Over the past decade, technology has shaped brick-and-mortar stores past the point of no return. But if online shopping was the first big game changer in retail, the next decade will see stores increasingly rely on technology to streamline the entire customer experience as well as in-house operations.
According to CB Insights’ retail trends report, brick-and-mortar stores will use technology in three primary categories: Product, Merchandising, and Distribution. From on-demand customization and VR experiences to autonomous delivery, technology is becoming part of the retail flow at every step.
Below are six major trends set to transform retail in 2019 and beyond.
With online and mobile shopping becoming the norm for millennials and future generations, the in-store experience will be key to brands that want to continue investing in physical spaces to showcase their products.
This means providing a space that not only offers access to popular products and great customer service, but is also enjoyable to visit. Brick-and-mortar stores without a clear brand message or branded in-store experience will get left behind as brands embrace the fact that customers will no longer be satisfied with a basic shopping experience.
Like many other retailers struggling to adapt to changing consumer behavior, the legendary toy store FAO Schwarz filed for bankruptcy in 2015 and closed down its iconic flagship store in New York. But last year it came back with a new store focused on the in-store experience, complete with magic shows, a kids’ grocery store where children can shop artificial produce, and a car assembly area.
Retailers are projected to be the number one buyers of augmented reality (AR) and virtual reality (VR) technology by 2020. AR, in particular, helps retail brands offer better experiences for customers by allowing them to scan products for pricing and reviews. It also gives them a clear visualization of how products fit into their lives, such as furniture arrangements in their homes or outfits without actually trying them on.
For example, the term v-commerce refers to technology that allows customers to walk through a virtual store using a VR headset. If ecommerce is about shopping online or on mobile, v-commerce replicates an in-store experience remotely.
Retailers like TOMS and Volvo are already using VR to offer unique shopping experiences. TOMS offered VR goggles to customers so they could see children in other countries receiving their donated boxes of shoes, while Volvo gave VR goggles to customers so they could test-drive cars virtually.
The Internet of Things (IoT) and the Internet of Experiences (IoX) will make the shopping experience much more convenient and speedy for customers while saving retailers operational costs.
For instance, sensor-based smart shelves will reduce the manual labor required to keep track of inventory by sensing the weight on a shelf and using RFID tags to know the precise location of each item, which can also guard against theft.
Automated checkouts alone can save up to 75% of cashier needs. Robot assistants in the aisles can answer FAQs and help customers locate items in as many languages as they’re programmed to offer. Proactive support and technology monitoring can also improve customer interactions and help retailers with equipment maintenance.
Mobile is now the main device used for online shopping, taking up over 40% of all online sales in Q4 of 2018/19. Younger demographics overwhelmingly prefer browsing and buying through mobile. Brands can use social media platforms like Instagram and messaging channels like WhatsApp to attract shoppers who otherwise couldn’t be reached through traditional advertising.
Mobile payments have now become mainstream and can benefit retailers through a mobile checkout process that saves customers the hassle of long lines and an often faulty card or cash payment process. Plus, mobile payment options provide customers with e-receipts they can always access, rather than paper receipts that can easily be lost.
A store-specific mobile app is also a great way to market products to customers outside of the store, as well as offer interactive brand experiences during the customer journey. Personalized discounts, location-based services, and customer service are all features mobile apps can offer to create a more impressive user experience.
According to the 2018 National Retail Security Survey, the biggest reasons for inventory shrinkage were shoplifting (35.7%), employee theft (33.2%), and administrative errors (18.8%).
(Source: 2018 National Retail Security Survey)
Lost and stolen inventory remains the top security concern for retailers. So RFID technology, GPS, and facial recognition will continue to play a huge role in the coming years to help businesses protect their assets.
For example, RFID tags will alert retailers when an item disappears and make it impossible for employees to leave the store with items without alerting security. GPS tracking will also be used to locate missing or stolen items, serving as a deterrent against theft. Facial recognition technology in security cameras will help retailers identify thieves as well as alert security when a known shoplifter enters their stores.
Emerging blockchain technology also has retail applications on the back-end by protecting customer data. Walmart is already testing this tech on its food supply chain, allowing it to track origination points of each box of produce and monitor spoiled food supplies.
The implications of AI in retail are huge in multiple areas, but data on customers will be the biggest point of leverage for retailers. Much like AI support systems use data to deliver personalized solutions, AI-powered customer service solutions can personalize in-store experiences by using previous purchase data to automate repeat purchases. It can also offer predictive customer service.
Furthermore, the emerging ecosystem economy requires that brands and retailers break down the traditional barriers around customer data. This will allow retailers to cater to customer needs within the context of the holistic customer journey. Participating in an integrated business ecosystem is key to future of retail, both in terms of customer experience and business operations.
Meanwhile, businesses can benefit from data analytics to offer competitive and flexible prices. AI can help retailers define products and areas that are more vulnerable to price changes so they can keep up with changing consumer expectations more efficiently.
Incorporating data transparency into the business model can also increase customer loyalty, as a study from the Food Marketing Institute (FMI) suggests that 86% of shoppers would trust a brand more if they offered transparency with their ingredients.
Stores that leverage technology to offer more convenient, engaging, and personalized experiences at every point of the customer journey - that is, both in-store and online - will gain a competitive edge over those relying on traditional retail models.
Likewise, businesses using technology for real-time inventory tracking, resource management, and security will suffer fewer losses and boost profits by streamlining operations and preventing theft.
Overall, businesses will need to invest in omnichannel technology and strategies that offer a seamless experience to their customers both online and offline in a way that feels consistent. Embracing technology doesn’t mean completely replacing brick-and-mortar shopping with ecommerce - retail technology can be used to enhance in-store experiences.