Dirk Hoerig, co-founder and CEO of commercetools, took the stage alongside Adam Warne, CIO of River Island at CogX, The Festival of Inspiration, Impact and Transformational Change in London. Moderated by Mary Hanbury, Associate Editor at Business Insider, the discussion, aptly titled, “Let’s get phygital: How the world of shopping is changing,” focused on how retailers are leveraging technology to create enhanced shopping experiences.
Dirk kicked off the conversation by introducing commercetools, explaining that the company provides over 450 brands and retailers with the components to create outstanding shopping experiences across all touchpoints. He called out Burberry and Sephora as examples of customers leveraging the platform to make the customer journey more engaging and enjoyable. “We help them to build omnichannel experiences and scale their businesses and, on the other end, increase their efficiency.”
Turning to the audience, he pointed out that about $30 billion US dollars in digital sales come through commercetools every year. “This means that roughly 90% of the audience here are interacting actually with one or more of our products at least on a monthly basis. You just don't know that commercetools is running the experience on the backend.”
While this statistic helps validate commercetools' place in the commerce industry, Dirk said he wanted to keep the focus on the challenges retailers face in delivering both digital and physical retail. He offered up examples to illustrate the problems shoppers have in the physical experience. “You go to a store, you find your preferred product, but then once you want to check out, you learn that it's not available in your specific size or color.ut you're almost through the shopping experience and you leave the store frustrated. So, navigating the store is a challenge — but most and foremost, 60% of the retail shoppers say that checkout is a huge problem for them.”
According to Dirk, the challenges with digital experiences are almost the same. “Checkout times, checkout complexity, slow page load times — you need to wait for things. Then you have complex delivery options or additional payments and so on.” All of these are, he stressed, a lot for a retailer to deal with while also having to respond to increasing customer demands. “What commercetools does with our platform is give them the flexibility to overcome these by not pitting offline against online.”
Offline isn't dead as many said during COVID-19, but on the other end, online pure play is not the sole and only winner. We are living in an omnichannel world where we're all interacting with these brands.
Co-Founder and CEO, commercetools
Dirk pointed to Ulta Beauty as a company that, thanks to commercetools, has been able to consolidate all their customer-facing apps onto a single platform, enabling the company to deliver a unified customer profile. Audi also tapped into commercetools' flexibility, scalability and performance to uplevel the digital experience on both its website and apps. He explained the car company came to commercetools to help it bring commerce functionality into the car, ranging from ordering a Spotify subscription to purchasing car enhancements such as LED lights. Our capabilities allowed it to accomplish this on a single underlying platform instead of isolated, separated systems for all these different touchpoints.
Adam confirmed that commercetools is enabling River Island to solve many of these same challenges. The privately owned, UK-based High Street retailer has been in business for 75 years with a physical retail footprint spanning 250 shops and a thriving digital business — including marketplace and wholesale channels — and he stressed that many of the new channels were added really rapidly. “We’re really proud of our physical retail,” he said. “We see our shops as an opportunity to bring something that is differentiated in the market from a customer experience perspective.”
He shared that commercetools is making it easier for the retailer to create phygital journeys that seamlessly connect its digital to its physical channels, going beyond delivering an omnichannel experience, and instead truly enabling unified commerce.
Omnichannel for me is where you have different channels and you try and merge them to work together through integrations or hard wiring experiences, whereas unified commerce for me is very different. It's where you build one capability and then leverage that one capability across many different channels.
CIO, River Island
To clarify, Adam offered up an analogy. “So think about it like your house. You might have a couple of bathrooms and a kitchen and you want warm water, hot water in those areas. You don't go and install three different boilers and have three different service contracts. You have one boiler, one thermostat setting, and that's what provides the hot water. That's how I see retail evolving. It's about businesses building one experience, one capability and then leveraging that across all of their channels.”
Recently, River Island launched self-service checkout in some of their retail stores. “There was a huge disagreement inside the business about whether it was right for River Island — whether it was cheapening the brand. Isn't this something that supermarkets do or bigger warehouse-type models?”
Adam thought it was a good idea and the retail director agreed, so the pair joined forces and moved forward with it. “Now, in some of its stores, a customer can pick up a product, drop it into a bin and the screen automatically recognizes it, rings it up, allows the customer to pay and then walk out. “The experience is faster than going to our normal till and it provides additional digital content that you don't see at the till. And, it provides us with an opportunity to capture more information about who that customer is to help feed the model so that we can be more personal with the customer.”
River Island has discovered that providing self-service checkout isn’t just about giving customers another channel. By using the same technology that the website uses, which is commercetools, it has helped to streamline operations while unifying experiences. “We’ve built one payment method and one checkout and we’re now using it across multiple channels. What that means is, that it actually reduces the cost of ownership, but the bigger win is the experience. We can launch a new promotion or something new on the website and now these in-store experiences get them automatically. We can turn them on and off, but it instantly delivers that satisfaction to the customer.”
For us, for every hour we can save an employee from having to stand at a till, that's an hour that that person can spend with the customer. All of the stores that we've got self-service checkout in, that’s actually happening — conversions are going up, customer satisfaction is going up. So, actually, what might sound like a technology play is actually a customer experience play.
CIO, River Island
Adam was adamant that physical stores will remain relevant despite the rise of digital commerce. He told Mary that it is an intrinsic part of the experience and that it’s really about what’s most convenient for the customer at a specific point in time. What’s important to River Island is that all experiences are consistent. For example, if you give product recommendations online, you should be able to get the same product recommendations in-store. “So, whether it's an app or a website or a store that's River Island, it feels like River Island [to the customer].”
How AI can both enhance experiences and drive efficiencies
Dirk and Adam also discussed the potential of Generative AI in retail. Both experts agreed that on the customer-facing side, the biggest impact will be in hyper-personalization, with Adam providing a scenario to show the difference between what happens today and what to expect in the future. “You just bought a coffee machine online and for the next five to six weeks you get bombarded by personalization on additional coffee machines because the system hasn't figured out that you already have one and it’s not something you’ll buy again the next day. With the capabilities coming to the market this year and probably even more in 2024, we will see significantly better personalization that might actually fit our needs better.”
Dirk pointed out that AI is able to solve challenges on the backend as well. “Let's say you have 500,000 SKUs, operate in 15 countries and personalize that by segmentations across all of these countries on prices and promotions. That’s actually quite hard. In real life, it might mean many, many spreadsheets and so on. Generative AI can cut the effort down to seconds.”
“On the back-office side, it's all about efficiency and quality,” added Dirk. “So, better product catalog quality, better imagery, more content, better customer care, better customer service, maybe even better operating hours. So, it's not that the call center is open anymore until 8:00 PM but seamlessly 24/7. Those kinds of things end-to-end are where we will see improvements — and that's also where we are putting most of our effort in.”
AI is not perfect, acknowledged Adam, but if it continues to improve it could be really interesting. “It’s a great tool. It’s filling some gaps. Ultimately, you’re still using humans to check the work. For us as a business, it’s for the 80% of things that are quite monotonous — it can save people time and get those people investing in the truly human, creative side of things.”
What to expect for the future of retail
Dirk and Adam touched on just about every technology that has been presented as a retail trend in the last five years, offering insights on everything from AR/VR to the Metaverse, Google glasses and virtual assistants. And, they agree that all of these may or may not contribute to what the future looks like for customers.
In the long term, Adam thinks all these different mediums will help consumers build a profile that fits them exactly. “The speculative future of retail is subscriptions and knowing the customer inside and out,” he said before elaborating on the idea, “Here are the brands that I'm interested in and I'm going to need a new pair of jeans once every six weeks because that's the habit I'm in. They should know me so well that they fit perfectly. So, maybe fitness tracking is going to say, 'Adam's been on holiday recently, he’s put on a few pounds this time, send them a size bigger.'”
In the short term, (three to five years) Dirk feels getting the fundamentals right has to be the focus. “A better in-store experience, no waiting line in the checkout and no need for a self-service checkout. You just pick the products that you want, get the best support from the store associates and then walk out. It's all about you. You are in the center of it and everything else that’s tied around you will actually come to life.”
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