With inflation likely to be reduced and wages set to rise, 2018 could prove a more promising year as far as the retail sector is concerned. However, in spite of improved demand, retailers will suffer the signs of being squeezed from all angles as costs continue to rise. While brick-and-mortar stores still very much have their place in retail, merchants will need to invest in online environments in order to stay relevant to the consumer. As retail executives alter this balance between their online and offline efforts, we will see more store closures this year. Overall, efforts will need to be further focused on margins, the bottom line, cost reduction and operational efficiency.
In consideration of these new industry developments, here are the top trends shaping retail and ecommerce markets today:
AI is at the forefront of consumer personalisation
In early last year, Coca-Cola sacked its CMO (Chief Marketing Officer) to make way for a different role – a CGO (Chief Growth Officer), to align better with the company’s new consumer-oriented strategy. This signals a real shift in the retail and consumer goods industries towards customer-centricity. Now, through AI, big data and analytics, brands have the option to duck out of intense pricing wars in favour of a more customer-first approach. Data can help brands become stickier by pre-empting what a customer will want, including collecting buying behaviours and customer searches, that power personalised marketing strategies, email campaigns and user experiences.
However, it is not just marketing that AI and big data are transforming. The recent launch of Amazon Go saw the internet of things, machine intelligence and mobile apps coming together to provide a unique in-store experience. At the flagship new store, no cash or checkouts are needed – the technology works seamlessly to understand which items you have picked up from the shelf, it will even place them into your online basket for you and allow you to pay without ‘physically’ paying in the in-store world. This shows that AI can be used not only to power online experiences, yet to tie together online and offline retail environments.
Now that brands can focus on customer experience over price, they save revenue through reduced churn and better retention of their current client base. As consumers pay more attention to the attributes of the brand they are purchasing from, retailers can concentrate their efforts more on brand culture, product quality, personal customising and end-to-end experiences, and big data is the perfect vehicle for doing this.
The convenience factor will drive retention and loyalty
It is no secret that consumers are embracing the connected retail experience, even demanding omnichannel experiences from merchants and gravitating towards those with time-saving technology. The more seamless the delivery of services, the easier the purchase journey, the self-service checkouts, and the delivery and return options, the more likely customers are to return to, and engage heavily with the brand. In addition to Amazon Go, Amazon have already launched Amazon Prime, and have even experimented with drone delivery and delivery robots.
Point-of-Sale (POS) technology is a key contributor in offering high-value convenience experiences to retail customers. According to a recent SOTI study, the current take-up is around a quarter of retailers at 23%, with 26% saying they would adopt the technology as soon as possible, and 21% stating they would adopt it in the next two years. Its strong prevalence is customer-led; 66% of customers prefer to use self-service technology as opposed to interacting with sales associates.
Voice is integral in retail purchasing
In years to come, Voice SEO and Voice User Interface (VUI) will become the norm, a trend which has already gained traction insofar as the smart home environment, and the success of Amazon Home, Google Echo and Apple HomePod.
A recent Google study stated that more than half of teenagers (55%) now use voice search on a daily basis, and retail is the industry which stands to most influenced by this trend. With the help of IoT, retailers will be able to pre-empt when customers need a refill of their food or beverage product through smart appliance, and through Voice, further facilitate the buying process. People generally like speaking to machines, and with voice-controlled smart home environments, cars and buildings, retailers can both gain from helping consumers to shop online through voice technology, anytime, anywhere.