The term Connected Consumer represents consumers in the new digital era – they are connected at home, on the move, at work and also in shops. They expect a complete and uninterrupted end-to-end shopping experience, regardless of where they are and how they are connected. This experience covers the whole sales process including pre-sales and after-sales and requires hybrid solutions that allow the shopper’s experience at the physical store to be enhanced by a range of complementary and personalized digital services.
In 2014, most physical shops are neither digital nor connected to the Internet, but we expect this to change dramatically in the next few years as the lines between offline and online shopping experiences become increasingly blurred. Consumers can expect to benefit from a range of new connected interactions in the specific context of the shops they visit. Personalized offers and long-lasting relationships built on mutual benefit, will ensure sustainable revenue and profit for the retailer and a richer shopping experience for the consumer. This addresses a main challenge for physical stores — how to compete with the dramatically increasing power of e-commerce based retail.
In 2018, many shops will be digitalized and Connected Consumers enjoy a continuous digital experience with personalized, innovative and value-added services.
The Connected Consumer concept is based on a complex ecosystem of stakeholders (including consumers, shoppers, merchants, service providers, manufacturers, content providers and advertisers). Most of their interactions are already well established, but the new ways of shopping and consuming will create new relationships among them resulting in changes to business models and processes. Multi-sided platform business models, as identified in Economy of Data, will apply to the new services deployed for distinct but interdependent groups of Connected Consumers.
The emergence of new shopping experiences is a reaction to the disruption caused by Internet shopping and results from the innovative thinking from retailers and partners to embrace the promise of multi-sided markets:
- Connected home shopping (machines ordering on behalf of the consumer)
- Social shopping (Consumer sentiment analysis allowing faster response to user demands)
- Digital advertising (emerging space for agencies to push services/products)
- Personal shopping assistant (“digital butlers”)
- Digital store (in-store on-line buying services but with access to the physical product)
- Wearable shopping (new experiences with digital glasses, smart watches etc.)
- Proactive sales and customer care (delivered through smart mobile devices)
- Sharing the shopping experience and getting advice from friends and family
- Streamlined production and shipping (including seamless payment & new delivery possibilities)
Technology at the heart of the Digital Retail Revolution:
- Mobile payments (proximity and remote payment)
- Smart labels (NFC, bar codes, image recognition, QR/QR+ codes)
- iBeacons (for new payment methods and indoor location and promotions)
- Digital Signage
- Smart Furniture (Tactile tables, virtual cabins, digital mirrors)
- Wearable computing
- Big Data and Data Analytics
- 4G networks and beyond
One of the most significant drivers for change will be the emergence of a new currency: Customer Data – a currency distinctly different from pure advertising revenues, which will drive new consumer value (and hopefully loyalty) through tailored offers and services. Such differentiation is key in an increasingly fragile environment, where consumer preferences change on the basis of quality of service, the shopping experience as a whole and even social media sentiment.
However the different attitudes held by particular demographics regarding privacy and data sharing might impact the degree to which these value streams can be exploited. Assurances may have to be given that personal context data will not be accumulated or used without explicit contractual agreement. In return for such agreement, customers will be able to take advantage of loyalty programmes and enhanced services.
Whilst users have increased their usage of technology, many shops have not evolved at the same pace and may face significant investment to deliver a fully connected experience. Retailers need to transform their traditional stores to compete against “classical” internet shops, with initial focus being on high engagement, high value purchases involving both physical and digital goods and services, where consumers shop between multi-channels to select the best product for them.
Reaching Connected Consumers through any channel, demands a connected and adaptable supply chain. Efficiency and effectiveness in “last mile” delivery requires a balance between flexible and lean distribution models, which will come from pervasive visibility of material movement from source to destination and connected replenishment recognizing demand from order to stock.
Retailers and manufacturers will provide an enhanced shopping experience by reinventing digital interaction with customers and the full shopping ecosystem.
Connected Consumers will become the focus of attention for the new digital shopping experience: anywhere, anytime. Strong IT players in this field should be able to provide end-to-end services with proven knowledge and expertise in the main technologies that facilitate this transformation: Smart Mobility, Payments, Loyalty and OmniCommerce. IT service providers must also offer a clear innovation approach that will allow them to continue generating disruptive ideas to generate growth and implement them in a timely and agile way.
The Connected Consumer paradigm will combine the benefits of e-commerce and the physical store into a new offering, reflecting the multiple requirements of the consumers. Much new data will be generated that will fuel the Economy of Data and facilitate Innovation Value Webs across multi-sided market ecosystems to define new services and provide better consumer personalization.
Preparing for the 3rd Digital Revolution:
A French fast food restaurant chain are pursuing a connected consumer centric digital strategy. They have achieved seamless integration of the physical and digital sales channels by allowing customers to order in advance using their smartphones and have the food ready to collect on arrival. This creates a unified, personalized and attractive experience for all their customers. It aims for insight, control and long term business benefits despite the competitive challenges presented by converging commerce.