Tag Archives: retail technology

The State of Retail 2017 – The Unstoppable Force of Change

What is the state of retail in 2017? What are the movers and shakers doing? And are there any retail stores left to close?

You can hardly keep up lately with all the news, good and bad, about the state of retail. News about customers shopping more online, and using mobile phones to do so. The expansion of Amazon.com to the physical retail channel and Walmart’s effort to mimic Amazon’s online business are also headlines.

Reports of thousands of retail stores closing in the US and elsewhere keep industry commentators and opinionists busy. Many suggest that retail technology may help to stop the rot…

Let’s look further at the matters that influenced the state of retail during 2017.

Retail customers continue to shop more online

There is no doubt that more retail customers are shopping online. The U.S. online sales are expected to reach more than $459 billion in 2017, rising 14% from last year and accounting for 12.9% of the anticipated $3.56 trillion in total retail sales, according to Forrester Research.

And retailer customers shop more online using mobile devices. In fact, according to Justin Smith, CEO of OuterBox,. He said that significantly more people are accessing the web from a tablet or smartphone than a desktop, and they’re doing it with more eCommerce intent than ever before.

The online shopping experience clearly has a major effect on eCommerce sales: The Forrester 2016 Customer Experience Index found that digital retailers delivered 17 positive experiences for every negative one, compared with just 13 among traditional retailers.

Amazon.com is making big moves while Walmart is trying to stay relevant

Amazon.com has made huge progress towards establishing Bricks and Mortar businesses during 2017. According to Dennis Green, writing in the Business Insider, Amazon.com has opened bookstores in major cities like Seattle, Chicago, and New York. He says that the stores operate exactly the same as Amazon’s online bookstore, since they allow visitors to browse a curated selection similar to how it appears on the site. There are currently 11 stores open, with two more on the way.

Even more significant was Amazon.com’s acquisition of natural foods store Whole Foods. Whole Foods was already a national chain with more than 450 stores, but with the power of Amazon behind it, it has the potential to be something even larger (Business Insider).  By the way, Amazon.com paid $13.7 Billion for Whole Foods (Bloomberg). However, with the acquisition of Whole Foods, Amazon.com was entering Walmart’s territory.

So what was Walmart doing during 2017? “Walmart has an annual turnover of $170 Billion and has largest share of US grocery retail sector by far” writes Phil Whaba in Fortune. That means that they really needn’t have to worry about Amazon.com, or do they? Walmart is worrying, and doing something about it…

Walmart is taking the battle with Amazon.com on the latter’s own soil – ecommerce.  “The e-commerce competition between Walmart Stores Inc. and Amazon.com Inc. is heating up, and Walmart executives are saying “bring it,” with plans to continue investment in its online and multi-platform capabilities” reported Tonya Garcia in Market Watch.  For the second quarter, e-commerce sales, which include purchases that are shipped to customers’ homes as well as transactions that are fulfilled in stores, such as the online grocery service, were up 60%, conclude Tonya.

But what was happening with the other retailers during 2017?

The apocalypse of retailers

The apocalypse of retailers refers to the closing of a large number of American retail stores since beginning in 2016, according Wikipedia. There was no respite for the industry as the apocalypse of retailers kept going on during 2017. Derick Thompson (The Atlantic) suggested that there are three explanations for the demise of America’s storefronts:

  1. People are buying more stuff online than they used to.
  2. The USA built way too many malls.
  3. Americans are shifting their spending from materialism to meals out with friends.

However, there are different opinions about the severity of the apocalypse of retailers. Glenn Taylor in Retail Touch Points writes that the retail apocalypse is more like a retail transformation. He suggests that while many retailers remain in flux, it appears more brands are getting the right tools in place to engineer a turnaround. Some commentators recognize that retailers shouldn’t seek the answers for the problems outside their organisations…

Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon suggested in Bloomberg that the problems with US retailers are of their own making: “The reason isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder—even for healthy chains.”

If the retail apocalypse can be countered by turning your company around, which usually involve spending more money, but there is no money, well then…

So, will retail technology keep the retail apocalypse in check?

How did retail technology affected the state of retail during 2017?

The adoption of the latest retail technology is proposed as one way to stop the demise of retail stores. Especially is the use of learned machines, data, and virtual- and augmented reality seen to make the in-store shopping experience of customers more pleasant. That, some says, will bring the feet back in the stores.

“With shoppers’ expectations rising, the proliferation of data and new touch points, and increasing competitive pressures, retailers must focus on delivering the most relevant customer experiences possible in order to succeed”, concurred Jeff Barret in Inc. That’s where the problem is with retailers – they have the data, but they don’t know how best to use it…

“Many businesses are failing to make the most of the technology available to them, gathering only a tiny fraction of the available data. They are using valuable manual resources to process and analyze the data they do get and presenting the findings in an incomplete or unnecessarily complicated way”, writes Patrick Reynolds in his blog eTech.

Thus, although retail technology was around during 2017, it seems that most retailers missed the opportunity to use it effectively.

Concluding

Now you might be asking: “What will the state of retail be in 2018?” It may be ‘same old, same old’ or a barrage of new pleasant (or unpleasant) surprises. I don’t know. May it is time that we go back to our customers and ask them. I’m sure they will know the answer…

Happy 2018!

Images:

  1. Georaph.org.uk
  2. Pixabay.com; Pixabay.com
  3. StaticFlickr.com

Read also: Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes

Marketing Automation is enabled by Artificial Intelligence, Big Data and Chatbots

“Marketing automation is growing – sizzling fast, announced Michael Jans recently in his blog AgencyRevolution.com. In fact, there are eleven times more B-B companies using marketing automation than were in 2011 (VBInsight). Most visible marketing automation for retail customers are chatbots.

Advancements in artificial intelligence (AI), coupled with the proliferation of messaging apps, are fuelling the development of chatbots.  Artificially intelligent chatbots or conversational agents can be used to automate the interaction between a company and customer.

What is Marketing Automation?

Marketing automation, in general, complements interactive and direct marketing with the help of automation and further on in CRM and email marketing 4. The goal of marketing automation is to target the right customer with the right content 1. To achieve this goal, the optimization of customer data – e.g. name, contact information, transactional data is critical. Consequently customers can be targeted with the right message. Therefore marketing automation allows marketers to respond instantly to identified opportunities in real-time even outside the marketing plan.

This use of marketing intelligence provides valuable management insights to markets, customers and campaigns and leads to enhanced efficiency. Also, this same use of data enables customers to receive personalized, relevant messages and offers at appropriate times. As result of this, customer experience is improved significantly. Indeed, Sarah Burke of Spokal concurs: “Marketing automation is a super effective tool when it’s used to supplement our marketing efforts in an attempt to make the lives of our customers even better”.

However, marketing automation is facilitated by Artificial Intelligence.

Artificial Intelligence

Techopedia defines Artificial intelligence (AI) as an area of computer science that emphasizes the creation of intelligent machines that work and reacts like humans. AI is becoming part of our lives ever more. Today we can ask a computer questions, sit back while semi-autonomous cars negotiate traffic, and use smartphones to translate speech or printed text across most languages. For AI to work properly, the machines or robots needed to be ‘learned’.

Machine learning is the process that offers the data necessary for a machine to learn and adapt when exposed to new data. Nello Cristianini suggests we should think of it as training a machine: “It depends on the other two methods by reading mined data, creating a new algorithm through AI, and then updating current algorithms accordingly to “learn” a new task.”

For most retailers and marketers in the digital economy, the intelligent ‘machines’ of choice are chatbots. However, chatbots are dependent on a host of interconnected and emerging technologies, many of which rely on machine learning and require massive amounts of data 3.

The use of data to enable Marketing Automation

Douw G Steyn, owner of the Bricks2Clicks (this blog) had this to say about Big Data: “One of the fall outs of the digitization of business is the massive amount of data that are everywhere. Every time a customer makes a purchase online or registers online, data is generated. The data can potentially tell you almost everything about consumers.”

Randy Bean in MITSloan commented on the use of Big Data with AI: “The impact of Big Data goes well beyond simple data and analytics. Big Data and AI in combination are providing a powerful foundation for a rapidly descending wave of heightened innovation and business disruption. While the first wave of Big Data was about speed and flexibility, it appears that the next wave of big data will be all about leveraging the power of AI and machine learning to deliver business value at scale.“

Data mining can find the answers to questions that you hadn’t thought to ask yet. What are the patterns? Which statistics are the most surprising? What is the correlation between A and B? (upfrontanalytics.com).

“Intelligent machines need to collect data – often personal data – in order to work. This simple fact potentially turns them into surveillance devices: they know our location, our browsing history and our social networks. Can we decide who has access, what use can be made of the data, or whether the data gets deleted for ever? If the answer is no, then we don’t have control” says Nello Cristianini in the New Scientist.

Chatbots as interactive conversational platforms

By definition, a chatbot is a computer program that responds to natural language text and/or to voice inputs in a human like manner 2. Chatbots can run on local computers and phones, though most of the time they are accessed through the internet (Chatbots.org). Moreover, the effectiveness of Chatbots is depended on the quality of the source data and how well they are programmed. They are after all robots! And robots need to be learned…

Once a customer starts to interact with a chatbot, the chatbot’s software identifies the customer. The chatbot will then have the demographic information of the customer, her purchasing history – such as what products she’d purchased most frequently, what time of the year she does most of her shopping, and when last did she purchased? The scope and depth of information can be never-ending.

The  of a typical conversation between a chatbot and a retail client (image: Chatbotsnewsdaily)

Eric Samson writing in Entrepreneur.com mentioned 7 benefits using chatbots as marketing tools

  1. Customer service – by providing the chatbot option for customers, you will lower the stress of dealing with customer service and increase customer satisfaction with your brand.
  2. Consumer analysis – chatbots can play a large role analysing customer data, and optimizing sales and marketing strategies in light of this analysis.
  3. Personalized ads – another chatbot strategy that’s proven to be successful is the creation of personalized ads.
  4. Proactive customer interaction – chatbots are ideal for “reach out” initiatives. To do this, the accompanying action should be something small, like inquiring whether or not the customer needs assistance.
  5. Site feedback – chatbots are great for reaching out to customers via simple questions and the gathering of feedback. This strategy is useful, especially for website optimization.
  6. Lead-nurturing – using the information that chatbots collect about a customer, you can create customized messaging that guides the consumer along his or her “buyer’s journey,” ensuring movement in the right direction that achieves higher conversion rates.
  7. Maintain a presence on a messenger act via a chatbot – by maintaining a presence on a messenger app via a chatbot, you can save money while simultaneously remaining available for your customers 24 hours a day.

According to Chatbot Conference, the 3 main disadvantages of chatbots are:

  1. Too many functions – most of developers strive to create a universal chatbot that will become a fully-fledged assistant to user. But in practice functional bots turn out not to cope with the majority of queries.
  2. Primitive algorithms – AI chatbots are now considered the best as they can respond depending on the situation and context. However, complex algorithms is required for this purpose. Meanwhile, only IT giants and few developers possess such powerful technological base.
  3. Complex interface – talking to a bot implies talking in a chat, meaning that a user will have to write a lot. And in case a bot cannot understand the user’s request, he will have to write even more. It takes time to find out which commands a bot can respond to correctly, and which questions are better to avoid. Thus, talking to a chatbot does not save time in the majority of cases.

Concluding

With Big Data, Artificial Intelligence and Chatbots there aren’t a clear ‘pecking order’. The Upfront Analytics Team explain it as such: “Data mining, artificial intelligence, and machine learning are so intertwined that it’s difficult to establish a ranking or hierarchy between the three. Instead, they’re involved in symbiotic relationships by which a combination of methods can be used to produce more accurate results.”

The speed at which technology is moving forward – “software is developing software” and “machines are building machines” an affordable, practical usable chatbot for customer care and marketing is not far away…

Read also:

  1. Predictive Analytics helps Retailers to make sense of Big Data
  2. Chatbots in Retailing – a Fact or a Fad?

Notes

1 Mattila, J. 2016. Customer experience management in digital channels with marketing automation, Master Thesis, University of Oulu, Department of Information Processing Science.

2 D’Haro, L.F. and Lue, L. 2016. An Online Platform for Crowd-sourcing Data from Interactions with Chatbots. Proceedings of WOCHAT, IVA.

3 Etlinger, S. 2017. The conversational business: How chatbots will reshape digital experiences, Altimeter.

4 Sandell, N. 2016. Marketing automation supporting sales, Master’s Thesis, University of Jyväskylä.

Image

Pixabay