Deloitte tells it like it is – essential reading for retailers

Deloitte’s annual ‘Global Powers of Retail’ report should be required reading for all retailers, it’s heaving with fact as well as highly qualified opinion relating to both the international and Australian retail scenes. You can download the report here.
Screen Shot 2013-07-12 at 1.51.44 PMWe’re quoting a lengthy section in full because Deloitte’s thinking is so spot-on. It’s well worth the read:
 
The retail industry is in the midst of a customer revolution.
The collision of the virtual and physical worlds is fundamentally changing consumers’ purchasing behaviours. Consumers are seeking an integrated
shopping experience across all channels, and expect retailers to deliver this experience. Failure to deliver puts retailers at risk of becoming irrelevant. The key drivers of this customer revolution are the rapid adoption of mobile devices, digital media and tablets equipped with shopping apps. In fact, the number of smartphone users in the United States will rise to 159 million by 2015 from just 82 million in 2010.
Traditional retailers must find opportunities to seamlessly embed the virtual world into their retail strategy by developing in-store and online technologies that allow them to create and maintain meaningful and sincere connections with customers across all channels.
The Future of Retail Has Arrived
The retail paradigm has shifted from a single physical connection point
with customers to a multi-pronged approach that crosses both physical
and digital channels. The traditional bricks-and-mortar retail store is
no longer the dominant medium for purchasing goods. Instead, it
serves as one of many potential connection points between customers
and a retailer’s brand. As one industry observer has noted, “While
physical stores may have once enjoyed the advantage of crafting cool
shopping experiences, the aesthetics of the iPad and all the social
sharing surrounding online shopping today are now shifting that
advantage to online retailers.”
However, many retailers are struggling
to take advantage of the increasing number of channels available to
them for connecting with customers. Further, they are neglecting to
make appropriate investments in technology, operations and talent
that would better equip them for seizing control of these channels.
Retailers’ technology can be disparate and fragmented, and multiple
physical locations can drive an unsustainable cost structure that is not
flexible and often underperforms. Additionally, employees often lack
the knowledge, training and tools necessary to facilitate a shopping
experience that engages customers across a variety of channels and
extends beyond the traditional shopping experience. As a result,
many retailers are falling behind in the race to offer a unique and
comprehensive experience with their brand that keeps pace with
customers’ ever-evolving attitudes and expectations.
Adopt a single strategy and vision across channels
Retailers are faced with the challenge of engaging customers on more
than just price. They must make shopping across all channels a more
stimulating and satisfying experience, rather than simply a way to find
the lowest price for a particular product. New competitors are disrupting
the market and capturing valuable market share through innovative
business models. Many companies are now seeking to become
vertically integrated by controlling the whole supply chain. As a result
of a vertically integrated value chain, a new generation of e-commerce
players is bringing high-quality products from the warehouse directly to
consumers at significantly lower prices.
Hence, retailers must respond to new competition by enabling digital experiences that improve both the store and virtual experience for the customer. Equally important, they must find a path to success that not only addresses the needs of their customers today but is also flexible enough to continually evolve with customer interests and expectations. The customer revolution and the future of retail have arrived. Retailers must respond now or risk facing obsolescence.
Retail’s Path to Relevance
Today’s consumer is increasingly connected to both the physical and
digital space and able to interact with retailers through multiple channels
simultaneously. To stay competitive in this ever-evolving landscape, it is
imperative for retailers to deliver a seamless customer experience across
all channels and provide the right services and products at the right time.
Specifically, retailers must develop an integrated strategy that aligns
talent, physical space, processes, marketing and merchandising to meet
consumer demands. This strategy should be supported by emerging
technologies and continually adapted to remain relevant to the customer
of tomorrow.
A robust retail strategy must include:
  • A strong vision of the experience the customer desires across all channels
  • A nimble operating model that can adapt as the retail environment changes
  • A deep understanding of how to support the vision through inventive
  • digital solutions and retail technologies, such as playbooks to operationalise the omni-channel strategy.
Create a Relevant Customer Experience
The transformation of the retail store begins with a deep understanding
of the customer and a strategy to personalise the experience at every
point of interaction. The most appropriate technologies should be
leveraged to enhance the experience in both the physical store and digital world.