By Peter Monk
For the majority of retailers, competing on price alone is no longer the viable strategy it used to be. All manner of consumer goods are fast becoming commodities which can be sourced and delivered from anywhere in the world. In this global e-commerce environment, Australian retailers need new ways to distinguish themselves from the competition and earn long-lasting consumer loyalty. But retailers need to do more than just lift the quality of existing customer service and engagement channels – they need to rethink themselves as selling services and solutions rather than products.
Why should retailers even contemplate such a transformation? Previous areas of competitive advantage, such as price but also brand quality and exclusivity, are more easily replicated and exceeded by competitors than ever before. For Australian retailers, focusing on building customer loyalty – and repeat sales – is a far more cost-effective proposition than aiming to compete against the rest of the world in these highly-contested transactional areas. A service-based model that delivers expert advice and consultancy is not only more likely to convince customers to buy, but also establish retailers as trusted sources of knowledge – more like a concierge than a salesperson – that can’t be replicated by a transactional e-commerce platform.
Appreciating retail assets
Australian retailers already possess many of the fundamentals required to provide this concierge-style level of service. Retail salespeople are typically required to be experts in their particular field because they have exposure to far more knowledge about products and trends than the average customer. Retail managers themselves must be up to date with the latest market developments and emerging preferences to tailor their investments – so why not translate this insider knowledge into advice to the customer base?
Digital technologies offer retailers the means by which to deliver these “knowledge assets” to their customers. In fact, retailers should consider how an omni-channel strategy applies to providing consultancy and expert knowledge as a core element of consumer engagement. By adapting their existing online and social media platforms, retail leaders can deliver advice alongside more traditional customer support and helpdesk services. Imagine, for example, using a brand’s social media channel to not only check on the status of a consumer’s order, but also contact a stylist to find items which would best match what they’ve purchased.
Retailers also stand to enhance the levels of expertise they can offer their customers through how they apply technology to their markets. Business analytics, for example, can be used to gain insights into inflection points for the industry. IBM’s CoreMetrics platform found that this year’s Click Frenzy clocked up 37 per cent more online sales than those on Boxing Day. But the same data analytics can inform how retailers understand and even predict broader cultural factors that influence what customers want. IBM’s analysis of social media “Big Data” suggests, for example, that steampunk is set to become a major trend for tomorrow’s fashion industry. As retailers continue to build their investment in new technologies, they need to consider how these might be used to enhance the knowledge and expertise that they can offer customers as part of a more sophisticated, service-based experience.
Retail at your service
The future looks far brighter for service-based retailers than it does for those which continue to focus on product and price alone. Emerging technologies such as telepresence and haptics promise to enable the transmission of far more sensory “data” than currently viable in our text-based online environment. Combine these sensory technologies with the spread of mobile devices, and the innovative retailer could one day provide real-time consultations and purchasing advice to customers anytime, anywhere. If you’re the clothing label of the example above, your stylists may one day be able to help customers recreate “looks” encountered on the street within the brand’s range, simply by using video technologies to mirror what the customer and expert see in real time.
Combining expert advice (“High Touch”) with increasingly powerful digital technologies (“High Tech”) may eventually give rise to a “concierge industry”, one where retailers offer omnipresent access to services and knowledge to their customers via mobile devices. Unlike price, function or even quality, this knowledge is unique to each and every retailer, based on the distinctive interactions between them and their consumer base. As a source of competitive advantage, it allows retailers to seek out new heights in customer loyalty and sustainable sales – rather than continuing in a price-race to the bottom.
Peter Monk is the sales and solution leader of global process solutions (GPS) at IBM.