Hartford Business Journal

26 Hartford Business Journal • November 12, 2018 • www.HartfordBusiness.com to learn more visit www.business.uconn.edu SPONSORED CONTENT By Deb Mitra and Joseph Pancras Debanjan Mitra (left) is a professor of marketing and the Voya Financial Chair at the UConn School of Business. His research encompasses innovation and new product management. Joseph Pancras (right) is an associate professor of marketing at the UConn School of Business. His research interests included targeted marketing and competition in digital contexts. Winds of Change: Customer Demands, Improving Technology are Creating a New World for Retailers In Philip Dick's "A Minority Report," Tom Cruise walks through a mall where his character's name is called out by a screen and he is addressed for an ultra-targeted Guinness ad. Yesterday's science fiction is tomor- row's retailing reality. With today's technologies this 'futuristic' scene can actually be a reality if it makes busi- ness sense for retailers. Yet today's customer are not passively reacting to the changes around, in many cases they are driving the change. The real- ity is that both sides are evolving. We discuss some of these critical changes that are happening on both sides -- the demand–side winds on the cus- tomer front, as well as the supply-side winds on the firm front, which are revolutionizing today's retail markets. DEMAND-SIDE WINDS: 1. Omnichanneling customer One of the major themes of today's retail landscape is the convergence of online and offline consumer pur- chase behavior. Typically consumers conduct search on information about the product or service to evaluate the compatibility of the product with their preferences, and to minimize risk of a poor fit. The online-offline divide is seeming to increasing an artificial di- vide as technologies enable consum- ers to seamlessly conduct searches in one medium and to consummate the transaction in another. 2. Social-networked customer A second major theme is the explo- sion of social media. Arguably, social networks have existed as long as human society, but the ubiquity of mo- bile technologies and attendant app platforms has served a dual function of surfacing and measuring many of these pre-existing social interactions that were previously unobservable, as well as to catalyze and facilitate new social links and networks. Consumers still trust word-of-mouth the most in making product choices, especially word-of-mouth from people they know personally or by reputation, and whom they trust. Many online commercial and social platforms are validating re- views with recommendation systems such as Amazon's 'Verified Purchase', as well as gamified tokens of breadth and depth of expertise such as the Badges and Mayors provided by the online platform Foursquare to retail outlet and restaurant visitors. 3. Locally Supportive and Sustainability- Sensitive Customer Farmer's Cow is an example of a local co-operative that has garnered support due to the trend towards authentic- ity. Consumers are moving towards au- thenticity, recognizing that they are part of a local and a global ecosystem, and that they would like to give back to the lo- cal community and contribute towards sustainable and green practices. They are also looking for products in line with a healthy, organic lifestyle. 4. Human connection-seeking customer Years ago, the European car compa- nies came up with their factory deliv- ery program – customers ordered in the United States and then trav- eled to Europe to visit the factory, take delivery, drive around the continent, and deliver back at the port for shipping to the U.S. The focus was, of course, on the vacation, but watching their car go through the final steps in the as- sembly line, and meeting the people involved, was perhaps no less import- ant. Today, consumers are increasing- ly sensitive toward the people behind the product and service. This creates empathy, and makes customers less price-sensitive too. 5. Value-Seeking Customers The Great Recession of 2008 has had a lasting impact on consumer need for value in retailing. This has meant the rise of dollar-store chains, the move to online purchases, the rise of foodservice in unconventional retail settings, such as Cumberland Farms gas stations, giant warehouse clubs, like Costco, as well as a seemingly lasting decline in consumers' willing- ness to pay for luxury goods. "Technologies such as machine learning and artificial intelligence are being used to bridge the gap between the impersonal nature of earlier generations of computer- aided recommendation systems…"

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