Experience is the new product
Today’s consumers are more discerning and informed than ever before. They’re expecting a richer range of experiences that blend retail, music, dining, and entertainment, for example, which is why futurists see a resurgence in shopping malls by the middle of the decade. Development of partnerships between different retailers, from hairdressers and spas to clothing retailers and office supplies, will see “unlike” providers collaborate as part of a blended retail experience.
A number of factors including supply chain disruptions caused by the pandemic, the new financial realities of a shrinking middle class, and millennials pressed by lower net wealth are shaping this scenario. A recent study by Eventbrite, for example, found that 72% of American millennials prefer to spend their money on experiences, not stuff. Instead of spending on cars, clothes, watches, or accessories, they spend on entertainment, live concerts, restaurants, and travel.
According to retail futurist Doug Stephens, even more than buying new stuff, every human wants and needs intangible things such as recognition, inspiration, purpose, and respect. Rather than focusing on demographics and psychographic profiling to sell people products, Stephens believes brands and retailers would be wiser to build value propositions that address deeper, more universal human needs such as good health, security, or a sense of belonging or contribution to society.
Experience is the new currency
One brand that has mastered this concept is adidas; its SAP software–based Runtastic app creates personalized experiences and motivation for its global fitness community by delivering millions of personalized messages online every day. Rather than just selling shoes, adidas is selling an experience that connects customers to a like-minded community that can motivate people to lead healthier lives. At the same time, the company is deeply committed to ending plastic waste and creating sustainable products using recycled, renewable, or natural materials. These are the experiences and connections consumers are seeking today.
Experiences have become the social currency of a new generation of consumers who have celebrated or commented on every meaningful life experience online. Studies show that millennials are the most brand-loyal generation thanks to social media. Studies also indicate that millennials are not influenced by ads or what brands say about themselves, rather by authenticity, which is derived from experience.
So, the big challenge – and opportunity – in 2022 for retailers is to draw the consumer into the brand story, deliver a remarkable brand and product experience, and establish relationships with consumers across multiple buying channels. For retailers that have been serving baby boomers for the last decades, this may require a new approach to their customer experience if they want to remain meaningful to the nation’s largest generation.
Delivering a flawless experience
To take advantage of the opportunity in the next era, retailers need to tap a range of possibilities to take their business into the future.
It begins with retail insights gained through a single view of the business, unifying operations and maximizing customer experience. Analytical tools provide a single view of relevant data to help retailers understand every angle of their business and identify new opportunities.
Personalized experiences such as those created by adidas depend on a high level of customer intimacy, and in the new era of data ethics, safeguarding customer data and privacy is equally important. SAP Emarsys Customer Engagement platform provides the provides a trusted and robust omnichannel experience retailers crave.
Delivering the experience across all channels requires a unified approach to commerce. This centralized view of the customer integrates online and brick and mortar for smooth experiences in-store, online, or on mobile devices.
No experience can be perfect without a flexible and resilient supply chain. Smart retailers are using SAP’s AI-based technology to redesign their supply chains to have full visibility. Shoppers can follow their orders from fulfillment to delivery, creating greater trust and loyalty. Intelligent supply chains also allow retailers to respond more quickly to disruption.
The return experience can break or build customer loyalty and trust, so it’s important to process returns and provide refunds to customers as quickly as possible. At the same time destroying (or even storing) returned items is potentially bad for the environment and represents a monetary loss. Managing returns efficiently and sustainably helps reduce costs and satisfy customers that expect brands to act responsibly.
Last but not least, retailers need an engaged staff that not only serves shoppers but understands their needs and knows how to create customer intimacy. Faced with a relentless war for talent, attracting and retaining employees requires better user experiences for managers, employees, and candidates, all of which can be managed with SAP SuccessFactors solutions.
Learn more about these opportunities to grow your retail business with SAP at NRF 2022 where SAP is providing a digital experience to showcase the future of Retail powered by SAP.
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