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In a technology driven world, what are the key trends for retailing?
From self-driving cars to mobile payment systems and biometrics, technology is changing the world at an extraordinary pace – but how is it expected to shape the future for consumer goods manufacturers, retailers and shoppers?
We have already seen major developments in the industry such as Walmart working on robotic shopping carts; and Amazon, amongst many other ventures, testing delivery by drone.
But what is likely to have the most immediate impact? The key trends currently emerging include automation, virtualisation and reintermediation and each of these opens the door to a host of innovations within the retail environment.
Automation: 20% of shopping can be predicted and automated
One of the earliest and most successful automated shopping services was the Dollar Shave Club which launched in 2012 and sold to Unilever in 2016 for $1 billion. Also launched in 2012, the Honest Company automatically delivers eco-friendly, natural products for babies and homes. Siemens offers an interesting connected device in the form of a smart washing machine which automatically orders liquids or powders when they start to run low.
Realising the considerable impact this type of business could have on the retailer, emnos did some analysis to ascertain which products could effectively be automated based on how easy it was to predict what, when and how much is purchased. This revealed that a staggering 20% of the average shopping list could be accurately anticipated with pet food, tinned seafood, water and milk at the top of the list.
If all these items were sold direct to the consumer, 25% of retailer revenue could disappear and inevitably entire categories would vanish off the shelves. The supermarket as we know it today would be forced to undergo dramatic changes – perhaps focusing on convenience shopping.
Amazon Go takes a different approach by automating some of the standard shopping processes. It claims to use the world’s most advanced shopping technology so customers never have to wait in line. You simply use the Amazon Go app to enter the store, take the products with you and leave without any queuing or checkouts – the cost is charged direct to your account. Monoprix had an interesting response to Amazon’s promotional video for the store – check them both out here:
Virtualisation: revolutionising interaction with customers
Nothing much has changed over the last 15 years in terms of how retailers interact with customers but virtual reality could trigger a radical transformation. No more searching online pages or pushing a trolley round the store, just put on some glasses and take a virtual shopping trip.
This presented emnos with another question – should we provide the same store layout for every client? Absolutely not, the virtual store could be customised for each retailer as in the real world. Some supermarkets have also tested augmented reality, which combines real and 3D generated images and supports personalised messages, offers and discounts for individual shoppers. Google Tango uses the same principle in enabling people via a mobile device to see virtual objects and information appear on top of their real environment.
Yes, you can have fun watching dinosaurs walking around your house but there are many practical applications such as navigating indoor or outdoor locations by overlaying directions onto your surroundings.
Of course vocal interaction is ideal in the shopping environment and there is currently much hype over voice activated digital assistants such as Amazon’s Alexa, Apple’s Siri, Google Now and Microsoft’s Cortana.
At the Consumer Electronics Show in Las Vegas earlier this year, there were dozens of announcements around voice systems including a partnership between Amazon and Whirlpool Corp. to add voice command capabilities to Whirlpool washers, dryers, ovens and refrigerators.*
As these assistants store data on what you buy, use and do on a regular basis and will recommend purchases accordingly, they present a great opportunity for cross selling. Research firm Tractica estimates about 40 million homes will use a voice-activated digital assistant by 2021.*
Reintermediation: a new layer of middle men
As retailers gather the vast quantities of shopper data generated through loyalty programmes in-store and online, they are increasingly aware of the strategic importance of sharing it with the right partners.
The availability of this information is likely to create a profusion of independent data services – often small start-ups taking advantage of the changing climate in order to provide advanced services to shoppers, FMCGs and also the retailers.
Within an open data eco-system these ‘intermediaries’ could, for example, offer sales predictions and trends at a fraction of the cost of the major research companies; or perhaps create services which enhance the shopping experience. Some retailers already expose their data to brands for their mutual benefit and learning to control further exposure to third parties could ultimately generate volume.
Data is extremely valuable and the retail sector should ignore all these developments at its peril.
Now is the time to meet the issue head on and take control of how data is stored, monitored and revealed to others. Certainly it poses a risk to retailing as we know it, but it also presents the opportunity to move with an evolving retail landscape driven by names like Amazon and Google rather than our own industry.
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