Digital transformation has lowered the barriers to entry into the retail market, with bricks-and-mortar stores increasingly struggling. Switzerland, as yet, has not been hit by the full force of this change: online sales accounted for less than 10% of total sales volume in 2017 (CHF 8.85 bn of a total CHF 91.9bn). Elsewhere, online shopping accounts for a far greater share: in the UK, 18% of retail sales are eCommerce. Traditional retailers in Switzerland are therefore at an advantage right now. Despite growing importance of digital-only players, there is an opportunity to learn from trends elsewhere and adjust business models now.
Tactile shopping still top
Arguably the biggest pain point in traditional retail is that consumers expect way more in terms of experience and service than retailers are providing. Yet studies show that consumers consistently prefer the tactile shopping experience: Cognizant-commissioned research based on shoppers worldwide revealed that nearly two-thirds of people still prefer to touch, see and smell a product before buying.
On the other hand, consumers are certainly willing to be tech-driven, with an overwhelming 90% saying that innovations such as connected products and location-based beacons would inspire them to visit a store. The implication is that consumers are more than ready to be persuaded into the bricks-and-mortar space – and that retailers who can achieve a smart blend between physical and digital will be able to maintain footfall and win over customers.
Retail within the tech space
The upsurge of new technologies – from wearables to virtual reality and digital assistants – does not spell the end for traditional retail. Rather, retailers need to carve out their own position within the new technology-driven space, by analyzing, adapting and investing. On a purely technological basis, ideas might include smart changing rooms with magic mirrors, in-store kiosks and pop-up shops, and 3D experiences with virtual reality.
Human touch first
But what will really make the difference is the human touch: the old-school understanding of what consumers are seeking. It’s likely that the physical store presence will be more than a brand experience, and will also offer opportunities that online cannot provide: the opportunity to participate in real-world connections and communities.
Retail is on the threshold of exciting change. How can retailers build a community that draws consumers in, or create an experience within their physical space? What role will AI and VR play? For insights on the way forward for players in the retail sector, download the Cognizant white paper Retail’s Next Frontier.