The Industrial Revolution in the 19th century was characterised by a transition from hand production methods to new manufacturing processes, more efficient use of water power, steam power and the introduction of machine tools. It changed society and lifestyles forever but what we are currently witnessing is potentially even more significant.
We are in the maelstrom of the Digital Revolution, in turn characterised by the internet, smartphones, tablets, social media, 4G, wifi, GPS geo-fencing, augmented reality, smart mirrors, new payment systems etc. etc. And which sector is affected by this Revolution more than any other? The Digital Revolution is driving seismic change within society; but nowhere more so than in retail. And this presents threats and opportunities in equal measure.
The consumer today presents a very different proposition to retailers than that of even just 5 years ago. The traditional retail model of engagement with its customers has been ripped apart by the connected consumer. Why? The connected consumer first and foremost has expectations which far outstrip those from just a few years ago. Why is this significant? The information which consumers now have at their fingertips, mobile and easily accessed, is driving a completely different buying behaviour and customer journey in order to reach their buying decision. Brand loyalty is practically non-existent as we become ever more promiscuous in our buying habits. The balance of power has shifted from retailer to consumer. Where once the 4P’s of marketing – product, price, place and promotion were key, more and more, the omni present consumer is expecting, if not demanding, an experience which engages them at multiple sensory levels.
Whether it be grocery, fashion, electricals or DIY the quality of the choices we can now make is so consistently high that we can easily switch between brands for sometimes seemingly trivial reasons but ones which are totally influenced by the experience.
In the ever increasingly competitive retail landscape, one wonders if some of the current trends are sustainable? For example, no grocery home delivery service makes a profit but all the big supermarkets are operating in this space – driven by consumer demand. Fashion: order online by 10pm and we’ll deliver next day. Whilst Next have an enviable supply chain, borne out of their long heritage of the Next Directory, rivals are having to try to match this as they compete for a share of our spend.
In the modern era in the buying process the timeline between desire and delivery has been condensed; I want it and I want it now is the mantra. And most importantly, I want it delivered to a location which is convenient to me.
Where once the supply chain relied upon suppliers feeding the distribution centres which in turn replenished the store network on a pre-defined basis, today, the supply chain needs to extend right onto the shop floor. As consumers we are demanding this without knowing it. In the current climate of unprecedented pace of change the demands this is placing upon retailers are relentless.
And if that wasn’t enough, many have legacy systems unable to cope with the demand for flexibility and agility. Add to this, that the traditional retail business models are having to be rethought and the size and scale of the challenge becomes evident. Whereas the traditional model was one of a silo’ed business with each function operating vertically, the demands of the Digital Revolution mean that the customer – more than ever before – must be placed right at the centre of the operation.
Hence we are witnessing the roles of the Chief Digital Officer and Chief Marketing Officer to name but two, move increasingly to the centre of the enterprise. Whilst the roles surrounding Social Media Strategy and Customer Experience are also moving centre stage and becoming more and more prevalent as retailers seek to understand, connect and engage with their customers.
All this means it is not only an incredibly exciting time to be in retail but also a slightly scary one as the pace of change threatens to devour all those who dare to stand still and not embrace the Digital Revolution around them. Will this revolution be as significant as that of the 19th century? Already the signs are that it is transforming our lives in ways we never imagined possible and will continue to do so for the foreseeable future.
Andrew Busby is Retail Business Head at Zensar Technologies and a regular contributor to Retail Week.