At this week’s Shop.org conference in Philadelphia, multichannel and online retailers came together to discuss the latest trends impacting retail. While technologies like chat commerce, driverless cars, and artificial intelligence were all mentioned, many of the conversations centered on some decidedly less sexy—but more practical—technologies.
“What’s interesting is a lot of the things that are hotter topics actually haven’t really been discussed a lot here,” Sucharita Mulpuru, vice president and principal analyst at Forrester Research, told Retail Dive.“There doesn’t seem to be a lot of interest in these topics yet. There is conceptually interest but it’s just not tactical…I think it exhibits often there is a dissonance between what people think is hot and what people are focused on in the day to day.”
While keeping an eye on these “bright and shiny” objects, as Mulpuru likes to call them, many retailers are focusing their efforts on more fundamental digital and marketing efforts, which could drive major changes to often-sluggish legacy systems and organizations.
Here's what we heard from some of the retailers and analysts at Shop.org.
‘Change is a constant’
The star of Shop.org was no doubt mobile—and how many retailers are still scrambling to cater to a growing segment of shoppers using their devices to shop and browse.
In his keynote speech at Shop.org, QVC CEO Mike George talked about how the leading video and e-commerce retailer was “dragged” by its customers into mobile at “great speed.”
“We thought mobile would just be a cool factor. We couldn’t imagine that anyone wanted to engage in the QVC experience on this little screen,” said George.
George further admitted that QVC’s past mobile conversion was “terrible” and the retailer's e-commerce strategy was languishing back in 2013. To address this, the retailer realigned its digital approach, embracing a responsive design to avoid being overwhelmed by digital, and rethinking the consumer journey to work on all platforms.
Now, George says QVC is working to make mobile a “flagship experience” for the customer. This didn’t come without some speed bumps internally, however, as QVC has reorganized to bring all of its content teams together to create a streamlined experience across multiple channels.
“We had to get our people comfortable to the idea that change is a constant, it’s sometimes energizing and sometimes scary,” said George.
In just the last two years, George has seen digital take off at QVC, with $3.5 billion of QVC’s $8.8 billion revenue in 2014 attributed to e-commerce. Even more impressive: 41% of its e-commerce revenue was generated by mobile platforms.
But don’t get carried away
Being “dragged” into digital adoption seems to be typical of many larger companies, especially if it requires massive structural changes.
“When you try to do disruptive innovation in a large company, the immune system of the company will come and attack you,” Salim Ismail, a former vice president at Yahoo and now the executive director of Singularity University, said at the conference.
Some industries are still trying to catch up to fundamental technological shifts that happened a few years ago, he explained, which leaves them behind in preparing for the next disruptive innovation. For example, the democratization of technologies like mobile have helped startups like Uber or AirBnB shake up traditional business models in the taxi and hotel industries.
But while these two stark examples from Ismail may be concerning for retailers, Forrester's Mulpuru said the retail industry shouldn't worry too much about facing total disruption like taxis did with Uber, due to retail’s relatively efficient nature and focus on a great product.
“In retail, I don’t think there are that many truly, truly disruptive businesses that are not flashes in the pan that are not heavily subsidized by venture capitalists’ hopes and dreams,” Mulpuru said. “And the reason for that is retail is fundamentally a pretty efficient operation. You see that in their margins, you see that in customer experience scores. When you try to compete with a store like Amazon, you can’t because they spend so much on the customer experience, and it’s hard to compete with that.”
“So where is the disruption? Where is there even room for disruption? And that’s where I think retailers can get a little distracted,” she added.
While some retailers may fear they are at risk of falling behind on the next truly game-changing technology in retail, Mulpuru said that companies will know if a technology is worth investing in pretty early on. Mobile is a perfect example, as retailers were quick to adapt as soon as they saw the technology impacting their sales, as evidenced by QVC’s experience. Instead of trying to be the first company to catch on to the latest trendy technology, Mulpuru cautioned retailers to wait and see how much of an impact it will on their sales.
“There are a whole bunch of things where there’s not really a huge advantage of being a first mover,” Mulpuru said. “[With] very, very few things are there advantages of being a first mover rather than a fast follower.”
Focus on the basics
Rather than being the first to use the latest technology like buy buttons or wearables, retailers should instead focus on investing in their digital channels, and further aligning these with their traditional brick-and-mortar operations.
This could be very difficult for retailers that look at digital investments with a “skewed” perspective, Kasey Lobaugh, chief innovation officer for retail and distribution at Deloitte, said at the conference. Because only about 5.4% of overall retail sales come from online, some retailers may feel like they only need to invest 5.4% of their resources in digital channels.
Lobaugh warns that this is a mistake. While only a small fraction of sales are attributed to online channels, digital interactions impact 50 cents of every dollar of in-store sales, according to Deloitte research.
“Technology is having a dramatic and irreversible impact on retail,” Lobaugh said.
When asked how easy it would be for larger retailers to adapt to this changing landscape, Lobaugh told Retail Dive that it would be “massively difficult.”
“Some of these companies have even built themselves geographically separate—you have your digital team in San Francisco and the rest of your business in the Midwest or East Coast,” Lobaugh said. “You build up this cultural divide and a whole set of systems. Something as basic as a [stockkeeping unit] might be different. So you have to work almost from the ground up organizationally just to bring those together.”
While this may be difficult, Forrester's Mulpuru said that integrating retailers' digital and physical businesses is possible, given the right amount of time.
“It takes time. You don’t have the luxury of building from scratch like a startup; it would actually be easier starting from scratch,” she said. “You have to retrofit your existing solutions into what you need to be, and that just takes time.”