If you’re a retailer, you better get ready to weather a storm unlike any other you’ve seen. The $15 trillion retail sector is about to undergo a major round of disruption as it enters a second wave of digital transformation, and if you want to thrive – not just survive – in this new era, you need to take steps to make sure you’re prepared.
A new report by Intel and The Store WPP, “The Second Era of Digital Retail: A Vision for the Future of Shopping,” outlines action steps for retailers to ensure they can win in this second wave of digital retail. Below are the main takeaways from the report.
The Major Forces of Change
The upcoming ‘perfect storm’ of change is being fueled by a wide set of powerful technological, social, demographic, business, and economic forces. These major forces are:
- Customer expectations. Customers today have rapidly evolving attitudes about shopping and a new set of expectations related to omni-channel shopping, customization, efficiency, transparency, and the quality of the experience itself.
- Manufacturer expectations. Suppliers want increased visibility into retail operations and expect retailers to deliver shopper analytics, targeted advertising, and other data insights.
- Disruptive technology. Moore’s Law is now delivering computing capability at costs and physical sizes that will soon disrupt the retail industry all the way from one end of the supply chain to the other.
- Global economic slowdown. In an increasingly over-saturated and highly competitive sector, retailers are playing a zero-sum game where an increase in sales for one retailer comes at the loss of a competitor.
- Online explosion. The ongoing shift to online sales requires totally new thinking in the omni-channel, 24/7 shopping landscape.
The Second Era: Smarter Computers and Customized Shopping Experiences
These forces are combining to usher in the Second Era of Digital Retail. This second wave of digitization has already begun, marked by smarter, faster computers in increasingly smaller packages and the growth of the Internet of Things (IoT).
In this new era, more smart products will be sold in more smart stores with smart infrastructure, and IoT sensors will gather data on shoppers. As a result, retailers and manufacturers will be able to offer fully customized shopping experiences where shoppers will feel the power of digital technology in every type of shopping they do.
Retail Trends and Challenges
As they navigate this new era and look to the future, retailers are facing an unprecedented set of major challenges. These challenges include the continuing shift to online shopping, the realization that urbanization is fueling the need for smaller store footprints, customers’ growing security concerns, and the potentially huge impact of a shift from ownership to an economy based on sharing.
Taking Steps to Succeed
Retailers can take steps now to succeed in the Second Era of Digital Retail. Here are some suggestions, broken down by category:
- Optimize operations to give shoppers high-tech, fun, interactive experiences.
- Integrate social networking throughout the shopper journey.
Customization and Personalization
- Tailor solutions by channel, shopper, and geography.
- Be ready to embrace mass customization in the store.
- Deliver personal and relevant in-store experiences.
Smart Products and New Services
- Partner with manufacturers to start imagining (and demanding) smart products.
- Consider new ways to monetize smart products and boost overall revenue.
Real Estate and Space Efficiency
- Rebalance the store and channel portfolio to shrink footprints, increase local presence, and reallocate space toward increasing the shopper experience.
- Use technology to create automated infrastructure and virtual spaces.
Data and Analytics
- Understand how to use data insights to increase loyalty, build brand connections, personalize the shopping experience, improve efficiency, and increase profits.
- Embrace robust end-to-end security for all data.
Shopper of One
- Unify in-store and online experiences and align all systems so shoppers can enjoy one seamless experience.
- Deploy IT solutions that give a single view of the shopper across the enterprise.
Only the Resilient Will Win
To win in the Second Era of Digital Retail, all retailers will need to be much braver than in the past. Only those brave enough to learn new skills, embrace new technology, and take big risks will come out on top.
Retailers who take advantage of all the possibilities of digital retail technologies will be able to ride a sustained wave of innovation that can carry them through the coming decades. They will also gain a healthy competitive advantage by improving the shopper experience and delivering better data insights to manufacturers.
The storm is definitely coming, but ultimately the future of retail remains bright indeed.