The past few years have been exciting for Retail. It has been a time of changing customer needs and preferences, economic gloom, broadband revolution and plentiful choice. In a nutshell we can broadly spot 4 main agents of change in the way Retailers conduct their business:
The Return of the Brick-and-Mortar Retailer
It has been the comeback of sorts for Brick-and-Mortar Retailers fighting their way to retain customers against the pure play online Retailers – and they have been winning.
Leaving out the Giants of the online world – Amazon and eBay – it has been tough going for pure play online Retailers to match the combination of convenience, touch-and-feel and experience that traditional retailers with a serious online presence can offer. Take a look at the success of JohnLewis.com in the UK Close to about 20% of their revenues come from the online channel. BestBuy in the US is another good example. They are riddled with the success of various multi-channel initiatives such as:
- Reserve Online and Pick-Up in-store
- Sharing wish-lists and shopping lists across channels
- Store Refunds for purchased made Online
Smartphones in every hand
Smartphones are now mass market and the mobile channel as a serious customer sales and outreach platform is now mainstream. Customers can locate stores, receive personalised promotions, navigate within the store and in some instances complete a transaction using their Smartphones. The most revolutionary aspect of Smartphones is perhaps the delivery of Location Based Services enabling consumers to receive promotions, offers and content based on their location.
Social Retailing
Nearly every Retailer serious about growing their business have invested time and effort in creating and executing a Social Strategy to engage their customers and leverage the collective good will of the social circles to either enhance their brand or create a new ‘Social’ sales channel. Facebook and Twitter has been in the centre of this change by creating a market of their own – big enough for all Retailers to sit back and take notice.
Emergence of NFC
The latest and soon to reach critical mass is Near Field Communication (NFC) technology. Many retailers such as Subway, Pret A Manger and McDonald’s have started trialling and accepting payments using devices that use NFC. This combined with Location Based Services offers a potent weapon for Retailers to attract your attention and for consumers to get the best promotion in the quickest possible time.
The big question now is what is NEXT? The unfortunate outcome of the recent changes is that it would take considerably little effort for all to emulate and replicate each other’s innovations and business models in a short span of time. Retailers need to be thinking now on how they would be differentiating themselves from competition in the coming years.
I have picked 5 trends that could lead this differentiation for Retailers:
Event based Promotion
The problem with Location Based promotions delivered today is that they are not cognizant of the personal preferences or state of the consumer. It favours the Retailer or the service provider i.e. because you are passing by a coffee shop the coffee shop offers you a promotion to come inside and buy a cup of coffee. This does not take into account whether you as a consumer prefer to drink coffee!
The next evolution will be offering consumers promotions based on a combination of their location, preferences, state or stage in life, social network, demographics and the need for a particular service or goods. In other words, Event based Promotion and not promotions that depend on the consumer’s impulse alone.
Foursquare is a good example of a service modelled around the beginning of what would eventually become Event based Promotion adopted by savvy Retailers.
In-Store Transformation
Imagine walking into Debenhams and finding that the one Toaster model that you want is out of stock on the shelf. However, the shelf has an electronic display that suggests that there is additional stock in the store’s Back Room. You click on the display and the shelf is replenished automatically. The store capitalises on what would have been a lost sale and you walk out of the store happy with the product of your choice.
The store experience is the next frontier of change in how products are merchandised, replenished and operations made efficient. The learning that Retailers have developed from completely automating the Warehouse would come is full display in the store. This is quite exciting as the in-store experience, other than the cosmetic change seen so far, will undergo a complete overhaul. So don’t be surprised to see Robots whizzing around in the store trying to replenish the stock on the shelf or your evening gown given the finishing touches in-store through a menu of options you are presented on a kiosk.
Virtual Store meets Physical Experience
This one’s quite exciting and breaks all conventional thinking. Pop-Up stores will have a different meaning all together when virtual technologies meet common public spaces. The use of technology will enable Retailer to create innovative new sales channels as Tesco has just proved by opening a Virtual Store at a Railway Station in South Korea. Such stores require little capital investment, do not have to carry stock and eliminate any wastage. Retailers will increasingly bring their store closer to the customer.
From a consumer’s perspective the advancement in display technologies such as 3D, holographic and projection technologies will mean that everyday devices such as the Television, Smartphones and Refrigerators will be able to virtually provide an experience that mirrors closes viewing and experiencing the product physically. This will enable the Retailers to achieve far greater conversion rates on these devices that what is achieved today.
Rise of the Single Person Retailer
The advancement of technology and services offered in the Cloud would mean that a single person will have the entire armoury to connect and manage the entire supply chain from sourcing products, merchandising and selling the products and delivering the products through drop-ship vendors.
This shall greatly empower the single person artisan, producer and entrepreneur to effectively compete against Retailers who sell mass produced produce by selling unique, individually crafted creations.
The long tail will further get infinitely longer and equally benefit all who want to participate in the trade.
Retailers and Service providers offering ‘Even More Unique’ Services
We have already started to see Retailers changing their business model to offer multitude of additional services to customers such as Banking, Pharmacy, Insurance, Telecommunications and others in an attempt to build loyalty with the customer and up-sell a range of services.
This trend will continue further to Retailers offering ‘Even More Unique’ services such as providing:
- Electricity, Water and Gas tariff plans in-store
- Electronic voting services over self-checkout tills or Kiosks
- Online shopping at the Gym
- Loyalty points conversion to Banking products e.g. Bonds
- Cooking lessons in-store
- Used car Pop-Up showrooms in the parking lots
- Airline ticketing/hotel booking/car rental services over self-checkout tills or Kiosks
Retail has been exciting over the past few years and the pace is only just beginning to pick-up. With the success of the iOS and Android platforms Smartphones have become commodity devices. Add to this the power of internet, robotics and new display technologies are providing a heady mix of opportunities for Retailers to capitalise and differentiate themselves in the future!
Please do write-in with your comments and views on what would you see as the next big trend in Retail.