The world of retail reached a kind of tipping point in 2017, as some brick and mortar retailers filed for bankruptcy while some online retailers stormed into brick and mortar. As the pace of disruption continues, we will see more dramatic changes in 2018.
Here are my predictions:
- Eat or be Eaten
Failure to transform will lead to retailers filing for bankruptcy or being acquired.
Brick and mortar stores are failing; as many as 8,640 stores with 147m sq. ft. of retailing space could already close down this year. To adapt to the new normal, retailers will have transform stores to become either fulfilment centres or experience centers (see #2) – or both.
By acting as a local fulfilment centre, aiding the fulfilment speed of the overall customer experience journey, store networks – particularly those close to population centres - can allow rapid distribution of product to consumers.
- An Immersive Experience
Stores will become experience centres.
“Brick and mortar is not dead but in desperate need of reinvention.”
By acting as an immersive experience centre, where customers can go to try out products or get to know the brand better through hands-on activities, can reinvent the brick and mortar store.
“The store has become an active node on the supply chain.”
Hindsight can be useful here, when you think that Toys R Us only competed based on price and assortment (the same as Amazon does). Perhaps it should have turned stores into big playrooms, where kids could actually use their products.
- Adapt at the Speed of Amazon
Winning retailers will be the ones that can change direction on a sixpence or a dime.
There is no “silver bullet” to competing with Amazon effectively; the key is in being able to adapt quickly and experiment with new business models and potential revenue drivers. Rental shoes and cars-by-subscription are two examples.
Innovating quickly might mean your own ideas or simply being a fast follower. “Amazon represents a gold mine of ideas that can be shamelessly emulated.”
- Intelligence Included
AI will enable Alexa and Google Home integrations to allow consumers direct access to their chosen brands – or the other way around!
“Expect to see Artificial Intelligence systems in stores that know exactly who we are, communicating directly with us and acknowledge our shopping histories and preferences.”
AI and augmented/virtual reality will start to play a part in retail, as will natural language intelligence with voice control for store operations – asking stock check real-time stock information in store for store staff – and at head office –real-time performance metrics available from head office.
“Hidden AI” built into operations leveraging IoT technology will respond to changing business conditions without the need for human interactions. The result will be smart supply chains that respond automatically re-deploying inventory without management interaction.
- I Feel Your Pain
Retailers will look to solve their own - and mostly their customers’ - pain points to gain competitive advantage.
To differentiate retailers need to solve a problem for the consumer; smart retailers will focus on the pains and problems in the customer experience.
“Virtually every disrupting organization has solved a pain point in the customer experience.”
Retailers will look at their own pain, like how to compete with Amazon and other disruptors, as well as their customers to see how to get visibility and improve efficiency.
- Channels, What Channels?
Progressive retailers are moving away from having different channels that compete with one another towards true unified commerce.
"The era of channel is over. What we're really embarking on now is a world, where for consumers, channels are completely merged."
Omni-channel has the recent buzz phrase but the new term being used is “unified commerce.” But Omni-channel isn’t done yet – most retailers still struggle with a single perspective on the customer across all channels. The ability to allow consumers to return an item, via a different channel from which they purchased it, still has to be figured out.
Consumers expect retailers to have full knowledge of every prior interaction across all channels – but few manage to satisfy this expectation. Winning retailers recognise the fact that channels are going away.
See more predictions and trends for 2018 by clicking below.