Article Preview
TopIntroduction
Retail industry is being challenged by rapid digital transformation. In this sector, with the passage of time, consumer behavior also keeps changing. So, the retailers need to continuously grow and evolve and improve their business model, in tune with environmental changes (Begley, Fox, Lunawat, and MacKenzie, 2018). This offers them the chance to magnify customer engagement and upgrade the comprehensive shopping experience. Digital transformation is one such critical disruptor that has had a profound impact on shoppers and retailers. Advent of new technologies, increase in smartphone ownership, and Internet penetration has morphed shoppers’ behavior and thus has been a key contributor to this change (Blazquez, 2014; Knowles, 2016). Tal Zvi Nathanel, CEO, Showfields, said that, “Today products are not bought, consumers buy stories and buy missions. Consumers actually define themselves by the products that they buy today.”
Consumers’ buying opportunities have expanded through an increased accessibility to products and services online with ease and convenience (Adityan, Harikrishnan, Anand, and Saju, 2017). Global e-commerce increase as a percentage of total retail sales is to be from 6.5 percent to 9.3 percent between 2012 and 2016 (Devitt, 2013). Some of the biggest retail organizations have declared financial insolvency since 2017, and this pattern is probably going to continue if no steps are taken to adapt in this volatile industry. On the other hand, global market analysis shows that 83 percent of purchased goods across the globe will take place in a brick and mortar shop by the year 2022. The store concept is making a return with the millennials and generation Z. Millennials constitute almost 20 percent of the global population, with large purchasing power (Euromonitor International, 2015).
Advent of online shopping has reduced the footfall of the brick and mortar stores. It has thus become important to explore the e-commerce channels and launch own shopping websites. There are more and more “hybrid” retailers who are selling their products through both online marketplace and traditional stores (Pozzi, 2013). There are multiple challenges in retail sector. We have seen the world getting impacted by the outbreak of COVID-19. Retailers today must confront bigger, tougher challenges due to that. Retail companies across the globe have closed their shutters temporarily, incurring huge revenue losses. They are also required to handle the unforeseen inventory and liquidity problems. Retailers find themselves competing with two sides. There are fast niche category retail stores on one side and huge digital platforms for shopping on the other. To thrive in the coming decade, retailers need to redesign and adapt the stores for digital era.
Online shopping also brings features like product recommendation, reviews, and large variety of products at one click, allowing customers to have more power to make a purchasing decision. The customers today are also highly informed due to all the information available over the internet. Due to the digital transformation, there are many new digital marketing channels. Retailers need to use all these channels to reach out to customers. More effort and a marketing strategy are required to holistically engage the customers through the various channels. It is also important to capture customer data from the multiple channels and effectively segregate it. The channels used by retailers are an important source of customer data. Use of omnichannel marketing helps in enhancing customer experience. The customer contact points can be used to understand what customers sense, feel, think, or behave, and ensure consistent experience. The customer data can be thus useful to understand consumer behavior at each point of transaction, and databases can be created to formulate strategies (Loureiro, 2018).