Technology has taken a central role in the future of the retail industry. The upsurge of ecommerce platforms and personalized shopping experiences are rewriting what legacy brands historically held as ultimate truths.
Changes in consumer purchasing habits and developments in digital technology have given rise to a number of new trends for modern retailers. In this article, we will examine the undercurrent driving the future of retail.
Industry on the Move
Digital technology has jumpstarted massive swings in the retail industry at large. Many experts, such as Benedict Evans of a16z, have highlighted that ecommerce is pushing online retail toward higher-touch purchases. Ecommerce is disrupting not only how consumers shop, but what they buy. New models are also making impressive headway in the industry. Companies like StitchFix and Harry’s use concierge and subscription services to alter the traditional retail experience. Additionally, persistent mobile tech is powering new consumer patterns and legacy retailers must react.
Primary Challenge: Retailers are now competing against new business models. How can brands disrupt themselves to create new services that meet the modern consumer where they are (on mobile) all the time?
Fiefdom and the Great Consolidation
Amazon has completely overtaken ecommerce retail. Many retailers are still finding it difficult to adjust to the speed and scale of Amazon’s domain. In the old world, companies competed against others in their industry, now nearly every company finds itself in the shadow of Amazon. With 60% growth of online sales in 2015, they show no signs of slowing. Amazon has repeatedly proven itself the new king and companies must reposition themselves to even compete in the digital space.
Primary Challenge: Organizations must view themselves as digital insurgents, finding unique ways to innovate on Amazon’s more fixated online retail experience.
“In store and online shopping experiences are converging and a blended and seamless “digital” shopping experience that combines the best of both worlds is one of the leading reasons for the brick-and-mortar store’s digital transformation.” — Sahir Anand, Vice President of Research and Principal Analyst at EKN
The Great Hunt for ‘Experiences’
There has never been a bigger need for retailers to provide seamless customer experiences. Technologies like beacons and wearables have promised to transform touchpoints, but have struggled to reach mainstream adoption. Though many brands have experimented, there are few strong indicators that beacons and wearables are on the brink of radical adoption. There is still an opportunity for brands to leverage IoT-enabled experiences at the in-store touchpoint for consumers.
Primary Challenge: Test innovative frictionless experiences. Retail organizations must look beyond campaigns to invest in the products that will enable fluid interaction with their brand.
Private-Label as Testing Ground
For retailers, private-labels have always been leveraged as a way to steal share and maximize on margin. Now many companies are realizing that private-labels are the key to differentiation among competitors. Private-labels offer companies an opportunity to radically innovate on their own business model. Because companies own every point in the private-label supply chain, private labels offer a chance for companies to disrupt themselves and test new ideas at all points along the chain, from production to distribution.
Primary Challenge: Private-labels are now a central testing ground for business models, not just products. There is a large whitespace for companies to market labels through dedicated digital products.
Winning in retailing today is less and less about control of the shopping experience because there is no longer a clearly defined shopping stage. — Werner Reinartz, Professor of Marketing at the University of Cologne
Digital technology provides an unprecedented chance for both legacy retail brands and new companies. Though the new landscape is displacing many companies, the changes we see are also opening new doors for brands to act as entrants and experiment with fresh business models. With the myriad of platforms for customer interaction, it is more apparent than ever that companies must take a human-centered perspective to succeed.