As the retail industry becomes increasingly competitive, merchants who want to thrive in the coming years must be more forward-thinking. After all, one of the keys to succeeding in the future is to anticipate it.
Of course, predicting the future is easier said than done. It’s not like there’s a crystal ball that can give you a fool-proof glimpse of what’s in store ahead. We do however, have the next best thing.
To help you gain insights into what’s next in the retail industry, we got in touch with 14 retail experts and influencers and asked them one simple question: What is the future of retail and what can merchants do to prepare?
Check out what they have to say below:
1. Retailers must adopt the “Four Pillars of Amazon Success” to thrive.
The advantage that brick & mortar retail has is real. People love to touch, feel and experience great shopping. The challenge is they need to develop the culture to compete with the likes of Amazon. Just as Wal-Mart didn’t put everyone out of business; neither will Amazon. Yet, it is going to hurt a lot of businesses that don’t adapt soon.
The top friction most customers are feeling today is the effects of time crunch. We are busier than ever and want things faster and easier with less commitment. We want personalized experiences that account for our preferences and constraints. Retailers must track these trends and find ways to create remarkable customer experiences that save our customers their precious time.
What can you do to prepare for the future? The key to success is to adopt what I like to call the 4 Pillars of Amazon’s success:
1. Be Customer Centric – Ask yourself; will you be in the business of helping your customers buy or in the business of trying to sell them hard?
2. Be Creative – In today’s environment, and our need to keep up with our customers, we must find ways to experiment. Figure out what works, what isn’t, and what is going to work next. Start small but keep experimenting.
3. Be Focused on Customer Experience – What are the little details of your store telling your customers what you think of them? What are those remarkable things in your customer experience?
4. Continuously Improve & Optimize – What data are you using to making your decisions? How often are you acting on this data? Is this data aligned with your brand and customer experience?
2. Delivering personalized experiences will be key.
The future of retail will encompass the continuous evolution of consumer connectivity and immersive interaction. Retailers must be prepared to deliver a personalized experience to shoppers, whether their store is small or large.
If your POS system isn’t providing in-depth analytics on your customers, inventory and conversions, it’s time to upgrade ASAP. Merchants should be able to know who they are serving and providing products for, how often they shop and have the ability to offer them perks that are relevant to them. These don’t always need to be discounts, but could be alerts when top products are back in stock, or exclusive first looks on new launches best on best purchasing trends.
Incorporating sensors in stores now is so cost attainable now, there really is little reason a merchant would not have this. With knowledge of traffic patterns and trends via companies like Placemeter, merchants can better serve their customer with pertinent hours of operation and more. Going deeper with beacon technology from companies like Footmarks, they can take the interaction further with better targeting the delivery of deals and personalized incentives.
And to bridge the online-offline experience, and merchants need to be sure they understand their customers in all environments – online, mobile and in-store.
3. The days of one-size-fits-all customer service are over.
I can’t tell you the exact future of retail, but I can point you to the person who has that answer: your customer. The days of one-size-fits all customer service are in our rear view mirror. Today retailers are challenged to innovate in order to provide as individualized a customer experience as possible.
Our organization feels so strongly about this trend that we changed our magazine’s name from Integrated Solutions for Retailers to Innovative Retail Technologies. We have seen leading retailers shift from focusing on back-end efficiency to embracing new technologies and philosophies that help attract and retain loyal customers.
4. Be prepared for Amazon’s no-click future.
When you look at the entirety of Amazon’s recent big bets — Amazon Prime Now, Echo Voice Re-ordering, Amazon’s Choice, Dash Replenishment Service, and Dash Buttons, the long term strategy of this “Amazon as a service” idea becomes clear: The retail giant is envisioning a no-click future.
In Amazon’s vision of a no-click future, once a shopper has made their brand or item choice, it will work behind the scenes to ensure the lifetime consumption of that choice is as frictionless as possible.
This has a couple massive implications on how suppliers will go to market with Amazon:
- Highly promotional categories will be disrupted as it becomes excruciatingly difficult to switch a shopper out of their replenishment-locked item
- Continued separation of Best Seller SKUs away from the general assortment.
- Item level profitability on Best Seller SKUs will become even more important as the focus on replenishing individual products will likely result in smaller basket size and thus a higher cost of fulfillment per item unless significant order consolidation occurs.
What about merchants that are competing against Amazon?
The retailers who can compete are those which can create value by reducing the stress of the shopping mission. Shopping on an Amazon (or any of the eCommerce mass merchants) can often result in choice fatigue due to the huge assortment. There will be resurgence in the category specialist that can convey their expertise through a curated assortment that helps reduce shopper angst.
5. Retailers will eliminate inefficiencies in managing staff.
Ongoing technology advancements, growing competitive pressure, and increasingly savvy consumers continue to impact retailers across all categories. At the same time staffing remains the single largest controllable expense item on the balance sheet. With margins tighter than ever, the ability to finely match customer demand with workforce supply will become more critical than ever.
Like inventory errors, employee mismanagement can be extremely costly. The key to establishing an optimal workforce is eliminating inefficiencies in managing staff. For retail operators now and in the future, accurate labor budgeting and planning is the foundation of real-time retail agility.
It’s all about making sure the right person, with the right skills, is in the right store at the right time while accounting for full and part-time ratios, labor policies and union rules.
This can be the difference between bumper customer spending or lackluster sales.
Only by integrating day-to-day operational management with employee scheduling, and time and attendance processes can retailers hope to increase the accuracy of labor forecasts.
With real-time visibility and analytical insight retailers can plan with more certainty and predictability. The upshot of which is only paying for labor when it’s truly needed, helping ensure optimal customer experiences while improving bottom-line business results.
6. Use technology to strengthen customer relationships while making operations easier
Consumer technology is moving fast, and retailers are faced with the exciting (and a little bit terrifying) challenge of keeping up in today’s mobile and social world. The future of retail is all about using technology to strengthen customer relationships and improve the customer experience, while making the day-to-day operations easier for merchants.
Take an emerging consumer technology like Apple Passbook, soon to be Apple Wallet, for example. Consumers use Passbook to keep their coupons and loyalty cards in one place on their iOS device and will soon be able to pay using the one app as well. This is a technology that’s just now available for merchants to start taking advantage of. As more and more consumers adopt it, it will become vital in the future as they demand to use it in-store. But to ensure it actually improves the customer experience it needs to be fully integrated with point-of-sale and your loyalty software or offers marketing engine, so that it runs slickly, speeding up transactions over the counter.
It’s all about recognising emerging consumer technologies, implementing them early, and in a way that improves the customer experience, while making things easier for staff. And all while creating that ‘wow’ factor that puts your store ahead of the competition making it a fun and interactive shopping experience.
7. Retailers are increasing their efforts to set up fully integrated systems
Retailers now face an adaption process for the changing lifestyles and patterns of consumer behaviour. It is the consumer’s expectations that drive the demand for numerous shopping options, access to a large amount of product data, retail comparisons, competitive offers, constant availability of brand options and so on.
Due to the rising demand, retailers are increasing their efforts to set up a fully integrated system to not only meet their clients needs but also allow for flexibility and supporting new ideas with little disruption to their profit and sales. At the core of this model is supply chain and inventory management. While the typical interaction is with POS and E-Commerce systems, retail businesses need to have the mechanisms to both take and feed data in real time to report on cost of goods, warehouse location and how much stock there is on hand.
The future for retail will involve an integrated eco-system to ensure complete visibility and efficient supply chain management.
— Jessica Pearse, Events and Product Marketing Specialist at Unleashed Software | Follow her on Twitter & LinkedIn
8. Many of the fundamentals will stay the same.
While the retail industry is set to change more in the next few years than it ever has, many of the fundamentals will stay the same. Successful retailers will continue to put their customer’s experience at the centre of their world. Retailers have the opportunity to forge deeper relationships with customers who are carrying, wearing and even driving more and more connected devices. These devices collect and share all sorts of data, which will allow customers to receive the best products and services, in a completely personalised way, at the right time, wherever they happen to be.
Done right, every customer will feel like a VIP on Rodeo Drive, whether they are shopping in store, at home, on the bus, or in their sleep. Retailers can prepare for this by treating this future as an evolution rather than a revolution. Bake change into the culture of your retail business and make small advances in the technology and systems you use on a regular basis.
9. Business collectives are trending.
Business collectives (i.e. when competing or complementary businesses band together) are trending. A recent notable example is New Zealand craft breweries with Wellington brewers Yeastie Boys and Tuatara Breweries, Renaissance Brewing from Blenheim, 8 Wired Brewing Co from Warkworth and Three Boys Brewery from Christchurch recently forming the New Zealand Craft Beer Collective to help market their brands to Asia.
So what can retailers do to ensure they are ready to take advantage of this trend? Firstly it is important for retailers to find themselves a niche and become an expert in that area. Niches, such as Funk Estate and their Seriously Funky Brews allow them to take advantage of a craft brewery collective but still stand out from the crowd.
By establishing a niche, retailers can maintain margins in an online world where consumers have access to products from all over the world. In addition, operating within a niche provides an opportunity for retailers to grow their audience. Where once a retailer was limited by their geographical boundaries and lack in numbers to service a niche, now, by adopting a multi-channel strategy which includes physical retail and ecommerce, they can tap into already-established communities of customers around the globe who are passionate about what they are selling. And by joining collectives, retailers can effectively sell to the converted.
10. Expect an uptick in competition.
An increasingly low barrier to entry for ecommerce, in conjunction with a growing variety of online selling tools, will encourage more and more businesses to enter the industry and create competition for current sellers. This uptick in competition will likely drive down prices and cut profits, forcing current retailers to get creative and find cheaper ways to source products, up their omni-channel marketing strategy and begin selling to alternative markets and niches to make up the loss.
Many of the businesses now selling online may also grow operations to include brick and mortar or pop-up stores in effort to mature the business model and establish their brand. Others may also begin to test new marketplaces and find which channel is most profitable for their products. Though most businesses today sell on Amazon, eBay, a shopping cart and through a POS system, the introduction of bourgeoning ecommerce marketplaces will likely encourage sellers to list their products via new sales channels. I think we may see sellers expand to all available channels as they arise within the space.
11. The future of retail will be transparent, dynamic, and seamless.
Going forward, expect retail to be:
Transparent – Shoppers already have unprecedented access to detailed information about retailers’ pricing, promotions, and individual products. Recent data from Deloitte suggests that $0.64 of every dollar purchased in retail stores is digitally influenced, so don’t count on shoppers being uninformed.
Greater transparency means that your competitors likely have better intelligence too. Anticipate that competitors will see anything shoppers do, and consider investing in competitive monitoring capabilities to take advantage of growing transparency.
Dynamic – As ecommerce and digital influence grow, many aspects of retailing are becoming more dynamic. Profitero data shows that Amazon, for example, changes prices on millions of products daily.
Business planning cycles that used to take months or longer are being compressed to near real-time. Expect more retailers to invest in capabilities that give them continuous visibility into key performance indicators like stock levels, sales, and staff scheduling and help them make optimal decisions on the fly.
Seamless – Tomorrow’s shoppers will expect a consistent experience online and in-store and transactions as quick, easy, and personal as some of their favorite non-retail experiences. Forward-thinking merchants will set the bar high for their customers’ experience and eliminate friction in everyday customer interactions like paying for or returning products.
12. Make authentic connections.
Whether online or in physical stores, the future of retail lies in making authentic connections with shoppers and engaging with them on a personal level.
With today’s shopper and her new shopping journeys, it’s becoming more important than ever to optimize a shopper’s visit to store or site. This can be through an understanding of what she’s shopping for and ensuring there’s available inventory on site, or at least a very convenient option – to the shopper – to deliver products to her.
Specific to retail stores, because of the fewer frequency of shopping trips and store visits, the imperative arises to deliver an authentic, seamless, branded shopping experience – from the most optimal shopper interactions with staff to zero points of friction in the shopping process. Those are the things that will establish one as a ‘retailer of choice’ and keep her coming back.
To position itself best in the competitive retail space, a brand should utilize technology touchpoints to authentically connect with the customer, with the goal of capturing opportunities to engage and retain a loyal following. Some of the best examples include fitness apparel, where companies like UnderArmor and Nike have invested in fitness apps, giving them a very authentic way to connect with customers.
Authenticity is so important. Shoppers can sense a lack of authenticity, and because of the wealth of alternative products, channels and retailers, they quickly move off one brand and onto another.
Lastly, retailers need to ensure in-store technology is designed around the shopper, her journey, and solve around her pain points. The shopper is key – what’s good for her is good for the business.
13. The future of retail is mobile.
We are fast approaching a place where mobile technology will offer retailers a channel that will create a perfect synergy between payments, loyalty, marketing and advertising.
The mobile device is increasingly becoming an essential part of the customer’s shopping journey. Bluetooth Low Energy (BLE) Beacons, NFC and QR codes are the latest proximity technologies on offer to retailers, providing an opportunity to engage with customers via their smartphone. Mobile payment technologies such as Apple Pay, are already using this type of innovation but, despite the relatively slow consumer uptake of this technology, the smart retailer will be looking beyond just mobile payments.
Retailers should be thinking ahead about implementing this technology within a mobile strategy that cleverly integrates mobile payments with customer loyalty and marketing initiatives. This is where the future will get interesting.
Retailers that have designed a mobile offering that links mobile payment infrastructure with sensitively planned marketing messaging and valuable loyalty initiatives will have the best chance of delivering a unique and engaging mobile-enhanced in-store shopping experience.
14. Get back to the basics.
We at Whisbi believe that the key of retail success lies in ‘getting back to basics’, to the roots of the shopping experience. It is very remarkable that most companies predict that they will be competing mainly on the level of customer experience instead of price or products in a few years time.
It’s the result of a customer (r)evolution. Shoppers now want to have it all: they demand convenience, speed and ease, yet they don’t want to sacrifice neither the quality of the products nor the quality of the shopping experience.
We believe that the best indicator is the typically huge gap between online sales conversion rates and that of physical stores. Approximately $4 trillion worth of merchandise is left in online shopping carts each year. For bigger companies, this means lost revenue, yet for smaller companies, it cannot only be translated into mere ‘profit loss’ but it is also an existential threat.
Our personal learning is that if you can recreate a real store experience 100% online, then the sales conversion you can expect is closer to in-store conversion than to online rates. As digital interactions already influence one third of spending at physical stores and cross-channel shoppers tend to spend more according to studies, omnichannel solutions will hold a huge business potential in the future.
If you enjoyed this post, you may want to check out our free ebook, Retail Survival of the Fittest.
This book serves as your practical guide to modern-day retail success. Learn how to use mobile technology, big data, and other digital tools to improve your brick-and-mortar store and ensure that it is well-equipped to engage and convert today’s savvy shoppers.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.