Shifts in Commerce & Customer Experiences

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Mar 31 2017, Posted by Florian Vollmer

A Seachange is Happening. Right Now.

As I sit in the energized audience at #Shoptalk2017, a Facebook friend shares a post: “The retail apocalypse has officially descended in America” (Business Insider). The contrast could not be greater: on the one hand, price pressure and an increasingly demanding consumer is causing thousands of retail locations to close this year, and on the other hand, retail tech and the emergence of cognitive commerce promises a future of highly relevant, customized, engaging, and ultimately profitable, customer experiences along a myriad of touchpoints.

Accelerated by technology advances on all fronts and a “customer first” thinking within innovation teams, brands are imagining a future that will look very different from today’s transaction-focused reality. Interestingly, the word ‘retail’ seems to be phased out, replaced by the more fitting concept of ‘commerce’ – a much more fitting concept, considering that what was once a one-way street from retailer to customer is now an interwoven web of value creation that can take many shapes and forms.

Reimagining the Store

When a key focus in the innovation process is placed on the journeys. The result is one of the most interesting developments in traditional retail to watch.

Taking this notion of speed vs. experience one step further, multiple retailers are leveraging current stores by adding two important functional layers onto the traditional store environment. First, stores or parts of stores are being re-imagined as canvases for experience-focused commerce, bringing events, conversations, education, exploration to the store environment. Second, stores are responding to elevated consumer expectations around rapid delivery by serving as local mini-distribution centers, with pickers taking merchandise off the store shelf for same-day delivery.

Commerce in a Post-Product and Post-Transaction World

Here’s an (incomplete) list of current hot topics and developments to watch over the next year…

  1. Conversational Commerce Driven by AI & NLP

    Mobile engagement is happening in fewer and fewer apps, and many of those apps focus on messenger functionality. Brands like eBay are recognizing the impact of this development, and are bringing experimental experiences right into the messenger applications.
    Voice assistants like Alexa, Cortina, Google Assistant are now in millions of consumer homes – enabled by major advances in voice recognition and natural language processing. Consumer’s expectations for seamless everywhere commerce are being answered with functions built right into their homes (and, by the way, expanding from a singular user to families of users as potential customers). Watch for voice-driven interfaces in retail environments, empowering both the consumer and the associate with the right information at the right time.


  3. Virtual Reality

    While the technology is becoming really good really quickly, mainstream use cases for consumers are still experimental at best. Currently, the power of VR is in innovation processes, allowing brands to rapidly simulate and test physical innovation without the need to build an entire environment for validation. Watch for more accessible price points for VR devices.


  5. Augmented Reality

    In-venue navigation is the leading use case currently in the U.S. The increase of computational power means that this is now possible with only computer-vision based algorithms (no beacons or expensive infrastructure needed), making indoor navigation more accessible and friction-free for the user. Watch for further innovation on mobile devices. Improved 3-D vision in smartphones should make this mainstream in the next 12 months or so.

  6. New Places of Commerce

    When a brand like West Elm opens its own hotel chain, this is interesting from a number of standpoints: it requires an enlightened perspective on brand building and value creation, it takes commerce from the store into new locations, and it signals a further challenge for traditional retail real estate. Watch out for the first hotels to open this year and other brands to hop onto the “in-venue experience” bandwagon.

  7. Retail in the Context of IoT and the Service Economy

    “The product is too hard to understand and too expensive”. If there is one category of products and services whose value needs to be communicated through storytelling, it is this one. Multiple retailers are experimenting with store formats to truly tell the story of these connected devices and their benefit to the consumer, but nobody truly has cracked that nut yet. Watch for more experiential retail formats to truly communicate personalized use-case stories.


A focus on Customer Lifetime Journey, Customer Lifetime Value

Enlightened brands embrace the journey from a focus on transaction to providing lifetime value. New innovation methods and measures of success have emerged and are implemented through updates in loyalty programs, product development, and brand behavior. They focus on value generation not only over the lifetime of a product or service, but over multiple generations of products or services. Taking the art of the long view, brands win by staying more relevant with the customer over longer periods of time.

The Power of the Brick-and-Mortar Store

In a world where much of the attention is on e- and m-commerce, what brings “digital native, vertically integrated brands” (i.e. Harrys, Bonobos, Warby Parker, Casper) to opening physical stores? Simply put, they build the brand, enable qualities of engagement that are fundamentally different from what’s possible online. They are considered just one stop on the customer’s journey to a purchasing decision, with many brands being more (financially) successful in markets where their digital presence is augmented with physical stores.

How to Win Today in an Ever-Changing Experience Ecosystem?


The world of customer experiences and commerce requires the skillful navigation of quickly shifting ecosystems. A few strategies may help brands be on the winning side of this shift: 

  1. Invest in Open Platforms

    Closed ecosystems prevent innovation and make experience innovation less nimble. Given the explosive growth in IoT technologies that we’re seeing, platforms that allow for a multitude of inputs and outputs will lead brands to success.


  3. Measure 

    What has been best practice in the online world for years now (Google behavior analytics, content personalization and A/B testing, etc) is now available in brick-and-mortar environments. Leverage this technology, measure before-and-afters, get new insights into consumer behavior to maximize conversion in the store environment. An empowered associate can also use this information to further personalize the shopping experience.


  5. From Solution to Iterations

    Experiment and iterate. Once an exclusive domain of software, apps and webpages, applying an agile mindset is now possible with physical touchpoints. Combined with retail analytics, brands can push new experiences, measure, and iterate in the matter of hours and days, not months and years.

  6. Customize the Experience

    A highly customized experience is tablestakes in online environments. Consumers increasingly expect a similar level of customization in brick-and-mortar environments. Advances in sensors make it possible to meet this demand today, so that you are increasingly curating experiences for your consumers and engaging and responding to their behaviors and interests in real-time.

  7. Reduce Friction

    Perhaps the most important aspect: if it takes some effort, consumers simply will move on to the next experience. Brands that create friction-free experiences will be the winners – for years to come.

The world of commerce is changing rapidly. Along with mobile and web, in-venue experiences are key for building globally successful brands. The technology is now here to bring breakthrough innovation to these environments. Brands that invest to lead with transformative innovation will be handsomely rewarded, while brands that underestimate the power of this change will ultimately fail. One last comment: pushing technology for technology’s sake may also be a recipe for trouble – however, leading with the customer and focusing on deeply human needs is the way to create world-class experiences and commercial success.

What resonates? What does not? Would love to hear your comments.

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