The future of retail: Chapter 1
You can’t connect the dots looking forward; you can only connect them looking backwards. So, you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.
– Steve Jobs
This is chapter one in a seven-part series about the future of retail.
The Great Buying vs. Shopping Divide
Jonathan Eley of the Financial Times has stated that, “The consumers of 2030 will look back at the early years of the millennium and marvel at the amount of time people wasted sourcing daily essentials and accumulating things they used infrequently.”
Eventually, consumers will expect their smart-home technology and voice-controlled assistants to bargain hunt and search for products that are feasible for their lifestyles.
As for shopping, it will remain a social activity for consumers. Shopping will be treated as an event that consumers pursue to spending time with friends, escape work stresses, and to enjoy themselves.
In the future, time will be the most valuable asset to consumers – not money. This means consumers will focus more on easier solutions to fulfill their needs.
Within the last decade alone, the retail industry has evolved tremendously. As opposed to still being viewed as destinations for repetitious and habitual purchases, many retailers have created multiple channels for shopping and opted for creating experiences instead of securing a sale.
But in this new decade, retailers expect emerging technologies to provide them with a greater understanding of the wants and needs of consumers. We will see that within this new era of retail, an increase in prediction data and analytics, automatic inventory reordering and an intensification in convenience fulfilment.
And even though these solutions could help retailers serve consumers better, there is a paradigm shift happening that retailers need to be aware in the way that consumers buy and shop for products.
Until the 1990s and early 2000s, buying and shopping were activities that happened simultaneously in a physical space. After the emergence of the internet and e-commerce, these activities started to be performed independently and expanded into the digital space. Now, it is theorised that these actions will conjoin once again.
However, it is important to understand the factors that are causing buying and shopping to come back together in the future.
The rapid growth of e-commerce
For the last decade, e-commerce has become a segment of retail that offers choice and convenience to consumers. It has ultimately shaped the buying behaviours of consumers and allowed retailers to sale beyond their geographical limitations.
And while e-commerce only accounts for an average of 13.7 per cent of online purchases globally, its sales have steadily increased year after year. The rapid growth of e-commerce sales can be accredited to consumers’ use and reliance on technology for purchases.
Data from PwC’s 2019 Global Consumer Insights Survey shows the steady growth of e-commerce sales comes from smartphone usage – 24 per cent of consumers use their smartphones to complete purchases.
Global e-commerce sales are projected to increase from 3.5 trillion in 2019 to close to 5 trillion in 2021. Because of this, retailers have had to quickly integrate an omnichannel approach within their strategies.
Retailers have invested significantly in business information systems, digital presence (i.e. social media), and online offerings to stay competitive. The haste of this change has also accelerated the volume of omnichannel retailers present today and influenced where consumers go to consume.
But it wasn’t always this way. Here’s a quick history of the evolving relationship between buying and shopping over the past three decades.
As one: 1990s – 2000s
Before the first web browser, shopping and buying were activities that happened within the physical confines of stores. But as the internet became accessible to more consumers, e-commerce was born. Companies such as Alibaba, Amazon and eBay pioneered and mobilised the act of buying. And as a result, consumers begin buying products online and continued to shop at brick-and-mortar stores.
Divergent: 2000 – 2016
Smartphones drove the online shopping boom. And as a result, more retailers sought to create better online experiences that catered to their customers’ needs. This required retailers to create responsive websites, offer greater arrangements of product, and engage with their customers online.
However, the increase in online shopping contributed to the ‘retail apocalypse’. The rising cost of rent, bankruptcies of leverage payouts, and lack of consumer confidence caused many bricks-and-mortar retailers to close their stores. These events initiated an overlap in buying and shopping, and enabled consumers to shop and buy in the phygital space.
Convergent: 2016 – 2020s
Consumers shop with their emotions rather than their wallets. The demand for human touch and efficiency has caused retailers to embrace omnichannel strategies. This involves delivering an interactive, engaging experience – both on and offline.
Because of this, online retailers like Alibaba and Amazon have built physical locations to allow visitors to experience their products. This allows visitors to connect with products before buying them. Google is even hosting pop-up shops in various cities to allow visitors to experience their electronics.
Likewise, digital and traditional businesses are using seamless experiences to cater to the needs of their customers. For instance, Netflix is leasing out movie theatres while AMC Theatres has launched their video streaming services.
Showrooming is also becoming more common as the number of tech- savvy consumers increase. The newly formatted, smaller IKEA stores throughout London are great examples of this. Visitors can walk-in to feel, view, and even measure furniture before buying. But these stores do not have restaurants nor checkout lanes. When customers are ready to check out, they use the self-service digital terminals or their mobile phones.
So, what will the future of buying and shopping look like? Come back tomorrow to read the rest of Chapter 1 on the future of retail.
With thanks to the team at Glory Global.
Brian Walker is founder and CEO of Retail Doctor Group, a retail advisory and consultancy group and the Australian elected partner member of the global retail expert’s alliance Ebeltoft Group.
Only 40 per cent of Australian adults with autism are in the labour force, and one business expert believes they ar… https://t.co/4st2fYCFfi14 hours ago
Retail associations have agreed on an industry code of conduct to help tenants and landlords negotiate leases in th… https://t.co/Lt3mxcGT2o15 hours ago