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Retail Industry Trends and Customer Engagement Strategies

Read Time: 5 minutes

With the latest COVID-19 safety guidelines in Texas, retailers may now open to 25% capacity. Many other states, including Georgia, Florida, and Oklahoma, have significantly eased up on business closures, as well. However, many individuals remain wary to leave home for services that aren’t absolutely essential.

Though all industries are experiencing the effects of the coronavirus differently, it is not merely the pandemic that’s leading to some retailers’ extinction. Rather, it has exacerbated struggles these industries have been experiencing for years, and revealed that many companies lack updated business models and digital transformation strategies.

Current State of the Retail Industry

Overall retail sales were down 8.7% in March, with clothing and accessories sales dropping 50.5%. Statista projected the continued decline of these numbers through April. As we approach summer, retailers are ramping up alternative methods to department store shopping, such as online ordering, curbside pickup, and home delivery. 

Major retailers, Neiman Marcus and JCPenney, filed for bankruptcy this month, due to their inability to sustain operations in the midst of government-mandated closures. However, the worldwide pandemic was not the spark, but rather the final push, in a series of challenges for department store chains. 

For many, the decline of department stores comes as no surprise. An article from Business Insider cites declining mall traffic, off-price alternatives and big-box retailers as some of the competition that has edged out department stores.  

The retail industry has undergone changes and restructuring in recent years, with innovative and customer-centered approaches at the forefront.

The Rise of E-Commerce

The rise of online shopping also poses a significant challenge to brick-and-mortar stores. Online shopping provides a personalized customer experience from the comfort of their own home — or rather, any place with a digital device and internet access. 

Though dominated by Amazon, many have persisted in their efforts to capitalize on e-commerce. Just two days ago, Facebook announced their plans to roll out Facebook Shops, a form of social commerce that would allow businesses to sell products directly through the platform. They foresee this as an opportunity for small businesses to interact and communicate more effectively with their customers, while also providing more data and leverage for advertising.

Mandated shut-downs aside, brick-and-mortar stores continue to maintain a substantial lead over online shopping sales. However, with many still staying home due to shelter-in-place orders, the appeal of online shopping is more relevant than ever. 

How Retailers Can Engage Customers:

This unexpected and extreme shift in consumer behavior has spurred many retailers to ramp up their online offerings — something that might have otherwise been developed further down the road. However, the cost of acquiring customers online can be high.

So how can businesses survive the latest onslaught of retail industry challenges? 

1. Personalize the In-Store Customer Experience

Many shoppers experience dissatisfaction or unwarranted guilt as they exit a store empty-handed. Others may not be in the mood for interaction and want to shop or browse uninterrupted. Still others may wonder why they can never find a store associate when they need assistance. 

One simple, but innovative, approach by Sephora is the practice of offering color-coded baskets to indicate whether or not customers would like assistance. While it is reported that this option is only currently available in Europe, it is a great example of bringing that independent, customer-focused shopping experience off-line.

Additionally, as social distancing continues, limiting face-to-face interactions becomes a new priority. Innovative ways to identify those in need of assistance could help alleviate unwanted or unnecessary interactions between shoppers and employees.

To improve the in-store experience, other retailers utilize technology to map in-store traffic. Identifying high traffic areas and common routes that shoppers take allows stores to optimize their product placement and sales displays. Now, those busy areas come equipped with handy social-distancing stickers, too.

2. Connect the Online and Offline Customer Experiences

Another way to engage customers is to merge the online and offline customer experience. Some applications of beacon technology are smart enough to map online customer interactions to their shopping in-store. How shoppers interact with ads, emails and coupons can provide key insight into conversion rates and the overall customer experience. Loyalty apps can also help increase customer engagement through a hybrid, in-store/online shopping approach. 

Many customers will look at products online while in-store to check prices and sales. Price matching guarantees, coupons and even in-store navigation can help to bring attention back to your brand. Target has capitalized on this idea by allowing customers to order online while also indicating where they can locate those products in-store. In-app price scanning functionality further allows shoppers to take control of their shopping experience.

It can often be bothersome to find an associate for a simple question or wait for one to become available. Technology can help free up sales associates from being pulled aside for one-off questions, allowing them to focus on other tasks or engage with customers with limited distractions. 

“Endless aisle” kiosks also facilitate this online/offline connection by allowing shoppers to view inventory, such as additional colors and sizing choices, that are not available in-store. Customers can choose between home delivery or “ship to store” for pickup. Installing screens in-store and contactless payment options also acknowledge a trend towards a more streamlined shopping experience.

3. Adopting Technology and Innovation 

As the popularity and number of online shopping options continue to rise, you may choose to take the approach, “If you can’t beat ‘em, join them.” Consider adopting data analytics, AI chatbots and emerging technologies to woo, engage and capture customers online.

A major challenge of online shopping is the inability to try things on and see how they look or fit. This leads to considerable costs for retailers, as customers will often purchase multiple items, only to return many, if not all of them. Clothing subscription companies attempt to turn this shopping mentality into a business model, though they hope personalized curation cuts down on returns.

One of the most promising technology trends in retail designed to reduce returns is using Augmented Reality (AR) to visualize products before purchasing. Another AR application takes this idea one step further. The FitFreedom app utilizes AR technology to create a 3D custom-fit model so that online shoppers can choose the correct clothing size the first time. It only takes a few minutes to capture measurements and the app doesn’t store your images. Instead, it compares the user’s 3D model to sizing charts across the retailers’ inventory to recommend the perfect fit.

It even accounts for customer fit preferences by showing the user where he/she falls on the sizing chart. If the user prefers looser fitting clothes, they can size up, and vice versa. 

Retail Industry Trends 2020

Retailers know that shopping is not just about the product – the customer experience is equally important. A consumer-focused retailer will build up its brand identity around creating an inviting, engaging and ever-improving shopping experience.

It is common to target Millennials and perhaps even hold Gen Z responsible for “killing off” different industries. But, the implications of technological advancements mean that those unwilling to adapt to their growing consumer base will be left behind – a business truth as old as commerce itself. The onus is on retailers, who must fight to not only remain relevant, but to innovate as well.

If your business is interested in digital transformation, 7T offers consulting and development services for a variety of industries. We can guide you through the creation of a data governance platform, help you set up a data lake, develop CRM and ERP software or facilitate cloud integrations. Additionally, learn more about FitFreedom’s AR body measurement capabilities and find out how your business can utilize this technology.

To discuss your development project, connect with 7T today.

Reach out to our team today!

Lacey Williams-McGhee

Lacey Williams is a marketing professional and Harvard graduate student living in the great state of Texas. When she's not working at 7T's headquarters, she can be found on the next flight to the Bahamas, hanging out with her husband and fluffy golden retriever, or studying! Lacey earned a B.A. in journalism from Baylor University. Sic 'em!


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