With the closing of big department stores and retailers’ revenues consistently declining, some commentators are predicting the end of retail
Is retail really dead? With the closing of big department stores and retailers’ revenues consistently declining, some commentators are predicting the end of retail. But are the doomsayers right? Start-ups are disrupting and big players are adapting to the existing customer experience by bringing the future closer to us. Now.
Open the business pages of any newspaper and you will probably read a story about big department stores closing and retailers’ revenues consistently declining. Some commentators even go as far as calling it a retail apocalypse. But has the end of retail really come?
Whilst traditional bricks-and-mortar stores have suffered immensely in the last decade, other retailers, and not only the online ones, are actually holding their ground. Compared with 2017, the Swiss retail market managed to increase its revenues by 0.4% in 2018.
So, what separates retailers that are swallowed up by the digital transformation from those that are riding the wave and seem to be growing? We know that the future of retail is changing, which is why at EY we have started the FutureConsumer.Now initiative, helping business leaders understand the future consumer. It imagines several paths into the future, allowing companies to shape their business for tomorrow, today.
Buying is mundane. Shopping is an experience.
Consumer demands are changing. The consumers of tomorrow are short on time and hungry for experience. What will they want? Nobody can predict the future, but those companies that start to imagine it can have a role in shaping it. We have started exactly this thought process with the FutureConsumer.Now initiative. For the future consumer, there will be a difference between shopping and buying. Buying will become transactional. Buying will be me realizing the battery for my remote is dead and that I need to buy a new one. Everything I need, from detergent, to batteries, to new socks, every transactional item I want will be bought quickly, cheaply, and efficiently on the go via a smartphone. In short: buying will become a practical, mundane chore.
Shopping, on the other hand, will become experiential. It will be individualized and data-driven. It will include interacting with a brand I identify with and therefore will be something worth spending my time on.
Based on data I have provided, shopping will evolve into me discovering a new item I didn’t know I wanted. The experience of shopping will be drastically different from today, as algorithms will use the data I have provided and offer me an experience I am actively looking for. In short, shopping will develop into both entertainment and pleasure.
The landscape is changing. Fast.
In the future, Artificial Intelligence (AI) assistants will manage everyday practical transactions and take over the buying process, facilitated by an ever-increasing network of the Internet of Things (IoT).
According to one of our latest findings, it is estimated that by the end of 2020, 50% of essential household items in the US will be auto-replenished using IoT whilst 100 million consumers are expected to shop in an augmented reality environment.
But if AI is doing the buying for us, what will happen in the future? Consumers will only shop for the very few products and services that help them express who they really are. There will be disengagement from 99% of products to super-engagement on the 1% of products the consumer is really interested in. Consumers will be able to check in real time whether an item has been ethically sourced, or try on products using digital avatars whilst simultaneously getting feedback from friends and family on social media.
All of these developments will fit the individuality of the consumer, who will only want to identify with brands that align with their value system.
The world today looks different from how it will look tomorrow.
There will be a paradigm shift in the future when comparing today’s retail consumer with tomorrow’s, some examples of which are highlighted in the table below.
As is evident, there are many changes from the status quo today – to stay on top, companies have to be willing to adapt and start shaping the future now.