What will retail look like in 2029? That was the question being considered at the world’s biggest retail event, Shoptalk 2019 this week.
Anil Aggarwal, Founder, Chairman and CEO of Shoptalk opened the conference in Las Vegas telling the audience that innovation is no longer an option but an obligation for retailers.
With the conference exploring themes like delivery speeds, tech-enabled innovation and the role of dis-intermediaries, it went a long way in explaining what the future of retail will look like and how retailers can innovate and stay ahead of the pack. Here are some key takeaways.
Speed of delivery
Tech has evolved considerably in the last 20 years: in the 90s, the tech industry had to wait three years for Windows 95 to be updated with Windows 98. Today, in a world in which everybody expects app updates in real-time, such slow speeds of delivery are unthinkable.
Granted, many meaningful changes in technology take a long time to develop. But Nordstrom Stores – one of the most successful fashion retailers in the U.S. – have handled this change better than most. They have moved over 30% of their revenue to digital commerce in the last few years. However, in spite of their success, Nordstrom Store’s Co-President, Eric Nordstrom, remains unconvinced whether they are moving “fast enough”.
That’s because the disruptors are assembling teams of programmers, designers, product owners, analysts and data scientists to deliver products in two-week sprints. Consumers are being inundated with fresh technology products at a such a rate that traditional retailers are under ever-increasing pressure to provide tech innovation and maintain pace with the curve of change. So, if you’re in a six-month delivery cycle as a retailer, you’re missing every consumer trend!
Many retailers have done an amazing job transforming their organisations to become fast moving and agile, with many listening to customers in real-time to capitalise on evolving customer trends.
Take, for example, Alibaba, who employ over 6,000 data scientists in their headquarters in Hongzhou, China. By digitally listening to any changes in their customers’ lifestyle, behaviour and interactions with Alibaba, the data scientists can implement changes to their systems and operations in alignment with fluid and ever-changing trends.
Considering most retailers would be lucky to have one real data scientist in their company, Alibaba’s approach to embracing change is extremely progressive. Disruptors are not only good at listening to customers but also are happy to embrace and adopt change. This openness to change doesn’t come easy for many large, established retailers, so their challenge is to build organisations with leadership who embrace change with happy hearts.
Focusing on products and markets are key features of successful retailing. Introducing platforms where shoppers can shop at any place, any time and in any market, is key to competing in omni-retail. Options such as shop online and collect in store, shop in-store for home delivery, or book online to trial in store were once revolutionary but are now the most basic expectations in today’s omni-retail landscape.
For example, MediaMarktSaturn Retail Group in Europe has set up dedicated teams to focus solely on “new retail” and are content with accepting the demise of “old retail”. The evidence of the necessity of change is all around us: in the last few weeks alone Gap announced the closure of 230 retail stores, J.C. Penney closed 27 department stores and Victoria’s Secret shut 53. That takes total store closures in the year-to-date to 4,500. And, Amazon, which has not really scaled operations in Australia and NZ yet, only accounts for 1% of global retail!
There is so much opportunity but understanding customers and tailoring services to suit them is the key to success. Customer interactions and consumer preferences are changing so rapidly that, without implementing technologies which sense and respond to these preferences, many more retailers could vanish. Retailers who once built beautiful store experiences to be enjoyed by customers for long shopping trips are, instead, now creating five-minute shopping trips and five-minute returns experiences.
An astonishing number of tech-powered intermediaries are taking centre stage in the retail landscape.
The Amazon marketplace recently changed an algorithm which disenfranchised tens of thousands of retailers and suppliers.
Instagram recently revealed that 90 million users are interacting with shopping tags on the platform. That’s a significant number when you consider that even the largest retailers in the world would be lucky to have 90 million shoppers in their loyalty database! Similarly, every month 10 billion messages are exchanged on Facebook by retailers sharing their precious business information. So the question is: how can retailers create their own digital presence and co-operate with global giants such as Amazon, Facebook, Alibaba and Instacart?
Secondly, given the data privacy and security scandals which have plagued some platforms, how do retailers make the most of their potential while keeping both their own and their customers’ information safe? Unfortunately, the data supply chain in this emerging retail sphere is neither clean nor certain.
Retail in 2029
So far, we’ve discovered that to succeed now and into the future, retailers need to utilise technology to ensure customers are getting the speed of service they expect, and on the channels they expect. But with future gazing and anticipating trends before they actually happen being such an important part of future-proofing your retail business, let’s discuss what retail will look like in 2029.
This year’s Shoptalk conference predicted that it will be commonplace to see robots serving customers in retail stores in ten years time. Some are even forecasting that stores will be able to predict what shoppers want before they know it themselves!
Mark Rabkin, VP of ads and business platform at Facebook summed it up nicely at this week’s Shoptalk saying, “If the retail apocalypse is coming, then it continues to be delayed due to the constant stream of innovation and disruption caused by retailers in an increasingly omnichannel and Amazon-influenced world.”
A full-scale retail apocalypse, a term used to describe the closing of brick-and-mortar retail stores, has also been predicted but isn’t here yet. Physical retail most certainly has a future, but those individuals and companies who innovate and keep up with how to service customers in-store, despite the rise of online incumbents, will be the ones who thrive while others get left behind.
Timothy Kasbe is Managing Director of Zoho