Retail is changing so fast that retail futurist Doug Stephens recently made this bold prediction: “Within five short years, the current user experience of online marketplaces like Amazon, eBay and Alibaba will begin to look as archaic as a Sears & Roebuck catalog.” New technologies, according to Stephens, will "radically evolve the core concept of online shopping and the notion of what an online 'store' can be."
Here are the five of the biggest trends that are already making traditional retail look archaic.
Mobile and wearable payments
Retail is quickly moving toward being not only cashless, but cardless as well. U.K.-based salad outlet Tossed piloted a completely cashless store model last year, with contactless payment terminals in the middle of the store, ready to accept mobile payments.
Beyond using a phone for Apple Pay or Android Pay, consumers will increasingly use their smartwatches to complete transactions, with new entrants like Fitbit getting in on the NFC payments scheme. Before long, “I forgot my wallet” will be a saying of the past.
Amazon is taking frictionless payments to the next level with its checkout-free convenience store called Amazon Go. Through a sophisticated combination of computer vision, deep learning algorithms and sensor fusion, Amazon is able to process which items consumers took off the shelf and walked out of the store with, automatically charging their Amazon account. Shoppers have to be Amazon members and tap in with their phones before they enter the store.
While this level of sophistication may be hard to scale up beyond convenience stores, Sam’s Club is close behind with an in-aisle checkout system that significantly reduces checkout friction.
Internet of Things
The Internet of Things (IoT) is making a profitable foray into retail through voice-activated hardware such as the Amazon Echo. According to research by NPD Group, Amazon Echo owners spent around 10 percent more on Amazon in the six months after they bought the device than before they purchased it. Traditional retailers will find themselves competing against clever IoT devices such as smart fridges that restock groceries, and even smart shelves that restock inventory in-store.
Traditional distribution channels such as department stores—and even whole shopping malls—are becoming obsolete as brands like Nike begin dealing directly with the consumer through digital experiences. While many brands launch apps to increase mobile conversions, the relatively new Nike+ app provides users with tailored news stories and connections with athletes for training tips (as well as the ability to purchase Nike gear in-app).
Similarly, consumer packaged goods company High Ridge Brands has made an unusually concerted effort to build a relationship directly with consumers through email, social and mobile channels. This consumer-facing work paid off with a $415 million acquisition, positioning them for even faster growth. As retail becomes more fragmented, the brands connect most deeply with shoppers are in a position to win.
Doug Stephens from Retail Prophet has said, “Experiences won’t just sell products; experiences will be the products.” The most immersive technology for creating new experiences is virtual reality, and forward-thinking brands are taking advantage of it. For example, Lowe’s has introduced a pilot VR program in a Massachusetts location that walks users through the process of tiling their bathroom shower, without having to get their hands dirty. VR won’t be applicable to every retail brand, but those that can leverage it well will leave their customers with an unforgettable experience. And in a retail landscape where customers can easily make purchases online, in-store experiences such as VR are one of the only things motivating consumers to leave the comfort of their home.
While it’s important to be aware of trends, retailers need to make sure that their investments help enhance the customer experience. Ultimately, an understanding of the shopper journey will help companies separate the trends that are here to stay from fads that are nothing more than gimmicks.