Between digitization and customer service:

Key trends and challenges in retail

There’s no doubt that bricks-and-mortar retail has been drastically changed by digitalization. But how far will the digital transition go, where will it stop, and above all – what’s next? Let’s take a look at the challenges and trends facing the retail industry.

German retailers are often accused of acting too passively and merely chasing digital developments. But despite critics’ bold yet simplistic statements like “The internet is killing the retail trade” and “Online shopping is destroying the high street”, the truth of the matter is actually far more complex.

Obviously, online retail has impacted on sales in the retail sector. But this doesn’t automatically mean that the future of retail lies in digitalization. On the contrary: if retailers want to thrive in the future, they need to stand out from their online competition.

They can do so by focusing on an often-overlooked core competency: putting their customers first. The biggest future trend in the retail sector is therefore not primarily digitalization, but customer focus.

Retailers often neglect the customer

The biggest challenge for the retail industry is to use digital methods to benefit customers. “At the moment, experimentation is being carried out in several areas, from chatbots providing sales advice to deploying robots at the point of sale. But not everything which is technically viable is necessarily embraced by customers,” says Janine Seitz, futurist and co-author of the Retail Report 2018.

This is something German retailers don’t necessarily appreciate yet. Far too often, retailers fail to take the customer into account. The Cologne Institute for Retail Research for example found that many digital measures simply don’t get through to the customer. Therefore, instead of wondering what digitalization measures should be introduced, what’s more important is to ask which ones can benefit our customers the most.

Retailers need to know their customers

This can only be ascertained by meeting your customers and talking to them. Collecting and analysing customer data is an important first step in identifying customer needs.

But this is just the beginning. Retailers need to build up a relationship with the customer. After all, although raw data is helpful, in order to know what customers really want, you have to communicate with them. This can take place on social networks or by talking to customers in the store. The important thing is to interact with customers on an equal footing and take them seriously.

Furthermore, we need to have the courage to question current customer service and try out new ideas. Only those who know who their customers are and what they want can go on to create suitable digital offerings for them.

Turning shopping into a memorable experience

Moreover, retailers need to offer customers more than a consumer experience. If someone merely wants to buy a product, they can do so on the internet. Customers go to a physical store because they want to experience something special.

The days when simple consumer messages were attractive or a good product drew enough buyers are over. With everyday life accelerating, the trend is moving towards deceleration, a return to the essentials, relaxation, and a conscious experience. This is precisely something which retailers are in a unique position to offer their customers while they’re shopping.

A bookstore where customers can sit comfortably on the sofa and browse. A consumer electronics store where customers are left alone to try out devices. Retailers can offer customers an awful lot that the internet can’t. This is exactly what they need to focus on.

Shops have to change from temples of consumption into lifestyle centres. Why not take a leaf out of Samsung’s book and set up an in-store digital screen on which customers’ movements are turned into choreography? It’s not product shelves but unique experiences like this that attract customers to stores.

The human factor is the key trend

But even those who understand their customers’ needs, support them with digital measures, and offer them a unique experience can’t do so without proficient staff.

Statistics prove again and again how important good customer service is. For example, customer satisfaction rises by 33% on average when the interaction between customer and sales staff is positive. Happy customers are very important to the retail industry. After all, satisfied customers are keen to return and buy something else. Moreover, they usually spend more.

According to many experts, the human factor is therefore the biggest and most important trend in retail. This means that retailers need to invest in good staff. But if they are to attract young, competent talents, they must become modern, attractive employers.

Summary: Prepare for the future by putting the customer first

All this shows that retailers face many new trends and challenges. But those retailers who focus on customers, tailor digitalization to their requirements, make shopping a memorable experience, and above all invest in capable staff will master the challenges of the coming years.