With so much innovation in e-commerce in the past five to 10 years, it isn’t surprising that the physical retail space, meaning the store and the shopping centre, has looked a bit static and stale. Everything is relative of course, so the appearance of inertia is misleading. Progress is being made, albeit at a slower and less discernible pace. Meanwhile, the internet has brought us all kinds of novel selling models – daily deals, flash sales, Amazon, e-auctions, small market a
ggregation, crowdsourcing, customisation, m-commerce, s-commerce, the list goes and on.
Not content with innovative ways to sell, it has also brought us innovative ways of fooling people – a trend that I call ‘innovative deceit’. Innovative deceit techniques include junk research and astroturfing.
The former consists mainly of online consumer surveys designed to elicit only those responses that indicate strong demand or rationale for the sponsor’s product. We are now awash with this garbage every single day.
Astroturfing is paying people to give your product fake positive reviews, or alternatively, paying people to give your competitor’s product fake negative reviews. Depending on whose data you believe, around 25 per cent of all internet reviews are now phony.
Astroturfing is such big business that it is being outsourced to developing countries, much like call centres.
Bangladeshis and Filipinos are being paid a buck or so for each review they can thrash out. In poor countries, creative writing skills are being nurtured on a massive scale thanks to innovative thinking in the West.
But with all these fun and games going on in cyberspace it would be quite wrong to think that the technology revolution had passed shopping centres and mainstream retail by. But few are paying attention to it.
Back in the 1990s, Bill Gates said: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10”.
Technology will make a massive difference to the physical world shopping experience over the next decade. It will help overcome some of the biggest obstacles to providing an outstanding shopping experience.
The paradox is that it will not achieve this primarily by creating the kind of whizz bang, theme park experience normally associated with technology. Rather, it will reshape physical retail space in three broad areas:
1. It will smooth out and in some cases eliminate the things about shopping that are a pain in the rear end.
Finding a parking spot, navigating within the centre, finding things in stores, being inconvenienced by out of stocks, and frustrated by unknowledgeable store employees are all examples of problems with the shopping experience that emerging technologies will address in the next few years. Not necessarily eliminate altogether, but at least soften.
2. It will personalise the shopping experience.
Big Data may look like something that belongs in a stalker movie but it is already one of the technologies helping to drive greater personalisation. Other personalisation technologies coming to the fore are geofencing, variable pricing, and personal shopper technologies.
Collectively, shoppers will gain more personalised access to retailers and retailers will have an opportunity to extract more value from each customer.
3. Making shopping more convenient.
If you can get technology to accomplish the first two things – reducing the pain and personalising the shopping experience, then shopping is already a lot more fun and a lot more convenient than before. But it goes further than that.
The store and the shopping centre will become more multi-functional buildings because of technology. And that multi-functionality is going to make it far easier for stores to engage and please consumers.
With the seeds of this transformation already planted in physical retail space, it is disconcerting that the retail industry is so fixated on the minuscule cyber triumphs of its declining icons.
Take some of the commentary surrounding David Jones achieving greater than one per cent online penetration in 1Q14. Opined one analyst: “DJs has spent the last 20 months transforming itself to become one of Australia’s leading multi-channel retailers”.
Wow, is the situation really that dire?
Think about it: the bellwether e-commerce sales penetration ratio for a decent fashion retailer globally has been five per cent to 20 per cent (with a sweet spot of 10 per cent to 15 per cent) for several years now.
The guys who are doing that level of e-commerce are usually the same ones who are getting big sales growth out of their stores as well. David Jones is doing neither – it’s in the tail of both distributions.
Fortunately for landlords, the physical store is still very much the hub of the shopping experience. Technology is about to start working for them instead of against them for a change.
Michael Baker is principal of Baker Consulting and can be reached at michael@mbaker-retail.com and www.mbaker-retail.com.