Earlier this year, the Firm hosted our 12th Annual National Retail and Consumer Markets Summit - our annual client-focused event that canvasses a selection of the most timely and relevant developments facing the industry, which was held virtually this year. Themes that emerged from the Summit included personalization for customers, authenticity in showing customers a company's values and focusing on effective integration of technology into businesses.
The following is Part 1 of a series highlighting key takeaways from the Summit which explores future trends in the retail and consumer markets ("RCM") industry.
The Future of Customer Experience in RCM
Customer expectations have fundamentally changed, forever, and 70% of customers are now shopping using omnichannels. Customers are looking for speed and convenience, product availability, transparency and predictability via online reviews and on-demand service. Angus McOuat (Associate Partner, McKinsey & Company) addressed the Future of Customer Experience in the RCM industry and highlighted several trends and innovations that are shaping the industry.
Established trends that will become tablestakes across the RCM industry
- Seamless omnichannel experience: Customers are demanding a connected experience with a blend of digital and physical. One example is an app that allows customers to, while in store, to check in-store availability in real time and another example is a cosmetic retailer using personalized omnichannel product trials by combining augmented reality virtual try-ons, personalized artificial intelligent ("AI") shade matching and physical product sampling home delivery.
- Interactive in-store experiences: Customers need a reason to return in-person and leave the convenience of shopping from their homes. Retailers are making their physical stores entertaining, educational, engaging and immersive using the latest technology and imagination. Examples include private sessions with experts in stores for an extremely personalized experience, a tech-enabled store providing real-time recommendations for complementary items that get delivered to fitting rooms and the ability for customers to scan items in grocery stores themselves and to receive brand-specific discounts.
- Personalization: Customers highly value choice and options, and while there are more choices in retail than ever, the challenge is to not overwhelm customers with the "paradox of choice". Personalization is key to curate choices for each customer. The use of AI to recommend targeted products to consumers when items are out of stock, or the use of image recognition technology are a few solutions retailers are exploring.
Differentiating players are accelerating customer experience trends
- Growing affinity for communities: Consumers take pleasure in the intimacy of finding brands that they can have a personal connection with, giving them a sense of community in an authentic, purpose-driven way.
- The ecosystem play: Retailers are looking to build deeper, long-lasting relationships with their customers by adding categories and services through an ecosystem that creates exponential value for the companies: rather than individual offerings, customers are being provided with integrated cross-sectoral propositions.
- One-click convenience through super apps: This trend is becoming compelling to customers as they become overwhelmed with the number of apps they have. Brands are trying to satisfy all customers' needs through one app so they are more connected to its customer and are providing rewards to convince customers to stay on their app, fulfilling social, entertainment, commerce and service needs.
- Growth of marketplaces: Instead of the historical model of retailers owning and managing what they sell, the "third party marketplace" model allows retailers to serve as a platform between customers and sellers of products. This business model is beneficial for both customers and businesses: businesses can reduce stock risk, have better access to customers and unlock new revenue streams; customers love that they can have more selection by going to one familiar place, they trust the retailer has vetted and curated the products and these marketplaces often have better prices driven by competition among sellers.
- Increase in social and live commerce. More than ever before, retailers are leveraging the power of influencers and personalities to market and sell their goods through advice and recommendations.
Future bets in Customer Experience
Metaverse: The Metaverse is the internet imagined as a shared and persistent virtual world where online and offline realities co-exist. There is potential for the Metaverse to become a "uni-channel" to access businesses. Forward-thinking players are thinking about building a backbone so they are integrated in the Metaverse.
Retailers are striving to build deeper relationships with customers through personalization or immersive experiences. It is essential to get to know your customers and get ahead of their needs. Inevitably, technology is a vital component of all these trends from a processes standpoint.
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