it is thought of as a lifetime relationship between a brand and a customer.
There are multiple components of a retailer’s business. These components have historically worked in silos. Merchandising and marketing, as described earlier, are two key components to driving merchandise assortments and communicating the most relevant information in the most effective way to the customer. The in-store teams, or store operations, are the components of the business that interact with the customers. The in-store teams are at the forefront of building relationships with customers once the merchandising, pricing, and marketing strategies have been executed. Last, cybersecurity is the component of the business that protects customers against cyberattacks and ensures that personal information, including credit card data, is not compromised.
The retail environment has had significant changes over the last couple of years with the rise of the digital landscape, an increase in e-commerce business, and the rise of the millennial customer. For retailers to be successful, they must break down the silos of these different components to their business to truly understand and shape the customer journey. In this book, we will walk through each component of the retailer’s business. We will discuss what each component is responsible for, how retailers are able to intertwine the components, the challenges retailers face, and how retailers can leverage analytics to overcome challenges while maintaining the art of retail to drive profitability and efficiencies.
Chapter 1
The Changing Face of Retail
The Internet completely transformed the retail industry and the way we think about shopping. Retail changed from walking through a store to a click of a button while sitting on your couch in your yoga pants. The growth of mobile and technology has also revolutionized the industry.
The first online retail site was created in 1979. Michael Aldrich connected a television to a computer that processed transactions in real time using a telephone. He called it Videotex. This was even before the World Wide Web. Tim Berners-Lee created the first World Wide Web server in 1990. The first retail site was a book retailer, www.books.com. In 1994, a secure port was developed for online transactions. This meant that customers were able to purchase items online through a relatively safe process, avoiding fraud and identity theft. It was by no means 100 % secure, but it was better than previous attempts. Still, people were somewhat skeptical about making purchases online.
Amazon and eBay quickly followed in 1995. I remember surfing for designer items on eBay in my younger years. I had somewhat of an obsession with Nancy Kerrigan during my childhood. My first eBay/online purchase was a Nancy Kerrigan refrigerator magnet. When it arrived, I discovered that it was literally a cut-out of Nancy Kerrigan from a magazine article, laminated, with a magnet glued to the back.
That was the risk you faced during eBay’s early years of bidding on items. Then eBay transformed into more structure and reliability. A “buy” option was also implemented, rather than waiting to be outbid or win. I’m not going to lie: I enjoyed the rush of the bidding process and the not knowing what you were going to receive in the mail. This might have been due to my age, but it created great memories.
Amazon was also one of the first e-retailers that only sold online. It has now grown to be the largest e-commerce retailer and recently opened a physical store location. Amazon started out selling books and has now grown to sell clothing, electronics, home goods, and even food. Amazon Prime offers free two-day shipping, which has attracted a vast audience. Amazon has also started same-day delivery in select major cities with a new program called AmazonFresh. Amazon’s latest technological move is the dash button, a small button that can stick to any surface and connects to a customer’s Amazon Prime account and Wi-Fi. When the button is pressed, it sends an order to Amazon. These dash buttons are available for brands such as Cottonelle, Clorox, Dasani, Red Bull, Tide, and many more common household products. If a customer notices she is running low on toilet paper, a simple click of the dash button generates an order, and a box of toilet paper is delivered to her door in two days. Amazon is becoming the king of e-commerce in today’s market and will reach 19 % of market share by 2020, making Amazon the largest retailer in the world.
The evolving technologies have changed not only the way we think of shopping but also our expectations. “Millennials” is a term used to describe people who were born between the years 1982 and 2004. This generation has predominantly grown up during the age of technology. A millennial’s first job was after the BlackBerry and Internet were invented. Technology is a known way of life to them. The millennials are a technology-savvy generation. Education has incorporated technology as a staple in their development. Therefore, millennials have much higher expectations from retailers.
I myself am a millennial. I remember the launch of AOL; online dating when it was in the form of chatrooms; and MTV when it was actually videos with my boy Carson Daly, and you were not cool if you didn’t have a cell phone in middle school. These expectations are even greater for the younger spectrum of millennials.
We check our phone on average 45 times per day and spend 3.2 hours on our mobile devices. Social media is a large part of a millennial’s life. Social media is the means by which we communicate and stay informed with what is going on in the news. The first social media sites were Myspace in 2003 and Facebook in 2004. Myspace is an online community that slowly lost popularity over the years. It is still around but has become more of an avenue for musicians. Facebook started as a social community only for individuals with a university e-mail address. It slowly evolved to include community colleges and eventually opened to the public, moving from exclusively college students to everyone and their grandmother.
In 2014, Facebook had 1.23 billion monthly active users. As Facebook grew, so did other social sites, such as Instagram, which is a site where individuals share pictures. This site came on the scene in 2010. In 2014, Instagram had 300 million active members. Twitter came on the scene in 2006 with the concept of leveraging Facebook’s statuses and through it emerged the infamous hashtags. Hashtags are now a part of the millennial English language. A hashtag is a word or phrase that describes a topic, an event, or a person. These words or phrases begin with a hash or pound mark.
For example, #ThrowbackThursday is a hashtag used on social sites every Thursday where individuals post old pictures of themselves. Hashtags are used for searching on Twitter and Instagram. I have a good friend who has a weird obsession with cats. I think we all know a few of these people. She frequently searches #cats, so the content on her homepage has been tailored to show things of interest to her, such as cats. Tagging your picture with the #cats description will increase the likelihood that your picture will show up on her page and she will like it. Liking is a whole other concept. On any social site, people are able to click “Like” on your picture. It is almost a personal mission to try to get the most likes. Timing is involved in this as well. A millennial typically will not post his or her best pictures on a Saturday night at 10 pm because that’s when everyone is out. If you post your best pictures with a large number of hashtags on a Monday around 4 pm when the workday is nearly over, your “like” factor will skyrocket.
Snapchat started in September 2011 and has evolved to be the second-most used social media app among millennials. Snapchat is a mobile app that allows you to take pictures, selfies, or videos and send them to select individuals or post to “your story.” The kicker is that if you send the pictures or videos to an individual, the picture expires after 10 seconds, and only one replay is allowed per day. This app also enables users to send text messages that disappear after they have been read. If someone takes a screenshot of the picture, the app will actually tell the sender. This is of great appeal to any young millennials who do not want to leave a trail.
It is important to understand these different social media apps and how they work to best target and understand customers. Social media is a growing platform for retailers to reach their target audience. When it comes to social media sites, millennials start using these sites first, and then they slowly
