It’s nearly impossible to talk about the “future of retail” when that future is only just beginning to take shape. Influences continue to come from all over the geographic world, from all over the technology world and from all over the social world.
When, and quite frankly if those influences ever converge remains to be seen, but as the more immediate future comes into clearer focus, there are a few things we feel fairly certain about in 2020.
The China (Retail) Syndrome
No, we’re not talking about Jane Fonda and a nuclear meltdown, we’re merely referencing the major impact we think China has had and will continue to have on the entire retail world. The trend-setting Asian consumers in general, and more specifically the Chinese, have often driven shopping habits in some interesting directions, as this very tech-centric region is typically ahead of the curve on many things.
The average age, of what we’ll call the high-spending consumer in China, is significantly lower than the US because youth in the country typically have greater access to material goods at a younger age, due to China’s one-child policy. This fact has shaped several interesting trends in the way shopping is structured in the country. Two numbers worth considering, that research firm Bain & Company recently released, are that 84% of millennials in China neither care for nor trust advertising and roughly 75% post feedback (both positive and negative) of their purchases at least once a month. That’s more than 300 million people in China who only move forward with purchasing a decision after getting consent from their peers via various social media channels.
If you’ve heard the terms “entertainmerce” or “retailtainment” it’s because they are all the rage now in China. The two terms are synonymous with all the experiential marketing retailers are experimenting with in the country, particularly online giant Alibaba. And most of the retail fun and games surrounding this trend are happening in-store - either at pop-ups or traditional brick and mortar. Despite their obvious thirst for digital, young Chinese consumers now rank in-person retail experiences as the most impactful. As a result, a merging of the two is beginning to happen.
The aforementioned Alibaba recently live-streamed an eight-hour fashion show on what is called Singles Day in China, similar to Black Friday here in the US. The event was shown over Tmall.com, a huge Chinese-language website for B2C online retail. Viewers could actually buy clothing as they watched the models wear the pieces down the runway. The idea has spawned more than 300 similar platforms with over 300 million users excitedly taking part in this “see now, buy now” retail approach.
This merging of bricks-and-clicks is also gaining steam in the US, as even the leading ecommerce companies are rethinking their online-only approach - Amazon’s acquisition of Whole Foods and the launch of Amazon Go is a great example.
AI & AR Opening Doors to New Opps
AI’s continued evolution will enable retailers to use store-level data to an even greater degree to improve the customer experience. Those digital footprints consumers are leaving behind are critical to be tracking - the things they like, what they want, and how much they are willing to pay - smart retailers are gathering and mining that information from sources like social media to IoT sensors and then using AI to bring it all together to personalize the shopping experience like never before.
And we are now seeing how AR is allowing consumers to gain a much fuller understanding of the products they are buying. With consumer electronics, the in-store experience doesn't always help customers visualize how products will fit and what they might look like in their homes. With apparel, AR is allowing online users to try things on so they can see what they look like prior to buying. AR is changing retail with its ability to let the online buyer truly experience products before they make a purchase. This will result in a significant decrease in the number of product returns we see today - a number that has been reported to be as high as 25%.
There are many more trends and innovations that will undoubtedly take retail in directions it’s hard to even imagine today. But the few we’ve touched upon in the paragraphs above should be leading the way for at least (part of) the next year. Beyond that, we’re going to have to wait for our crystal ball to come back from the repair shop.