Technology has long disrupted multiple industries around the globe, arguably none more so than the retail industry. From personalisation through to automation and e-commerce, the gains made have been significant. The digital experience has allowed shoppers to make better-informed choices. From online reviews to social networks, consumers have an avenue to determine the best products to meet their needs, while also having a direct line to brands via platforms such as Facebook and Instagram, enabling them to communicate in real-time, and thereby improving their overall shopping as well as after-care experience. Brands, on the other hand, with better insights into consumer behaviour thanks to big data, can optimise their product lines, delivery routes and much more. In light of such innovations, retailers are cashing in. Today the average ecommerce customer in the US spends approximately $1,800 over the course of the year, and by 2021 global retail ecommerce sales are expected to reach $4.5 trillion. So what else can we expect in the years ahead as further technological innovations continue to revolutionise the shopping experience?
With many products now available in online stores, Amazon being the prime example, consumers in many instances don’t even need to visit a physical store anymore. In 2017, Amazon accounted for 44 per cent of all US-based e-commerce sales, equating to 4 per cent of the country’s total retail sales. Meanwhile a swathe of close to 7,000 brick and mortar stores were shut down across the country, as other retailers struggled to compete. Department stores have been especially affected, as well as specialised retailers such as Gap and The Footlocker. Gone are the days when a retailer could simply stack their shelves and expect consumers to come flocking through the door.
A brand’s digital footprint as such is becoming ever more critical to its success and with it, an omnichannel approach. A multi-channel approach that provides customers with an integrated shopping experience, the key to omnichannel is delivering a brand’s products and messaging seamlessly across its digital assets – be it social media platforms, e-commerce sites and blogs. From marketing your products to sales services and customer support, goals and objectives should be aligned across each one of those channels. In doing so, customers will have ease of access to your products and services, streamlining their experience. Whether they spot a product they desire in your store first, scanning a barcode for further info, or spot it online, either way, they will have access to the information they need to decide on their purchase, as well as the ability to order the product in whatever manner they wish. One of the best examples of the omnichannel experience today is Disney. Thanks to their app, for example, an individual can buy tickets online, download their fast-track ticket for entry, locate Disney characters on a live interactive map, and have pictures taken at the park show up on your phone. With the omnichannel experience encouraging your customers to spend up to 4% more time in-store and 10% more time online, omnichannel is a must need in today’s highly competitive retail environment.
Against the backdrop of an ever more competitive environment for retailers, it is worth saying a few words on those in the e-commerce industry targeting niche sectors. Selling unusual or exclusive products such as luxury items or plus-sized clothing, for example, is a strategy paying off for many. With less competition, a greater ability to cut through the noise when it comes to digital marketing and search engines, more return on advertising spend thanks to specialised advertising platforms and greater loyalty among customers are some of the key attractions. Among those niche sectors expected to benefit over the coming years include apparel, cosmetics, flowers and gifts, craft supplies and video games.
Another trend to watch is Artificial Intelligence or AI, with market intelligence firm Tractica predicting that global revenue from AI will grow from $643.7 million in 2016 to $36.8 billion by the year 2025. Reducing the cost of labour and improving efficiency, retailers are expected to make multiple gains from making the switch to AI. One of the outcomes of greater use of AI includes better use of big data to deliver personalised web-shops based on information such as gender, age, previous purchases and search habits. Chatbots in the meanwhile are another great example of AI already in use. While they currently are quite rudimentary, with future advancements in machine learning, AI is expected to enable these bots to answer ever more complex questions. Voice assistants are similarly taking off, with US-based 1-800 Flowers, for example, using Amazon’s Alexa and Google Assistant to create a more convenient shopping experience for its customers.
Finally, a word need be said on augmented reality (AR). The tool is being used increasingly among retailers, particularly those in fashion, beauty and interiors to deliver an immersive experience to consumers, allowing customers to try before they buy, be it a new outfit or a sofa for the living room. Originally catching our attention with the Pokemon Go craze, early adopters of AR include the likes of Apple, Google, Microsoft, Alibaba, eBay and Amazon. Ikea is another brand which has already implemented the technology with great success. As e-commerce continues to grow, AR will become increasingly critical throughout app usage of major brands, further enhancing the online shopping experience. One report from Digi-Capital has suggested revenue from AR has the potential to reach $90 billion by 2022, with major gains to be made in 2019.
Numerous other trends in the retail environment are also worth watching – from Virtual Reality to drone deliveries. Without a doubt, there will be plenty more breakthroughs in the retail industry thanks to technology. Retailers will need to do their homework and plan for the future if not to be left behind.
July 22, 2018
Dr. Marc Nassim
Partner & Managing Director