Featuring in over a half dozen global retail influencers lists, Tony D’Onofrio leverages his extensive in global retail technology to research, write, consult and speak about the disruption of multiple industries.
We caught up with Tony to learn more about his thoughts on how technology is shaking up the retail world.
MANTHAN: What are some of the big changes you see taking place in retail today?
TONY: The smartphone I identified early on as the 3rd megatrend reshaping the future of retail. Because of this smart device, consumers are able to walk into a store and instantly decide whether to buy in the physical location or buy the same identical product from a competitor online. This mobile trend is global and in the long run provides substantial opportunities for the growth of the retail industry.
As I stated in one of my blogs, with more than 5 billion unique mobile subscribers worldwide at the end of 2017, mobile has a greater reach than any other technology. By 2025, mobile internet penetration will reach 61% of the global population and 86% of unique subscribers.
The smartphone ushered the need to digitize the store and engage with a much more knowledgeable consumer. Those retailers that got ahead of this curve and for example empowered associates to have a meaningful digital conversation with their consumer are among the brands succeeding today.
MANTHAN: Do you feel retailers are now more eager to apply advanced analytics to their decision-making, than before?
TONY: If retailers are still asking this question, in my view they are in trouble and in catch up mode to their stronger competitors.
The challenges emerging out of the digitized store and a data rich retail enterprise is that we have too much information. Advanced analytics is critical to distill the valuable nuggets to get to a faster decision process.
Too much data is an across industries challenge. There are 2.5 quintillion bytes of data created each day. Over the last two years alone, 90% of the data in the world was generated.
As Peter Sondergaard said, “information (data) is the oil of the 21st century, and analytics is the combustion engine.” Retailers need not be afraid of too much data. They need to continuously fine tune the engine through advanced analytics to differentiate their business model from their competitors.
A strong enduring brand requires continuous advanced analytics to maintain / grow the loyalty of digitally empowered consumers (that continuously generates new data).
“New generations are almost expecting technology engagement. They will respond positively, provided it is a differentiated experience.” Tony D’Onofrio
MANTHAN: Which retailers do you see setting the pace when it comes to customer innovation?
TONY: I was asked a similar question by a different publication recently and was surprised by how quickly a growing list of brands came to mind.
- Zara (Inditex) and TJX in how they create scarcity or deep discounts which leads to continuously loyal customers looking for that special item that might not be available tomorrow.
- Zara also for their heavy investments in IoT to deliver on the Fast Fashion model and their continuous experimentation to improve customer experiences through technology.
- Walmart and their physical to digital journey expansion plus investment in their associates.
- Amazon with the Prime loyalty program, in pushing the innovation envelope with Amazon Go and voice through Alexa.
- Nike and the flagship House of Innovation stores that they recently opened in Shanghai and NY which have multi-floor differentiated immersive differentiated consumer experiences.
- Ulta Beauty with their digital strategy and loyalty program.
- The resurgence of Ashley Stewart through a digital media strategy and passionate consumer and associate brand ambassadors.
- Restoration Hardware with their loyalty program and experiential retail model.
There are multiple other examples in both USA and the world of retailers. Key elements to success include focus on digital transformation, differentiated loyalty programs, and technology investments such as IoT to get closer to consumers.
“A strong enduring brand requires continuous advanced analytics to grow the loyalty of digitally empowered consumers.” Tony D’Onofrio
MANTHAN: Do you think technology is taking away from personalized and human experiences that customers desire?
TONY: Technology is only a tool to solve problems. Implementation and follow up determines whether it enhances or detracts from human experiences.
The smartphone, the internet, and social media are transforming how consumers engage with brands.
Generationally, the answer to your question will be different. According to the Pew Research Center, more than nine-in-ten Millennials (92%) own smartphones, compared with 85% of Gen Xers (those who turn ages 38 to 53 this year), 67% of Baby Boomers (ages 54 to 72) and 30% of the Silent Generation (ages 73 to 90. Similarly, the vast majority of Millennials (85%) say they use social media. For instance, significantly larger shares of Millennials have adopted relatively new platforms such as Instagram (52%) and Snapchat (47%) than older generations have.
New generations are almost expecting technology engagement. They will respond positively, provided it is a differentiated experience. Make it viral and the experience will go to the next level of positive engagement.
MANTHAN: What is the most interesting technology (used by a retailer) which you’ve seen this year?
TONY: Two recent examples come to mind.
The first is from Zara. The average conversion rate of someone buying an apparel item after using a fitting room is about 70%. According to Alert Tech research, shoppers who receive service in the fitting room are THREE TIMES as likely to buy products from that store.
To take this statistic to the next level using technology, Zara installed self-checkout stations inside the fitting room. If you really liked that garment, instead of standing in a potentially long line, you can instantly purchase the item inside the fitting room. After initial pilot results were positive on sales uplifts, the self-checkout technology was rolled out to more store.
I like the Zara example on multiple levels. Moving the needle with technology does not mean chasing the latest shiny object. For Zara, it meant making it more convenient for shoppers to instantly purchase the item with the added perception of faster service. The testing and fine tuning of the deployment was also an important part of the mix to maximize consumer acceptance.
The second example is the Nike House of Innovation initially opened in Shanghai and more recently in NY. Nike changed to approach of a “flagship” to one where technology and the brand’s products are immersive experiences. Instead of rolling out the chain with the latest shining innovation objects, the flagship is the perfect location to measure which technologies deliver the greatest ROI.
As I wrote in one of my blogs, from making the smartphone the retail engagement entry point, to curating to local shopping favorites, to allowing you do shop differently depending on your mood (today I want experiences by engaging with experts, tomorrow I want to just Scan & Go), the Nike House of Innovation is a great example on the potential and importance of physical stores to the future of retail.
MANTHAN: Do you think we are now on the verge of AI living up to its retail promise?
TONY: Like every other technology, AI has the potential to play an important role in advancing the future of retail.
In the latest IHL/RIS technology study, 7% report having implemented AI, 16% are planning for it next 12 months, 14% in 112 to 24 months, and 14% in more that 24 months. Add all this up and it’s a majority of 51% that are planning to deploy AI.
AI has the potential to add substantial value to the retail industry. Live every other technology, we need to stop chasing the latest shiny object and focus on solve real problems that have a defined ROI. Have seen multiple examples in sales / CRM applications, customer recommendations, logistics and payment services.
It’s not a question on whether we are on the verge of AI living up to its promise. It’s focusing the technology on areas that strengthen the value of the brand and create immersive consumer experiences for the consumers.
Thank you, Tony!