Don’t expect your holiday gifts to be delivered by drone this year, but we are getting close! Technology and innovation continue to drive new opportunities and experience, sweeping up consumers and retailers in its wake. Some consumers are more willing than others to adapt; however, once they become accustomed to the convenience, they become believers, and there’s no going back.
This year, consumers told us they will combine in-store and online for a best-of-both approach to their holiday shopping lists. For a hard-to-shop for aunt, they’ll head to the store. But for a son who already made a list, online is the way to go. Those who run out of time can just click and pick up the gift later that day.
As the season unfolds, savvy retailers are preparing for the digital changes afoot. They recognize that while these changes can present logistical and operational challenges to implement, they ultimately improve customer satisfaction. Following are four trends retailers are already embracing.
1. Solve customer problems via the physical-digital combo: In its essence, customers just want their problems solved. That means a faster, more relevant online experience; an elegant website that doesn’t actually solve their problems won’t do anymore. Today, they seek more accurate data on product availability, more precise search results, and faster checkout. Ultimately, they want the most convenient experience, no matter whether they shop online or in store.
Certainly, the 43% increase since 2015 in the number of shoppers who buy online, then pick up their items in store, illustrates that consumers are finding ways to combine physical and digital channels to maximize convenience. And retailers are responding: When consumers log into Best Buy online, for example, they can order an item to be delivered. Or they can pick up the item at a store close by, sometimes as quickly as an hour later. If a shopper wants to buy something for a son or daughter in college in a different state, that student can pick up the item at a store close to campus with Best Buy’s pickup option for friends and family.
2. Smartphones pack a punch: Analysts estimate mobile payment will surge more than 16-fold between 2012 and 2020 as consumers adapt to the increasingly prevalent technology. In fact, almost 50% of men ages 22 to 35 told us they will pay by smartphone this holiday season (versus 20% of all consumers)—while nearly 30% will pay by smartwatch (versus 10% of all consumers). Consumers ages 13 to 16, who’ve grown up with mobile devices, are not far behind: Almost 30% of them told us they will pay by smartphone, while nearly 15% will pay by smartwatch.
Given the right incentives—such as the ability to preorder online and go to the front of the line for pickup—consumers are more than willing to use mobile payment. Starbucks’ mobile app represents one-third of all orders, up from 8% just three years ago. And mobile customers, all members of Starbucks’ loyalty program, spend more, representing 36% of sales, even though they’re only 18% of Starbucks’ 75-million strong customer base. They are sold on the convenience: complete order customization, selection, and payment all within the app, and all from the comfort of the home, office, or on the go.
Sweetgreen, meanwhile, a healthy alternative to traditional fast food, has built up a digital customer base in a short time: Forty percent of transactions are digital, compared with single digits a few years ago. Launched a decade ago, Sweetgreen is hyper-focused on making the customer experience as frictionless as possible.
The future promises even more convenience as Walmart rolls out a pilot digital checkout program at a dozen or so stores around the country. Shoppers can use the Walmart app to scan barcodes for items they want to buy, then click “pay” and show proof of purchase on the app to a Walmart employee at the door. Done! Shoppers without smartphones can use handheld scanners that Walmart provides.
Next up? The concept Amazon Go is fine-tuning: stores with virtual carts and digital shelves that allow shoppers to scan in via smartphone, buy what they want, and leave. A combination of deep-learning algorithms, sensors, and computer vision, which allows computers to interpret and analyze digital images, make possible this emphasis on checking in rather than waiting in long lines to check out, which consumers tell us every year is especially painful during the holidays.
3. Bring choice to the customer—in a box, at home: Online shoppers have become notorious for “bracketing,” meaning they buy a few different items, then keep the one or two they like and return everything else. In response, a raft of retailers offer free shipping on returns. And some newer online pure-plays go even further. Stitch Fix, for example, takes customization to a new level: Shoppers provide information about their sizes and style preferences, then sit back and await a shipment of five pieces of clothing tailored specifically to them. They keep what they like and return the rest. With measurements and preferences already registered, each time customers need something new, they receive five options to choose from. The ultimate goal: to provide an ultra-personalized shopping experience that brings the variety of selection available in a store directly into the shopper’s home.
4. The store informs, educates, and entertains: No longer merely a warehouse for inventory, today’s reimagined store plays a defining role in overall strategy. It is an outlet for product discovery, a forum to educate and entertain, and a channel to reinforce the brand—all of which the new Apple store in Chicago does, blending seamlessly into the riverfront with its floor-to-ceiling windows overlooking the river. Customers can take classes, set up one-on-one sessions, learn about new products and features, sign up for an outdoor “photo walk,” learn the best smartphone camera techniques, or just share a comfortable space with friends.
In this community of commerce—the juxtaposition of commerce and community that offers shoppers a welcoming environment where they enjoy spending their time as much as they enjoy spending their money—store experience matters as much as products and services. Walmart’s announcement that it will host 20,000 parties in its stores during November and December clearly address this imperative of a community of commerce.
When retailers focus on solving customer problems, technology takes on a whole new meaning. Rather than a force that decimates, it becomes the enabler powering their evolution for the next generation.