Hesitant retailers could miss out on £860m in sales by not adopting new technologies, warns eBay
Hesitation in investing in ‘third wave’ technologies will cost UK retailers more than £860 million worth of sales over the next two years, new research from eBay reveals. That’s the equivalent to the amount UK shoppers spend on phones and telecom equipment, including smartphones, every year.
Collectively, third wave technologies – interactive TV, augmented reality, image recognition, smart devices and a host of in-store technologies - offer a potential boost of £2.4 billion in additional sales to the UK retail industry by 2014. This multi-billion pound dividend is equivalent to nearly one tenth (8%) of UK online retail sales in 2014.
Despite this opportunity, over a third (38%) of retailers have no plans to introduce these new technologies over the next two years. When asked, those failing to invest the reticent retailers identified the following barriers in doing so:
• Lack of understanding of how to make the technologies applicable to their business
• Cost of upfront investment
• Confusion over the number of new technologies and which to apply to their business
• Concern that focusing on new technologies will mean taking their eye off of the core business
Research shows that smaller retailers in particular run a real risk of being left behind with less than one in ten currently using new technologies and nearly three quarters not planning on implementing them in the next two years.
Despite this lack of future investment, many retailers recognise the potential of these new technologies with over half worried that their failure to invest will affect their market share.
Nearly half (42%) of retailers have no plans to introduce interactive TV over the next two years, missing out on a chunk of the predicted £750m direct sales this technology could deliver to the UK economy by 2014.
Three quarters (73%) of retailers have no plans to introduce augmented reality over the next two years, missing out on a chunk of the predicted £345m direct sales this technology could deliver to the UK economy by 2014.
Only 50% will be introducing in store technologies, missing out on a proportion of the predicted £955m this technology could deliver to the UK retail economy by 2014.
Nearly two thirds (61%) of retailers aren’t planning on introducing image recognition, missing out on a proportion of the predicted £97m in direct sales this technology will deliver to the UK economy by 2014.
Despite the potential boost of over £250m, nearly half (43%) of all retailers do not plan on taking advantage of smart devices as a retail channel.
And, worryingly, a third (33%) of retailers aren’t even planning on integrating mobile, now accounting for 0.5% of UK retail sales and rising, into their retail strategies.
The new research, commissioned by eBay, demonstrates that third wave technologies will become increasingly popular with shoppers. Consumer shopping spend either directly or influenced by third wave technologies will surge in the next two years, from £108m in 2011 to £2.4bn in 2014, which is an increase of 2000%. By 2016 just under a third of the population will regularly use at least one of these new technologies when shopping.
Neil Saunders, Retail analyst, of Conlumino recognised the need for retailers to change their strategy and avoid standing still. He believes that: “Retailers need to take their heads out of the sand. They understand the potential of these new technologies but are paralysed to act. Retailers that don’t invest in these new areas will find growth much tougher.
“In order to meet this consumer demand it’s vital that retailers pick up the pace and invest today to keep up with the shopping world of tomorrow.”
Angus McCarey, UK Retail Director for eBay adds: “Today’s figures show that it continues to be a challenging time for retailers. However, technology is changing the way consumers shop and has the potential to provide a valuable lifeline to the retail sector. eBay research shows that UK retailers could be missing out on up to £860m by failing to harness the potential of technologies such as interactive TV, augmented reality and in-store technologies to deliver an enhanced shopping experience. Previously, consumers viewed online and offline shopping as distinct, but that’s no longer the case. Today they don’t see a channel, but a brand. Retailers who embrace these technologies to deliver an integrated and seamless multi-channel shopping experience will be the ones who survive, and ultimately, thrive.”