Experiential Shopping: Why retailers need to double down on hybrid retail
Shopping can no longer be divided into online or offline experiences. Most consumers now engage in a hybrid approach, where a single shopping experience involves both in-store and digital touchpoints. In fact, this hybrid retail journey is the primary buying method for 27% of all consumers, and the specific retail category and shopper age can significantly increase this number. According to Consumers want it all, a 2022 study from the IBM Institute for Business Value (IBV), “today’s consumers no longer see online and offline shopping as distinct experiences. They expect everything to be connected all the time.”
Experiential hybrid retail is a robust omnichannel approach to strategically blending physical, digital, and virtual channels. It empowers customers with the freedom to engage with brands on whichever shopping channel is most convenient, valued or preferred at any given time. For example, consumers may engage in product discovery on social platforms, purchase online and pick up items at a store. They may also be in a store using digital tools to locate or research products. The possibilities are endless.
While hybrid retail is now an imperative for brands, it has created new complexities for retailers. “Channel explosion is a reality and retailers are challenged to scale their operations across what is essentially a moving target,” says Richard Berkman, VP & Sr. Partner, Digital Commerce, IBM iX. The result is often disconnected shopping journeys that fail consumers. Imagine selecting the “in-store pickup” option for an online purchase, only to discover that fulfillment of the order was impossible since the store was out of stock.
According to Shantha Farris, Global Digital Commerce Strategy and Offerings Leader at IBM iX, the real cost of an unsuccessful approach to hybrid retail is losing customers—potentially forever. There are still a lot of pandemic-weary consumers for whom patience and tolerance for shopping-related friction is at an all-time low. Additionally, people remain desperate to feel connected. Retailers must be totally on point, pleasing customers with friction-free and highly experiential omnichannel commerce journeys. When this doesn’t happen, customers can react harshly. Farris refers to this phenomenon as “rage shopping” and observes that consumers will choose to shop elsewhere based on one disappointing experience. “End customers demand frictionless experiences,” she says. “They’re empowered. They have choices. They want to trust that their brand experience will be trusted, relevant, and convenient—and that this will remain true every time they shop with you.” Retailers must modernize their technology ecosystem for omnichannel and cross-channel consistency.
“Whether the transaction itself occurs digitally or physically is beside the point. It’s got to be experiential.”
Websites. Mobile apps. Social, live streaming and metaverse platforms. Determining which channels to strategically activate is tricky, but it’s not impossible. Commerce begins with brand engagement and product discovery, so it is critical to leverage data-driven insights to understand customers: everything from who they are to how they prefer to progress through the end-to-end shopping journey and how compelling they rate the experience. Then, Berkman says, “retailers need an experience-led vision of the future of their commerce initiatives across channels, with an ability to activate data and dynamically manage those channels.”
Which channels offer the best chance for positive consumer engagement? It depends on the brand. Additionally, measuring the success of each individual channel cannot be assessed using only conversion metrics. Farris comments, “You might discover a product on TikTok, but conversion will probably take place elsewhere.”
A primary benefit of augmented reality is increased consumer engagement and confidence at the earliest stage of a purchase.
The reality of rage shopping is a useful premise for retailers re-examining the current efficacy of every interaction along the purchase journey. Each step, from product discovery to last-mile fulfillment and delivery, needs to “meet customers where they are and evolve into one connected experience,” Berkman says.
Here are three ways to approach hybrid retail using technology along the customer journey. “Whether the transaction itself occurs digitally or physically is beside the point. It’s got to be experiential,” Farris says. “And to provide that experience, you need technology.”
Enhance product discovery with AR
A primary benefit of augmented reality (AR) is increased consumer engagement and confidence at the earliest stage of a purchase. Farris points to work done for a paint company in which IBM designed and deployed a color selection tool, which allows consumers to virtually test different paints on their walls. “There’s a huge fear factor in committing to a paint color for a room,” she says, but with virtual testing, “all of a sudden, your confidence in this purchase goes through the roof.”
AR has a measurable impact on reducing returns, which can cost retailers up to 66% of a product’s sale price.
Similar AR tools have been a hit for retailers like Ikea and Wayfair, allowing consumers to see how furniture will look in their actual homes. Smart mirrors provide another example: This interactive AR tool enables a quicker try-it-on experience, creating an expanded range of omnichannel buying opportunities for in-store shoppers. Effective AR use is also shown to have a measurable impact on reducing returns, which can cost retailers up to 66% of a product’s sale price, according to 2021 data from Optoro, a reverse logistics company. And a 2022 report from IDC noted: “AR/VR—over 70% view this technology as important, but less than 30% are using it.” That said, a study shared by Snap Inc found that by 2025, nearly 75% of the global population—and almost all smartphone users—will be frequent AR users.
Empower decision-making with 3D modeling
“Digital asset management is a fundamental part of commerce; 3D assets are just the next generation of it,” Farris says. 3D coupled with AR allows consumers to manipulate products in space. “It’s about making product information really convenient and relevant for consumers,” she says. In 2021, Shopify reported on average a 94% increase in the conversion rate for merchants who featured 3D content. One example is being able to virtually “try on” a shoe and see every angle of it by rotating your foot. The technology is useful for B2B too. “Instead of reading 50 pages of requirements and specs for some widget, buyers can actually turn the part in space and see if it’ll fit on an assembly line,” Farris says.
3D assets coupled with AR go beyond providing retailers with today’s tools. It’s a measure of futureproofing. “Some of these technologies will give you immediate returns today,” Farris says, “but they will also help retailers build capabilities that will be applicable to deploying a full metaverse commerce experience.”
Digitize how consumers interact with physical stores
In-store customer experiences can be significantly enriched with the use of digital tools and seamless omnichannel integration. Farris points to a major home improvement retailer that does this well. “If you go into one of these stores and can’t find an associate to help you, you can whip out your phone, go to the store’s website, and it’ll tell you what bin a product is in, down to the height of the shelf it’s on. Your phone becomes your in-store guide.”
The employee experience is also dramatically improved with the right digital technologies and omnichannel access. “Store associates need to have real-time data and insights relative to anyone who might walk in the door,” Berkman says, noting that associates, service agents and salespeople should act more like “a community of hosts.” Armed with the right information and access to technology like predictive analytics and automation, Berkman says, “those employees would have the insights to effectively engage customers and create more immersive and personalized experiences to drive brand growth.”