The Changing Face of Retail Industry

The Changing Face of Retail Industry

By: Graeme McVie, VP & GM, Business Development, Precima

Graeme McVie, VP & GM, Business Development, Precima

Emergence of Omni-channel, 3D Printing, and Mcommerce

The Amazon Go store has prompted a lot of interest in the industry. In particular the concept of not having to go to a register and scan all of the products you buy is generating a lot of excitement–this removes one of the major friction points from the shopping experience. Retailers will start to remove some of this check-out friction by allowing some customers to use their smart phone to scan items and then simply walk out of the store.

"Shoppers are increasingly seeking out healthy options and technology will enable this by providing information, advice and the ability to track behavior"

Omni-channel and ecommerce/ mcommerce will continue to be hot topics. For grocery retailing, click-and-collect and home delivery will continue to rise in popularity as will ordering ingredients from online meal providers like Blue Apron. For other retail verticals, shoppers will not accept a fragmented customer experience and retailers will need to realize that a shopper who buys online may want to pickup in store or to return an online purchase to a store. They will also want to visit a store to review an item in person but will be happy to have the item shipped directly to their home. For clothing retailers, shoppers will make increasing use of body scanners and will expect to be able to receive clothing that is specific to their own body size and shape.

While we’re going to continue to see an increase in ecommerce and mobile activity, what will be most interesting will be the adoption rate of auto-replenishment. Amazon has pioneered this approach with their Amazon Dash button. As shoppers look to minimize the mundane aspect of shopping, more and more of these types of “standard” or “routine” purchases will migrate to auto-replenishment over time. This approach will continue to be driven by a user-initiated action, but it will increasingly become true auto-replenishment where the purchase is triggered by a shopper running low on a product.

3D printing of personalized items will continue to gather pace. Shoppers will be willing to pay a premium for items that are considered one-of-a-kind and can be printed locally and delivered to their homes in a few days. 3D printing is better suited to some types of products than others, but expect to see the uses of 3D printing broaden to new product areas.

Health-related technology will continue to grow in importance. Shoppers are increasingly seeking out healthy options and technology will enable this by providing information, advice and the ability to track behavior. The more advanced retailers will proactively provide suggestions for healthier alternatives and make it easier for shoppers to lead healthier lives.

In-store robots are another interesting trend that will grow in popularity. Companies like Lowes Home Improvement have already started trialing these helpful in-store assistants and will likely grow in popularity as shoppers become more accustomed to them.

An exciting technology development to watch will be delivery drones. 2017 might be a little early to see them enter the mainstream but progress in this regard will be made in some way.

The Advancing Role of Companies

With the rapidly changing consumer and competitive landscape we’re witnessing a mixture of emotions within the industry. For some, these changes are viewed as huge opportunities to be leveraged to drive towards a new nirvana; for others they are terrifying forces of change that are ushering in a new era that is strange and scary; finally, it can be perceived as a delicate balancing act between taking advantage of the opportunities when they can and attempting to keep their heads above water when they are feeling overwhelmed.

I feel that the role of companies like Precima is to be a calming influence and a guide during these somewhat turbulent times. We’ve moved from primarily being the data and analytics experts to being the trusted partner who will assist retailers with safely and successfully navigating the rapidly changing waters. Education, context and change management are all increasing in importance as retailers are looking to get to grips with big data, advanced analytics and new cloud-based technologies. We spend much more time laying out the end-state vision and charting the course that is best suited for the client’s organization and then working hand-in-hand with our clients to help them along the journey.

Change management is absolutely key to the successful adoption of new data/analytics/technologies and that is one area that will continue to see increased focus–without broad-based and consistent adoption of new approaches it is not possible to execute improved actions that deliver value. As the saying goes, ‘every journey starts with a small step’, however I must add it is best to go on a journey with a good guide and a reliable map, which is where Precima is increasingly assisting our clients.

IoT Will be the Game Changer

I think the IoT will drive radical change in the grocery retail sector as mundane replenishment shopping will be handled by the IoT and only shopping that requires some consideration and judgment will prevail. With grocery shopping I could see the center of the store (dry/frozen/home/personal products/etc.) shrinking dramatically as most of these purchases are auto-delivered to the shopper’s home when they are running low. Grocery retailers will then have to decide what to do with that extra space in the center of their stores–do they simply shrink the overall size of their stores; do they expand the fresh areas of the store across the entire store foot print; do they turn half of the store into a replenishment facility to fulfill all of those auto-replenishment orders?

For other retail sectors it will drive a need to upgrade appliances to incorporate IoT technology. Washing machines that can identify maintenance issues before they happen; refrigerators that can identify when the consumer is low on milk and can initiate the auto-replenish order; home printers that can re-order printer ink when it is running low.

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