Commerce is changing – are you ready?

Recent news reports reveal that signs declaring, ‘Jesus is coming. Are you ready?’ have been removed from roadsides because they seem threatening to passers-by. Because I had already become so used to them, they caused me no real alarm. Are you aware of another major force for change from which even commerce is not immune? Are the signs, ‘Digitalization is coming, are you ready?’ upsetting your daily routine? Or, have you become accustomed to them?

On a grey November morning, slush squelches to the pace of my steps as I trudge along the street in Helsinki. I’m on my way to a breakfast event organized by Solteq to hear what ‘the digitalization of commerce’ means in practice.

I look at store windows and wonder whether digitalization will also make brick-and-mortar stores redundant. I will soon find out what Gartner’s Toni Nygren and Solteq’s Juha Luomala have to say on a subject they have both studied.

The eternal life of brick-and-mortar stores

With coffee cup in hand, the first bit of information takes me by surprise. In 2013, nearly 80% of commercial income came from brick-and-mortar store networks. Since then (at least in my opinion), online stores seem to have experienced a massive increase in popularity. Hence the reason for my wake-up call: I find it even a bit odd, that according to Gartner forecasts, up to 72% of income will be generated by traditional stores next year, as well.

However, buying behavior has changed. E-commerce sites are used effortlessly as an extension of the traditional retail outlet network. Online channels influence up to half of all purchases that are made in traditional stores.

When I think about my own purchasing behavior, it is easy to endorse the research findings. I go around the city with my sister and find what I want. Nowadays, instead of going to the cashier, we first get a cup of coffee and use our phones to check where we can immediately buy the desired product in the right size and color – and at the right price. Just a few years ago, we would peruse all the potential brick-and-mortar stores with the same agenda.

So, the brick-and-mortar store is not dying at all: it has become more of a showroom-style space for ‘trying on’ items. Customers need to experience, seek advice, sample or enjoy something extra in stores to feel it is still rewarding to spend time there. As shopping also transitions to coffee shops, traditional store outlets also have to work seamlessly with the internet. We will be able to combine our coffee break with retail trade’s best sales performer – an e-commerce site or mobile experience giving consumers a positive and relaxed feeling.

Invisible guiding hand

A digital ‘wow-factor’ customer interface is impossible without digitalization. Good customer encounters at every touch point require harmonized product and availability information, in addition to a smooth flow of goods to homes or retail outlets, returns to other stores and product exchanges at a third. Processes must not get entangled.

According to Gartner’s Toni Nygren, the majority of commercial digitalization projects are not directly visible to customers. For example, Danfoss freezers automatically transmit information about temperature changes or doors left ajar to the maintenance network. In retail outlets, smart shelving reminds staff to replenish stocks. This is only visible to customers as a conveniently well-stocked shelf.

Because of back-office processes, we are deeply immersed in digitalization without even noticing it. Although we, as consumers, often remain unaware we are using digital applications, invisible powers direct our experiences. Merchants benefit from satisfied customers, reduced waste and lower operating costs.

However, in some cases digitalization doesn’t go unnoticed. For example, miniature info robots leading me to the right corner of the hypermarket to find just the light bulb I’m looking for. Or, Volvo’s already-existing delivery service: a car’s trunk serves as its online store’s delivery point. The car’s location is tracked and a digital key allows a courier to leave merchandise in the trunk.

Much of digitalization involves such concrete procedural changes visible to customers. But a lot must also occur behind the scenes.

In the name of the customer, the customer and the customer

It is reassuring that according to a Gartner survey for Finnish ICT decision-makers in the retail sector, their most important investment targets include improving customer experience, followed immediately by developing digital products and services. Creating omnichannel commerce is seen inevitable.

In a country widely accused of being engineering-fixated, developing digital services could seem like the wrong investment focus – unless the driver is the customer. IT management did not invent mobile purchasing: it became a necessary part of commerce as a result of changes in people’s buying behavior.

I am an individual. You are an individual. We are all individuals.

The best stores are those where people know me. Where the person at the fish counter knows to offer me the kind of fish my family likes – especially since they have a larger batch on hand today. Or those stores where the salesperson brings a belt to the fitting room emphasizing my waistline in that new dress. It’s a must-have!

In tomorrow’s world of retail, the equivalent would mean that information gathered about the customer from different digital devices will be combined into a single profile. Even merchants managing larger masses of customers will be able to serve me in the same way as my favorite salesperson in my favorite boutique. For example, could an online store feel like it was made for me personally – even the landing page?

We don’t even need to limit ourselves to e-commerce sites, mobile applications or other more traditional customer touch points. Pinterest already has a ‘Buy it’ button and we can even order dishwashing liquid by pressing a button on the side of our washers. So, commerce continues to follow the customer where it is easiest and most logical to do business. Products and services customers prefer pave the way.

Omniscient answers

How can merchants monitor thousands and millions of individuals, and serve each of them equally well at the same time? Even that’s not enough: we must go one step further. Although difficult for humans, Watson, a merchant’s ideal assistant, is always ready with an answer.

According to Juha Luomala, specialist in the retail trade, Watson functions as an assistant to both merchants and their customers. For example, Northface has a Watson app helping users to find gear appropriate for various weather conditions.

In selection planning, pricing and discussions about ‘why product X doesn’t sell’, Watson helps merchants deal with myriad individuals. Watson can debate and provide reasoning behind its recommendations. And, just like real people, Watson is also ready to evolve in his role to become an independent decision-maker.

My coffee cup is empty and during the speeches I have stuffed myself with marshmallow and candy skewers. My thoughts revolve around the digital force for change. Perhaps Watson could be a form of support even amid the signboards – whether they are seen as threats or opportunities.

The world is changing – so much the better. It is changing for people and for players in the retail business. Drilling down to Solteq: my eyes are a bit more open to all the opportunities and markets in which Solteq and its customers can choose a growth path to becoming the world’s smallest global player in digital commerce.