A decade ago, “going shopping” meant a modest trip to the store or a ﬂip through a catalogue. While online shopping was on the rise, it was neither a de facto nor even a secondary consumer transaction platform. Who could have predicted that, by 2018, more than one in ten retail transactions would take place online, and of these online transactions, more than one in three would be made on a mobile device? Who could foretell that by the same year, 80% of all transactions would be inﬂuenced by a digital interaction or that one in five consumers would have made at least one voice-activated purchase through Amazon Echo or another digital home assistant.
Much has changed in the past decade. But for all the sociological, technological and economic changes that have rocked the retail sector over the past decade, it is fair to say that when it comes to digital disruption we “ain’t seen nothing yet.”
As we look forward to the next decade of retail reinvention and enter what can be aptly described as “Retail’s Next Frontier,” a number of defining characteristics are starting to take shape. First, shoppers will expect a seamless experience across an increasing range of connected devices, with unquestionable immediacy and convenience. Shoppers will seek an environment in which shopping is frictionless, curated, experiential and personal. This will translate into interactive, highly engaging online and real-world retail environments, connected but different based on their medium.
Secondly, the distinction between the physical and online store will eventually blur and disappear. As shoppers seek real-time satisfaction in their shopping needs, the concept of the online store might even disappear altogether, surviving only as a background resource to manage transactions. At the same time, while physical spaces will continue to shrink in size and dramatically decline in numbers, they will become a significantly more digitalized version of what exists today, with multiple smart devices working together on a single IoT platform to deliver hyper-personalized, adaptive and context specific experiences. While much of the technology will be invisible to the consumer, shoppers will have the opportunity to interact digitally within the physical store environment in a way that provides real-time experiences and addresses their underlying needs and preferences, when they matter most.
Thirdly, the widespread adoption of increasingly powerful, large-screen smartphones will continue to improve the m-Commerce experience. As such, more and more retailers will optimize their sites for mobile shopping, delivering rich, personalized content in a way that inspires a deeper connection with their consumers. These developments will turn the smartphone into a platform that can support the entire shopping journey, from product search and discovery to comparisons, recommendations and payments.
By 2025, contextual location will be an integral part of the retail experience, providing a way for retailers to deliver targeted, timely, contextually relevant messages to consumers. Moreover, as home voice devices, such as Alexa and Google Home, continue to proliferate, richer modes of home shopping will be part of the experiential landscape.
The next frontier of retail will be predictive, contextual, sensitive, adaptive and responsive. Shopper demands and desires will be foreseen, processed and fulfilled before they are articulated or even consciously realized. This will be made possible through an increasingly connected and intelligent ecosystem of devices that exchange data at unprecedented rates. Through sensors and unobtrusive technology, entire environments around people will be leveraged to predict and individualize their needs with experiences that are hyper-personalized, accurate, fast and frictionless.
Wearables will become particularly rich sources of granular data insights and new types of behavioral and usage data. Augmented reality (AR) will overtake virtual reality (VR) to play an increasingly important role in the retail experience and help turn physical stores into experience centers. Blockchain will become a critical part of the retail ecosystem to reduce counterfeit product, increase counterparty transaction efﬁciency by eliminating the need for intermediaries and improving the traceability of the food chain.
Also, small-scale shops, pop-ups and other streamlined establishments will increasingly be integrated with mobile and web channels to facilitate on-demand product fulfillment, including pickups, deliveries and returns. Shoppers will be able to procure rapidly produced and customized products, such as on-demand tailored clothing, individualized makeup and formulated scents, and products created in the moment through AR-aided design and 3-D printing.
How To Stay Ahead
These precognitions are meant to serve as nothing more than a mere peek into what may very well define retail’s next frontier. The exact combination of technologies and experiences that will prevail in the end will depend heavily on how individual retailers choose to invest and prioritize. However, against the backdrop of these projections and based on our experience helping retailers formulate and execute their strategies for the digital era, we have identified a number of key actions that retailers must take to convert challenge into opportunity and thrive in the rapidly changing digital economy.
Put the consumer at the center: Retailers must possess a deep understanding of the entire value proposition it exchanges with consumers, and by placing the consumer at the center of this ecology, pull consumers into the brand by continuously offering compelling reasons to engage.
Think omnipresence, not omnichannel: Retailers must evaluate and respond to the more complex, multiple journeys and life events that lead consumers to engage their brand. They must think beyond the channels themselves to understanding the key moments they have as a retailer to capture consumers’ attention and connect with them.
Make AI and advanced analytics core operational competencies: Retailers will need to systematically harvest structured and unstructured data across multiple, eclectic sources and develop and apply advanced, predictive algorithms that turn these AI-driven insights into foresights and recommended actions.
Capitalize on the combined strength of physical and digital assets: Retailers must invest in a digital workplace strategy and determine which consumer processes and value propositions are best suited to humans, best suited to machines and best handled by a combination of the two.
Invest in integrated and adaptive digital platforms: To transform business models and better connect consumers, retailers must invest in platforms that drive customer experiences rather than transaction.
Retail’s ongoing transformation is both prolific and unprecedented, and exposure to the brute force of technology disruption brings both challenges and opportunities. The most successful retailers are embracing new human-centric business strategies rather than traditional transformation. Moreover, they are beginning to understand what happens when mind meets machine and the changing psychological dynamics between people and technology in an age when technology is increasingly defining what it means to be human. For, if nothing else, the value of the digital era is the scalable ability to take a human desire, preferably one that has been around for a long time, and to use digital technology to fulfill this desire with greater ease, greater speed and greater reach.
There will undoubtedly be retail winners and losers in the months and years ahead, but those that thrive will do so by building innovative business models on a foundation of technologies that meet consumer-centric demands for a digitally enabled shopping experience. Retailers will be expected to redefine and reinvent their value chains within new ecosystems, to innovate and experiment with new technologies, and to leverage the value of data harvested from the proliferation of IoT. For retailers who are able to embrace the new retail paradigm, bust through age-old habits and conventions and reimagine the very essence of brand value, the future will present a plethora of new, exciting opportunities.
Scott Clarke is Chief Digital Officer and Global Consulting Leader for Cognizant’s Retail, Consumer Goods, Travel and Hospitality industries. He brings over 25 years of international, cross-industry consulting experience, helping organizations grow and innovate by understanding the ramifications of sociological and technological change, and how this affects relationships with their customers and creates opportunity for competitive advantage.