Retailers’ concerns over the temporary impact of COVID-19 are giving way to a more fundamental realisation that 'business as usual’ may be gone forever. The question is, how to prosper with the new normal?
In the years prior to the pandemic retail activity had already been shifting gradually online. What the lockdowns and stay-at-home measures of 2020 have done is supercharge the move. A recent report predicts the global e-commerce market will be worth US$66,932.1 billion by 2030, and grow by 13.5% annually between 2020 and 2030 – accelerated by the rise of online shopping and digital transactions during the pandemic.
From the retailer perspective, KPMG observes that online shops are gaining more customers and increasing trading volume. Many companies are rethinking their business models as a consequence.
So the new normal is very much online. Let’s look at some ways retailers can thrive.
1. Virtual solutions are more than a stopgap
Many retailers who adopted virtual solutions as a temporary substitute for the in-person product experience are finding that the benefits are a game-changer. The reach of virtual more than compensates for the dilution of physical experience.
But it’s not a straight trade-off: the virtual space also offers utility which real spaces can’t. Digital mirrors in virtual stores allow customers to instantly 'try on’ different AR or VR outfits. Instead of crisscrossing a physical store to find the right shelf, virtual shoppers can simply manifest the right product, along with information, availability and delivery time. And increasingly, like physical retail, virtual spaces are social, with customers interacting with virtual assistants as well as the merchandise.
2. Don’t follow – do your own virtual thing
Virtual technologies, including AR or VR aren’t a one-size-fits-all solution. Figuring out the right approach to the technology starts with understanding target customers’ needs and behaviours.
Pico’s VR offering is called Virtuosity X, an innovative hardware/software suite for custom virtual experiences. It has already been successfully proven by clients in a wide range of settings: complementing Takeda Pharmaceutical’s booth at the five-day China Import and Export Fair 2019 with a virtual booth that welcomed visitors for six months; inducting Microsoft enterprise customers with a VR experience that took visitors inside its new cybersecurity software; and in May this year, activating digital exhibition environment at the 5th Global Virtual • Reality Conference.
Company budget and objectives affect the type and scale of a virtual solution, but as always, it’s the creative application that really makes the difference to the online experience. For Takeda, Pico used VR headsets to allow visitors not only to browse the booth and access product content, but book conversations with company representatives.
For retailers, offering VR inside stores offers a novel and compelling customer experience: the tangible experience of the real product alongside the ability to try out the virtual product 'twins’ – and purchase on the spot.
3. Maximise brand exposure and sales with an online pop-up store
Pop-up stores were already gaining popularity prior to COVID-19 as a way to take brands to new places, attract new customers and boost sales. A virtual equivalent is only natural.
Online pop-up stores are 360-degree immersive, interactive tours of physical stores, built up using three-dimensional cameras. As well as linking to a retailer’s e-commerce site, the pop-up can include a range of appealing features not available in the 'real world’. Visitors to a Calvin Klein five-day virtual pop-up store on Tmall could experience an online exhibition with K-pop star HyunA and rapper Lil Ghost, create personalised images, and interact in various ways with CK ONE. If so inclined, they could even purchase products worn by celebrities in the virtual exhibition.
With innovations like Laan Labs 3D scanner app, which delivers instant 3D models of spaces and objects on an iPad, virtual environments are moving rapidly into the popular domain.
4. Take key opinion leaders (KOL) virtual
Social media conquered all during the COVID-19 pandemic – and social media is where the KOL is a key connector of people and brands. A Chief Marketer study found that before COVID-19, only 9% of marketers placed KOL marketing among the top three ROI strategies. After COVID-19, 22% did.
KOLs can take customer engagement to a whole new level. In China, some retailers are using their own sales associates in the role – connecting with customers on platforms such as WeChat and building followings on personalities, the latest products and trends. As an added enticement, followers get advance notice of upcoming promotions and special events.
Virtual KOLs are another possibility. Unlike their human counterparts, the virtuals can post content that isn’t limited to their immediate physical spaces. Pre-eminent among them is 'Lil Miquela’, a 'change-seeking robot’ who has already shown up in music videos and the Coachella rock festival, and linked up with brands like Calvin Klein, Prada and Samsung. Brud, the transmedia studio that created her and other similar concepts, posted a valuation of US$125 million within three years of its launch, indicating the astonishing earning power of virtual KOL. Our digital evolution has already caught up with William Gibson’s Idoru, published in 1996: 'idoru’ means Japanese idol – an AI construct in Gibson’s novel.
Digital transformation was underway for years before COVID-19. What the epidemic has done is forcefully push it forward, leaving consumers with little choice but to go online for just about everything. The consumer has adopted new habits – and in retail, habits bring business opportunity.