If you’re in the market for a new pair of running trainers, or an upgraded kitchen, taking to online shopping from the comfort of your own home has been the norm for years.
For the consumer, the choice of hundreds of sites to peruse for the best product is as good as it can get. But, for a solo retailer, this has raised the bar – they need to attract and retain consumers by taking the retail experience beyond the point of transaction.
As the average customer enjoys a limitless shopping experience full of variety, retailers are looking at advanced digital technologies to create enhanced customer relationships; improve their lifestyle branding and better merge the physical and virtual world experience.
At Web Summit Lisbon, chief digital officers from furniture store IKEA and sportswear retailer Decathlon spoke about how their brands are looking at technologies such as AR, VR, and Web 3, alongside tackling sustainability and data security to enhance customer experience.
Advertisers have, for decades linked a lifestyle to their products to attract customers. Think Red Bull, a simple energy drink which now has a strong linkage to extreme sports such as cliff diving and mountain biking because of the events it has sponsored and the image it has promoted.
Chief digital officers Jerome Dubreuil, Decathlon, and Parag Parekh, IKEA
For sportswear retailer Decathlon, its aim is to be a completely accessible, all-encompassing sports experience, according to its chief digital officer Jerome Dubreuil.
Currently, the brand offers apparel and equipment in more than 70 countries for more than 90 sports activities varying from football, kayaking and horse riding. So, the idea for Decathlon is that it wants to use digital technology to become even more accessible, dependable and useful for its customers.
“We are deeply convinced that we need to have a continuous conversation with users to be really useful,” Dubreuil added.
This means building a digital platform and using connected technologies such as internet of things (IoT) devices and AR/VR headsets to make sports of any kind more accessible.
Recently, Decathlon partnered with table tennis equipment firm Pongori and is now selling an adapter, in a similar shape to a table tennis racquet, which can be attached to a VR handheld device that connects to the Oculus headset.
“We worked with them to tune the experience so that it is as close as possible to the real experience,” revealed Dubreuil.
“Now, you can start playing table tennis that’s really realistic without the need for a table.”
In the future, Decathlon imagines “experiences, where, if you’re on a treadmill you won’t be running alone”.
“You can put on a virtual headset and you can go to the metaverse and run through a landscape with other runners,” he added.
Parag Parekh, IKEA’s CDO, said that the Swedish furniture retailer is currently going through one of its “biggest transformations, both in the business and in digital in our eighty-year history”.
To put into context how rapidly IKEA has been taking its store online, in 2016, IKEA’s online market took up about 2% of its business, and now, in 2022, 25% of its business is online.
Like Decathlon, IKEA is making itself more accessible to customers both physically and virtually, with a proliferation of stores opening in urban areas, rather than out of town.
“For those of you who are used to going to the big blue boxes located in the outskirts of a city, it’s no longer the outskirts,” proclaimed Parekh. “If you are in Paris downtown, you will be able to buy decorations. If you want to look at kitchen studios, there are now kitchen studios in the centre of Tokyo or Copenhagen.
As well as improving the physical experience Parek said that IKEA also wants to make shopping for furniture a better experience digitally. “It’s not only about making transactions possible online and the [online] app, but it’s also about how to engage and inspire the customers.”
In June, IKEA launched a 3D technology in the US, named IKEA Kreativ, that enables users to take a 3D scan of their room and use the scan to place IKEA furniture in their room, and even erase existing furniture, so that they can previsualise what a newly furnished room might look like.
Parekh added, “this is just the start of how you get from a very traditional experience to an immersive and engaging experience.”
In terms of sustainability, IKEA has a goal of becoming climate positive by 2030, and it’s using climate technology to tackle this.
In a recent survey IKEA conducted, “80% of people agree climate change is one of the most difficult topics we need to address”, says Parekh. However, “60% of people say that we don’t know how best to participate in this”.
It also recognises that, for a household to become more sustainable, a customer usually must pay a premium for climate technologies.
To tackle this IKEA is starting to bring out low-price technology products “which make sustainability affordable”.
Last year, IKEA launched a subscription service in Sweden called Stromma that allows customers to buy renewable electricity from solar and wind parks to power their homes.
The customers using the service will be able to track their energy usage in an app, and those with Ikea solar panels, which are available to buy in 11 markets, will be able to sell excess energy back to IKEA.
It is also tackling “last-mile deliveries” by using electric vehicles to deliver products to homes, with the goal of having 100% of IKEA deliveries to be emission-free by 2025.
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IKEA 100% electric home delivery
Both brands are also introducing a circular economy in their physical stores which sell or rent second-hand versions of their existing products for a cheaper price.
AI and data
Currently, Decathlon is harnessing AI to help with its supply chain, forecasting pricing, and making sure that the products it uses also help achieve its sustainability goals.
In terms of pricing, AI is beneficial ,“especially in the current economic conditions,” says Dubreuil. “How you pick the right pricing is super important because of inflation.”
One challenge Decathlon is facing is upskilling people to keep up with the rapid implementation and demand for AI. “Upskilling, embarking and learning the new tools are important for enhancing better experiences,” Dubreuil adds.
As for data, IKEA has made a promise to its customers to be more transparent about how the data is used: the store recently adapted its data promise to not only talk about data but also about the algorithms it uses and how they’re implemented.
The retailer works closely with different commissions around the world to follow the regulations, whether that’s the UK’s OECD, the European Commission and the World Economic Forum.
“We go a step forward to make sure data is used only with customer consent and we are very strict about how we use the data,” Parekh enforces. “When we are able to create value for them, that’s when they’ll start engaging with us and start trusting us.”