Amazon and Alibaba were the first companies to take a huge, hard bite out of the retail sector. Customers were dazzled by the prospect of cheap goods delivered directly to their door within a few working days. At the same time, traditional retailers were also hit when they got caught off-guard by new and higher levels of customer expectation.
This sent shockwaves through the industry – and many retailers are still struggling to adapt. So how can retail businesses grow in an age of such rapid digital innovation? While not every retailer knows the answer yet, most are at least asking the right questions.
In Econsultancy’s recent survey – in partnership with Sitecore – retailers showed they’ve learned lessons from their brush with the marketplace giants. Approximately 85% of retailers agreed that their “success as an ecommerce business depends on their ability to create compelling customer experiences.”
This was the highest affirmative response to this question across all the sectors we surveyed – suggesting retailers understand that in a world where products are cheap and easy to access, the greatest differentiator you can offer consumers is an outstanding customer experience.
At the same time, just 44% of retailers feel they have “a commerce system that’s tailored to their needs.” This is likely a reflection of retailers’ customer experience insight – they understand how high the bar has been set, so they know how much progress they need to make to deliver unique, personalized customer journeys.
In businesses that have always been transaction-focused, this is a particular challenge. Legacy platforms usually don’t allow retailers and brands to gather and use data from across the entire customer journey, or create personalized content at the scale or pace required to be effective.
Retail is rising to the challenge
Marketers from this sector listed customer retention as their second highest current priority, behind customer acquisition. Retailers agreed that retention would remain their highest priority in the next three years.
In contrast, none of the other sectors surveyed said that retention is their number one priority now, or that it would be in the future. Again, this demonstrates that retailers understand that transactions aren’t the end of their relationship with a customer – they’re simply part of the overall journey.
This sector-wide understanding also explains the growth of retail subscription services. Shaving razors, craft beers, household goods, and almost every other product you can think of have been given the subscription treatment. This trend is spreading to other sectors too; even car manufacturers are starting to launch subscription-based services.
The lesson from these developments is clear. Where brands once checked out their direct competitors and measured their buying experiences against them, that’s no longer enough.
Remain in the ring — stay nimble, know who you are, and get personal
If you have a long, personalized, trusting relationship with your local grocery store, you’re going to expect a similar level of customer experience with any other retailer you frequent. The retailers who have recognized this expectation, and are acting upon it, are the ones who will thrive in the long term.
Competing purely on the grounds of fulfilment efficiency with players like Amazon and Alibaba would be a tall order for even large, powerful retailers. So the best way to compete is to offer greater sources of inspiration, more exciting moments of discovery, and more intimate relationships through personalized content. This is possible for specialized retailers, who, unlike the large marketplaces, have a clear identity and increased level of expertise, making them an authority on their given subject.
There’s no doubt that Amazon and Alibaba gave the industry a jolt. But now it seems many retailers are steadying themselves and hitting back with more personalized, brand-centric experiences. This has been the wake-up call that many retailers have needed to push their business forward, and customers will ultimately benefit.
To learn more, download the full Econsultancy report, “Reinventing Commerce: How retailers, CPGs and manufacturers can compete with content and experience,” or access our on-demand webinar, Reinventing Commerce: Econsultancy and Sitecore, where Sitecore and Econsultancy discuss the findings of the report.
Wanda Cadigan is the global business leader for Sitecore’s commerce offering and is passionate about helping customers realize the benefits of a unified content, commerce, and personalized marketing platform. She has played an integral role in the evolution of Sitecore in the commerce space, and acts as a customer advocate and executive sponsor for several large digital transformation projects. Find her on LinkedIn