How Technology and Social Media are Shaping 21st Century Retail

As online sales are growing ten times faster than offline, technology is disrupting the retail environment. However, brick-and-mortar stores are still the vital drivers of sales and brand management: in the last few years, even a number of online-first brands like Rent the Runway, Bonobos, and Birchbox have expanded into retail. Bonobos even offers shoppers haircuts, free drinks, and in-store style consulting. 

How should existing retailers now be competing, and how should retailers be taking on online as shoppers move to the web for most of their browsing and product discovery?

Path to Discovery 

The identification of a need triggers a purchasing process, which is followed by the evaluation of alternatives. Due to the skyrocketing number of products and brands and a decrease in brand loyalty, the web and social media play an essential role in this stage.

The first step retailers are taking is getting in front of more buyers by raising next year's online marketing budget, which provides great return on investment (and analytics) versus traditional channels like TV commercials and billboards.

Social media is dramatically changing how consumers gather information, even allowing buyers to be inspired by trends from a continent away. Besides a channel for consumers to engage with one another, the best brands are using social media as a way to reach their own consumers.

What they aren't doing, however, is pitching the: instead, authentic content, especially content crafted by influencers not directly connected to the brand, has become more trusted and credible for product discovery than company-promoted advertising. According to Digital Sherpa, 81% of consumers trust information and product reviews they read on a blog.

Selection Evaluation

The next stage in the purchasing process is the selection. In this step, customers actually prefer offline compared to online, as two-third of online shoppers use a physical store before or after the transaction. This is why previously-mentioned successful online retailers, such as Bonobos and Warby Parker have opened brick-and-mortar stores to reach their customers through offline channels: to take the brand into the real world, and create a new touch-point by which to engage their customers.

However, even though consumers are more prone to make offline versus online purchases, that path is significantly affected by the online discovery on social media, search, Instagram, and Pinterest. Lacking an online presence dramatically diminishes a store’s visibility as consumers use the internet to identify, research and find the store when they're ready to make selections.

To optimize this flow, smart retailers are using in-store analytics to plan their inventory, track foot traffic, and craft an experience around the behaviors of their customers. In fact, Bonobos holds no inventory at all, opting to ship desired products to customers from off-site warehouses within 24 hours. Another high-street giant, Zara, has launched a new RFID technology which tracks every product, from factory to final sale, for faster inventory restocking.

Post-Purchase Decision

The post-purchase decision concludes the purchasing process. In this step, the buyers confirms the wisdom of the purchasing decision, which greatly impacts future purchases. Again, the web and social media are the channels for consumers to voice (and receive) opinions after checkout, whether with store photos, selfies in their new outfits, or the comments of followers as they wear their clothes out to an equally trendy party. All these social interactions then become information sources for customers who are earlier in the consumption cycle. This phase may also involve reviews of the experience on sites like Yelp, or directly on Facebook.

By providing multiple channels, retailers can better profile their customers and create a more personalized and engaging experience in-store.  In fact, based on a study by Verde Group, the more channels a retailer offers, the greater the customer engagement and loyalty. As technology has advanced, the shopper's expectations have evolved accordingly. Customers want the right products, at the right time, in the right place - which is made possible with a multi-channel retail strategy.

Conclusion: The Multi-Channel Retail Playbook

Brick-and-mortar stores still have huge appeals to customers, as shoppers prefer a sensory experience where they can see, feel, and try the product they want to purchase. However, the route from when a customer intends to buy a product to when the transaction is completed has changed significantly due to technology.

The rise of the mobile shopping, the influence of style bloggers, and the omnipresence of social media like Instagram and Pinterest has dramatically changed the way consumers make purchasing decisions, and how they affect those around them.

Retailers, constantly faced with new purchasing dilemmas to invest on in-store innovations and online platforms, are feeling the pressure to incorporate technology and social media strategies into their stores to continuously track and influence the customer journey. The question is no longer online vs. offline, but how to create a memorable brand and experience for customers across all channels, including their phones.