Will 2020 Mark the End of the Retail Apocalypse?

December 30, 2019 | 3 minute read
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Fast fashion retailer Forever 21 recently became one of the latest to file for bankruptcy amidst a decade-long “retail apocalypse,” and once-iconic brands like Toys R UsGymboree, and Sears have become the haunting storefronts of the brick-and-mortar ghost town that the term conveys.

Starting over with a much smaller footprint, Forever 21 aims to recover and reposition. “This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21,” said executive vice president Linda Chang, as reported by multiple sources.

As the company—and many other retailers—seek rebirth and perhaps even reinvention, one might wonder if the gloomy apocalyptic metaphor used to describe the state of the industry is apropos.

Even as the companies that either failed to adapt to the digital economy or succumbed to the pressure of excessive expansion and debt load continue to fall along the way, the industry as a whole has pressed on. According to CoreSight and as reported on Seeking Alpha, the number of store closings has outpaced the number of store openings by about 50% or more over the last three years, while companies like Target, Walmart, Costco, and The Home Depot thrive.

So what advantage do the industry leaders hold over the laggards? While other economic trends may also be at play, a significant contributing factor is how retailers have managed to embrace the change in consumer expectations over the last decade. While the early 2000s saw a significant swing of the pendulum toward digital interactions, smartphones and related technology have driven consumers to expect an amalgam of the digital and physical experience.

Especially as smart technology allows shoppers to experience the physical and digital worlds in tandem, the decade’s “retail apocalypse” could be considered more of a cocoon than a coffin. The retailers who will thrive in the new environment will be the ones with the means to invest in the brick-and-click environments to create ambient experiences that seamlessly blend the customer’s physical and digital worlds.

Companies that successfully blend the two environments can reinvigorate the physical storefront by allowing customers to experience brands like never before. Companies who do this well will:

Capture extensive interaction data across physical and digital environments

Especially as mobile devices become the linchpin of the consumer experience, retailers have the opportunity to collect massive amounts of data both inside and outside of the store. Combining micro-interaction data from the consumer’s web and app experiences with location-based services in-store, retailers will be able to analyze and act on rich behavioral, profile, and preference data to personalize in-store and digital experiences—and even transform the physical environment to make the shopping experience more rewarding for the consumer.

Apply intelligence to every layer of the interaction

The proliferation of customer data means that companies can apply predictive algorithms and artificial intelligence to determine the best experience for each individual. The goals of applied intelligence are to personalize the experience, to make more effective decisions relative to staffing, supply chain, store operations, and merchandising, and to create human-like interactions with websites, apps, kiosks, and multimedia displays, all with the intention to create meaningful brand experiences for customers across every place of interaction.

Create immersive experiences

Immersive technology uses digital technology to emulate the physical environment. Mobile devices have become ubiquitous in the modern consumer’s daily interaction with the physical world, and the retail environment is no exception. As a result, digital in-store experiences are becoming more commonplace than ever before. This is especially true now that companies have the ability to connect data and intelligence to create personalized, human-like experiences with consumers. Modern retailers should look for opportunities to create digitally-enabled, compelling, in-store experiences for their customers that inspire a desire for prolonged and repeat experiences with your brand.

The good news for brick-and-mortar retailers weathering the storm of the “retail apocalypse” is that the upcoming generation of consumers is motivated toward a physical retail experience. According to ISC’s Industry Insights report, the mall is making a comeback. Gen Z expects the mall, like the retailer, to provide experiences, not just convenience, and the ability to deliver those experiences will help determine which retailers emerge majestically from the cocoon, and for whom it will prove a coffin.

This content was originally published at SmarterCX by Oracle. It has been adapted for the Customer Experience Blog.

Scott Winterton

For the last 20 years, Scott Winterton has consulted with leading brands to deliver insights that help them to innovate, transform, and grow their businesses. A retail business architect and graduate of the University of California Davis, Scott is the self-proclaimed and undisputed Pizza King of northwest Austin. 

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