Shopping center mirrors
Insights

Shopping 4.0 – What Does it Look Like?

By Melanie Tschugmall & Nadine Stoyanov &

How will we shop in the future? Online? In the shop? Both? What will we experience in the process? And how will that work out? Questions like these concern not only us as consumers, but also companies and especially retailers around the world. For these ideas to become reality, however, companies must learn to think in a comprehensively digital way.

In fact, many exciting technologies for digitalisation in retail are now just ready for use in practice. Quite a few of these innovations will be standard in a few years. But in practice what do we find: many such projects remain individual lighthouses. What is missing is a uniform and overarching strategy. A lot of potential is being wasted.

Insight in brief

  • Due to a lack of strategies, the potential of technologies in the retail sector is not properly exploited.
  • Possibilities of technologies must not be considered in isolation, but must be adapted to the entire structure, process and organization in the company.
  • Smart Data and Supply Chain are like big issues that will become more relevant in the future
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One example of such a digital initiative is virtual mirrors, which are currently being tested in some department stores. These attract a lot of attention and are therefore good for marketing. Beyond that, however, they are not really relevant to the business. This would be the case if, for example, artificial intelligence could be used to display the customer's favourite colours from his or her last purchases or to make further product recommendations. The main problem here is: virtual mirrors are not integrated into a long-term digital strategy that puts customers and their wishes in the spotlight.

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Digitalisation in retail needs holistic thinking

Anyone who seriously wants to exploit the opportunities offered by digitalisation and make the most of them must stop looking at these opportunities in isolation. They must see not just the customer front, but also the possible influences on the entire structure, on processes and the organisation in the company. Admittedly, this requires an adjustment of the system landscape, the corresponding processes and the organisational structure - from the supply chain to the end-customer contact.

The decisive factor in retail digitalisation is to prioritise the right combination of technical and analogue options, not forgetting the needs of the end consumer. Here we see two particular major issues that will become even more relevant in the future: Smart Data and Supply Chain. These two themes not only cross-fertilise, but are interdependent, and together they enable a variety of services that until recently was unthinkable.

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How does digitalisation bring optimum results in retail?

Thanks to data, retailers can offer their customers highly personalised services and products; thanks to a modern added-value chain, retailers can produce these products on demand and to suit personal preferences. In addition, automated and self-optimising supply processes make it possible to deliver these products within the shortest possible time. Digitalisation only brings optimum results here if both sides – data management and a sophisticated supply chain – are coordinated.

As far as data management is concerned, it is clear that in the future, the customer experience will make a decisive difference. A customer journey of inspiring and seamless experiences across all channels and touchpoints is becoming increasingly important in order to be at all relevant as a supplier. What the consumers of today and tomorrow want is to receive relevant information, product suggestions and services at exactly the right time and through the right channel.

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Big Data arrived in retail a long time ago

This is where the retail trade already has the solution in its hands: it has been collecting consumer data for decades. So Big Data has long since arrived in the retail sector. The problem: this data is often still used and viewed too one-sidedly. Retailers would have to turn this into "Smart Data", which would answer the following questions: when does my client want what? How do I get them to see my products not just as a necessity, but as a "must have"? To achieve this, communication has to be precisely tailored to the customer: it must trigger their intrinsic needs and excite them.

In this context, one of the questions asked at the beginning can also be answered. Yes, we will continue to shop in stores. People are still social, physical beings, who live through all their senses and want to be filled with enthusiasm. For companies, their stores offer the opportunity to meet consumers on site and inspire them with a "sensual" shopping experience. But here too, the important thing for this interaction across all channels and touchpoints is that Customer Experience Management is strategically managed at the company level and not just at individual contact points.
 

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Shopping 4.0 needs a good supply chain

This theme also applies, of course, to the second pillar of digitalisation in the retail sector: the supply chain. Particularly when we talk about personalisation, the processes and logistics must be adapted to the new customer needs. There are countless possibilities, ranging from simple automation steps to optimisation from end to end thanks to technological innovations. A useful side effect of this: today's consumers want transparency and traceability. They react sharply to topics such as food waste, etc. Then again, anyone who can meet these requirements thanks to an optimised and technically based supply chain has a differentiation factor and can improve their customer experience.

A well-functioning supply chain can help in making better decisions and reacting faster to a demand situation, in adjusting supply and even in facilitating flexible pricing all the way into the store. With predictive analytics, companies can forecast demand more accurately, enabling them to reduce or better manage volatility, increase asset utilisation, and deliver greater customer convenience at optimised costs. Topics such as IoT and Smart Data certainly also play a role - as the networking of machines and individual components within the value creation.
 

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A head start through digitalisation in retail

Our listing shows that: The individual building blocks of Shopping 4.0 have been around now for a long time - they just need to be combined in a sensible manner. This is the only way to achieve the goal of creating seamless worlds of experience for customers that create added value for all parties involved and optimise value-creation in the long term.

Whoever succeeds first will be first to answer the crucial questions about Shopping 4.0 - and thus also secure a valuable advantage in the competition for the customers' favours.

 

Melanie Tschugmall Zühlke

Melanie Tschugmall

Business Development Manager
Contact person for Switzerland

Melanie Tschugmall joined Zühlke in 2016 and has a Master in Strategic Marketing with a focus on Innovation. Before joining Zühlke, she worked in different service companies. In order to stay ahead with new ideas and cross-industry impulses, Melanie is involved in various networks and continuous education, eg. Digital Ethics & Behavioral Economics. This makes her a creative and energetic sparring partner. Melanie is fascinated by digitalisation and continuously challenges status quo. 

melanie.tschugmall@zuehlke.com +41 43 216 6414
Nadine Stoyanov

Nadine Stoyanov

Principal Business Consultant
Contact person for Switzerland

Nadine Stoyanov is Principal Business Consultant at Zühlke since April 2018. She gained both strategical and operational experience in corporations and technology start-ups. Nadine believes that by the means of digital innovation coupled with a strong customer focus and data analytics, companies can create a unique and consistent customer experience that sets them apart from competition. Furthermore, Nadine has a proven record in the commerce sector.

Nadine.stoyanov@zuehlke.com +41 43 216 6640