homes. Apparel and cosmetics brands such as Timberland and Charlotte Tilbury added VR-infused mirrors in some stores to make trying products more convenient.
The last mile becomes a top priority.
As retailers fight to stay relevant to today’s customers, the last mile in the supply chain—delivery—has emerged as a competitive differentiator. Overall, retailers are failing to meet customer expectations for delivery: nearly 60 percent of shoppers rate the delivery experience as mediocre at best. Retailers that successfully balance operational cost against fast-changing customer expectations for a prompt and transparent delivery experience can set themselves apart.
The stakes are high for getting it right: 70 percent of consumers say they will not shop with a retailer again after a poor delivery experience. With such a direct impact on revenue, the delivery experience is now a standard KPI.
This represents a business opportunity for retailers able to get on the other side of the dissatisfaction curve. While price is still consumers’ key consideration in selecting a delivery method, nearly 25 percent say they are willing to pay significant premiums to have their orders fulfilled more quickly. Retailers can expect this percentage to grow, according to a recent projection.
How can you prepare for the future?
The solution is to prepare your organization with cloud-ready IT infrastructure that is optimized for on premises as well as in the cloud: Oracle Engineered Systems.
These systems are designed, fully integrated, and optimized with Oracle Database to deliver faster retail reporting, improvements in supply chain management, better customer experience, business and product forecasting, and increased revenue and employee productivity. The Oracle Engineered Systems are integrated to eliminate data loss, a retailer’s most valuable asset and accelerate rapid data recovery across your enterprise. And they provide a seamless path to the cloud when your organization is ready.
Many leading retail customers around the world have already learned that they can optimize for today while planning for tomorrow, with Oracle Engineered Systems.