Retail infrastructure will change significantly. Twentieth century retail was built around the car, high-traffic real estate locations and mass media advertising.
Twenty-first century buying will revolve around AI, voice, mobile and automated fulfillment technologies, such as drones and self-driving delivery vehicles.
Rather than being a competitive advantage, timely fulfillment-to-customer will evolve to being a basic customer expectation.
More consumer brands will adopt direct-to-consumer strategies. Meanwhile retailers will try to differentiate by increasing private label and vertically integrating enhancements to their services. This could take the form of acquiring logistics capabilities to secure distribution networks or incorporating media and technology arms to tie consumers into a broader ecosystem.
This will further accelerate the emergence of smaller, agile cross-sectoral players capable of quickly tapping into fast-changing mindsets. The brand and store portfolios of larger retail and consumer players are being pushed towards obsolescence due to an inability to adapt and restructure quickly enough to accommodate upstart brands and technologies. However, they are fighting back by developing their own offerings and by working across sectors to add value in other areas, for example providing e-commerce food delivery solutions on flights to avoid passengers returning home to an empty fridge.
Choosing where to play
As multiple industries converge around a different kind of consumer, retailers should decide where they want to play.
Data analytics, digital media, logistics and technology will be crucial battlegrounds in deciding which ecosystems consumers apply to drive their future choices. We will see an acceleration of partnerships and acquisitions of niche technology providers as retailers seek to fast-track their digital transformation. Pricing will be dynamic and customized as AI analyzes demand and supply in real time. Collaboration between ecosystems to create seamless end-to-end user experiences between providers will facilitate progress, but there will still be winners and losers.
Questions leaders must consider
- Which purchasing decisions will be commoditized and which will require more consumer interaction?
- What steps will brands need to take to ensure that they are visible choices? Both in AI-led buying and consumer-led shopping?
- As channels and platforms become blurred, who will have the primary relationship with the consumer?
- When algorithms influence consumer behavior, who programs the algorithm and how will their power be regulated?
With buy and shop divergence reshaping retail, consumer products companies and retailers must decide where they will play and how they will get there.