Digital Transformations Impact on Physical Retailers: Marketing Strategies to Prepare for the Future

By: Punchh


In recent years, consumer expectations have been transforming rapidly due to advancing technologies. Over the last 20 years and since the beginning of the Internet, new technologies also have emerged to deliver new types of experiences for consumers, which entire brands have been built around. A whole generation of consumers have never seen the world before the internet existed or mobile for that matter. Teens today, for example, have never known anything but a touch screen are used to swiping and clicking for the things they want. They see physical retail experiences as an extension of online experiences — compared to previous generations where they clearly viewed them as separate. Technology and changing generational behaviors have created increased competition and made it increasingly harder for retailers to grab and retain customers’ attention, business and loyalty.

Meeting the Needs of Today’s Consumers

To meet the needs of today’s technically-savvy customers, retailers must deliver on three key consumer expectations for engagement and interaction.

  1. Value and convenience. This has remained steadfast over time. Consumers want retailers to offer a large selection of products and services at competitive prices.
  2. Personalized experiences. Across all types of industries, customers expect retailers to know who they are, where they live, what products or services they may have purchased in the past, and what their current preferences are. It matters to them that retailers know what they like or don’t like and demonstrate this understanding.
  3. The ability to begin and complete their experience anywhere and anytime. Consumers may begin offline by browsing for a product and then walk into the store for the purchase. They expect the retailer to know this and deliver similar experiences across any channel, across any store format and at any time.

Key Challenges and Opportunities Facing Physical Retailers

Meeting modern consumer expectations is challenging for many physical retailers who have specialized in providing a large selection of products for customers to come into the store to browse and purchase. They also lack some of the inherent advantages of online retailers such as offering customers the convenience of being able to shop anytime and valuable personalization that drives relevant offers and product recommendations. This presents the fundamental challenge facing physical retailers — the ability to map a customer’s identity to his or her purchase.

Physical retailers must not only solve the challenge of identity resolution, they must also contend with new players that have emerged and are competing against them across every step of the value chain. The fact is about 89-90 percent of all transactions take place in physical retail locations, while only 10-11 percent of purchases in the U.S. are made online. This means physical retailers have a very real opportunity to transform how they do business and serve their customers to drive business growth.

Technologies Brands Need to Compete Today & in the Future

Historically, physical retailers were burdened with legacy technologies that were too slow to move to the cloud, which meant they could not connect and understand their customers and their purchase-related transactions and behaviors in real-time. Many companies are overcoming this challenge by embracing cloud technology to create a data foundation that helps them understand their customers and deliver highly personalized experiences. Brands are also prioritizing a single, scalable digital platform that provides a comprehensive end-to-end customer journey, including tools for customer acquisition, loyalty, and engagement.

Physical retailers that solve the problem of sacristy of conceptual data such as customers’ purchases in real-time and have a flexible platform can also build early leads in AI and ML. This technology helps them much better than humans ever could to integrate and translate data to know exactly when a customer walks into the store, what he or she is looking at, what past purchases he or she made, and in real-time serve up a relevant offer. This is the value proposition and the promise of AI and ML that physical retailers can and should begin leveraging today.

Interested in learning more about the top digital strategies needed to meet retail customers’ lifestyles and engagement preferences? Download the free ebook: Reach New Heights of Omnichannel Personalization Through Retail Digital Transformation. 

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