It is mind-boggling how extensively the retail sector has changed in only a few years. Just over a decade ago, buying music and movies on iTunes was an affair for the initiated, and many consumers looked askance at e-commerce, fretting about using their credit cards online. Now, purchasing something at the tap of a touch-screen — or at the wave of a smartphone — is the rule rather than the exception.
“In the not too distant future, consumer payments will be more integrated as mobile and digital wallets become more prevalent both in-store and in-app,” says Catherine Moore, European President of Merchant Services at J.P. Morgan. “Looking ahead, consumers will not differentiate between Apple Pay, Samsung Pay, their credit cards, bank transfers or cash, but rather think about their preferred forms of payment curated and used in a very personal way.”
Crucially, the change brought about by the Internet and the mobile payment revolution is not going to stop anytime soon—if anything, much more is to come.
To be successful, retailers have to find a way to continue to extend their brand into the digital space
“As retailers continue to innovate and increasingly engage customers online in the full sales experience, facilitating easier and more secure payments will continue to be critical. People today expect a more personalised service across all retail interactions and in multiple locations,” Moore says. “To be successful, retailers have to find a way to continue to extend their brand into the digital space, based on consumer-defined, behavioural frameworks that are still emerging.”
In order to be up to that challenge, the whole retail sector is already experimenting with emerging technologies that have the potential to reshape retail in profound ways. One of such technologies is the blockchain. Notorious for being the digital scaffolding of ill-reputed cryptocurrency bitcoin, the blockchain is a digital decentralised ledger able to keep a permanent, tamper-proof record of any transaction. That makes it ideal for several applications in the retail sector.
Blockchain technology, for example, could be used for so-called “micro-transactions”: very small payments which, right now, are not convenient because of banking fees. Cryptocurrency is easy to fractionalise and does not require the payment of any fee. Blockchain-based transactions, therefore, could be a way to pay for short-term usage of services or appliances, German blockchain startup Slock.it proposes. “Blockchain Framework, using micro-transactions, can help shift business models towards ‘Pay As You Use’ services, for any device, anywhere,” says Slock.it cofounder Stephan Tual.
But blockchain’s impact could go beyond payments. London-based company Provenance, for example, is harnessing the blockchain to enhance transparency in retail: while on the one hand e-commerce has simplified access to a vast range of products, on the other hand consumers may struggle to ascertain that their purchase is authentic or sourced ethically.
To solve that — company founder Jessi Baker explains — Provenance uses blockchain technology to give products a “passport”, which allows consumers to track down their movement throughout the supply chain.
“The way we trust brands and products is changing. With the rise of mobile and data, decisions based on a wider set of information is increasingly easy. However, trusting that information is the next frontier – particularly when shopping online,” Baker explains. “Our vision is that one day every product will come with a Provenance e-commerce embed and interactive tag allowing us access to data. This will help consumers find products that match their values, and that they can trust.”
Digitally enabled products become direct channels of interaction with the consumer
Other companies believe that provenance could be established through different means.
British firm Evrything marshals a variety of Internet of Things (IoT) technologies — including NFC, QR, RFID, and Bluetooth — to provide consumers with more information. When choosing a product in a shop, a customer can scan it with their smartphone to get valuable insights, explains Evrything CEO Niall Murphy.
“Digitally enabled products become direct channels of interaction with the consumer. This means that for example a consumer can use their smartphone to access information about a product directly from that product item in the store,” he says. “But they can also pay for that product directly from their phone without going to a check-out.”
And, in the same breath, such “smart products” allow retailers to run their businesses more efficiently.
“Retailers lose sales if the right inventory is not in the right retail store when a consumer wants to purchase it. And they lose income if too much inventory is in a retail store, having to discount products to sell them. IoT makes it possible to track individual product items and apply realtime analytical intelligence so solve these kinds of problems,” Murphy explains.
IoT technology might also be leveraged to deliver an interactive shopping experience: rather than expecting customers to draw out their phones and check out products on the shelves, shelves themselves could address shoppers with recommendations.
“Think of smart shelves that talk to the smart assistant on your mobile phone as you walk past, recognise that it’s your partner’s birthday tomorrow and start recommending not only presents but also recipes for a romantic meal in for two,” says Alex Voica, Head of Technology PR and Communications at online retailer Ocado.
In general, though, the real question is: in the near future, will there be shops at all — or will they be utterly superseded by massive warehouses and online shopping websites?
Brick-and-morter shops will exist mainly so we can touch, feel and try on the stuff we want to buy
The consensus is that brick-and-morter shops will likely be around for a while, but they will be different, and will serve a different function. We will go to the shop mainly to touch, feel and try on the stuff we want to buy — but then we could decide to just order it online and get it delivered the day after.
Therefore, many shops will reinvent themselves as showrooms, rather than marketplaces. They could become smaller, and keep less merchandise in-store. Augmented Reality (AR) technology would play the key role of conjuring goods out of thin air, or customise them on the spot through digital filters.
“Some retailers already have iPads set up in such a way that customers can place virtual chairs around a physical table. Obviously, this allows for much more economic use of those expensive square shop metres,” explains Ko de Ruyter, Professor of Marketing at Cass business school.
“Nike has a base model shoe on display and — with the help of their phones — customers can customise their own model. You can have any colour car on display because AR-based apps will allow you to change the colour by a click.”
It follows that, in some cases, shoppers will skip the shop-going altogether, and just download an Augmented Reality app to “try” the product at home.
Manchester-based startup Digital Bridge, for instance, has developed a technology that blends AR and machine vision, allowing customers to visualise on their handsets what furniture would look like in their own homes.
“It was developed to help solve the problem of the ‘Imagination Gap’ – where people can’t imagine how a product will look in their home. This means they are putting off making expensive purchases,” says company founder David Levine.
“Thanks to tech giants Apple and Google announcing the launch of technology that allows AR apps to be developed and used on their mobile devices, there will be a greater opportunity for retailers to get on board.”
Ground-based delivery robots have opened the door to new opportunities for retailers
Of course, once we have decided that we love that AR lamp, the question remains of how to get it physically delivered to our place. One-day delivery and real-time purchase tracking are already with us — so can home delivery get, possibly, even more high-tech?
Turns out it can. But although a lot has been said about Amazon’s drone-delivery ambitions, regulation could prevent the plan from flying — at least for a while. More terrestrial solutions, though, are rapidly catching on.
The UK is already a testing bed for several companies trialling driverless delivery buggies — i.e.: small autonomous (or semi-autonomous) vehicles that can find their way to the buyer’s home, solving the so-called “last mile problem”.
“Last mile delivery is currently the most expensive mile for delivery firms and accounts for the biggest bottleneck in the growth of the e-commerce industry, especially local e-commerce such as groceries and food delivery. Until now, there has not been a truly affordable method of neighbourhood delivery for local businesses, online retailers and consumers,” says Allan Martinson, COO of self-driving robotics company Starship Technologies.
“Ground-based delivery robots have opened the door to new opportunities for retailers and delivery firms alike,” Martinson adds.
William Sachiti, whose company Academy of Robotics has designed self-driving delivery pod KarGo, concurs. “Self-driving cars allow not just super fast delivery but they are also enabling in terms of being able to take customers to retail locations where they otherwise wouldn’t/couldn’t have gone,“ he says.
“One of the reasons most people hate driving to a local town is parking. Autonomous vehicles eliminate the parking problem and allows even those who can’t drive to be able to go to retail locations.”
“The main problems is regulation: while autonomous vehicles are a great concept, there still is no legislation around them,” he adds.
J.P. Morgan’s Moore also underlines the importance that regulation keeps up with the technological disruption the sector is already experiencing: “New regulations will play a significant role in helping retailers maintain digital relationships with their customers in-store and online,” she says.
“Providing active consent for how personal data can be used (up to and including the ‘right to be forgotten’) will be a game changer in redefining how merchants serve up targeted marketing and offers to consumers, as well as to analyse data to leverage for deepening relationships and loyalty.”
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