As 2016 draws to a close we’re taking a moment to look ahead to what the New Year will bring for ecommerce and multichannel retailers. Here, we hear from contributors across the industry about the trends and technologies they believe will be important in 2017. We’ll also start off the New Year with the final post in this series, on January 3.
Fiona Swerdlow, VP and research director at Forrester puts the emphasis on mobile and digital talent.
According to Forrester’s 2017 retail predictions, brick-and-mortar stores won’t die, but they’ll need digital to thrive. Major problems are foreseen for mall-based retailers that haven’t kept up with changing consumer needs and are under pressure from discount stores and online competitors. Retailers must go on the offensive to defend and grow their position against competitors, and technology will play a key role in the following ways:
Mobile first thinkers will win
Consumers in 2015 spent an average of 126 minutes on their mobile phone every day – double the time they spent just two years earlier. Successful retailers will identify how their customer uses their smartphone/app/mobile site specifically, then design their offerings around that.
Digital talent will be in short supply
Many retailers will need to tap their partner network for digital resources, combining them with in-house capabilities. Additionally, retail CEOs must groom experienced digital execs in broader roles – or risk losing that talent to retailers who are eager to nab them.
AR won’t hit the mainstage
Only 11% of digital business professionals used or piloted in AR in 2015. AR isn’t a standalone strategy – rather, retailers must use AR if it truly enhances a broader mobile solution and provides the customer added value.
Craig Smith, VP of solutions and customer success at Amplience [IRDX VAMP] focuses on mobile and merchandising.
The mass move to mobile
“New mobile payment methods took the retail sector by storm in 2016, with Apple Pay allowing consumers to pay for their goods with just a touch of a finger. Through the holiday shopping season and into next year, we’ll see shoppers shift from simply browsing, to completing the entire shopping journey on their mobile devices. The attention span of shoppers is dwindling so people are increasingly turning to mobile shopping for its convenience and speed. Currently around 50 per cent of shopping is done on mobile and this is only set to rise in 2017 as people are finding less reasons to shop in physical stores.
“Many retailers are struggling to adapt to this new shopping habit and aren’t creating engaging apps or content, this must be a focus in the coming months in order to keep front-of-mind for shoppers. Expect to see fashion retailers upping the ante and transforming their mobile apps into a rich and enticing experience rather than a convenient ‘nice to have’. 87 per cent of mobile owners are using apps but only 3 per cent of these are retail apps. The app market is a crowded space but there is a great opportunity in the year ahead for retailers to embrace the appetite for mobile.”
The decline of the department store
“Marketplaces are conquering the retail sector at an alarming rate. The juggernauts Amazon, Alibaba and eBay are posing a threat to mass merchants, and the bad news for them is that marketplaces are here to stay. It is anticipated that global marketplaces will own 39% of the online retail market in 2020. Once their key differentiator, department stores are no longer able to compete on range, and many have forgotten the art of curating and bespoke service. If department stores want to restablish themselves, they should think less about price and volume, and more about brand and customer engagement. Selfridges is a prime example of a department store fully embracing cutting-edge retail technology. In 2016, it debuted a shoppable app including a ‘shop-by-Instagram’ functionality, using self-generated content as a means to drive sales. In 2017 we’re likely to see other stores following Selfridges’ lead in providing variety in combination with a tailored experience. Missguided is an example of an online retailer fusing the online and instore experience to create an immersive shopping experience. Its newly opened physical store encourages shoppers to Instagram and Snapchat their experience, placing reminders and hashtags throughout the shop floor to create a social buzz.”
Guy Chiswick, managing director of Webloyalty Northern Europe, sees the advent of robots.
The machines are learning
Technology is now at a stage where AI systems can not only analyse data but make predictions, and this has vast implications across almost all sectors of the retail industry.
Tailored customer shopping experiences in particular will become increasingly elaborate in 2017. Brands are already starting to use AI platforms to analyse shopping data, growing exponentially in volume thanks to the rise in e-commerce, in real-time and entirely redefine how they interact with you. Neural networks and deep learning are being applied across many platforms – Amazon’s DSSTNE, for example, is an open source artificial intelligence framework that the company developed to power its product recommendation system.
Clothing brand The North Face has been experimenting with a tool called Fluid Expert Personal Shopper, powered by IBM’s cognitive technology Watson, which asks the consumer a series of questions during the online shopping process, evaluates the answers and accurately delivers tailored product recommendations.
But simple product suggestions are just the start. Even chatbots and virtual shopping assistants are moving on. In 2017, AI will inevitably take simple multiple choice questions into the next-generation territory of natural language and real two-way conversation, as if talking to a real-life personal shopper. From a retail point of view, the financial implication is huge – not only is it more likely that the buyer will get what they want, but more importantly that the seller will make the sale, with the minimum of effort.
Robotics in the supply chain
Delivery and the supply chain is another AI-related area that brands are exploring. Advanced data analytics can help here, allowing the logistics industry to be more agile and efficient. The ability to seamlessly link real-time customer demand with stock planning and management is invaluable for forecasting accurately and cost-saving.
Automation in logistics is already a reality – for example, DHL has started to use test autonomous fork-lift trucks, and Siemens has automated some production lines to the point that human supervision isn’t needed for weeks at a time – but the future lies in more sophisticated robotics. Unlike fixed automated machinery such as conveyor belts, robots can be programmed for many different tasks. Traditional forklift trucks refitted with AI computing power could be transformed into pick and pack robots – the possibilities are endless.
Delivery is fast becoming a key brand differentiator for retailers as customers expect their shopping to be delivered in the fastest and most convenient way possible. Harnessing the rapidly developing advances in automation and robotics can only help reduce the time to market. Although we’ve seen developments in this area, including Just Eat’s recent partnership with Starship Technologies’ delivery robots, driverless trucks and drones will only really take off when they can meet the high standards in place to keep our roads safe.
Steve Rothwell of Eagle Eye on synergy and wearables.
Physical and digital synergy
As we go into to 2017 and beyond we’re going to see more examples of the death of online pure-plays, which will either be bought, or will open their own physical store. With the boom of ecommerce, online retailers are feeling the impact of managing escalating deliveries and returns, as numbers go up, the cost impact becomes prohibitive. An example is Amazon Prime. Consumers pay a consistent price, but with the number of orders rising year upon year, Forrester estimates that the company loses $1 billion a year on free delivery Prime shipments. By opening a store in the physical world, as Amazon is now reportedly doing, retailers can adapt to that problematic final mile, with optional click and collect from store
Don’t believe the hype: wearables
Smart watches are the biggest consumer wearable right now and will eventually be a massive hit, but currently it lacks a driver to push it into mainstream adoption and feels less like an enabler, and more like technology for technology’s sake. In today’s market smart watches are expensive and while the Apple Watch only functions alongside your smartphone, it doesn’t offer you anything that your smartphone can’t do. For it to become the next big thing, it needs to replace the phone, or make an impact to a person’s life; its biggest potential is convenient payments. If everyone could buy a cheap wearable for £9.99 and it carried your Oyster card, you would see it become mainstream for Londoners overnight.
Jamie Merrick, head of industry insights at Salesforce Commerce Cloud [IRDX VDMW] on mobile and emerging technologies.
See now, buy now
The strong disruption in retail made by mobile devices goes hand-in-hand with emerging mobile payment options. This trend is sweeping across the globe – in China, for example, purchases driven by social influence are surging, buoyed by the growth of WeChat as a platform to order and pay for goods and services. 2017 will see this trend move to western markets, building on what we are already seeing from Instagram and Twitter being used as order or engagement platforms.
Make what you want
As technologies like AR, VR and RFID start to take hold in mainstream use, these are going to be built into digital concept stores – tying online, mobile and in-store channels together and bringing customers one unified experience. This personalised approach will mean shoppers can find the product they want and from the home, to visualise how it will look or fit. As we’ve seen with Singles Day in China this year, the east is leading adoption of these technologies, complemented by a demographic keen to augment and virtualise their everyday experiences. In the months ahead we’re likely to see other countries in this region showcase best-in-class examples of bringing innovation to market in this space.
We’ll have our final set of 2017 retail predictions in our first newsletter of next year, on January 3.
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