As we head into the year 2020, there is much excitement about how the next decade will unfold as we usher in a digital-first era of hyperconnectivity.
The future of retail is a particularly intriguing one as consumer expectations are surging and the world becomes their oyster in their search for relevance, authenticity, connection, meaning, experiential value and convenience in their purchase journey.
Fast Company declared at the beginning of 2019 that the “retail apocalypse” has officially ended and that brick and mortar is set to make a comeback. At this year’s World Retail Congress, experts point to China’s “New Retail” concept coined by Alibaba’s Jack Ma, which involves essentially the integration of online and offline retail, catching on the West with the likes of Walmart using data to personalise and enhance the shopping experience for their customers.
One may argue that the future of retail is not confined to just integrating the online versus offline buying experience. The advancement of mobile technology will also play a critical role to connect both the online and offline worlds for consumers, bringing together an omnichannel experience.
We examine 5 notable trends steering the future of retail and point to what retailers need to look out for in the near future.
1. The mobile (M-Commerce) will continue to rule retail
The Mobile Commerce (M-Commerce) market is set to reach a CAGR of 27% by 2024.
The adoption of smartphones, faster mobile connectivity soon to be powered by 5G, as well as the rise of retail facilitated by social networks (eg. shopping on Facebook and Instagram) have all given M-commerce a huge boost, allowing it to become the predominant channel along a consumer’s purchase journey.
Many payment modes for both online and offline retail are also mobile-compatible, making M-Commerce the path to least resistance for shoppers across different channels.
2. IoT-enabled “Smart Retail” powered by 5G
Shopping in the smart store will essentially take place in consumers’ natural habitat built to revolve around their needs, where 5G-powered censors could instantly transmit data of a consumer’s interaction with products on display to AI-powered virtual shopping assistants on a mobile app. There could also be “virtual shelves” within the store to enable shoppers to place orders even for those products that are not available in-store, to be delivered later.
The data collected around consumers’ attention and spent on products or even facial expressions can be used to optimise product display based on consumer preferences. A “smart inventory” platform can also help stores to manage their stocks more efficiently, calibrated to suit consumers’ preferences.
Gone are the days where retailers predetermine the overall brick and mortar experience. With these powerful data and insights readily shared with retailers, it is true that customers now “hold the rights” to personalized shopping experiences that can elevate their overall purchasing journey instore.
3. Deep Retail: moving from transactional to relational
Consumers will expect their favorite stores or brands to know them better than they know themselves. The gravitational pull of data binding consumers and retailers ought to provide valuable insights into what the consumers might need or want next and steer retailers into tailoring their offerings to consumers’ tastes and preferences through machine learning and artificial intelligence (AI).
Personalisation will be key here. AI-powered shopper assistance solutions that automates brand-to-shopper interactions on mobile should also provide more engaging personalised and insightful recommendations to the consumers. For example, at the new Funan Mall in Singapore, shoppers will be able to access smart directories on a mobile app providing navigation assistance and product recommendations based on the shoppers’ demographic profile.
4. A-Commerce: the growth of the subscription economy
From product discovery to delivery and post-sales customer service, retailers need to automate the customer journey in a digital-first world.
As the subscription of e-commerce market continues to take off, consumers are starting to outsource their daily decision-making to their trusted brands and expect them to anticipate and deliver on their needs, from daily groceries to household products to music and entertainment. In fact, according to a report by McKinsey & Company, the market for subscription e-commerce market has surged by more than 100 percent a year from 2013 to 2017.
With a whole host of technologies taking flight with 5G connectivity such as facial and voice recognition, consumers will expect more smart features from retailers going forward. For example, at the end of 2017, a Havas survey found that 80% of Chinese consumers are looking forward to automatic refrigerator refills. We can look towards retailers implementing an end-to-end service for customers going forward, fully automating the purchase journey and even making shopping invisible.
5. Making payments invisible
To make the consumer’s retail experience less transactional in nature and focused on experiential value, making payments invisible will play a huge role in making the purchase journey seamless. For example, ride-hailing apps have done a great job in eliminating the in-person transaction between rider and driver by integrating cashless solutions at the outset, and Amazon Go has pioneered the concept of no check-out for shoppers. More retailers will need to look into similar solutions to truly make the consumer journey a frictionless one to thrive in a digitally-charged world.