The future of retail has a very interesting outlook when you consider the current technologies available to consumers and retailers. Imagine a scenario like this. You decide to stop off at your favourite retailer on the way home from work while wearing a wristband which tracks your stress levels, quietly alerting shop attendants to your current state upon arrival. To help ease you into your shopping experience, a staff member greets you at the entrance with a cold glass of water and shows you to a comfortable seating area.
Whilst you relax in a chair, a shop attendant pulls up a large display on a projector form their tablet showing you through their latest arrivals in your size. With wearable devices, your every interaction could be tracked and analysed by the store to build a long-term relationship that encourages you to spend more money with them. The future may evolve to monitor success by sales growth per customer, rather than the old fashioned way of simply measuring total sales.
In light of Amazon looking to enter Australia, it should worry traditional retailers who will have to use every retail trick known to man, from data analytics to neuroscience in order to keep customers returning. It’s thought that the more experimental the retail world becomes, the more it will be based on the customer’s emotions. These are the thoughts and opinions of Richard Umbers, Chief Executive of Myer.
The first sign of this is already being implemented through the form of iBeacons that are being rolled out through large stores to notify customers of special offers as they pass particular parts of the store. As this develops we should expect to see retailers honing in on ways to cultivate relationships based on emotions to continue encouraging customers to buy.
The differentiating factor in this new retail landscape is more geared around developing personal relationships with customers, where historically it was focused entirely on a race to the best price and selling in volume. This new approach could be fundamental to premium department stores, because it could help enhance the customer experience and add more value to the store's service.
Myer is currently investing $600 million into a new strategy that will turn the company around and into a technologically focused direction that will help the brand address customer's needs more accurately. A lack of floor staff has been one of the major gripes from customers, but with new investment the store hopes to tackle this along with other issues. Richard Umbers divulged that Myer have rolled out 2,500 iPads to team members so if a customer can't find the right size or colour, staff can arrange for it to be delivered next day to their home.
This is new age retail and it's happening as you are reading this article, right now. Michael Ford, CEO of The Good Guys shares a similar belief that technologies wont simply help meet customers needs, but it will also be able to anticipate them. The Good Guys have even gone to the extent of creating a ‘sandbox store’ aimed at millennial customers. The store will trial new concepts, new innovations, different colour patterns, different fixtures plus a variety of other things to see how they react.
This type of innovation has come at a time when breakthroughs in neuroscience have been made within the past 5 years, uncovering new information that is more ground breaking than the last 500 years combined. The future of retail is expected to adopt these new findings over the next 15 years. Consumerism is about honing in on customer satisfaction drivers and understanding how that can be adopted into their social lives which will be the major shift we experience next.
One of the most popular works that have been implemented into the retail environment comes from Dr David Rock, a neuroscientist who developed the SCARF model. This model basically helps explain the factors that activate a reward or threat response in the human brain. SCARF stands for ‘Status, Certainty, Autonomy, Relatedness and Fairness’. The model explains that these five domains activate either the ‘primary reward’ or ‘primary threat’ circuitry within the brain.
To explain in more detail so that you may understand how retailers plan to part you from your money, let me provide a brief explanation. Apparently, a threat to one's status activates similar neural responses to when someone’s life is threatened. An increase in fairness is also closely associated with the same mental triggers we experience when receiving a monetary reward.
This can be achieved, as described in our opening scenario above, by simply offering a glass of water when a customer walks into the store. The shop attendant may then ask the customer whether they wish to wander through the store, if they have an appointment or would they like to be given a tour. By creating certainty with the customer, the attendant helps them overcome a complex decision by simplifying their environment. Assisting a customer with these decisions will ‘help them through their day’, increasing their level of happiness. So watch out for these marketing and sales tactics that will differ from anything we have seen before in the retail world - they are coming after your wallet.