The retail industry comprising of brick and mortar stores and online channels is fiercely competitive. However, it seems that the future of retail won’t just be about online vs. offline, but a blend of the two through a number of engaging personalized tools and services which focus on just one thing—consumer satisfaction—the heart of retail.
Here’s how retailers are fast embracing advanced technologies to increase customer engagement and offer experiences that make shopping more delightful and convenient.
The global retail industry is huge and growing at a competitive pace. It is expected to reach $31.88 trillion by 2023 from $23.46 trillion in 2017, registering a growth of 5.3% during the period. While online platforms are one of the major disruptions in retail, market stores continue to be backbone of retailing. A report by A.T. Kearney’s highlights the fact that 90% of all retail sales are transacted in stores and 95% of all retail sales are captured by retailers with a brick and mortar presence. In the U.S., e-commerce sales were 9.8% of the total retail sales during the third quarter.
The future of retail thus lies in the combination of ‘brick and click.’ This fact is realized by the biggest e-commerce giants as well as traditional retailers. Back in October 2016, Jack Ma, wrote, “In the coming years, we anticipate the birth of a re-imagined retail industry driven by the integration of online, offline, logistics and data across a single value chain. With e-commerce, itself rapidly becoming a ‘traditional business,’ pure e-commerce players will soon face tremendous challenges.”
It is estimated that by 2023, Alibaba (BABA) and Amazon (AMZN) together would dominate 40% of the global online retail market. This is indicative of the impact these two e-commerce giants have had on the global retail landscape, yet these players are bringing forth the most advanced ways of customer engagement by using the most advanced technologies in the physical world.
Alibaba first displayed its idea of ‘New Retail’ at a Hema supermarket in Shanghai last year. The smartphone powered experience takes a buyer through each product’s journey (origin, backstory, and even offered suggestions) and a seamless payment mechanism. To make shopping at Hema supermarket even more fun, the Shanghai’s Hema supermarket has a robotic restaurant area is a highly automated system of fresh food selection and its preparation. With more than 65 such supermarkets in the last one year, Hema and its model is expanding fast.
In March 2018, Alibaba’s Tmall and Ford (F) redefined car test-driving experience with the launch of China’s first “auto vending machine.” The super-test-drive -center in Guangzhou, offers three-day test-drives to potential buyers researching their next purchase, allowing them to choose from more than 100 vehicles. Back in December 2017, Alibaba and Ford has collaborated to work on opportunities for more sales using cloud computing, artificial intelligence, infotainment and the Internet-of-Things (IoT). China is the world’s largest automobile market. In October 2018, to recognize the importance and focus on China as a market, Ford China was elevated to a stand-alone business unit (separating from Asia Pacific) reporting to Ford global headquarters with Anning Chen becoming the president and CEO of Ford China.
In early 2018, Amazon launched a new kind of store—Amazon Go—that allows the ‘Just Walk Out Shopping experience’ to its customers. By leveraging a combination of advanced technology such as artificial intelligence, computer vision, and multiple sensors, Amazon brings cashier-less shopping to shoppers. All that is needed is the Amazon Go app to enter the store and go without waiting in lines or checkout. Amazon has already opened nine such stores and has plans to opening up to 3,000 cashier-less stores by 2021 as per a report.
Nike (NKE) believes that, “The future of brick-and-mortar retail counts on engaging, personal shopping experiences that respond as quickly—and as personally—as its digital counterpart.” Its new NYC flagship store is the ‘face of living retail’ offering services that are deeply customizable and effortlessly smart and seamless.
It is predicted that by 2020, customers will manage 85% of their relationship with the enterprise without interacting with a human; stores by Nike, Alibaba and Amazon are just a reflection of that. The rising customer expectations and competition are forcing retailers to innovate and invest in advanced technology. Gartner estimates that the global retail sector technology spending will reach almost $203.6 billion in 2019 and around $225.4 billion by 2022.
Among customer experience, products and price, ‘experience’ will become more and more important in coming years, and emerge as a brand differentiator by 2020. The pace at which advanced technology is getting interwoven with retail is a proof that none wants to be left behind in creating such ‘differentiators’, heating up the competition further.
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