Ten tech trends that will transform retail
Last year was a solid one for retailers that were responsive to change. This year, while we’re expecting accelerated growth in Australian retail (forecasted between 2.6 and 2.9 per cent), people will spend more with retailers that are experimental, interactive and personalised.
As new battle lines for product, merchandising and distribution are drawn, emerging technologies will be vital for decade-old and newly launched brands to successfully evolve.
Let’s take a look at the key trends set to shape the retail year to come.
1. Chat becomes the new secret weapon
Every month we exchange more than eight billion messages with businesses on Facebook Messenger, a number that has significantly grown by 400 per cent in the past 12 months, according to the social media platform.
Further enabled by WhatsApp, WeChat, Instagram DM and live chat, messaging is now the preferred way to communicate. When we think back to the basics of service, any good customer relationship begins with a conversation and builds on that connection over time.
This is the year that retailers will realise messaging assistants, in particular conversational chatbots, can be their secret weapon for acquisition, revenue and retention.
The bar will be raised as applications using NLU (natural language understanding) become more advanced; think chatbots that mimic humans, remember customers, understand context, speak with the right tone of voice and provide scalable value in every interaction.
In addition to welcoming, onboarding, answering questions, and helping with product/service research, chat and voice assistants will also measure sentiment and drive sales more frequently as and when the customer wants.
2. Increased focus on voice
As we prepare for the rapid adoption of voice-enabled technologies in years to come, 2019 is set to be foundational for retail and customer usage.
By the end of the year, 50 per cent of US homes are expected to own a smart speaker, and Australians are closely following suit with Google Home and Alexa audiences growing locally.
As a lively, engaging and helpful experience, voice creates important customer connection through higher memory effects and physiological responses and allows retailers to better understand their customer.
Retailers investing in voice will have a competitive edge. Those with localised search strategies (incorporating ‘near me’ searches as an example) will reap initial rewards as customers search and discover via voice.
While the opportunities relating to purchase have yet to be realised, we are on the cusp of what’s to come. Fuelled by advances in NLU and AI, conversations are becoming far more contextual and valuable for both the customer and retailer.
3. Social commerce on the rise
Social commerce is set to grow fast this year, with mobile usage increasing and social-loving generations maturing in the year to come. Today’s customer doesn’t need to visit a website to buy – they can discover, research and purchase directly from social and often, it’s a more enjoyable and convenient experience.
Social content formats are changing. According to Hootsuite’s Social Trends 2019 report, the rise of ‘storyliving’ over traditional storytelling will continue, with Instagram Stories now growing 15 times faster than feed sharing.
Both retailers and social platforms will adapt to new content opportunities, and make it easier to instantly buy on social, given the breadth of shoppable moments. More retailers will launch exclusive products available on Instagram, Snapchat, YouTube or WeChat only, and we’ll see new frontiers open with digital/fictional influencers (such as Lil Miquela) releasing their own collections.
4. Real-time data drives deeper customer knowledge
As technology advances, the need for a master data strategy and real-time insight correlation is higher than it’s ever been. As customers, we are human data sources and retailers are striving to better understand search, purchase and engagement behaviour through centralised and transparent platforms.
Functioning alongside artificial intelligence and increased data inputs, mobile location intelligence and store sensor data will allow activity to be mapped out in physical locations. As a result, we’ll see the convergence of offline and online customer profiles to track a more complete customer journey, understand brand sentiment, and improve budget efficiencies.
To complement this, there will still be a need for traditional data and analytics. Machine learning algorithms suit predictive insights and specific use cases, however traditional methods will continue to be used for time-series, ad-hoc analysis and business dashboards.
5. The search for value in data exchange broadens
Perceptions of data exchange, security and privacy have been tainted in recent times due to misconduct and breaches. Ninety per cent of people who log onto retail sites are hackers using stolen data and the impacts can be devastating. Last year, illegal activity concerning Under Armour and its MyFitnessPal fitness-tracking app affected close to 150 million users.
Gone are the days where customers would hand over their information without a clear benefit in return. Today, they want assurances that their data will be protected, and they want to understand why their data is required and how it will improve their experience.
Seventy-five per cent of people will avoid purchasing a product if they do not trust the retailer to protect their data, according to a survey from IBM.
Given we are seeing more dialogue around customer data rights, retailers will need to demonstrate trust and transparency in how they handle data, and ensure that their strategy focuses on data collection methods that drive an improved experience or superior level of service (both directly and indirectly).
6. Personalisation gets more precise
Netflix and Spotify have set the standard for personalisation, providing relevant recommendations and curating content based on what we’ve watched and listened to, what time of day it is and what mood we’re in.
As a result, customers are now craving more precise personalised experiences when it comes to shopping. They’re comfortable sharing data in secure ways, if the retailer can effectively draw meaningful insights and go beyond surface-level personalisation.
To meet expectations, it’s anticipated retailers will focus more closely on the individual, their behaviours, attitudes and intentions – she added the skirt to her cart on her mobile and is now in-store– and then generate a personalised message or reward to encourage purchase.
As customer engagement and lifetime value becomes more important, we’ll see personalisation extend beyond website, social and email to product, service, events and experience offerings.
7. Less ownership
Customers will continue to move away from ownership to subscription and rental services. Largely driven by millenials to date, this trend is set to influence broader audiences as concerns about sustainability grow and the desire for personalisation and convenience increases.
Following in the footsteps of disruptors such as Rent the Runway, Stitch Fix and GlamCorner, retailers will adopt subscription and rental innovations to open up new revenue streams and offset in-store traffic.
This year, we’ll also see the ‘secondhand’ market be adopted more broadly. Currently at $20 billion globally, it’s expected to double by 2022, according to the ThredUp 2018 Resale Report.
This growth is largely being fuelled by the re-selling movement which has permeated youth culture and consignment leaders such as The RealReal.
8. New delivery and payment methods
The time customers are willing to wait for a delivery has significantly dropped in the past three years, from within a week to under two days. Fast delivery, free shipping and allowing customers to pick their own delivery option will keep businesses popular, and this year, we’ll also see additional methods of delivery emerge to meet customers’ demands, increase efficiencies and reduce expenses.
As last-mile delivery costs can make up to 28 per cent of a product’s total delivery cost, retailers and delivery providers are set to experiment with sensor-driven replenishment, drones and autonomous vehicles to gain a competitive edge.
9. Accelerated adoption of mixed realities
Retail will become more interactive with high quality content distributed through a combination of augmented reality, virtual reality, and mixed reality experiences. Applications such as virtual fitting, product catalogues, try-on and in-store search will bring products and services to life to create a more spontaneous shopping environment and drive conversion through immersion.
Digital collections and 3D garment simulation, which showcase clothing and accessories virtually, will also increase in popularity due to the sustainable nature of designing and sharing fashion in a way that avoids single-use clothing waste.
10. Increased blockchain usage
Today’s customer wants assurance their products have come from the stated origin, and that their order has been safely handled and transported. As corporates and customers seek greater transparency, more retailers experiment with blockchain – an immutable data ledger in which everyone involved has to verify every step along the supply chain process.
Walmart has partnered with IBM’s Food Trust blockchain platform to improve food tracking and safety, and as a result reduced the time it takes to track food sources from months, to 2.2 seconds.
Blockchain will also help retailers open up sharing economies, enable omni-retail communications and accept new payment forms such as cryptocurrency.
Emma Sharley is the director of Sharley Consulting, co-founder of personalised shopping app Shop You, a start-up adviser, a board member of IFAB and regularly speaks and contributes to industry publications. Contact: emmasharley.com