Recently, at Berkshire Harthaway's annual meeting, Warren Buffett said that in 10 years the retail industry would look different from today: “Shopping malls are moving online.”
Bad News That Was Foreseen
Buffet did more than predict the collapse of traditional retail; he withdrew money from the industry. Berkshire Hathaway sounded a warning to retailers in 2/2017 when it sold 900 million USD in Walmart shares. Instead, it invested billions of dollars in airlines. Speaking to CNBC after the divestment, Buffet said retail was “too difficult,” especially in the age of Amazon.
Buffett’s remarks came during major upheaval in retail. More than 3,200 stores closed in the first half of 2017 alone, and Credit Suisse estimated the figure would exceed 8,600 by the end of 2017. Department stores such as Macy’s, Sears and JCPenney were hit hardest. Since 2001, department stores have lost half a million jobs. Over the past decade, Sears also closed 22% of its stores.
A 2016 eMarketer report stated: “E-commerce retail sales will reach 1.9 trillion dollars in 2016, with growth of 23.7%.” That figure is broadly consistent with recent reports. Traditional retailers are gradually fading, to the point that a busy shopping center must have some connection to an e-commerce presence or an online advertising campaign.
The identified reason is retailers' failure to invest in understanding and analyzing customer experience to know what customers need. In particular, their core customers are Generation Y, born from 1980 to 2000, currently the main shopping group. They use smartphones to chat with friends on social networks and buy clothes, tickets and books, and are very familiar with online payments. They always want to improve their online shopping experience, such as receiving recommendations for exactly the products they seek, easy payment and same-day delivery.
Where should you begin?
According to a report in late 6/2017 by TalkWalker, a platform specializing in collecting and evaluating online and social media data, retailers need to focus on data and analyze online customer experiences. An internal report by investment fund AVG and e-commerce platform iprice, which operates in 7 Southeast Asian countries including Vietnam, reached a similar conclusion.
Retailers therefore need to prioritize mobile phones, personalization, customer service, and customer experience alongside business initiatives. Consumers are busier and want everything faster. Business owners even need to continually monitor what their customers are doing and thinking on social media.
Experiences and Consumer Trends
One brand that makes the most of customer experience and new trends is Starbucks. Besides selling coffee, for a long time, Starbucks has consistently affirmed one thing: treat customers as friends and always give them what they need. Starbucks is active on social media and has a mobile loyalty app to make payment easier.
What Starbucks learned is that, if you do not participate in social media, you are not part of society and cannot expect to connect with anyone.
Continuously improve the customer experience
Understanding customer needs is the key to successful sales. A retailer needs to focus on what customers need and want to make quick purchasing decisions. Specifically, it should collect and analyze users’ website browsing habits to make the purchasing process as simple as possible. The experience from payment through delivery, and even the design of striking advertisements, are things online retailers continually improve and develop.
Use user-friendly systems that assist customers during the buying process, such as online advisory chat software (chatbots) and a safe, quick payment experience. Also consider how to keep customers happy.
The power of chatbots
According to a Google study, 97% of users are using smartphones. They need as much product information as possible before deciding to buy. Crucially, they want everything quickly, including product details and prices available on the website. Consider how H&M used a chatbot to reach and win over its customers as an interesting lesson. Specifically, questions include: What should I buy? What are the opening hours? Which clothing size fits? For basic questions like these, the chatbot is programmed with automated answers like a personal stylist and is, of course, online 24/7.
Customer loyalty program
A study shows that 79% of customers will turn to another brand or provider if the customer service they regularly use is poor even once. Brands such as Sephora, McDonald's, and Starbucks have run quite successful loyalty programs.
All 3 brands follow the principle that ‘everything happens on your smartphone!”. They launched mobile apps offering 20% off orders placed online or 25% on customers’ birthdays. They even turned smartphones into “mobile ATMs,” allowing users to add funds, pay through the app, and collect reward points.
Improve customer service
You must recognize that your consumers act very quickly. 60% of customers on social media expect answers to their questions within 1 hour. Recent studies found that 76% of users are willing to recommend products with friendly service to friends, and 43% interact with brands through social media. This means you need a social media presence. Fortunately, many tools now filter what users say about your brand on social media and make it easier to reach your customers.
Collected
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