Strategic Thinking

THE RISE OF E-COMMERCE SHAPED THE PATH-TO-PURCHASE OF THE MODERN GENERATION PUSHING RETAIL COMPANIES TO INNOVATE AND IMPROVE THEIR STRATEGIES.

Paola Andrea Elli BA - L6 fashion marketing and communication MIED 607 CWK1 Strategic Thinking professor: Enric Bayรณ

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he London School of Economics and Political Science (LSE) developed a survey which analyses 100 of the largest multinational companies to understand how they are implementing Internet in their strategies. The forecast predicts that in 2012 e-commerce will reach $500 billion. (Emeraldinsight.com, 2016) Surprisingly, today the total retail sales globally account for $22.049 trillion. It has increased by the 6% from previous years. (Emarketer.com, 2016) Nowadays the largest retail e-commerce market is China with sales that reach $899,09 billion this year.

In North-America is expected to rise by 15,6% growing to the amount of $423,34 billion. (Emarketer.com, 2016) According to Cecilia Daniela (the Guardian, 2016) e-commerce is shaping innovation within the fashion industry. In fact, the article affirms that consumers before completing a purchase seek users-generated online content. The main sources are social networks and applications such as Instagram or Depop.

Consumers are expecting the easiest possible path-to-purchase, from application to having the items right at their houses’ doors. Therefore, it is relevant for companies to focus on bettering their online platforms, to increasing their functionality and usability. In addition, the use of these digital tools are addictive for costumers.

The current consumers’ generations, which are active purchasers, are all influenced by the Internet revolution.

The Generation X (1946-1964) has aged seeing the raise and the development of the digitalisation, now the youngest segment of this age group is embracing the web and the possibility that online world provides.

Olu Eletu, unsplash.com

The Generation Y (1981 - 2000), which is worldwide known as Millennials, is composed by consumers who grew up in the digital environment. They are extremely used to the free access to information and the main use of the Internet is related to socialisation.

Joel Buckelman, unsplash.com

Nowadays, Millennials are the ones driving the changes in the traditional consumers’ behaviours (Marketing Teacher, 2016).

In fact, they are more informed, they have more expectations and more power. According to Accenture, (The Future of Consumer Goods: moving form analog to digital, 2014) 81% of their purchases are made from home. In addition, in 6 months from the iPhone’s launch 6 billion apps have been downloaded and eBay generated over $2000 million in sales from the iPhone app in the whole 2014.

The main target addressing online shopping is the Millennials which are quickly switching their behaviours as consumers. In order to understand the way of thinking of the Y generation, some insights are needed.

This audience has flexible identities. In fact, through technology they have more adaptability, they can create different lives and personalities thanks to various applications. In addition, the modern society allows people to be whatever they want and this means that identities can be transformed on daily basis as fashion.

Today the gender issue is the most hot trend in fashion which is raising designs that are more and more linked to the genderless aesthetic. Even in more conservative countries movements about sexual gender malleability are growing little by little.

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Flexible identity is also about versatile jobs. People nowadays, have two or more jobs and therefore, they live two different realities. For example an architect can be also a surf teacher. This kind of realities are common in the today connected and fast world. For the new workforce the only necessity is the wifi connection, the new job schedule from 9am to 5pm is creating a new class of workers which in 2020 is accounted to rise to the 40% of the US workforce, characterised by a strong independence. (Bell, 2016)

Shoppers today reflect the influences of the generation into which they were born and grew up.

Nevertheless, their choice are made according to other influencing factors: the lifestage they have conquered; their lifestyle which, in turn, derives from the income; their personality and attitudes which can be relate to a reference group even though the modern individual is less pressured by stereotypes and feels free to express its own self. The new millennium is more individual than ever, people need to have control over their life as a consequence of the economic, political and environmental global instability. (Hines and Bruce, 2001) Nevertheless, the main concern of the modern individual is time. In fact, they try to boost their personal productivity shrinking as much activities as possible in one day. In relation to this, Peter Simpson, the Commercial Director of the First Direct, affirms that the modern lifestyle is composed by multiple needs and desires simultaneously.

Therefore, the different aspects of life are no more confined in tidy compartments but, on the contrary they all overlap and mix and it causes the fact that markets are no longer defined by product categories but by multi-faced experiences, needs and problems’ solutions. (Hines and Bruce, 2001) It is possible to affirm that in the contemporary culture the rise of internet and digitalisation has solved the problem of the lack of time destined to purchase traditional goods as groceries, clothing, shoes, furnitures and electric goods. This is the reason behind the powerful success of the e-commerce.

Andrew Guan, unsplash.com

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In order to face the competitiveness of online Moira Clark professor at the Henley Business e-tailers such as Amazon and Alibaba, School, business organisations need to the key the companies acting in the retail engage and talk with their shoppers in order element of the environment have to take into to evaluate the factors influencing the modern consumption is consideration some structural identified by the buzz-word relationship. It is believed that the starting changes. Starting from the key point for an exceptional purchase experience customer experience element of the modern consumption is the consumer’s knowledge. In fact, which is identified by the buzz-word today they are the one in control and leading customer experience. According to the changing in the consumption industry.

The focus must be centred on measuring the Customer Effort (CE) a concept which date back to 1940 and it is based on the idea for which the easier you make it for shoppers to buy, the more loyal they will be and they will be more likely to repurchase and spend more. It is important to underline that the CE is based on each individual shopper’s perception in evaluate the quality of the buying experience. It is not based on an objective opinion but it concerns the time and the energy the consumers spend on their purchase. It represents the non-monetary cost of the consumption.

It includes several factors which are grouped in three: COGNITIVE ENERGY

EMOTIONAL EFFORT

TIME ENERGY

which is the amount of mental energy spent in the process of collecting the information about the products. It includes labels’ reading and many other activities which now are tight with the Internet and the web research. Even though people do not take this aspect really into consideration, the renowned psychologist Daniel Kahneman affirms that “Thinking is to human as swimming is to cats; we can do it if we have to, but we’ll do anything to avoid it”. Meaning that individuals are lazy and they will usually go for the easiest process possible.

that is the result from the issues the consumers may have in the store or in the online platforms.

Such as the problem with the staff or the website accessibility. This aspect and the process linked to it can cause stress, boredom, anxiety and frustration in fact, it is the psychological cost linked to the purchase.

which is how much time is required to do the purchase.

It is related to the lines at the cashier or the fitting rooms, the crowd inside the store or the time spent in looking for the needed item.

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In order to collect these insights about the correct management of the store and the appropriate clients’ service, companies can rely on intelligent tools which analyse the behaviour of the consumers inside the store while purchasing.

Tcgroupsolutions.com, 2016

OUTSIDE TRAFFIC READERS identify - how many potential clients pass in front of the point of sale - the cost for potential clients which can be achieved in relationship with the rent of the commercial space - the attraction rate of the windows merchandising display that allows to have the Visitor Conversion Rate - the Costumer Conversion Rate which is the amount of visitors that converts into real customers buying something.

INSIDE THE STORE it is possible to analyse - the dwell time meaning the time consumers spend inside the store - the capability of the store meaning the number of people inside the store at any given moment.

Tcgroupsolutions.com, 2016

In addition, taking into consideration the results of the report developed by InReality for which 75% of the shoppers use their mobile phones in-store while purchasing (Siwicki, 2017), retailers should take into consideration the possibility of benefit from the phenomenal use of portable devices inside brick-and-mortar point of sales in order to identify the amount of repeated visitors.

In fact, thanks to a wifi antenna which tracks the connections of technological tools, the store has the possibility to know the frequency of the visits of regular consumers and the so called Customer Loyalty Ratio which is based on repeated visitors and the percentage of new consumers respect to the amount of potential customers who have previously entered the store. (Tcgroupsolutions.com, 2017) Tcgroupsolutions.com, 2016

The increasing use of portable devices in the daily activities has brought consequences in the buying behaviour. One of them is the fact that many users consult social network, friends or family’s members in order to have real time feedbacks about the purchase. According to the same survey by InReality quoted above, the 25% of store shoppers who use their mobile devices while buying, make a purchase right from the technological tool while they are in the store (Siwicki, 2017).

Fast fashion retailers such as Zara and H&M are encouraging their consumers in employing their official application inside the stores to let themselves govern their purchase.

In fact, companies create online customer experiences in order to make consumers feel as they are in control and addresses their emotional need of “self-realisation” of their inner personality.

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E-commerce allows to clearly identify the preferences of the consumers. As instance, many online shopping platforms are provided with a rating system and a wish list that consumers use in order to give feedbacks or to have their favourite items saved online. Amazon, one of the leading e-tailer, has develop a physical point of sale related to books in which the shelves are filled with publications rated by online users.

This project aims to boost the profitability of the offline store taking advantages from the knowledge about users’ preference and consumers’ demand acquired online. (the Guardian, 2017) This organisation is an example of the exploitation of the omincanality which bounds all the touch points online and offline together for a harmonious and helpful flow of information.

Taking into consideration the omni-channel aspect, the future of fashion retail companies lays in being able to develop a coherent and comprehensive research and deep knowledge about their consumers taking advantage from the physical point where it is possible to bind front-end and back-end technologies.

The first are able to charm and engage consumers while the second are the ones that indireclty support the front-end technologies.

In fact, back-end tools are mostly softwares and applications able to managae the resources needed by the front-end devices to work. Therefore, the back-end techonologies are also able to collect the data coming from the interactions between the front-end and the shoppers. Consequently, they are essential in the process of understeding the steps that consumers take to arrive to a decision. Some example of frontend devices are: the digital signage, the smart mirror and the interactive kiosk which are already employed in some point of sales. On the other hand, the back-end systems are: the business intelligence analytics, CRM, stock’s solutions, electronic invoice, etc. (www.venistar.com, 2016).

Media.licdn.com, 2016

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In conclusion, fashion today is a fast business which is no more focused on products and functionality but it is completely oriented on satisfying dreams and desires. Fashion is part of the culture, therefore retail has to signify more than just a channel for buying goods, it must be an experience. But, in order to understand which kind of involvement consumers want, fashion retailers needs to deeply know their audience. This is possible towards the collection of tracks and signals left by people while shopping online as well as offline and they are key to disclose the right information about clients’ purchasing habits and attract consumers of the digital revolution into the brick-and-mortar point on sales which still have a lot to give before shut down the business.

Page 10 REFERENCES Print - Bell, A. (2016). Consumidores Futuros 2018. 1st ed. WGSN. Print - Hines, T. and Bruce, M. (2001). Fashion marketing. 1st ed. Oxford: Butterworth-Heinemann.

Print - The Future of Consumer Goods: moving form analog to digital. (2014). 1st ed. Accenture.

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- Siwicki, B. (2016). 75% of store shoppers use their mobile devices in-store. [online] Internetretailer.com. Available at: https://www.internetretailer.com/2015/04/09/75-store-shoppers-use-their-mobile-devices-store [Accessed 4 Nov. 2016].

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