Retail apocalypse, retail Armageddon – we’ve all read about it for some time now. When will this happen in the Nordics? This is one of the questions I get most often these days.

Technology evolves quickly and changes in the retail industry are happening at a rapid pace. Now that the first half-year has passed, we can see that Sweden now has reached the tipping point in retail development, whereby growth in e-commerce is outpacing that of retail sales in brick-and-mortar locations.

E-commerce sales accounted for the entire growth of total retail (excl. groceries) during this period. Thus, there is no sales growth in physical, brick-and-mortar stores. It is also likely that future growth will come from e-commerce. Why? Because we do not see any significant improvements in either household income, interest rates, etc., which could lead to price-insensitive consumers shopping more in physical stores. Also, we continue to spend more time on our mobile phones, and e-commerce is becoming easier and easier. Above all, new technology will make the shopping experience more realistic, accurate and inspiring.

Some industries stand out more than others in this relatively gloomy image of the future of physical stores. Above all, it’s tough in electronics and fashion. E-commerce in electronics has grown by about 15 percent during the first six months this year, while sales in physical stores showed negative growth. The same trend holds for the fashion industry. Fashion is the retail sector most exposed to global competition from China, the United Kingdom and Germany.

What does this all mean? One conclusion, apart from the obvious such as availability, convenience and lower prices online, is that the development pace of new formats and concepts for physical stores is too slow. Creating meeting places, highlighting the in-store shopping experience, and providing personal service is necessary if you want to stay in the market. Personally, I also believe in an ever-increasing interaction between the digital and physical world.

We’ll see if the second half of 2017 shows the same trend as the first half-year, or if the retail sector is able to catch up. If not, then we’re going to see a lot happening to physical stores. Retail apocalypse is a strong word and we are not there yet, but a tipping point has definitely been reached.

Carin Blom, retail analyst, PostNord

Part 1 of 6

Consumers, especially in more mature e-commerce markets, are making ever-clearer demands that they themselves should be able to influence over how their purchased goods are delivered. Satisfying consumers’ wishes is becoming a business-critical issue for e-tailers. “Customer obsession” is an expression you often hear today, and the winners will be those companies that best meet consumers’ demands.

One of the most critical challenges today lies in the fact that the consumer is in control throughout the purchasing journey right up until delivery, but after that, their power often ends there. Many merchants have not given the consumer the opportunity to control the delivery.

When consumers do get to influence what delivery options have been ordered, are given the ability to affect delivery also after check-out, and they have shaped where, when and how delivery will take place, then the logistics are working and can contribute to an even stronger relationship between the customer and seller.

We have put together six recommendations that can help form the view of how consumer-driven logistics should be developed in order to strengthen consumers’ buying experiences. The first follows below.

Recommendation 1 – make delivery options clear and simple

Delivery is playing an increasingly important role in the consumer’s experience of buying online. Making it clear right from the start when, how and where the delivery will take place creates confidence in the customer about every aspect of the purchase. Retail companies who know their customers from before can suggest the most suitable option based on experience. By predicting which delivery option will suit the customer best, the conversion rate for orders will most likely increase. This builds loyalty and indicates knowledge of the customer. But for new or occasional customers the ability to choose the right delivery options may be the difference between an order won or lost. Freedom of choice regarding speed and exact timing may be determining factors. The options should be clearly specified at the store’s check out, as well as which company will be responsible for the delivery.

This is the first of our recommendations. The other articles in this series will be subsequently published on this blog.

Olof Källgren, Market Information Manager, Direct Link

E-commerce is getting more personalized each day. And listening to Miki Berardelli, founder and CEO of Kidbox, makes you quite convinced that this is the way to go.

Kidbox’s concept is to offer parents of children between 2–14 years of age a box containing clothing and shoes that the kids probably would like to wear – before they know so themselves. The customer relation starts with parents and kids sitting down in front of the computer and together answering a “style quiz”. What interests the children have, if they like any specific fashion brands, what activities they enjoy in their spare time, and so on.

This style quiz is designed to take not longer than 3 minutes to complete. When that is done, customers place their order and wait. At that point, intelligent technology in the form of machine-learning algorithms take over. Kidbox then puts together a mix of apparel pieces from different brands for the individual customer based on personal preferences and interests from the quiz.

After about 7 business days, the first box arrives, addressed to the child. The cost of shipping and returns are included in the price of the box.
After unpacking and trying on everything at home, parents and children decide together if they want to keep all the items in the box or if some of them should be returned.

Kidbox was founded as recently as early 2016 but has already attracted a high number of repeat customers. Their success has probably also been helped by the corporate social responsibility shown by the company – for every Kidbox purchase, a new outfit is delivered to a child in need via a charity organization chosen by the customer.

This surely is an interesting concept that combines the best of personalization, artifical intelligence, and CSR, and could be of important inspiration for other e-tailers.

Olof Källgren, Market Information Manager, Direct Link

A few weeks ago in June, Direct Link attended the CO-REACH fair in Nuremberg, Germany. CO-REACH started as a classic (print) dialogue marketing fair but is now trying to shift to become a meeting point for all relevant print, online and cross-media professionals.

Photo: NürnbergMesse

In an e-commerce-driven world where postal organisations are complaining about a constant decrease in classic mailings and letter volumes, there was a somewhat old-school atmosphere in the exhibition halls. However, measuring the importance of mailings only by their amount is short-sighted.

Sure, the time when companies spent millions of their budget on unprecise target groups are over. Marketing specialists are combining all the data they have in order to address the special needs of every customer. The information that retailers are gaining from their own databases and additional big data offered on the market can sometimes be scary, but this provides marketing specialists with unlimited possibilities in approaching and addressing customers in a way they never thought possible ten years ago.

At CO-REACH, we met many of our existing customers but also interested prospects who asked about the possibilities of direct marketing in the Nordics. Talking with these companies, it’s clear to us that classic dialogue marketing is still relevant and can make a difference – both when you’re selling clothing to an urban hipster or a golden ager.

Thus, at the end of the day, lower-volume marketing mailings can result in a much higher ROI when the message is clear and target groups are carefully chosen.

Ulrich Hinz, Sales, Direct Link Germany

The 13th edition of IRCE (Internet Retailer Conference & Exhibition) just recently took place in Chicago. This is claimed to be the largest e-tailer conference in the world with well over 100 speakers, close to 500 companies exhibiting, and more than 10 000 conference delegates.

An event like this obviously covers a range of different themes and perspectives of e-commerce. Looking at the agenda and listening to key note speakers from brands like Sephora, Under Armour and Kidbox, several key trends crystallize for the US. Personalization, personalization, and some more personalization.
Plus, the personalized customer experience is coming to your mobile!

Having access to extensive customer data and combining that with faster-than-ever digitalization makes it possible for brands to interact with customers in remarkable ways. How about letting your jogging shoes tell you if you’re running in the most optimal way, or letting an algorithm decide what kind of clothes your children should wear?

But then again, are we sure that we really want this?

Keep an eye on our blog during the coming weeks as we will be covering how US industry leaders plan to build customer loyalty and increase online sales.

Olof Källgren, Market Information Manager, Direct Link