If you think retail has changed a lot in the last 20 years, hold on to your hats. Or perhaps to your virtual reality goggles and bitcoins.
One of the sessions that packed people in at this year’s SXSW Interactive focused on where retail is heading—and why many retailers are in trouble if they’re not able to appeal to customers’ rapidly changing desires.
“The one thing that really surprises and disappoints and shocks me is that a lot of C-level people see this as a problem to be solved,” said SXSW panelist Michael Schrage, a research fellow at the MIT Center for Digital Business and consultant specializing in innovation. “You have to accept this isn’t just about building digital capabilities; it’s about changing your culture.”
Established retailers that fail to make the shift will be starting a new chapter, he said. “And it’s called Chapter 11.”
What should retailers focus on to avoid such a fate? The conversation at SXSW centered on three trends, each of which has plenty of devils in the strategic and execution details.
1. Customers’ expectations are changing—and quickly.
“How people want to shop is completely and utterly out of your control,” Schrage said. Consider, for example, new retail competitors that eschew websites for Instagram or focus on pop-up stores rather than permanent shops. “What does it mean to shop? New platforms can pop up and completely transform that,” Schrage warned. “We’re just a place for people to buy stuff.”
In fact, a significant chunk of customers expect that by 2020 they’ll be using emerging technologies, from bitcoin to augmented reality (AR), in their future shopping experiences, according to the recent Beyond Digital: What’s Next for Businesses in 2020 report from Infomentum.
Some 16% are anticipating 3-D-printed product downloads by then as well, and 15% want AR to enable them to try before they buy—something IKEA is exploring with its new virtual reality pilot that enables customers to explore kitchen design options. And 14% said they would like to see drone deliveries by 2020, which in Texas some refer to as “skeet shooting with prizes.”
All of this potentially in the next four years.
Add these new approaches to the already constant pressure of customers discussing bad experiences with your site or your company on social media: The Infomentum study found that only 55% of people would bother to ask customer service for help—but 89% would discuss negative experiences on social media.
2. It’s all about the experience.
Schrage said he works with product companies that are wondering how they should provide services, and service companies looking to develop products because their assets go home at night.
“Just like digital and physical is a false dichotomy, product and service is a false dichotomy,” he said. “Is an iPhone a product or a service? It’s both. What we need to do is integrate product quality with experience quality.”
What people are seeking is the basic trifecta of value, convenience, and experience. The constantly evolving landscape of applications and platforms makes delivering those three an enormous opportunity or, for businesses that are crippled by staid processes and change-averse cultures, a huge challenge.
“Identifying an opportunity is one thing—being able to execute on it is another,” according to Matt Clark, a partner at KPMG Boxwood. “For many, adapting to these realities will be challenging and will require a fundamental transformation to their way of thinking about their customers, their market, and their operating model. These are not simple changes to make, but they are necessary ones.”
3. Get ready for artificial intelligence, IoT, and even-bigger data.
Of course, it’s no surprise that data will be critical in the future. What will set retailers apart, however, is how they use that data, which will come at them in ever-increasing waves and from all directions.
Schrage contends that machine learning capabilities will transform how the shopping experience is defined—and will be something that retailers should add to their arsenal. “You will get better-quality customized recommendations for shopping from analytics of data rather than a human curator,” he said. “Human shopping advisers are going the way of travel agents.”
Advanced analytic capabilities will be critical for retailers to stay competitive, according to industry research and advisory firm Gartner—and even more so as Internet of Things (IoT) technologies and revenue opportunities come into play.
IoT will usher in a phase of retail that stands to eliminate a chunk of customer decision making, with devices making purchasing decisions. Consider smart refrigerators ordering groceries and perhaps negotiating prices directly with a food delivery site; such devices won’t be tempted with impulse purchases, and they may be programmed to buy at the lowest price or only specific brands.
“As the Internet of Things continues to expand over the next five years, the effects on multichannel retailers will be more disruptive than anything seen to date and will require advanced analytics capabilities to cope with this disruption,” warned Robert Hetu, research director at Gartner, in 2015.
And as more data is collected by retailers, customers are feeling a bit conflicted. A recent Oracle Retail survey of 5,000 shoppers around the world found that while 55% have reservations or disagree with retailers accessing their personal information, 56% now recognize that sharing personal information can benefit their shopping experience.
For an in-depth look at these issues and how retailers are reinventing their business strategies, don’t miss Oracle Industry Connect Retail in Orlando, April 11 to 13.
Go to Oracle.com for more:
One of the sessions that packed people in at this year’s SXSW Interactive focused on where retail is heading—and why many retailers are in trouble if they’re not able to appeal to customers’ rapidly changing desires. “The one thing that really surprises and disappoints and shocks me is that a lot of C-level people see this as a problem to be solved,” said SXSW panelist Michael Schrage, a research fellow at the MIT Center for Digital Business and consultant specializing in innovation. “You have to accept this isn’t just about building digital capabilities; it’s about changing your culture.”
Established retailers that fail to make the shift will be starting a new chapter, he said. “And it’s called Chapter 11.”
What should retailers focus on to avoid such a fate? The conversation at SXSW centered on three trends, each of which has plenty of devils in the strategic and execution details.
1. Customers’ expectations are changing—and quickly.
“How people want to shop is completely and utterly out of your control,” Schrage said. Consider, for example, new retail competitors that eschew websites for Instagram or focus on pop-up stores rather than permanent shops. “What does it mean to shop? New platforms can pop up and completely transform that,” Schrage warned. “We’re just a place for people to buy stuff.”
In fact, a significant chunk of customers expect that by 2020 they’ll be using emerging technologies, from bitcoin to augmented reality (AR), in their future shopping experiences, according to the recent Beyond Digital: What’s Next for Businesses in 2020 report from Infomentum .
Some 16% are anticipating 3-D-printed product downloads by then as well, and 15% want AR to enable […]
