The world around us is changing very fast. Owe it to technology or overall economic development, the way people go about their lives is changing. The trend of what people spend, on what do they spend it, how do they spend it is all changing. This is changing the world of retail business. While there have been studies by many economist all over the world, many of these changes are obvious, sensible and required to meet the needs of today’s usrban, fast paced life. Here are a few top trends that we think will grow this year.
1.Smaller stores instead of larger stores: People are moving closer to the city centres and downtowns. From suburban houses, they are moving into apartments. Many are also now avoiding purchasing or owning a car. That means the patronage to large format stores situated on the outskirts of the city will reduce. City centres don’t offer space for large stores. So smaller stores will increase in number. Many of the large retailers such as Target, Ikea, Best buy in US and Tesco in UK are already investing in small format stores. At the same time, customers don’t want to spend a lot of time walking around the aisles of a store. They now have an option to order things online and have them delivered to their doorstep, in the matter of hours. This means brick and mortar retail stores need to carry more curated products for their niche clientele in their catchment area to stay competitive. These two trends combined together will result in smaller stores located closer to the main residential areas, carrying a smaller but relevant selection of products.
2.Unique in-store experience: Customer has now many options to buy his product from. Not only offline, there are now many online stores selling same or similar products. However there is one thing that online retailers cannot provide the customers. The physical feel of the product and the in store experience. It is well known that for many customers, buying a product is a physical experience that involves many senses. With new technology, more options are becoming available to please these senses. For example, a home ware retailer in US, provides its customers with a handheld tablet. Customers can scan the barcode of the product they want and get more information about it online, on the tablet. If they like to purchase it, they simply add it to the digital basket. All the products are collected, packed and handed over to the customer at the checkout counter. Customers don’t need to haul the baskets or trolleys anymore. Now that’s a unique customer experience. As the unique in store experience becomes more important, we will see more such initiatives coming through.
3.Mobile payment solutions: Cash is getting irrelevant. Cards are a passé. There was a time when almost every store offered a loyalty card and customers carried bunch of them on their key chains. That was when it was simpler to just provide a customer with a card to identify him as a loyal customer. Today, technology has developed far beyond. All you need is just a mobile number to identify the customer. With digital wallets technology proliferating, credit cards are also becoming a hassle to transact with. This may be a good news for the retailers too, as they don’t need to maintain expensive credit card machines. A simple mobile based transfer of money with wallets or other mobile technology is easier to maintain for the retailer. With NFC technology maturing, it will be just a matter of touching the mobile in front of scanner and the payment will be done. This may seem like a small incremental step, but has huge potential and impact on the time customer stays at the checkout point.
4.Personalization will deepen: With so much competition, it is important to know your customer. In online world, the moment an old customer returns, he is identified and products, promotions and offers are shown based on his past purchases and search history. That’s almost a standard feature now. However when it comes to offline, this is still difficult to achieve. But, remember the mom and pop neighbourhood stores of old days? They remembered everyone by name. The moment a customer walked in, they told them where their special preferred product was kept, or a new product similar to the one they were looking for is here and they should try it. That’s the kind of personalization technology needs to provide. We believe it will happen sooner than later. The level of personalization in both offline and online retail business will improve.
5.Data will continue to be the king: More and more retailers will adopt data based decision making across their supply chain, right till the post purchase stage of the buyer’s journey. With tools for data collection and analysis becoming easily accessible, there will hardly be any retailer who will not employ data analysis to improve their efficiency and customer satisfaction. This will proliferate only in online world, but also in brick and mortar world in a very different format. A very well known clothing merchant in USA, factors in current trends and historical data to decide which product to buy and distribute to which of its stores for fastest movement of inventory. It is not only able to predict the demand; it also keeps the stores stocked with right merchandize to the right stock level, minimizing waste throughout the supply chain.
6.Retail and Technology will become inseparable. To provide consumers with better experience and entice them to make a purchase, the retailers will invest even further in technology. Artificial intelligence, augmented and virtual reality, internet of things etc will become preferred tools that online retailers and brick and mortar stores, both will exploit to enhance and personalize the buying experience for each customer. For example there will be a smart dressing room uses virtual technology to show a customer how she will look in a particular dress without their having to actually try the dress on. Technology will further invade every step of buying, right from enticing (advertising) to payment and delivery of the product (heard about drones?)
Retail world is changing. It was shaped by what was available to the customer for purchase. The customer came to the store to make his purchase. Today, the store needs to reach to the customer and attract him to spend his money in that store. The key attracting factors are going to be faster, easier and more personal attention than ever before.