Think Tank: What retailers need to know when eyeing technology
By Gilles Rousseau, Senior Vice president of Sales and Marketing at Splashlight.New York - March 28, 2017
From advancements in artificial intelligence and virtual reality to the utilization of chatbots to bring elements of the in-store experiences online, retail brands are overwhelmed with technology investment options that all promise success and opportunity amid a market that has seen better days.
Retail is struggling. In fact, the number of distressed U.S. retailers has tripled since the Great Recession, according to a recent Moody’s Investors Service report. Today, fashion and retail brands are feeling a greater sense of urgency to adopt any and every new technology product or service to gain an edge in the market. Technology will only continue to become more pervasive in the retail and e-commerce industries and these investments can make the difference between success and failure.
Avoiding the Frankenstein Model
In an omnichannel world, the typical trap for retailers is to build a Frankenstein-type business model in hopes that leveraging various forms of technology will address the demands and issues across multiple channels. This approach, even if carried out with the best intentions, can create an overly complex environment that will damage the client and customer experience.
Keeping up with the evolving demands of today’s consumer has fundamentally impacted how every business unit operates, including marketing, advertising, customer service, IT and more. Today, the consumer has taken back control of their online shopping experience and purchase decisions without the influence of a salesperson. They decide how they want to shop, what they want to click on and ultimately, what they want to purchase. Retail brands are continuously trying to serve these needs and develop brand loyalty by experimenting with new technologies. These experiments can potentially drain time and resources and cause unwanted disruption. These are the common consequences of implementing a Frankenstein model.
Simplification across the board on infrastructure, organization and customer experience is paramount prior to adding new technologies. Adding new layers of technology and systems before existing ones are considered “bulletproof” can also negatively impact the customer experience.
For instance, what’s the point of using artificial intelligence to offer shoppers personalized product recommendations if basic information is not already being properly extracted and analyzed? A lot of data is generated in the retail world and when internal systems and processes are not properly in place, the value that comes with that data is lost and companies are at risk of falling behind.
A central mistake many retail and fashion companies make is not aligning technology investments to internal capabilities. Some companies simply do not have the expertise on staff or the scale to successfully roll out new technology solutions or platforms. Without a proper business plan in place and internal alignment, brands will not experience the full benefits of their investments. This will also result in lost time, money and resources for the company.
Precision Moves the Needle
Retailers that strategically invest in the right technology at the appropriate time will find themselves more in control of the business outcomes they want to see, including increased sales, customer engagement and productivity.
Many retailers try to roll out emerging technologies too prematurely, and the result can lead to a final product that is off-brand, disjointed from core business values and lacking a return on investment. For example, in the early days of social media, some brands commit themselves to joining social media platforms without assessing the ROI and fit with their brand. Rather than taking into account how these platforms could be used to better serve the company/brands, they are consistently drawn to the shiny new toy and jump on the latest trend without a plan in place.
A pragmatic and progressive approach is necessary. Brands that take the proper amount of time to research, develop and implement new technology investments will stand out among their competition with a result that encompasses quality and creativity. The goal is not to launch a product, for example, an augmented reality app, simply because competitors are doing it. It’s not about playing catch up. Rather, it’s about creating brand differentiation and aspirations and that would enhance the relevancy and consumer pull.
Emerging technology is redefining the retail industry and brand management, making room for more seamless, personalized and immersive experiences. The benefits and the full power of these investments cannot be harnessed if brands do not first ask, “How will this impact our customer?” Brands and retailers that fail to embrace the way their consumers want to shop will not see their technology investments convert into success. By acknowledging the mind-set that the consumer “owns” the brand, executives will be able to make more informed decisions when it comes to technology investments that will move the needle.
Splashlight is a visual content creation company serving retailers, luxury, jewelry, apparel and athletic brands such as Target, Bloomingdale’s, Victoria’s Secret and David Yurman.