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The Future of Retail in Canada: Op-Ed

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By Solange Strom and Frederic Dimanche

Over the last couple of years, a chorus of voices predicted the end of traditional retail, stating its future would lie online. The pandemic exacerbated this belief as it triggered almost a year of store closures, physical distancing, and other restricting measures. As a result, between March and May of 2020 e-commerce sales rose 99.3% according to Statistics Canada.

Evidenced by Shopify’s unprecedented growth in 2020 and by the implementation of various tools including “Buy Online Pick up In Store” (BOPIS), curbside pick-up, and social selling, retailers pivoted massively to e-commerce. A digital capacity has become imperative today, however, focusing solely on that channel would be a serious mistake.

Indeed, as retailers flood the digital space, its differentiating power diminishes and fades. The situation reveals the dearth of high-level online customer service that retailers overlooked in their quest for sales, and the increased focus on digital disregards the importance of the physical stores that remain the core of their business.

In this fast-changing and complex environment, here are the most important things retailers should be doing right now.

Digital Is Necessary but Not a Sufficient Requirement

Digital is not an option, it is essential. With the pandemic triggering a digital acceleration that saw four to six years of growth within a few months, a lack of digital presence is bound to hinder retailers’ future expansion, rendering them invisible to the markets they work with. But being available online doesn’t deliver the competitive advantage it once did. The more crowded the space, the lesser the differentiating power of digital distribution.

Specialty and luxury retailers must find creative ways to navigate the now and shape the future. A 2018 McKinsey report highlighted how the traditional linear customer journey had already been blown to bits with the average luxury shopper engaging with brands through multiple touchpoints before entering a store. Therefore, being present and active on social media is critical, even when not selling online. Chanel is a good example of a brand who shies away from e-commerce but still delivers rich digital content for its followers to share, making it the world’s most influential brand on social media.

Additionally, with ample options across multiple channels, shoppers’ online expectations have risen. There is little tolerance for sub-par digital shopping experiences that might have been adequate before the crisis. Mobile responsive websites, integrated services such as BOPIS or “buy online, return to store” are now standard.

Finally, seamless delivery is a must. However, despite a 2018 PwC survey stating that many shoppers would willingly pay more for same-day shipping, experts at a recent Business of Fashion (BOF) webinar claimed this was no longer the case. The pandemic revealed a significant lack of tracking tools, leading irritated shoppers to hound brands’ social media in search of orders. Today, delivery seems to be more about accuracy than immediacy.

Online Customer Service Must Mirror Offline Counterpart

It is clear that the digital aspect of the customer journey is inescapable. But it goes together with improving online customer service capabilities. Customers who switched to shopping online during the pandemic expected the same personalized service they received in stores. Unfortunately, it was often not the case. A customer whose order was lost tried for days to get in touch with the company’s customer service department only to reach someone in a foreign country who was incapable of assisting her. Existing tools like chatbots, next-day social media messaging, or live chats subcontracted overseas just don’t cut it if the strategic intent is quality service.

Indeed, a recent report released by Stella Connect found that 50% of customers surveyed prioritized customer service as a deciding factor about whether or not to do business with a brand, and that 80% still preferred to interact with a real person. Retailers acknowledged these preferences as they moved to live online selling during the pandemic with associates doling out tips via chats and videos. But despite new technology players (e.g., Endear) simplifying the process, it often failed to transform inexperienced advisors into superstars.

It is up to the companies to purposefully develop teams to service online channels in the same way they would store advisors: With a focus on quality. The human touch remains essential. Investing in customer service cannot be ignored as evidenced during the pandemic with brands overwhelmed by customer complaints. In the future, all retail channels will be treated equally with the customer experience flowing seamlessly between them.

Investment in Physical Stores Can’t Be Ignored

With 10 years of e-commerce growth happening in just 90 days, the digital space is becoming extremely crowded and retailers doing business online face serious obstacles. Customer acquisition costs have sky-rocketed, often exceeding the lifetime value of a customer as have online operational expenses triggered by generous shipping and return policies.

In such a context, physical retail remains one of the most important touchpoints in the customer’s journey. It is critical that retailers invest not only in digital channels but also in their physical ones. While brands can draw in web-savvy consumers through appealing and efficient e-commerce sites, it is usually the brick-and-mortar stores that make the most lasting impressions: They deliver experiences that simply cannot be replicated online.

In his book Reengineering Retail, Doug Stephens goes as far as stating that the stores of the future will be designed first and foremost for experiences with products coming second. Retail experts agree that a focus on transactional retail only is not a viable option. Store design is paramount, says Marcelle Rademeyer, principal at Beauleigh retail consultants. It has to fit the human need for connections and community.

When a space is well-designed and comfortable, the value of a store’s assortment of goods is elevated. Despite popular belief that physical retail is dead, it seems that being able to see, smell and touch things is still vitally important to the majority of the economy.

Future of Retail Lies in its People

Together with beautiful Instagrammable spaces, consumers need compelling experiences combined with exceptional customer service. Responding to this successfully will further heighten a shopper’s positive sentiment for a brand.

Retailers must devote time to develop their front store teams and ensure they acquire essential soft skills like empathy and communication. How a customer feels when she shops is more important than what she’s shopping for. The focus must be on upskilling the personnel to master the art of storytelling and be able to amaze customers.

Doing so can actually inspire a consumer to make a purchase even if the same item can be found elsewhere. Wharton University Professor Marshall L. Fisher demonstrated in a 2015 study that well-trained sales associates who can answer customers’ questions knowledgeably are an incredible weapon for a retail store. He believes that most customers end up buying online because they get better information than in store.

Seen in that light, stores could be retailers’ most profitable channel. Investing in training and development must be an immediate priority, not only to increase sales, but more importantly for the long term, to increase the quality of the brand experience, resulting in higher consumer loyalty and increased differentiation from competitors.

Building Now for Tomorrow

As stores reopen, retailers will have to ensure customers feel welcome. After the first lockdown, it was painfully obvious that sanitary measures were prioritized over employee and customer well-being. Too often, retail staff had to unwillingly take on the role of hygiene watchdogs rather than do their jobs. Clients eager to visit stores abided by the rules but nevertheless expected to be warmly welcomed and shown special appreciation for coming. Instead, they often felt like interlopers. While safety is absolutely paramount, it should be like tech tools – integrated and invisible.

Additionally, fierce competition for talent can be anticipated in customer facing sectors from hospitality to retail. In Canada, there is a lack of potential staff to recruit from that has been exacerbated by the pandemic with many leaving the industry for other sectors.

Suzanne Sears, President of Luxury Careers Canada, thinks that retailers’ human resource department will have to reinvent itself to start serving more of a marketing function developing ways to attract the best individuals to their organizations. Some of the necessary changes will have to include not only training and career advancement opportunities but also adequate compensation packages.

Solange Strom

Gone are the days when a retailer could offer little more than minimum wage and no benefits. When employees are properly trained and developed, they move from being a cost to the retailer to becoming revenue generators. And while some might balk at the extra expense this will entail, the more progressive retailers will view this investment as a way to grow revenue, create value for their brand, and remain competitive in the marketplace.

Frederic Dimanche

Solange Strom, visionary and entrepreneurial retail executive with a track record of driving growth through employee-centric strategies. 25 years helming global brands such as Boiron, L’Occitane en Provence and Repetto Paris. Founder of the Radical Retail Method, a training program aimed at supporting retail organizations in their quest for excellence. To contact Solange visit www.solangestrom.com.

Frederic Dimanche, Professor and Director, Ted Rogers School of Hospitality and Tourism Management, Ryerson University. Thirty years of professional and academic experience in service marketing and consumer behaviour, particularly in hospitality and tourism. Academic experience in the USA, France, and Canada.

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