“Digital transformation” is the IT industry’s latest buzzword. But for brick-and-mortar retailers, it’s all too real.
The way your retail customers sell their products and services — plus the way their customers purchase those products and services — is being transformed. Shopping will never be the same.
The impetus for this transformation has a name: Amazon.
Since Amazon’s founding over 20 years ago, the retailer has expanded from just books into appliances, gourmet food, video games, computers, clothing and a whole lot more. Today Amazon offers more than a half-billion unique products. It controls fully half of all U.S. e-commerce sales, according to Statista.
To counter Amazon and other online-only retail sites, brick-and-mortar retailers are fighting on several digital fronts. Here are a few examples:
> Tesco, the UK’s biggest grocer, opened 20 virtual stores in South Korea. These aren’t physical stores, but instead digital projections on the walls of subway and bus stations. Customers of these virtual stores download a Tesco app onto their phones, then use their phones to scan the QR codes of virtual products and schedule delivery of those “real” physical products to their homes.
> Sam’s Club offers Scan & Go. This mobile app lets customers scan and bag items in the store, pay directly with their phones, and then leave the store without having to stand in a checkout line. Customers can also use the app to reorder essentials.
> Bed Bath & Beyond now lets customers find products online, check the products’ availability locally, pay with a credit card, and then pick up the items in a local store. Customers are promised “Ready for pickup” emails within 2 business hours, and their products are held in stores for up to 2 days.
What’s the price?
Retailers are taking another arrow from Amazon’s quiver: real-time pricing.
You may have noticed that the same product on Amazon can have a different price, depending on who’s doing the shopping. Amazon reportedly has algorithms that make educated guesses about how much of a discount each customer needs before they’ll make a purchase.
Other retailers will also start doing this soon in their brick-and-mortar stores, according to a new forecast from research firm Gartner. It predicts that the 10 top retailers by revenue will all use real-time pricing by 2025.
There will be some hurdles to get over. For one, to display the latest prices, retailers will ideally use digital signage and electronic shelf labels. Those that don’t will need to continuously update prices by hand. As Gartner points out, that can lead to costly errors.
Also, consumers will need to be educated. Few shoppers mind a price cut. But if, say, the price of a Budweiser six-pack goes up 25% in a single afternoon, there could be a lot of unhappy beer drinkers.
For both retailers and the tech providers who serve them, the stakes are huge. Physical stores already support fully half of retailers’ sales online. As Gartner researcher Robert Hetu says, “It’s no longer a competition between online and offline.”