Will traditional retailers be dethroned in the brave new digital world?

Digital_Revolution

The ‘digitisation’ of our daily lives

We’re all aware of the huge digital revolution that’s taken place in Western society recently. Ever since computers made their way into homes in the 80s, the digitisation of our daily lives has been occurring exponentially. Internet and email emerged in the 90s; the noughties brought complex digital devices, not to mention the smartphone. Wearable technology, flexible/portable screens and geolocation devices are predicted to become commonplace soon. In true revolutionary style, it’s a case of out with the old and in with the new in increasingly shorter timeframes.

Retailers need to understand the digital revolution’s impact for business. Specifically, how consumers’ wants, needs and expectations have shifted. Retailers who want to be a part of the brave new digital world need to re-evaluate their product offering and services to ensure they remain relevant – or risk being dethroned.

Who rules in the brave new digital world?

Gen Y consumers were born into the digital world. They automatically incorporate new technologies into their lives as they emerge and expect retailers to do the same. They’re currently a quarter of the world’s population and growing. Non Gen Y consumers are also increasingly engaging in digital technologies. The bottom line is: the number of digital consumers is growing; traditional consumers are in decline.

What the digital consumer wants

Digital consumers want more. They expect to interact with retailers in any way (be it email, social, live chat, in-store) with any device (be it smartphone/tablet/desktop) at any time of the day/night. They also want to be able to chop and change the way they interact at any stage of the customer journey and get a consistent experience throughout. They want all information required for a purchasing decision upfront (e.g. user reviews) as well as timely and useful responses to their queries. If a retailer can’t deliver, digital consumers switch to those who can.

How can retailers join the revolution and continue to reign?

The core principles of selling still apply in the brave new digital world. But some traditional retailers may need to reframe their offering. Retailers must ask: Are my products/services desired by digital consumers? Are my prices competitive compared to my international competitors online? Are digital consumers hearing about us online? If the answer is no to any of these questions, change is required. Many traditional retailers will find it a challenge to remain relevant to digital consumers as technologies and society evolve at an ever-increasing rate.

Some of the most notable victims of the digital revolution to date are Kodak, Dymocks and Blockbuster. Digital consumers no longer desired their products. Retailers with products at risk of becoming irrelevant need to innovate and come up with new revolutionary products that will be desired by digital consumers of the future.

There has been increased competition in all industries (due to the proliferation of information now accessible) making it harder for retailers to compete on price. Retailers should look to offer services valued by consumers if they can’t match competitors on price. Nike has justified its higher prices by offering personalised sneakers through NIKEiD.

Retailers should also be watchful of new ways to reach consumers when their behavior changes as a result of new technologies. Facebook allowed retailers to occupy the same space as a consumer’s digital social network, as well as leverage any advocacy within that space. UK telco retailer Giffgaff incentivises its digital consumers to answer other customers’ queries at its member forum and spread the word about the network online to attract new customers. As a result, Giffgaff doesn’t need to advertise to acquire new customers, or a call center to service existing customers. The result is lower prices for its customers. Retailers who are first to capitalise on opportunities arising from the emergence of new technologies will benefit most.

Out with the old and in with the new

While the digitisation of our daily lives leads to challenges for those retailers who aren’t robust enough to adapt quickly, it does present an opportunity for those who are, and for those who aren’t currently in the marketplace but have what’s required in the brave new digital world. One thing’s for sure: in the next couple of decades consumers will behave in ways currently unimaginable. A flexible business model that predicts and reacts quickly to changes in consumer behavior will be most beneficial to retailers in the future.

Author: Virginia Bashford, Senior Account Manager
With thanks to ologyrealestate.com.au for the image