‘The combination of the digital and physical world is what’s going to be critical’: Synchrony’s Trish Mosconi on the future of retail
- Synchrony's Trish Mosconi on how the pandemic forced consumers adopt more online shopping, bringing e-commerce and connected commerce into the spotlight.
- One size does not fit all – and as retailers may have an inclination for implementing AR and VR technology, a variety of costs may make it prohibitive for many.
What will the shopping experience look like in the next decade?
This is a critical question for financial brands and payment companies seeking to enable a strategic approach to create next-gen retail experiences – keeping in mind that a growing number of consumers expect financial services to facilitate their day-to-day living in a technology-driven world.
Recently, Tearsheet held The Big Bank Theory conference in New York, where Trish Mosconi, EVP, chief strategy officer, and corporate development leader at Synchrony, shed light on how the pandemic forced consumers to go down the online shopping route, bringing e-commerce and connected commerce into the spotlight. The pandemic is over but these past years have cemented consumers' behavior of turning to e-commerce for their shopping needs deeper than ever.
It is interesting to note that 38% of consumers prefer shopping online and only 40% would go to a store only if something unique was offered. But 31% still lean toward shopping in-store regardless, shows a new report by Synchrony. The almost equal divide among consumers indicates that while the omnichannel approach can benefit consumers and retailers alike, it calls for more connected experiences through partnerships to close the online/in-store gap to keep up with consumer expectations. With a lens on the future, partnerships – whether it’s with service providers, suppliers, or even other brands – play an essential role in tapping into a wider audience and growing brand awareness leading to an increase in sales.
According to Mosconi, shopping is no longer an isolated activity and is closely intertwined with the physical and digital worlds. Forging ahead, retail strategies are further expected to embed into other platforms such as social media apps linked to geo-location recommendations while out on a walk, or metaverse brand interaction that directs shoppers to the nearest physical location with customized recommendations.
“Bringing the digital and physical worlds together is the future of shopping – to create a connected, curated, and convenient customer experience,” she said.
Technology, convenience, and personalization with a human touch are emerging to be key factors in joining these dots and driving customer loyalty and retention in the phygital world (a combination of physical and digital experiences). And although in the next five years, it is expected that near-human-like AI assistants would assist shoppers with their shopping, 68% of shoppers prefer engaging with a real person as they feel a good customer experience leaves them feeling heard and appreciated. Moreover, this also results in driving engagement with the brand.
Tech and retail: Two sides of the same coin
Shoppers are increasingly looking for digital experiences including virtual reality (VR) and augmented reality (AR) to enhance their shopping experiences whether in a physical or online sense and virtually interact with products – to see, touch, and get an overall feel about them before purchasing.
“More than the product, it’s the experience that counts for consumers,” said Mosconi.
AR enhances the real physical world with superimposed digital elements. With AR, customers can see themselves interacting with items in a real-world environment, such as trying on a shoe, clothing, or jewelry item. While VR is an artificial, simulated environment that creates a totally new world where users can digitally immerse and sink into a deeper shopping experience instead of just briefly browsing or scrolling in passing, explained Mosconi. For example, in a VR world, customers can experience distinct phases in Nike's supply chain upon entering, which provides them with a broader perspective of the brand.
New data by Klarna shows that retailers will likely need to develop a game plan to win customers in the future – by making moves in investing in artificial intelligence (AI), AR, and robots, which according to the study are likely to influence the in-store and online landscape, especially fashion retail.
IKEA Place by IKEA
Some brands are already providing AR and VR experiences on-premise, including guiding customers on how to use the products they plan to purchase or have purchased. AR, with its easy availability on mobile, also allows brands to offer in-app experiences. Ikea is a brand that employs this strategy in its Ikea Place app, which lets customers see how furniture looks in their homes before buying, for example. Late last year, Shopify became among the first e-commerce platforms to offer AR capabilities as a part of their seller toolkit.
Younger generations that seek tech innovations are emerging to be among the early adopters of this technology. A new report by Square shows that 39% of Millennial and Gen Z shoppers are keen on AR and VR shopping experiences. This suggests that tech tools may become more important for brands and retailers looking to connect with younger shoppers and serve this market going forward.
Not all roses
Rising prices have been challenging for the retail sector in the post-pandemic recovery period. And although digital experiences are bringing with them growing demand for shopping experiences using the technology, not every business is capable of offering this digital shopping experience. One size does not fit all – and as much as retailers may have an inclination for implementing this technology, they don't want to lose sight of the big picture when making these decisions.
Things like investment and development costs, and maintaining the technology have deterred brands from creating AR experiences. Additionally, small business retailers are bringing important factors into question – like finding relevant use cases and whether the sales justify the investment for them, for example. Data shows that 52% of retailers are not ready to take the plunge to integrate AR or VR into their shopping experiences yet.
Moreover, there exists a generation gap when it comes to data-sharing preferences among consumers that impede retailers’ advances in creating personalized experiences. 28% of digital-native younger generational consumers are comfortable and willing to exchange privacy for relevancy. However, the idea is still alien to 52% of older shoppers, as data-sharing concerns are still holding them back from sharing their personal details with retailers.
Consumer data and predictive analytics enable retailers to develop a better understanding and clear insight into consumer preferences, purchase behaviors, and decision patterns, which can lead to delivering more customized and smarter shopping experiences for consumers. Moreover, it also helps to increase customer LTV (Lifetime Value) for retailers.
“Right technology and the power behind technology and data can actually help us create hyper-personalized experiences,” added Mosconi.
Given the existing problem of data sharing, retailers can communicate to customers in a transparent way, better communicating “what’s in it for them” and why they are better off sharing their personal data within well-defined boundaries. Additionally, by focusing on their customers’ preferences, making personalized offers, and improved recommendations, the tactical data may come naturally from customer relationships for retailers – in conjunction with honing their sales skills and bringing new strategies into play.