What Digital Means to Retail 


BY Paul Phillips, Digital Director, Interbrand Europe

“Building a digital presence is no longer an 'extra'—it’s a must. Consumer behaviors are changing fast, and retailers that want to stay ahead will have to keep up."

In a remarkably short period of time, the social web and mobile technology have transformed the way consumers live, work, play, and shop. Against this high-tech, hyperconnected backdrop, retail brands are innovating continually to remain relevant.

As internet use has grown, retailers have launched—and relaunched—their websites. As consumers began to adopt mobile technology, retailers responded with mobile-ready shopping experiences. But, increasingly, consumers are looking to integrate their physical and digital worlds into a seamless experience that will allow them to get the benefits of value and convenience wherever they are.

While many retailers are still searching for the best ways to integrate digital into a holistic brand experience, others are already using digital channels to delight customers, win fans, build loyalty, and generate brand value. To help you get your organization up to speed digitally, we’re sharing some findings on digital trends and highlighting what successful retailers are doing to meet swiftly evolving consumer expectations.

Shopping is everywhere—and it’s going mobile

Building a digital presence is no longer an “extra”—it’s a must. Consumer behaviors are changing fast, and retailers that want to stay ahead will have to keep up. Accenture’s report, Energizing Global Growth, puts the retail landscape into sharp relief:

  • 73 percent of consumers researched or purchased online more than they did five years ago, with social media an increasingly important part in the process
  • 68 percent say it’s important for them to be able to buy what they want, when they want it
  • 63 percent want to customize products or services to their exact specifications
  • 51 percent say they consider the environmental impact of a product before buying
  • 73 percent of business executives recognized a marked change in consumer behavior in the last three years, but 74 percent admitted they did not fully understand those changes, and 80 percent believe their companies were not taking full advantage of current trends and opportunities.

According to Forrester’s U.S. Online Retail Forecast, 2012 to 2017, e-commerce, which accounts for about 8 percent of total retail sales in the U.S., is expected to outpace brick and mortar retail sales to reach USD $370 billion in sales by 2017. Digital research firm eMarketer projects that e-commerce growth will be greatest in the Asia Pacific region, followed by North America and Europe, where it will reach nearly 40 percent of total sales in the business to consumer sector.

In order to design the best shopping experience, it’s imperative to understand which devices people are using, as well as the context in which they’re using them. The type of device shoppers choose is primarily determined by opportunities, location, and economic status followed by context—what mood they are in, where they are, what time of day it is, what they want to accomplish, and how much time they have for the task.

Google’s The New Multi-screen World study revealed that consumers are juggling mobile devices: 65 percent of people start the online shopping journey on a mobile device, usually a smartphone, but increasingly they’re starting on a tablet. If the purchase is not completed via smartphone, shopping then continues on a laptop, PC, or tablet.

However, the adoption of mobile phones is what has really shifted behavior. As consumers realize that mobile web lets them fulfill their most spontaneous shopping desires instantaneously—anywhere, anytime—mobile shopping has become irresistible. A survey conducted by eConsultancy, Digital Marketers United, confirms just how much people are using mobile to shop. As one might expect, among people aged 18-34, 44 percent in the U.K. and 42 percent in the U.S. are shopping via mobile. However, among those aged 35-54, 21 percent in the U.K. and 28 percent in the U.S. are also using mobile to shop. As retailers master the mobile shopping experience and mobile payment systems improve, this mode of purchasing will only continue to grow.

Virtual shops bring the store to the customer

Innovative digital shopping experiences are accelerating as physical retailers increasingly go virtual. When Tesco, for instance, wanted to gain market share in South Korea, it had to take on emart, the country’s leading supermarket and discount retailer. Though Tesco’s Homeplus retail chain is second to emart in market share, Tesco had to innovate to stand out and impress the one-fifth of the population who use smartphones. In a brilliant move, it brought the convenience of mobile shopping to commuters waiting for trains and buses.

Laid out just as they’d be in a traditional shop, Tesco created 22 virtual stores in subway stations and bus stops. The product images on the “shelves” featured QR codes that could be scanned by the Homeplus app, allowing the shopper to fill a virtual cart and have groceries delivered home in minutes or hours—not days—later.

While many big supermarkets have mobile-optimized websites for online shopping, Homeplus’s Cannes Lion-winning virtual store pushed the idea of mobile shopping into the minds of people who could use it on the go. The result? According to The Telegraph, Homeplus’s online sales increased 130 percent in three months. It’s now the number one e-grocer in the market, narrowing the offline gap between the Tesco-owned brand and emart; and its app has been downloaded more than one million times.

Making its mark in the offline world last year, eBay debuted connected digital storefronts for shoppers at the Westfield Mall in San Francisco. Integrating shoppable windows, mobile technology, and digital payments, this partnership gives Westfield brands Sony, TOMS, and Rebecca Minkoff the ability to sell from virtual storefronts.

Aiming to bring itself closer to where the majority of transactions are happening—in stores—eBay has tested similar ventures with Kate Spade’s Saturday brand in New York. If these trials continue to see success, it could help eBay build its offline presence and its eBay Now delivery service. The screens also allow eBay (and participating retailers) to collect shopping metrics and sales data.

Whether we see virtual stores as a display advertising campaign or a new way of building mini-stores in spaces that already exist, either way, it’s a completely new way to shop and a leap in retail innovation.

Keep it personal

Email is still the key marketing channel whereas social is still in its experimental phase, but when enhanced by content and personalization, social media is a force to be reckoned with. In the fashion world, perhaps no brand is using social platforms as effectively as Burberry. In 2011, the success of its first Tweetwalk sent the #Burberry hashtag trending worldwide on Twitter—and showed retailers a whole new way to excite and engage consumers. From its HD live stream of the catwalk—and accompanying tweets, Instagram shots, song tracks, and animated GIFs of key looks—Burberry’s mastery of digital technology is reaching consumers in more territories and on more platforms than ever before.

Fab, online purveyor of everyday design products, built the world’s fastest growing e-commerce site using a combined approach, bringing together direct email and content marketing. According to Mashable, Fab had attracted 10 million customers across 26 countries within its first 18 months. Kicking off the effort with a 200,000 member pre-launch list, the site’s reputation and member base grew through social sharing, which is how most customers discover the brand.

Fab has also integrated analytics to understand its customers and track their purchase behaviors, which helps the brand curate its offer. Further personalizing the shopping experience for its members, the company maintains an Inspiration Wall where members can upload and share design inspirations and a “Live Feed,” which enables users to share what they are buying, liking, and tweeting on Fab.com. Selling an average of 5.4 products per minute, Fab has found a winning approach—and has even ventured offline with its own retail stores.

Personal recommendation is still one of the most effective ways to sell something—a fact perhaps best demonstrated today by Amazon’s recommendation engines’ ability to drive sales. Brands such as Burberry and Fab are successfully using social media and social communities to step outside of the traditional advertising model and allow customers to help build the brand through their own discussions and recommendations.

Clearly, social technologies present a key opportunity for retailers to build relationships with their consumers. There are, however, different levels of activation and engagement. Here are a few ways retail brands are using digital to make the shopping experience more personal:

  • From Burberry to Walmart, brands are using customer data to help staff know their customers—by name, preferences, and previous purchases—to help them find what they want.
  • Retailers are also using email, social media, and mobile to keep customers informed about sales and in-store events. Geofencing, for example, a location-based service that sends messages to smartphone users who enter a defined geographic area, is a way to deliver alerts, relevant offers, and information about coupons and discounts. Text messaging has proven to be an effective way to reach consumers, especially younger ones who are more likely to read a text than an email. On average, 98 percent of SMS communications in the U.S. are opened and read, according to LogMyCalls.
  • Social media is also allowing retailers to explore new models of collaborative consumption. B&Q, the largest home improvement and garden center retailer in the U.K., has created the Streetclub social network, which aims to build communities, virtual and real. With over 1,000 clubs set up, members are using Streetclub to talk, share information, swap tools, and address neighborhood issues. While encouraging DIY skill sharing and tool borrowing might not sound like a smart way to do business, B&Q sees its initiative as one that is contributing to a greener economy, future-proofing its business, and building its reputation as a community resource and innovation leader.
  • Sephora is taking advantage of social media in a different way: by launching a Pinterest-like community called The Beauty Board, which is integrated with the Sephora to Go mobile app. Fans can pin a photo that will be linked directly to Sephora.com for an opportunity to buy the products necessary to get the look.
  • Increasingly, many brands are using digital technology to help customers personalize products. Clinique, for instance, has created a custom-fit beauty experience at its counters using iPads and exclusive software. The self-guided skin care diagnostic tool helps consumers identify skin care concerns and processes over 180,000 product combinations that precisely match each consumer’s personal needs. At the end of the analysis, consumers receive a printout or email with a list of very specific product recommendations. As the Clinique example also illustrates, more retailers are seeking to create a physical shopping experience that is as intuitive as the best web sites.
  • Virtual fitting rooms and augmented reality mobile apps are another growing digital trend in retail. IKEA’s mobile app helps consumers visualize what furniture items might look like in their own home—exactly to scale and where one would want each item to fit—directly from the digital versions of its catalog.

Be customer-centric, not channel-centric

Creating a single customer centric view with an integrated multi-touchpoint customer journey will make the shopping experience more enjoyable—and your retail brand more valuable. Here are some examples of how retailers are joining up online and offline channels to deliver better customer experiences and greater business and brand value:

  • Emailing receipts at the point of sale to grab customer data for future communications and eliminate printing—saving cost in the long run and a plus for the environment.
  • Furnishing staff with tablets to enhance customer service by helping customers see more products than are displayed in-store, personalize items, and get information on stock availability.
  • Offering remote customer service and collaboration technology—including interactive kiosks—that help bring retail services, support, and remote product expertise closer to the consumer. Nationwide Insurance in the U.S., for instance, has teamed up with Cisco to provide high-tech mortgage service.
  • Using mobile to boost in-store service. The Neiman Marcus brand in the U.S. has launched a number of apps, such as the NM Service app, which included QR codes, plus NM Gifts, and NM action. The latest: the NM app, which allows iPhone users to text, email, call or FaceTime favorite sales staff, track loyalty rewards points, and stay on top of promotional events.

  • Experiential stores and showrooms like Audi City, the auto brand’s new digital car showroom format that uses state-of-the-art technology to make clever use of precious city space. Under Armour’s shop in Shanghai employs “storytailing”—a new way of conceiving shops as 80 percent story and 20 percent store. Hointer, the Seattle-based high-tech apparel store that uses robots to deliver jeans to fitting rooms, has deftly merged the physical and digital. Showing the way forward for brands that must adapt in the age of Amazon, Hointer is now helping other retailers disrupt and reinvent the world of shopping with technology. Digital players, on the other hand, will also be building up their physical presence as illustrated by eBay’s click-and-collect deal with Argos and Google’s 2013 Winter Wonderlab pop-up stores in the U.S. As Apple's senior vice president of retail has stated, “Online, offline, it’s gotta be the same.”

The customer journey is still what matters most

The shopping experience will continue to change as many retailers reduce their physical presence and invest more in experiential, digital-enabled spaces. Today, retailers will have to constantly think of new ways to meet customer needs and fulfill desires—better and faster than ever before.

In many cases, retailers are benefiting from working with partners to help innovate their offer and make it more relevant, differentiating, and valuable. By making purchasing easier, stepping up service, using storytelling, and integrating the physical and virtual, brands are reimagining the “final mile” and creating unique experiences for consumers that convert browsers into buyers.

Branded service innovation is the key to it all, which means designing experiences that capture the core idea of a brand and bring it to life across the entire customer journey. The experiences retailers create must work at each touchpoint—and also in combination—to constantly reinforce the brand and build value for customers, staff, partners, and shareholders alike.

Article Summary

From mobile shopping and augmented reality apps to virtual storefronts and fitting rooms, retail brands are reimagining the customer journey through a digital lens.


What the world’s leading retail brands understand about digital

  • The world’s Best Retail Brands know that retailers must master mobile to make purchasing easier, step up service, emphasize storytelling and personalization, and integrate the physical and virtual to create better customer experiences
  • Innovative digital shopping experiences like virtual shelves, storefronts, and fitting rooms are critical, and accelerating
  • Social technologies present a key opportunity for retailers to build relationships with their consumers
  • As traditional retailers go increasingly virtual, digital players are building up their physical presence