Customer preferences are constantly evolving. How will your business prioritize superb customer experience in 2024 and beyond?
The retail landscape—and what the customers are expecting from retailers and brands—is always changing.
Online shopping, for example, surged during the pandemic, and the rate of increase slowed when physical stores reopened.
The changing economic and environmental climates further drive these shifts, which require retailers to deliver better-than-ever omnichannel consumer experiences to retain loyal customers. As retailers, the key is to stay ahead of the curve by being prepared to meet your customers where they are.
The Timeless Value of the In-Store Shopping Experience
Contrary to headlines and the media, stores are not dead. Despite the technological changes influencing consumer behavior and the need for an efficient omnichannel presence, one thing remains constant: the value of a compelling in-person shopping experience.
Physical stores will always be an essential retail channel. People enjoy having conversations with real people, and getting help from friendly and cheerful store associates who are willing to go the extra mile to help customers by checking for sizes, styles, and assisting with customer needs.
Retailers must invest in updated stores that resonate with customers, offer tailored assortments, and employ knowledgeable and helpful staff who respond to customer preferences in real time. Engaged, helpful employees in a brick-and-mortar store can transform an average customer experience into a memorable one.
One fantastic example of a retailer who understands its customers and invests in its in-store experience is Abercrombie. The controversial brand went from being a retailer with a negative image and declining sales to completely turning its business around.
How’d Abercrombie do it? Its CEO focused on customer experience, segmentation, and a deep understanding of customer desires. By refocusing on an older demographic, it stayed relevant to its original, young customers, who were now in their 20s and working—meeting them exactly where they are today.
Abercrombie responded to a cultural shift with repositioning and remerchandising, which allowed the brand to grow up with its customers.
Abercrombie has now become a top brand for Gen Z because of their rebranding strategy which helped them regain popularity. Last year, Abercrombie was the best-performing stock on the S&P Index at 285 percent stock price increase—they must be doing something right.
How Online Retailers Remain Competitive in the Age of Amazon
After the rise of Amazon, many retailers feared they couldn’t compete with that kind of online experience plus free shipping and returns. And for many businesses, this was true. But although Amazon completely changed the e-commerce landscape, some companies have taken this as a challenge to improve their online offering and deliver an even more compelling customer experience.
A few successful strategies include:
1. Differentiated Product
Amazon’s vast customer experience approach provides a generalized shopping model that is satisfactory across a wide range of products but rarely excels in any specific category. This limited model creates an opportunity for specialized retailers to outperform Amazon by delivering superior expertise and a tailored shopping experience in their chosen niches.
By focusing on specific product areas, retailers can offer in-depth knowledge, personalized service, and exclusive products that Amazon cannot match. Niche specialization allows retailers to carve out a distinct market position and provide exceptional value.
2. Competitive Customer Loyalty Programs
Take Target’s 360 program, for example. It strategically counters Amazon Prime and costs a third of Prime’s price at launch while still offering similar benefits like free shipping. This makes Target more competitive in e-commerce while retaining a rewards program for non-paying members, which encourages them to upgrade.
It’s not easy to gain customer loyalty, but the reward is worth it.
3. Flexible Purchasing Options
Leading in e-commerce also requires flexibility and adaptation to customer preferences. One growing trend is Buy Now, Pay Later (BNPL), which allows customers to make purchases even in a challenging economic environment. Contrary to popular belief, BNPL isn’t just for risky buyers or debt-ridden consumers—it’s popular across diverse demographics, including financially sophisticated individuals who appreciate its flexibility and simplicity.
Retailers have seen significant benefits from offering BNPL options, such as increased sales, higher average order values, and improved customer satisfaction and loyalty.
Using AI to Provide a “Phygital” Transformation
The best retailers balance the benefits and costs of both in-store and online experiences and strike the right balance between physical and digital retail. This is often referred to as the “phygital experience.”
While e-commerce is essential, it isn’t always cheaper, more sustainable, or less complicated than brick-and-mortar. The optimal approach varies by business and customer needs, often leveraging phygital strategies to meet customers in-person, online, and everywhere in between.
One key component of a phygital experience is utilizing AI and technology.
Retailers with an online presence must leverage AI to stay competitive. AI can review, analyze, and tag products to optimize their visibility, ensuring the right merchandise reaches the right customer. Many companies use AI to predict customer behavior and drive merchandising, leading to more accurate sales forecasting.
While there’s no one-size-fits-all approach, the best retailers will certainly leverage both online and in-store experiences to ensure they are meeting their customers exactly where they are.
In summary, the retail landscape is changing faster than ever, and the truth is that it will continue to evolve and change in the coming years.
But one thing will always remain true: Retailers will only be as successful as their customers are happy. Retaining customers is always less expensive than acquiring new ones. Positive consumer experiences will always lead to higher customer satisfaction, increase the likelihood of repeat business, and boost revenue.
By ensuring that their products and services focus on delivering a highly personalized, superior customer experience, retailers will remain ahead of the curve.
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