For the final group project, my group decided to analyze the effects of the digital economy and it’s technology in relation to the retail industry. We learned that digital technology has become a crucial part in the success and sales of many popular companies such as Apple, FootLocker, Forever 21 etc. The digital era has transformed their business strategies in both market and distribution in order to maintain success and increase revenue. In our explainer video we explain how the digital economy has altered the relationship between consumer and retailer as well as the tactics these company use.
Here you can find the visual representation that we created to correspond with out analysis.
After intensive research and collaboration we reached the following conclusion and analysis on the effects of the digital economy in the retail market:
- The retail industry is simply a connection between consumers and sellers in which sellers produce a product that consumers buy through multiple channels. These retailers can include department stores, family owned businesses, specialty stores and more. The retail industry has changed drastically due to the digital economy. Before digitization there were catalogs that customers browsed through and picked out what they wanted. From there, the store ordered the consumer’s goods and had to wait for their supplier to hand-make the good and ship it back to the store. Now, in the 21st century, the middle man is out. Consumers can directly order the desired product online and get it directly shipped to them. There are hardly anymore handmade products; most are made in a factory in bulk, then shipped to the appropriate retailer or consumer (investopedia). In addition, with an increasing percentage of online shoppers, it is imperative that retail companies be present and interactive online. This being said, many companies use social media such as Twitter, Instagram and Facebook to interact with their customers and showcase their product online. Now customers are able to talk to one another and share ideas and knowledge about the company’s product (Teuber). Social media is a great way for retailers to gain more traffic in the store and in sales.
- The digital economy is important to the retail industry because consumption will always be hyper-local; individuals are the ones purchasing these products and they demand attention from these retailers (Kilcourse). This being said, it is important that the retail industry focus on exactly what the consumer wants to not only keep the customer, but gain new customers and a steady cash flow as well. With this era of new technologies and digital revolution, retailers can interact with consumers, interact with them and get to know their likes and dislikes. Not only this, but business partners can collaborate and optimize profit (Hood). Companies associated with the retail industry include Ulta, Sephora, Forever 21, Best Buy, Gamestop, Nike and Auto Zone just to name a few.
3. Digital technology is important to this market because “It makes shopping more accessible to consumers.” says Sales and Stock Associate Alison Kingsley. We live in a modern world and the integration of technology in our everyday lives have helped boost retail sales. Digital Channels account for as much as 45% of sales for retailers (Business Wire). The mindsets of consumers are evolving as their path to in store purchasing is changing, they now require technology in store to help assist with their needs. “An immersive in-store experience is acknowledged by retailers as increasingly important in the face of online and, particularly, mobile retailing,” (Fashion Retail 2014 Report). In store technology helps the consumer flow and helps retailers with connecting their marketing to distribution. Apple is a perfect example of this as their use of in store technology and the digital economy. “Apple stores utilize technology in many ways – to demonstrate products, to explain functions and uses via digital signage, to check out using tablets. Technology is fully integrated into the Apple store experience. Results have validated this approach, as Apple consistently has the highest sales per square foot of any retailer, (Profitable Retail).”
- Because of all of the technology used in retail it has raised questions of how secure shopping is. Kingsley explains, “Majority of people pay with cards rather than cash which can be more convenient but also leaves a room for security issues especially when shopping online.” With a lot of online traffic comes room for shaky security which can lead to identity theft which is why more and more companies are investing it the most secure methods of payments to keep customers happy and the money rolling into their pockets.
4. The biggest impact that the digital economy as well as technology have had on this market is convenience. Improved Customer Service, Simplified Checkout, Real-Life Shopping Experience without the hassle that comes with in store shopping are just a few benefits consumers receive from this new wave.Because of this is sales boost for the retailer as sales are made easier, quicker and more frequently online. “Physical retailers complain of bearing the costs while online shops make the sale. The phenomenon is real: 27% of food, 24% of clothing, 62% of consumer electronics and 41% of home improvement online shoppers, as well as 40% of those who concluded contracts online for telecommunications services, previously visited stores,” (Retail Revolution). Retailers now have to do less work and still receive maximum profit with minimum output.“The proliferation of retail digital channels demonstrates the trend that ‘clicks upstage bricks,’ but even consumers shopping at traditional brick and mortar stores are increasingly using in-store,” browsing capabilities,” (Lynn Holland/Wakelin)
Interview with retail expert:
Alexis Young: How does digital technology affect retail in your experience?
Alison Kingsley: Digital economy plays a role in retail because it makes shopping more accessible to the everyday shopper. Everybody isn’t always able to come into the store to make purchases and shopping online gives you similar results while on the go. Shopping in store can get overwhelming, while online you can click shirts or shoes and use filters to get exactly what you want when you want it then have it sent directly to you. So for shoppers it can be more convenient. Technology in store is similar because it helps me make the experience of shopper that much better.
Alexis Young: How does it assist you in helping consumers in store?
Alison Kingsley: I worked at Hollister and customers would come in and want specific items so technology made it easier to find. If somebody wanted a pair of jeans or a shirt in a different size I could use my walkie talkie to contact stock and handle the situation. If a customer wanted a specific item or had something on hold I could go to the system and find it for them or tell them if it was available which made my job easier and their experience more efficient. At Hard Rock Cafe, which is where I work now, we have a restaurant and merchandise store so communication between employees is key and the technology we have in store makes sure everything is running smoothly. We have devices that help the waiters with managing their orders and tables, the host/hostess manage reservations and open tables and things like that.
Alexis Young: What do you think about the digital economy in relation to your industry?
Alison Kingsley: The Digital Economy plays a huge role because majority of the people pay with cards rather than cash which can be more convenient but also leaves a room for security issues especially when shopping online, so shoppers have to be careful but the company that I work for makes sure that our customers are secure with any transaction. It also makes it easier to transfer money, restock, and do business interaction because the digital economy make the everyday tasks of running a retail business faster and easier.
Investopedia Staff. “The Industry Handbook: The Retail Industry.” Investopedia. 2016.
Ball, Brad. “Profitable Retail: The Importance of In-Store Technology in Effective Store Design.” On The Ball. Profitable Retail. Web. 14 Apr. 2016. <http://www.profitableretail.com/2013/10/profitable-retail-the-importance-of-in-store-technology-in-effective-store-design/>.
Brown, Brent. Graham, Bonnie. Hood, Tim. Kilcourse, Brian. “Transforming Your Business.”
Voice America. 24 March, 2015.
Lunka, Ryan. “Retail Data: 100 Stats About Retail, eCommerce & Digital Marketing.”
nChannel. 9 June, 2015. (visual representation)
“Retail Industry reigns for US Digital Ad Spending.” eMarketer. 2 June 2015.
<http://www.emarketer.com/Article/Retail-Industry-Reigns-US-Digital-Ad-Spending/1012554>. (visual representation)
Teuber, Bruno. “The Rise of Social Media in Retail.” The Guardian. 25 July, 2012.
Wakelin, Aneysha. “The Importance of Creating In-store Digital Retail Experience.” SignStix. Land Security, 20 Aug. 2014. Web. 12 Apr. 2016. <http://www.signstix.com/insights/retail/the-importance-of-creating-in-store-digital-retail-experience/>.
“75% of Retail and Technology Professionals Cite Payments Security as Most Important Feature for Digital Channels.” Press Release Distribution, EDGAR Filing, XBRL, Regulatory Filings. Web. 18 Apr. 2016. <http://www.businesswire.com/news/home/20160127005059/en/75-Retail-Technology-Professionals-Cite-Payments-Security>.
Lilah Brewer, Noni Marshall, Andrea Crossen and Alexis Trimble