Market research has identified 5 trends that will shape the future of retailing
- technology and tools to enhance decision making
- innovations in visual display to make customers’ purchase decisions easier
- differentiating customer experiences
- collection of data at massive scale (Big Data) and their usages
- use of analytics to improve profitability
In today’s article we will discuss and illustrate each of those 5 market trends.
1. Technology and tools to enhance decision making
Several technological developments have changed dramatically the way we shop and will continue to be important in the future.
More and more personalization
Thanks to cloud and distributed computing purchases logged on loyalty cards can be better leveraged to propose personalized offers. Further technological improvements will help retailers propose personalized offers in real-time, for instance through mobile applications.
The shopping trip will become more convenient
In the future shopping trips will become frictionless, hassle-free and always faster. This will imply having less human interactions at the checkout. Experiments like AmazonGo in the US or Tap-To-Go in The Netherlands support this trend and will most probably replace other checkout systems like quick scan or self-scan on the long-term.
E-commerce market share to grow
In some countries the market share of e-commerce is still low for Fast Moving Consumer Goods (FMCG). But it will keep growing. Consumers have less and less time to go to the supermarket and online ordering will increase. Whether the delivery is at home or picked-up in the supermarket will depend on the supplement asked for that kind of service but shoppers willing to undergo the hassle of a crowded saturday afternoon supermarket will become rarer and rarer.
2. Innovations in visual display
How to stand out from the crowd when consumers are overwhelmed by product offerings ?
Shoppers are unable to process the amount of information at hand in a supermarket. The cognitive load is just too high. As a consequence they buy always the same and don’t discover what the range of products available.
Supermarkets need to change the way they display product to make it easier for shoppers to discover products and process the related information. Smart shelves like the one presented by AWM are obviously going to be a groing market trend in the future.
3. Differentiating customer experience
The importance of creating differentiated customer experiences should not be stated again.
One excellent definition of customer experience is offered by Prof. Verhoef :
“[it] involves the customer’s cognitive, affective, emotionnal, social and physical response to the retailer. This experience is created not only by those elements which the retailer can control […] but also by elements that are outside of the retailer’s control […]”
We believe that the future of retailing will leverage emotional connections with customers. Several strategies can be used by retailers to reach this goal :
higher purposes or values
Retailers may try to connect with customers through the development of strategies emphasizing higher values and purposes.
The retailer’s category will play a role in determining which experience is proposed. Premium food retailers will certainly engage in campaign for healthier eating and will try to make purchases less of a commodity. Higher technological maturity may also lead retailers to renew out-of-store experiments that had failed in the past (see for instance the Delhaize “The Cube” experiment).
Visual aids, smart shelves, faster payment methods will all contribute to making the in-stire experience different. In-store experience will also be revolutionized by mobile apps. They have been very underestimated until now and their use remain rare and is mostly limited to experiments (see for instance the augmented reality app launched by Ahold).
4. Big Data
Collecting data has been at the heart retailers’ strategies for years. Personalized coupons for instance were created using complex algorithms to predct what you’d like to purchase next.
The availability of cheap computing power in the cloud will enable to leverage even more the data collected and support the development of new systems aiming at collecting even more. See for instance the Amazon Go concept store launched by Amazon which collects and analyses a wide range of data previously not captured.
5. Linking analytics and profitability
Supported by the previous trend (Big Data collection) it seems obvious that retailers will invent new ways to improve their profitability (especially in a context of tug-of-war between e-commerce and brick-and-mortar stores.
New experiments of in-store dynamic pricing will certainly be reported in 2018. New types of data collected (for instance through instant payment methods) will enable retailers to visualize in-store shopping sequences and improve store layout to lead to more impulsive purchases. An important performance indicator in that respect is the percentage of products purchased that are new to the customer. Ensuring that the customer explores the widest range possible of products is key to the retailer’s profitability.