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The Difference Between Need and Love: The Future of Retail in an AI World

Retail is headed into two seemingly paradoxical and divergent directions: towards a logical, data driven future where every need is met with a specific suggestion, and towards a physical world of beautifully designed stores that showcase products and encourage shoppers to engage with knowledgeable salespeople.  This contrast is embodied in the Amazon Echo device with Alexa as your friendly personal assistant vs. the new design for Apple stores.  “Alexa” mines everything that Amazon knows about you as a shopper and shoppers in general, while the Apple store uses human beings to engage and connect with shoppers in a setting designed to encourage personal interaction.  With its stores, Apple is not just selling products, they are selling a brand promise and the lure of connection with other product devotees.  Apple has taken the notion of experiential marketing to its apex. Their store that just opened in Chicago is a human agora: a Parthenon where shoppers are invited into a building that is a literal embodiment of a Macbook. You go there to not only talk to a genius, but to have a community or business meeting or join a group of iPhone photo aficionados.

A new global study conducted on behalf of Criteo about what shoppers think about retail experiences online and offline perfectly illustrates this paradox and points to the future of retail:  While 72% of shoppers in the UK say that they prefer to do most of their shopping online, a nearly equal number (74%) say that they love to shop in retail stores when they have time. Stores are valued as places to learn about new products and trends and shoppers are eager to try new retailers.

What? If you believe the business press, you would think that retail was dying and within one short decade we’d all be using Alexa to have most of our goods shipped directly to our homes. What this scenario negates is that human beings will always crave physical experience and that we are fundamentally visual.  Alexa is brilliant about delivering on our needs, but she’s pretty terrible at creating desire: at getting us to the “love connection” that people have developed with a brand like Apple. Product love is earned over time through personal experience, the words of our family and work and social connections, as well as media messaging.

To satisfy BOTH the needs and loves of shoppers, retailers need to stop acting as if there is a competition between online and offline commerce, but instead use data to enhance and facilitate omnishopping. It doesn’t really matter where or how the shopper chooses to actually buy the product, what is important is to provide opportunities to experience a product, new ways to potentially try them, and then creating marketing that delivers on an emotional level while driving the sale with the most relevant offer.  A new generation of stores is emerging which have less merchandise: a more “curated” collection of goods, but an altogether better experience.

We all can learn from what is being achieved from online only retailers who are branching out into the physical realm.  They found an audience online and started from scratch with their in store presence. They realise that the internet can give them the personalisation and depth of merchandise that Millennials and Gen Z desire, while using the store to develop relationships with customers and showcase that merchandise.  

In preparing for our Mindshare Huddle presentation we began researching “clicks” retailers who have decided that “bricks” is a great idea. The list grew long. In the UK, it includes: Missguided, Made, Farfetch, YouTube and soon, the Amazon bookstore.