How technology is leading millennials away from brick and mortar stores

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As retailers in Asean continue to evolve their operations to support a more joined-up commerce strategy and capture millennial sales, they must provide a modern, engaging customer experience for the uncompromising modern shopper.
DECEMBER 24, 2019 - 7:03 AM

THE retail industry in the Asean (Association of Southeast Asian Nations) region has undergone massive disruption over the last few years. The way the industry operates today is vastly different from the past. The unprecedented growth of e-commerce has truly changed our shopping habits. Retailers in Singapore clocked record sales during the recent Black Friday and Cyber Monday sales, with Amazon Singapore seeing an 84 per cent year-on-year increase. Customers today are spoilt for choice while shopper expectations continue to rise rapidly. In Asia-Pacific, shopper satisfaction in store (78 per cent) and online experience (76 per cent) are on the rise but retailers still have room to improve, according to Zebra's Shopper Vision Study 2020

In Asean, Singaporeans, followed by Thais and then Malaysians, are the most active users in the region, where nearly every second person purchases goods online. While the evolution of this online shopping culture is affecting many demographics, one group is particularly affected: the millennials, who are now making 60 per cent of their purchases online. At the heart of the millennials' modus operandi is the consumption of technology. This obsession with technology among millennials is in turn influencing how retail sales are made all over the world. The Zebra's Shopper Vision Study 2020 also found that 86 per cent of millennial shoppers in Asia-Pacific indicated they shopped in a store and abandoned purchases only to end up buying the item online. 

In order to grow and succeed, retailers in Asean must understand the incredible spending power that this new generation of e-shoppers have. We know that millennials hold great sway when it comes to retail sales, but what services do retailers need to deliver to capture millennial sales? What is the technology driving the millennial market? 

Millennials expect enhanced service

In order to target millennials successfully, retailers in this region must go down the omnichannel route. This is important as it will support marketing strategies across all channels – including online and offline. A seamless omnichannel approach is vital to capture the millennial sale, as it can deliver personalised content and services to customers at the right place at the right time. The data that this approach generates can also be used to analyse key metrics such as store visit frequency, repeat visitors, basket size as well as customer retention and cross-channel visits. 

The rise of omnichannel is most typified by the growing popularity of click-and-collect. Put simply, the typical millennial mindset is one of instant gratification – an "I must have it now" mindset. Click-and-collect allows consumers to place their orders online and then collect in-store, a local shop or lockers. In the case of in-store pick-up, the store itself makes the ideal picking location and with location analytics, a notification can even be sent to the enterprise’s picking systems when a click-and-collect consumer comes within a certain radius. This notification prompts staff to get the order ready. Not only does this enable stores to deliver better customer service – it enables retailers to deliver seamless retailing.

Another area of growth driven by millennials is free returns. In fact, increasing numbers of e-commerce sales are accompanied with the offer of free returns to avoid unsure customers leaving with incomplete sales. E-commerce has created a new retail reality in which where consumers expect unlimited returns, which has generated a substantial cost for retailers – estimated to be over $600 billion annually by the IHL Group.

Returns have long been a pain point for retailers. And with e-commerce returns running over three times that of store purchase returns, retailers are actively looking for solutions. Linking this back to the click-and-collect aspect of omnichannel, one best practice methodology is to encourage customers to try out their goods on the spot, minimising the risk of damage or loss and bringing forward any returns, thus minimising time stock is out of the inventory cycle. Some progressive retailers are using their stores as extra warehouses, creating a single view of stock across the business wherever it sits, and often enabling shipping and receiving returns directly to the local outlet. 

After the items are ordered, packaged and ready for collection, it’s time for payment. For millennials, the preferred method is mobile payments. This is due to the demographic disinterest in carrying cash. Retailers in ASEAN need to ensure mobile payments are at the forefront of their offering to engage with this specific audience.  

Let IoT take the wheel

Identifying the services that millennials desire is an easy enough task, but what technology is needed to deliver these? Managing the operation behind the shop front is a vital factor in retail strategy.  

Central to the conversation here is the Internet of Things (IoT). And while much of the conversation surrounding IoT may seem like hyperbole, connected devices are not only the future, they are the now. Indeed, Zebra Technologies’ Intelligent Enterprise Index 2019 found nearly 86 per cent of retail decision makers are expecting an increase in their IoT spend over the next two years.

The study also revealed that retailers are investing in IoT technologies — from beacons that beam shoppers customized coupons to radio frequency identification (RIFD) tags that track inventory — to simplify, enliven and customize the shopping experience, generate revenue, and reduce costs. They’re embracing IoT platforms to transform real-time, visibility-driven data throughout the supply chain into actionable insights.

Personalisation is key

Aside from IoT, machine learning is playing a vital role in targeting millennials. This technology utilises analytics and predictive models to help retailers personalise customer experiences and enhance inventory demand, forecasting and visibility. The outcome is increased, repeat sales as well as great customer satisfaction. This latter point is vital in today’s digital age where millennials can post negative reviews if they feel they are getting short-changed on the high street. 

The final powerful tech available to retailer is automation. This often involves the identification of areas where mundane tasks can be automated, freeing up staff to focus on customer service and sales tasks to improve conversions. This technology is vital for ensuring orders are shipped efficiently, inventories are tracked meticulously, in-store inventory levels can be monitored, and customers can find their items. Automation could be described as the unsung hero in the retail mix. 

What’s next for retail?

Being the 20th century’s first truly digital generation, millennials make up the most influential key demographic in the growing retail industry. As retailers in Asean continue to evolve their operations to support a more joined-up commerce strategy and capture millennial sales, they must provide a modern, engaging customer experience for the uncompromising modern shopper. To do so, these retailers must employ the right technology both in-store and in the back office. Failure to do this could see millennials shopping elsewhere, and any forward-looking retailer would not want that. 

The writer is regional director – Southeast Asia, Zebra Technologies Asia Pacific.