Debates about the future of retail have long been on the agenda. The topic opens a wide array of questions, including the polarity of e-commerce and physical retail outlets, and how brick-and-mortar stores can attract customers back into their spaces. COVID has had a major impact on shifts in demand, and sent many retailers onto the edge of bankruptcy: but arguably, the writing has been on the wall for high street retailers for a lot longer than that.
One of the most frequently overlooked areas of retail technology is that of communication. After emerging from lockdown, most retailers were forced to take a long, hard look at the way they communicated: what channels were they using? Were they abreast of changing technologies? What was the core of their message? Were they really communicating at all?
The correlation between retail and marketing communication is the core interest of Domonkos Pichovszky, CEO of a number of sales support marketing and automation businesses. With over 20 years of marketing experience, he understands these industry-related problems intimately, and has dedicated himself to creating easy-to-implement solutions that simplify the marketing message workflow for large brands, retailers and financial institutions.
Here, Trendeavour talks to Domonkos about the state of retail, digitalisation and innovation in marketing communication.
What is the current state of retail, in the middle of the pandemic, when news about infection rates and variants are still making headlines?
We have to accommodate – and retail has to accommodate – the ’new normal’. COVID was the 9/11 of retail; face masks, limitation in opening hours and restrictions on the number of customers in-store were all things that quickly became accepted by consumers across the world. Whilst some people rallied against these changes and a few shied away from venturing out, most people simply adjusted their shopping behaviours accordingly.
And they did this because ultimately, people want to visit shops. People need human interaction, and the ability to touch, feel, smell and taste products. But if retailers want more than just mere survival, they have to transform their rules of engagement much more substantially than before the pandemic. Ever-changing COVID health regulations and opening hours, along with supply chain and replenishment issues have all shown the weakness of the system and the networks that support them. Retailers desperately need to combat these issues, and technology is key.
The biggest issue is that major retailers are still using technology in comparatively limited, primitive ways; spreadsheets, e-mails, in-store promotional materials printed from files on USB sticks – it’s all very early 2000s. Without the digitalisation of the physical retail space and – most importantly – its communication assets, classic retail will not be able to offer a competitive experience to customers, and hence, keep up with e-commerce. Some of the bigger players are starting to harness this level of digitalisation, but in general the retail space has been slow on the uptake.
If retailers do manage to harness the level of digitisation you’re advocating, are there any potentially negative side effects?
Digitalisation is a means to achieving a goal, but cannot replace the underlying purpose of physical retail, which is surprisingly not what most people might think: shopping in the real world isn’t about obtaining products (at least not exclusively), it’s about having the experience of obtaining products. The true nature of the customer/server relationship cannot be fully replaced by self-service touchscreen desks. It’s this exact same reason that e-retail is unlikely to obliterate brick-and-mortar retail in the near future either. We want to go shopping, not just buy things.
Take for instance McDonalds. They have considerably decreased the ordering time with self-service kiosks. The only hiccup is that they also lost substantial x-sell/up-sell opportunities – as it is much easier to click “no” or “close pop-up window” when ordering through a machine, than to do the same in a live human interaction.
And McDonalds features fairly low on the experience/product acquisition spectrum – it’s more about getting the meal than enjoying the meal. But implement a self-service kiosk in a fine dining restaurant? It’s clear that’s not going to work. In implementing digitisation, firms have to be very analytical about their position and their value, and the congruence of this with various technological advancements. It’s just about picking futuristic technology, it’s about picking technology that fits.
How have consumer communication channels changed over the years?
The channels and toolkits we have always reflect the general advertising trends and the wider operational framework. The analogue era started with print – with higher and higher resolution images; from mall magazines to indoor backlights and City Lights. This was replaced increasingly larger screens and more and more complex message flows.
But these methods really just represent better ways of doing the same old thing: the approach still fails to reflect or tally with evolving customer behaviours, interests, demographics and journeys. The breakthrough will be the point where touchscreen and smartphone integration kick in. We’ve started to see it in the hospitality industry; in the UK Wetherspoons implemented an ordering app long before the pandemic, and other players scrambled to keep up when the necessity of social distancing made the benefits of this tool readily apparent. But even in a post-socially distanced world, we’ll see a fully changed mindset and behaviour from consumers who value the convenience it brings: played well, these tools can metaphorically surround the customer – knowing their exact location, understanding and anticipating their needs, and customising their experience, even to the point of having virtual juke box control. Restaurant order apps are here to stay, at least for a particular market segment.
But classic retailers have been much slower on the uptake. Even though big retailers were the pioneers of loyalty cards – which have always been far more about the data than the loyalty – they’ve failed to keep up with the way that e-retailers use customer data to carefully manage the customers’ journey – making it smoother, more personalised and more enjoyable. We already have the tools to provide the same experience for in-store customers, the questions is: are retailers ready for it?
What is driving the transformation of retail marketing?
In the glorious era of the first department stores and shopping malls both retail and retail marketing were full of sparkling innovation. In the last two decades physical retail ceased to lead the charge – it staggered behind, playing catch-up as other arenas set the major trends of the decade. The marketing strategies and messages it used were no different; they were reactive rather than proactive.
So what is – or should be – driving the transformation of retail marketing? Necessity really. It’s do or die. Retail requires reinvention; marketing should be at the forefront of this change, and digitalisation should be the backbone. We need a retail renaissance.
Why should newer generation customers visit brick-and-mortar stores? How can we attract them? These questions may sound simple, but this is the way we should approach the problem. The floorplan and the functionality of the shop hasn’t changed much in the past few decades – which is a surprising mistake, considering that pretty much every other paradigm of existence has, from transport, to eating out, to working and doing business, to holidaying and travelling.
The core issue I’m seeing here is an increasing need for new strategic thinkers and visionary leaders being able to first identify and name these problems, then try to break the solution down to a feasible action plan. Digitalisation can help as a mechanism to both support and facilitate the real world customer experience –from behind-the-scene customer management platforms to in-the-pocket personal shopping assistants.
The key thing is the point I made initially to this question: retailers used to be a dominant force in shaping consumer trends, behaviours and needs. But at some point they lost their footing, and found themselves playing catch-up to external forces. In this sense then, the main task of retail is to regain control and drive flow, using digitalisation as a key turning point.
What kind of trends and innovations have you noticed emerging in retail (marketing communication) recently?
Although COVID hit hard on classic retail, the promising new signs are there: Sparkasse Bank realised that younger clientele below 35 do not like going to its branches. They started transforming their outlets: changing to new furniture, new colour schemes, creating a new floorplan and implementing new “waitertanment” ideas. There is no in-depth analysis available yet, but the first customer satisfaction surveys look promising.
Petrol station networks are restructuring their marketing inventory – creating longer and more involved contact times (and spending) as a result of improved product offerings in their shops: we might even spend half an hour at a petrol station with a coffee shop. Screens are everywhere in the malls but instead of recreating a dull “in-store TV broadcast”, more and more managers are opting for interactive screens with value added functions.
When it comes to these added functions, it needs to be considered. Aiding consumer orientation is vital, whilst forecasting the weather is not. Suggesting alternative or additional stores linked to the consumer purchase intention is smart – showing the highest bidder as the main result isn’t. Showing a digital mirror with AR is fancy, but that doesn’t provide real time availability regarding sizes and colours of the item. Again, it comes down to using these technologies in a considered way that tallies with a deep understanding of customer needs and expectations, not just implementing gimmicks for the sake of it.
What is your take on advertising on TV vs. social media?
In the last episode of Bridget Jones (back in 2016) our beloved protagonist declared that in the modern era everyone can and will broadcast. This sadly became true. The insane rise of social media networks has been, in essence, due to the multiplication of individualized content streams. Internet portals didn’t die – they just metamorphosed into millions of Facebook and Insta feeds.
TV will not die either. It’s already made the digital leap, and pretty soon the on-demand paradigm will fully take over from linear content streams. So far, on-demand has favoured the subscription model, rather than advertising (with Youtube being a glaring exception, and one that is arguably overplaying its hand).
But despite constant efforts to out-evolve conventional advertising models, that particular paradigm is here to stay. Advertising always follows platform evolution – though often with some delay (Facebook was born in 2004 but introduced ads in 2007 only). The keyword is always efficiency, which goes hand in hand with customisation. My bet is on a personalised broadcasting stream with individualised advertising inserts – ideally interacting with the location and physical customer journey. Sounds futuristic, doesn’t it? Yet, technologically, this has all already been available for years.
But whilst individual brands leverage these mediums as a part of their strategy, you rarely see actual retail outlets do the same. It’s like they feel that by venturing over into the territory of the enemy (the online world), they’re admitting defeat. This isn’t the case – indeed, that’s exactly where they need to carve out a foothold – fetching back their consumers from the ‘dark side’ and into the light of the real world.
It’s clear then: retail has a lot of work to do if it’s to shore up the losses that have been made in the wake of an online revolution and a subsequent global pandemic. And whilst we perhaps don’t want to go as far as a ‘Minority Report’ world where adverts scan our eyeballs and literally yell for our attention, it seems clear that digitisation can be harnessed in a whole host of ways to augment the customer experience and leverage the true value of bricks-and-mortar shopping: namely, interaction and experience.
Designer. Founder of Trendeavour. Fashion & retail specialist by day, content creator & digital marketing geek by night. Coffee and instagram addict. Crazy about her dog.