Bits and Mortar: Why hybrid shopping is happening everywhere
Whether e-commerce superstores or thousand-outlet chains, hybrid cloud connects customers with what they want
Where, how and when people shop has changed forever. Retailers need to be there at every step.
In-store shopping, despite what you’ve heard, and probably experienced the past year, is very much alive.
Even at the height of the pandemic, when many stores were closed, and only those deemed essential saw long lines and empty shelves, three out of four purchases were still made in physical, rather than digital, shops, according to data collected by the US Census Bureau. By this spring, the rate of e-commerce sales was only slightly higher than historic trends, hovering between 20 percent and 22 percent.
As consumers flock back to brick-and-mortar stores—for the goods they need, for the good of their communities and for the sense of normalcy it provides—those retailers have a once-in-a-generation opportunity to excite and engage them anew. In fact, it’s an imperative.
Shoppers may be back, but they’ve been turning to the digital aisles for years already. COVID-19 didn’t change things so much as accelerate a transformation already underway, and the retailers who can’t keep up will be left behind for good. Digital shopping experiences have spoiled us all. If consumers take the effort to go into a physical store, and they don’t have what we’re looking for, or if we must endure long checkout lines, or if an online sale item is full price in the store, we get frustrated and may not come back. We are shopping in the store with the sales tag in one hand and our phones in the other.
Retailers must be ready to do the same, blending their in-store, online and on-the-go environments in daring and unexpected ways. And consumers, weary of screens and wary of certain digital giants, are ready for something new. We’re ready for hybrid shopping.
“Customers are everywhere, shopping in micro-moments, whether looking through the glass of a storefront or their phones,” Colm O’Brien, the director for strategic offerings for the Global Consumer Industry at IBM Services, told Industrious. “Retailers need to be there with them, and to do that, they need to be much more agile to marry digital and physical experiences.”
That agility comes from a host of new technologies, and even more importantly, the operational and organizational capabilities to deploy them where and when customers, employees and partners need these tools and services. When you take a hybrid cloud approach that merges legacy and modern systems to meet customers, developers and workers where they are, at all times, in an ever-evolving way, anything is possible.
Every retailer needs to be asking right now if they can do converged commerce and seamless experiences—can they deliver on the new expectations of post-pandemic consumers? Can they do so economically, not only serving a supply chain for hundreds of stores but hundreds of thousands of shoppers—those looking for everything wherever they are? Can they do it practically—empowering employees and consumers alike with seamless data that inform offers and analytics?
Merging digital and physical
“A very senior retailer said to me, within the past year, that ‘In the olden days, all we had to do to sell a product was to put it on a shelf and expose it to the risk of sale–can you imagine that?’” Mary Wallace, an expert in retail, consumer behavior and place at IBM iX, said. “Now, the customers are so much more in control. And that creates a gulf between the old retail practices of marketing, engagement, merchandising, purchase and fulfilment, and the new, hybrid retail.”
Those retailers who’ve already invested heavily in modernizing and digitizing their physical stores are well ahead in this regard, breathing new life into traditional shopping environments with modernized customer experiences. Some of the most adept even seized on the challenges of the pandemic to provide new kinds of shopping, purchasing, check-out and returns features.
Yet this work remains in its nascent stages, particularly as consumers get comfortable with what might be called the new world of shopping. Just as the ways we live and do business will continue to evolve, so will retail, which is why agility for companies is so important.
Take personalization, widely understood to be a key enabler of great customer experience. The best e-commerce personalization aims to emulate the kind of high quality customer experience that in days gone by was achieved in store through an associate who knew you personally. While today’s store experiences too often lack this experiential, personal touch, they alone have the potential to recreate and deliver it.
The challenge for retailers is to bring the best digital insights into their physical spaces, and to integrate both for a seamless customer experience. This harmonized approach turns physical locations into strategic assets that contribute unique value. Its an omnichannel experience to rule all omnichannels.
It’s imperative that retailers modernize their brick and mortar locations within an omnichannel framework that treats all channels as pieces of a seamless whole. Customers want to be able to browse anywhere, buy anywhere, and have their order fulfilled anywhere, and retailers need to be able to deliver on all three of these at scale in order to survive past our current brick and mortar rebound.
Architecting for agility
Great customer experience means delivering accurate, personalized, contextually-relevant service in the moment—or micro-moment—where and when the customer needs it. Pulling this off requires squaring with perhaps the most consequential industry challenge, the need for agility, from the foundation up.
Yet agility is more than just raw speed. Retailers need to be able to pivot and adapt quickly and elegantly implement new technologies as they come, so that the business can respond immediately to ever-changing customer needs. It’s not trendy features but swiftly creating entirely new retail models, like social shopping, AR and VR. Retail’s always been about the next big thing, so it’s critical to be ready for it.
When contending with macroeconomic changes, customer preferences and new technologies that are bound to evolve, retailers need a new approach to their information architecture. They need IT and methodologies that future-proof their business, so they can quickly integrate new software and manage it from a single vantage point.
They need a retail cloud built with a hybrid approach that can connect and execute on shoppers dreams anytime, anywhere and any way imaginable.
“We don’t necessarily know what our customers will want tomorrow,” O’Brien said. “We don’t know what technology is going to come out tomorrow. We don’t know what competitors are going to appear tomorrow. So you’ve got to have an approach that allows you to change quickly, bring on new capabilities, and test and learn.”
Part of what makes this so challenging for retailers, particularly those with a strong history in the business, is they are often juggling multiple disconnected systems to manage their operations. Successfully marketing a product to an individual, and getting that product from factory to carrier to warehouse to supplier to store shelves (or directly to the customer’s doorstep) involves countless IT decisions, each step of the way mediated through clusters of disparate, isolated software solutions. The resulting lack of visibility, inefficiency and opportunity cost are felt at every level of the business.
The best of all worlds
Under the previous paradigm, releasing a new feature meant having to develop it for multiple incompatible systems, and may have required costly in-person visits to stores for installation, upgrades, and troubleshooting. Older stores contain legacy IT systems, and in many cases, it’s prohibitively expensive to replace those systems with shinier ones. When it’s so costly to develop all these systems in isolation, modernization efforts can simply stall out, resulting in store experiences that feel more or less the same as they did ten or 20 years ago.
Furthermore, it’s often disadvantageous to throw everything out, since important practices and company culture has been baked into these systems over time. Keeping the best parts, and optimizing the rest, is the goal.
That’s why the solution isn’t to overhaul every system—that would be prohibitively expensive and operationally risky. Instead, retailers need to think about how legacy systems can be integrated into an overarching information architecture where they can “talk to” new systems, and be updated alongside them as part of the same workflow.
O’Brien shares a hypothetical scenario to illustrate the point:
“Let’s say I’ve got a digital assistant for inventory visibility, like Watson Assistant, that tells me I’ve got seven black T-shirts in store #1234. I’ve got 27 black t-shirts in my warehouse. I’ve got a shipping container coming from China with 20 more black t-shirts. I want to have that level of inventory visibility. Now imagine a customer saying, ‘When a black t-shirt is back in stock at my local store, I want to be told about it.’ There are so many ways that a microservice such as a digital assistant can be used. An associate can query inventory in another store, a customer can build a shopping list, an associate can look up how they should handle an uncommon type of product return. The benefit of an integrated, “hub-and-spoke” system is that everybody can use that microservice, regardless of what the use case might be.”
It’s an exciting moment for both consumers and retailers. In the coming months, Industrious will look more closely at the retailers and technology partners who are leading the way in the transformation of the three areas most central to hybrid retail: customer experience; operations and logistics; and employee empowerment.
It has been some time since going into a store has held such promise. Hybrid shopping is here to stay. Which brands will be is up to them.