Experience Design Lead, Syuzi Pakchyan, discusses current trends in retail as seen at the recent CES Conference in Las Vegas.
As retailers are quickly moving from being adopters of technology to being its innovators, the conversation is beginning to shift. Rather than asking what technology can do for retail, it’s more about understanding the changing needs and behaviors of humans (not just as consumers) and how technology can be used to service those needs.
With the 2017 launch of their tech incubator, Store No. 8, Walmart is one such company pioneering this change. Principal & Founder, Katie Finnegan, recently discussed this topic a the CES High Tech Retailing Summit. Exploring everything from V-commerce (using AR/VR), to autonomous delivery, Walmart’s Store No. 8 is determined to reinvent the shopping experience.
And they aren’t alone; Yoox Net-A-Porter, Sephora, Nordstrom and ASOS have all launched some type of tech incubator or accelerator program in the past two years, all in the hopes of staving off the next tech disruption. Or, in the case of ASOS, maintaining their spot as leader of the pack.
The “New Retail”
Consumer attitudes, behaviors and expectations are undeniably changing–and at a rapid pace. Perhaps best embodied by Marie Kondo’s ruthless war on stuff, we are entering a new era of technology-driven minimalism. More and more, people are putting their dollars towards experiences rather than simply material objects, especially Millennials. The sensational (and highly engaging) hit, the Museum of Ice Cream, is a perfect example of this trend.
Conversational commerce represents another big shift in consumer behavior. With the 128% increase in the purchase of at-home smart speakers in just under a year, devices like Amazon’s Alexa have made the transaction process more effortless than ever before. Eventually, this type of shopping could supplant the use of conventional websites entirely.
Facing multiple vectors of change, retailers must figure out what these these trends mean for them while simultaneously grappling with the differences between US, European, Russian and Chinese consumers.
Deborah Weinswig, Managing Director, Fungi Global Retail Tech, believes that China is where we should be directing our attention, positioning the country as the vanguard of “New Retail” in her CES presentation.
Coined by Alibaba Chairman, Jack Ma, New Retail refers to “the integration of online, offline, logistics and data across a single value chain.” In practice, it reflects the intersection of a number of trends from “Instant Gratification” to “Hyper-Personalization” actualized via machine vision, AI and seamless transactions.
The result: A more seamless consumer experience, from online to offline, and vice versa. In the first instance, consumers ‘click and collect,’ meaning they buy merchandise online and pick it up at a nearby store (offline). On the other hand, we have inventory-less (offline) stores staged with products that can only be purchased online. These types of stores are intended for inspiration, rather than immediate consumption.
Moving beyond aisles of shelved products and checkout lines, New Retail champions the idea of experiencing things first and buying them second. This is taking many forms, from Apple’s new “Town Squares,” where people can gather, take classes and hang out with no checkout lines in sight, to Alibaba’s mobile-first Hema Supermarket, where consumers can opt to have their online-ordered groceries delivered in 30 minutes, or have their hand-selected food cooked for them in-store–all via the app.
Brick & Mortar Reimagined
With store closures from Toys R’ Us to Macys, 2017 was a brutal year for retailers. But the billions of dollars e-commerce giants Alibaba and Amazon have been pouring into brick-and-mortar acquisitions effectively squelch any debate of a retail apocalypse. Brick and mortar is far from dead–it just needs to be reimagined. And it was clear at CES, that is what they are currently doing.
One thing is for certain: As ‘digital’ moves to the background and experiences take center stage, it’s not enough to attack the technical side.
Buying things is as much an emotional experience as it is transactional. ‘Convenience’ sometimes means a high-touch experience versus a one hour delivery by a drone. ‘Personalization’ isn’t just about using data to target a user’s preferences, but about bridging their identity–who they are today with who they want to become tomorrow. And ‘fit’ is just as much about personal taste and style as it is about the precision of measurements.
Emotion, identity, story, style; this is the vernacular of well-loved brands. Even in the age of Amazon, Alexa cannot speak this language, and that is why retailers have the right to win.
Read more from Syuzi Pakchyan on the future of retail here.