Increased standard of living and income has changed consumer behavior and increased appetite for more goods. Nowadays, people love shopping, as it feels good and your brain gives you that dopamine rush just like eating chocolate.
Hence, during the lockdown, people were increasingly forced to rely on the internet to get their retail dopamine hits. In fact, during the past 2 years of COVID, over USD 1.7 trillion was spent in the US alone for buying stuff online. Globally online sales jumps to USD 26.7 trillion in 2019. Also, the pandemic has sped up retailers where they have been forced to adapt and innovate.
Technology is opening a whole new world of shopping. Today we can have everything we ever want from our fingertips without having to get out of the couch. And in the future, we’ll see more on-demand products and services. So it will be even harder to get people away from their homes.
Shopping is changing more than ever, stores are now relying on digital platforms to satisfy the consumer’s increased appetite. And more and more retailers are using technology incorporated with artificial intelligence and data analytics to increase the shopping experience and engagement.
In the past brands used to define themselves and their product, with glossy ads. But the internet has put consumers in the driving seat calling the shots for what’s cool. And reviews social media posts and influencers are leading the way in this retail revolution.
Influencers have started to live stream reviews of products online to their followers which in turn drives more sales for retailers. China is leading in live streaming selling which has partly helped the country become the world leader in e-commerce.
A forecast predicts that half of everything bought in China will be bought online. The Chinese internet market is highly developed and the scale of the market is expected to reach over USD 3.3 trillion worth of online consumption by 2025.
Usually, the online world goes like this, Google for searching, Facebook for social media, Amazon for e-commerce and PayPal for payments. But the Chinese consumers do their online shopping in an entirely different ecosystem.
In the Chinese e-commerce market is that they’ve put all transactions in entire ecosystems where a single organization handles everything all together. And of course, all of this generates a huge amount of data.
Online commerce has huge amounts of collected data about its customers. And when you compared that to traditional brick-and-mortar retailers, it seems like they are flying blind. This is why internet companies are beating traditional retailers and brands for most of the last 20 years.
This super ecosystem gives the retailers intimate knowledge of exactly what their users like, want and buy. With, more direct insight into customer demands, retailers can maximize their margins and also cut waste. Some Chinese tech firms are even using people’s digital footprint to influence the way goods are produced. So factories can deal directly with consumers and cutting intermediaries.
The companies that harness the power of their consumer’s data are thriving. Amazon exceeded USD 100 billion in quarterly sales for the first time in the last three months of 2020. And of course, the internet provides more scalability for companies and as they grow bigger, they’ve got more data.
With their established logistical system and smooth purchasing process, many useful online brands trade their stock through these big companies. Smaller brands accept customers’ orders but do not keep goods sold in stock. This process is called drop shipping. Big companies like Amazon and Aliexpress handle the inventory.
However, this has some drawbacks as the brand doesn’t pass on much of the customer’s data which means companies know very little about who is buying their products. Hence, other companies have taken a more direct to customer approach online.
For example, Nike decided to sell online only via the Nike website and it developed ways of keeping much closer tabs on its customers. Like membership program and loyalty scheme which allows it to create a customer profile for its 170 million members.
And Nike’s apps offer the customer a personalized experience in return for a detailed insight into their behavior. When you sign up for their app, you’ll give them information about how much you run every day, what sports you’re doing, how much yoga you’re doing and all sorts of stuff that helps inform Nike on what to produce. They’re able to see where you are and also better inform you where to put their stores.
Nike’s apps also let users customize their shoes and in doing so learn the customer’s favorite colors and designs. And by tracking how far they run, they can even know when it’s time for a customer to splash out on a new pair of shoes. You’re sharing your data and intimacy with Nike which in turn creates a more intimate bond between Nike and its customers
As shopping has shifted online and with the pandemic there has been a greater need for direct-to-consumer selling. Platforms like Shopify allow anyone to set up their own online store. Shopify aims to create an ecosystem that integrates e-commerce with social media.
Hence, from now on the future brick-and-mortar will be more about experiences. It will be more about providing a different elevated experience. About teaching or giving people something they cannot get from their home. It will also be about community because people still need people.
Even if we have a technology-powered society, in the future people will still crave human interaction and we have to leave the house to get that. Studies show that people make other people happy and while we have all these advances in technology like robots, AI, virtual assistants, online platforms and automation people will still search for human interaction.
Stores will not be dead, rather they would just be reimagined to provide an entirely new type of experience. They will be great for providing what we call the brand theatre and giving a live experience to the customer. It will also provide an expert level experience which can really help customers in a way that the internet cannot.
A more utopian view of the future of retail stores is that when you walk in, your device will automatically connect to the Wi-Fi. At the same time, AI will recognize your device and pull up all the relevant data it has on you.
Data about your previous purchases, your interest in the store and if you might need any upgrades or repairs items. You might get a notification letting you know about personalized discounts and offers that might pinch your interest.
Nike has adapted its stores to create a bespoke service for its customer, thanks to the information on their digital profile and the store present yet another channel to capture their data. In the midst of the pandemic, it opened a huge store in Paris where you go in and immediately offers you interactive experiences.
It blends both online and offline data and the whole point is to make the experience of shopping at Nike more intimate more direct and more kind of one-to-one.
When it comes to online shopping today, it’s quite a flawed experience because you can’t touch or try a product. Sizing is a real problem but with advances in augmented reality, you’ll be able to figure out your size.
Shopping for clothing in the future will be extremely personalized and much less effort for both the customer and the company who today has to deal with this nightmare of returns in e-commerce.
In the future, we’ll see even more voice-activated assistants in the home. And humans process images 60 times faster so we’ll see more virtual assistants coupled with imagery on a screen that can help customers to make choices.
The voice-activated assistant will only grow in its ability to understand what the customer wants and needs. For example, you might tell your voice-activated assistant I need an outfit to go to the beach and the virtual assistant will tell you exactly what to wear. Or maybe even deliver it to your door without having to do much effort.
And whether it’s retail or figuring out what to shop for dinner, people want things instantly and this will not change. But the methods to getting those items will change. We are already seeing Amazon’s same-day delivery. The company is also coming up with the idea of drone delivery.
Which is more environmentally friendly and even more scalable than cars. In the future, we can expect to see even more instant delivery scaling up to under 30 minutes. So in the future, we’ll see more experimentation with getting people’s items faster, more efficiently and in a more environmentally friendly manner.
According to an estimate, the amount of data collected globally is expected to increase from 33 trillion gigabytes in 2018 to 175 trillion by 2025. This will be accompanied by rising concerns about privacy and the exploitation of personal data. This may sit uncomfortably with some but one thing is for sure is that the retail revolution will be driven by your data and customer experience.
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