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Born digital, the cloud, and augmented shopping

The Kinetic Enterprise: Getting ahead of retail trends to create customers for life

From digital and in-store experiences to overnight product delivery to customer service, customer expectations keep rising—forcing retailers to continuously adapt. As businesses of all sizes face a new competitive landscape, the pressure to innovate fast, operate flexibly, and cultivate customers for life has grown.

Deloitte transformation leaders discuss how organisations can evolve to address emerging retail trends, strategies for unifying and elevating omnichannel engagement, aligning operations to impact the back and front offices, and creating more personalised customer experiences.

 “Born digital” and the customer experience

The first inclination in e-commerce for many retailers is to invest in the front of the business, the actual selling of product to customers. This was especially true during the pandemic, when many retailers were clamoring to maintain or grow market share.

However, there is domino effect for back offices – inventory, supply chain, finance, product returns and customer queries – that is often underestimated. As Marcela Cordero, partner, Deloitte Consulting Chile, points out, companies that were “born digital” can navigate these stresses much better than traditional retailers that struggle to play catch up. Regardless, “at the end of the day, born digital or not, the client experience is impacted.”

To illustrate the point, Sean Carnrite, director, Deloitte Canada, offers the grocery store. The long-standing brick and mortar had already been disrupted pre-pandemic. Then 2020 threw the front end/back end into an unprecedented pressure test overnight. “If retailers hadn’t solved the process from end-to-end, the customer experience was sub-optimal. Frustrated, people went elsewhere to buy what they needed.”

Culture of immediacy

Whether its groceries, clothing, home goods, electronics–even data–whatever the item, we want it now. Same day delivery is, to some extent, driving the success of Amazon. And while e-commerce has made it possible for smaller retailers to reach more customers, the gains in reach are lost by the costs of shipping. E-commerce and the what Duncan Stewart, director, Deloitte Canada, calls “a culture of immediacy” has created a complex dynamic.

“The big get bigger and the small have trouble competing,” he says. “We're seeing this across all kinds of technologies where the really, really big companies are getting so big, so fast, so dominant, so profitable that we are wondering what do the small players do.”

In the case of shipping, smaller players subsidise the cost. When those subsidies, for whatever reason are no longer possible, customers will face a decision: How much am I willing to pay for convenience? This, Cordero submits, is where the relationship between a retailer and its customer will shine through and yield returns, particularly with younger generations of purchasers. “They are more willing to pay for convenience if it is coming from a place or a company they feel closer to their heart.”

Cloud as a roadmap accelerator

Whether they are quickly moving to the cloud of their own volition, were pushed by the pandemic, or are being dragged by enterprise software vendors (or their competition), companies are moving to the cloud. They are also learning, Stewart points out, they can do so without compromising reliability, security, or data sovereignty, and accelerate their digital roadmap.

But the move to the cloud, though ultimately a boon for the company, may not be easy when it comes to complex legacy systems. That is where hybrid cloud comes in. “I think we will always see some form of hybrid cloud,” says Carnrite, “where there's some on-premise, and either a private cloud or a public cloud agreement with other applications.”

The new retail frontier:  Augmented shopping

Augmented reality (AR) is changing the way people shop. In augmented shopping, customers can engage with brands and products via digital experiences that allow them to try on, try out, interact, or personalise their product virtually; these experiences help deliver more detailed, intuitive product information than standard web experiences. Though still in early days, it is quickly emerging as the future of retail. A 2020 Deloitte study on AR in retail revealed the sweet spot in product sets that are highly standardised with high opportunity for customising features.

“The world of retail,” says Carnrite, “is going to create a personalised experience and a better way of buying. and really understanding what the customer wants.”

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