Insights 15 February 2021

Brick-and-mortar Shops Focusing on Creating Good Customer Experience with Technology to Impress Gen M

The businesses that depend mainly on brick-and-mortar shops to adapt during the new wave of COVID-19 to create strengths and opportunities. They should apply technologies including geofencing technology, the Internet of Things (IoT) and cloud computing to offer the good customer experience that suits the completely changing behaviors of consumers, especially the millennials who have purchasing power. Good customer experience can happen through cleanliness, improved access to customers, long-term customer satisfaction, the status of being new destinations and increased collaboration between shop owners and landlords. These are known as SOLDC.

COVID-19 outbreaks heavily affected business and it was difficult to foresee an opportunity for business to be restored to its pre-COVID state. The adverse situation happens especially to brick-and-mortar shops that feel three impacts – the declining number of the people who go shopping, the consumers who spend more carefully and the target groups of customers who turn to online shopping. Besides, consumers pay more visits to local shops near their residential areas. Therefore, the operators of brick-and-mortar shops must find ways to increase competitiveness.

“We have found that today’s consumers, especially the millennials who are in their working age and form the main group of buyers, are more willing to pay for experience than for products and services. So, businesses must offer impressive experience to the buyers of their products and services. The experience must be greater than customers’ expectations so that they will steadily repeat their purchase of products and services,” Mr. Pochara said.

Although customers do more online shopping, it does not mean that brick-and-mortar shops become unnecessary. This is because the shopping behaviors of consumers in the new era increasingly happen both online and offline. For example, they first look for online information about products and then place orders after trying the products at traditional shops.

Therefore, the competitive edge will go to the brick-and-mortar shops that can adapt to build strengths in 5 areas known as SOLDC namely safety, omnichannel (to reach customers), loyalty program, destination (of new experience) and collaboration (between shop owners and landlords).

1. Safety

Amid COVID-19 outbreaks, safe services are the immediate priority. Many businesses have implemented measures for the safety of their customers. They include scanning body temperatures and cleaning and disinfecting equipment in shops. However, disinfection alone cannot guarantee safety. Touches should be minimized at traditional shops to build customers’ confidence. The necessity to touch cash can be reduced through electronic payment options including Rabbit LINE Pay, WeChat, AirPay, Alipay, TrueMoney Wallet and QR Payment.

Apart from guaranteeing safety for customers’ happiness, businesses can make the crisis an opportunity to communicate their brands and attract customers. For example, robot cleaners can be used to create the image of cleaning technology. Another example is the placement of Bar-B-Gon mascots sitting with customers for social distancing at restaurants.

2. Omnichannel

The online channels of brick-and-mortar shops increase access to customers and allow the shops to provide comprehensive services. Such traditional shops with online channels also have the competitive edge over the businesses that have only online channels because brick-and-mortar shops have some services that online businesses cannot provide. These include the trial of real products, thorough advice and product troubleshooting.

An interesting example is the famous clothing brand, Pomelo, that began with online sales and later opened outlets at department stores to let customers try its products. For information technology products, the click & collect approach can be used to let the customers visit local shops and collect the products they ordered online. By this means, customers can check the products at brick-and-mortar shops, the rents of shop space can be reduced and it is easier to manage stocks.

3. Loyalty Program

Loyalty programs have been existing with many businesses for a long time. However, they cannot win the heart of customers in the long run unless they regularly offer privileges instead of giving a high-value but single treat. Loyalty programs should be in interesting forms such as gamification which invites customers to play games and earn points that can be redeemed for prizes. Others include special points for the customers who check in at shops and for the referral in which friends are advised to apply for the membership of loyalty programs.

Apart from attracting customers to accumulate points, loyalty programs should give easier access to privileges and serve the different lifestyles of customers. For example, they should allow customers to redeem points for products or discounts at other shops with different products and services to increase redemption options.

4. Destination

Businesses can turn brick-and-mortar shops into the new destinations where consumers can have their demand served and broaden their experience apart from buying products or services. Traditional shops can welcome visitors to do activities. For example, a part of cafés may be used as co-working space.

Besides, designing shop fronts to function as event venues is an interesting option. A marketing survey found that promotional events can increase purchase by at least 20% from a normal level. Events also build brand awareness among customers, provide access to new groups of customers and generate extra income from sponsors.

5. Collaboration

COVID-19 prompts shop owners and landlords to collaborate more with each other because a decline in shop owners’ income certainly affects rent payment. Their collaboration may include the replacement of fixed rents with revenue sharing.

Besides, landlords can initiate projects to support the growth of potential shop owners. An overseas example is Kimco Realty Corporation that implements its KEYS program to support startups and businesspersons during the early years of their operations. It offers business tips including those on preparation for new shops and plans for proper franchise expansion and financial support in the form of free use of space in the first year of leases among others.

In addition, technology will play very important roles in offering new purchasing experience. The 3 following technologies are the interesting tools that retailers can apply.

1. Geofencing Technology

As most consumers search information via smart phones when they plan to buy products, geofencing technology which traces customers plays important roles in increasing interaction between shops and customers. Shop owners can apply this technology in various ways. For example, they can display advertisements in the places where customers frequently visit. Customers’ behaviors may be analyzed while they are at shops. Besides, discount coupons or promotional privileges may be tailor-made for each customer.

2. IoT

The Internet of things (IoT) can enhance efficiency at shops. For example, it can speed up and automate payment and thus provide customers with convenient services. Besides, it helps save the cost of staff. IoT can automate inventory management and supply chains, covering warehouse checks, inventory assessment and communications with suppliers to order the products that are about to be sold out. It can also support the analysis of product displays in shops.

3. Cloud Computing

Cloud computing contributes to efficient shop management because branches receive information about stocks, sales and product deliveries on a real-time manner. Cloud computing also increases the flexibility of business when it comes to cost control and the adaptation of business operations to suit changing situations. For example, cloud computing can reduce the costs of computer system resources in the time of small orders and can also expand computer system resources to receive more orders.

4. AI/ ML

With AI/ML (artificial intelligence and machine learning) technology, shop operators can analyze the behaviors of customers at shops and sales to plan the real-time marketing campaigns that match particular groups of customers. This can increase the sales of the other products that may interest customers, improve customer services and give the information that is useful for the development of new products and services.

As situations and customers’ behaviors change, retailers must find solutions to cope with it. Retail trends have emerged in other countries. For example, technologies are applied to create the virtual shopping experience that is comparable to visits to brick-and-mortar shops. Retail shops in Thailand must also have online channels to facilitate customers’ purchase of products and services. In addition, their fronts must change to be more than conventional sale space. They must also provide customers with new and various experience to effectively convince them to regularly revisit shops in the long termยะยาว