TECHNOLOGY | RETAIL TRENDS
3. TECHNOLOGY This is huge – we know that. It drives, as well as enables the other two factors. From a consumer perspective it allows the consumers to interact with companies in new ways – using smartphones or IoT devices for example. Smartphones opened new channels for retailers to engage and sell their wares. After one retailer offered this, expectations increased, and others had to offer it. Technology has been applied by those meeting the demands of consumers. It is the application of technology that has enabled faster delivery – from days to hours as operations have been streamlined. Omni-channel retail has made retail processes much more complex due to different customer journeys and fulfilment options, but shoe rental or razor subscription make these processes more complex still. Technology requirements become essential and these innovative business models are not supported by standard ‘out of the box’ software solutions – you have to orchestrate processes across multiple systems. The reality is that application software does not have in-built capability to support the latest innovations – nor will it, while the speed of change continues at the current rate. Continuing with my Rule of Three, I have found there are three things that retailers want from their technology: insight, efficiency, and quick response. All of these contribute to meeting the ever-demanding expectations of the consumer through the support of new business models. Only by having a flexible technology approach that provides insight, efficiency, and smart response can you hope to be able to address the three forces of change and flourish today and into the future. The Rule of Three.
The reality is that application software does not have in- built capability to support the latest innovations – nor will it, while the speed of change continues at the current rate. Though the “expectation economy” puts customers’ desires at the centre of retailers’ digital transformation, winning the hearts and minds inside your organisation is also critical to achieving success. 2. NEW BUSINESS MODELS When we hear the term “digital transformation” we often hear talk of “new business models” - but what does this mean? Amazon was a new business model, but many more have appeared since. In short, it is a way for a company to generate revenue in a new way. For a consumer, it offers the ability to buy or access products in new ways. For an existing player it could be a threat to their revenue or equally it could be an opportunity to generate more revenue. Consider Rent the Runway – who will rent you an outfit for a special occasion (or every day). Or Bombfell & Thread, who does personal shopping for you and sends you clothing on approval. Equally, Dollar Shave Club and others remove the pain of needing to remember to buy razors – offering a subscription-based approach where they are delivered to your door. Ideas around “access-type” models appear in multiple areas - even Lego is now considering renting out their plastic bricks. These are good examples of the radical new types of business models that solve pain in the customer experience, but in every case, they are enabled through the innovative use of technology.
Retail and the Rule of Three Retail is going through tremendous and undeniable change, and there are so many discussions about the cause. But there are three undeniable causes that interact with one another and underpin everything that is going on.
BY OLIVER GUY [SOFTWARE AG]
he Rule of Three is well-known in marketing circles; it comes from a speechwriting technique that drives a point home more effectively and memorably - by using three salient points. Think “Friends, Romans, Countrymen,” or “location, location, location.” So, when I was asked by a customer what I saw as the three biggest factors influencing change in the retail industry today, I knew they needed to be good. Although they might not be as memorable as “location, location, location,” they simplify a complicated journey toward helping retailers stay relevant.
My “three forces of retail” are symbiotic, in that each one gives support and receives support from the others. 1. CONSUMER HABITS & EXPECTATIONS Close your eyes and think about how you shopped ten years ago and compare it to today. The two experiences are hugely different. With every year that goes by, new options appear, and customer expectations rise. For example, next-day delivery used to be a big deal – now we want same day or, in some cases, same hour delivery. Bob Hetu at Gartner said every retailer needs to carefully examine its customer engagement to discover any weaknesses. “Disruptors seek
the weakest parts of the customer experience, emphasizing the benefits of their solution and converting customers in the process,” he noted. One such “weak spot” could be the ability to keep GenZ happy. I have talked before about GenZ and how 2019 is the year in which those born between 1995 and 2009 will make up the single largest demographic group in history. They have very specific expectations of how they feel their experience should be. While right now Generation Z may not have the most significant amount of purchasing power, what is fascinating is how behaviours and expectations exhibited by those in Generation Z are already migrating to those in older generations who have a great deal of purchasing power.
Software AG helps retailers digitally transform their businesses. With Software AG’s Digital Business Platform, retailers can connect systems, people and things in real-time in order to streamline, automate and provide intelligent visibility. Leveraging vendor agnostic integration technology, data silos can be eliminated to efficiently enable the omni-channel customer journeys demanded by today’s demanding consumer. Industry-leading API Management, IoT and AI technology enables retailers to leverage the power of sophisticated retail ecosystems and facilitate new business models. For more information, visit SoftwareAG.com/Retail
54 RETAILER | NOVEMBER 2019
NOVEMBER 2019 | RETAILER 55www.retail.org.au
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