Reading Linked In and business magazines you will see headlines like: “The retail apocalypse”, “The end of retail as we know it” and “Online retail eats offline retail for breakfast”. These headlines are used to tempt people reading the articles, but they are wrong. Retail is not going to disappear and online and offline are part of retail also tomorrow. Yet it is clear that retail is going through a big transformation period – as it has done many times before. It must be admitted that this transformation is bigger than the earlier ones, since web is great technological innovation and has an effect on every part of the retail. So, what kind of retail we are having tomorrow? This is not a forecast – they fail anyway all the time – but here are some thoughts based on working experience in retail development.
Retailer buys stuff and sells it to consumers, with or without service. The sales can be done by online of offline channels. In the online channels consumers can benefit low prices, fast to-to-the-door logistics and endless selection. The price for these benefits is that consumers allow retailer to use their online data to various purposes and the shopping process is self-service process. In the offline channels customer benefits nice shopping environment, professional face-to-face service, excellent customer experience and even little bit pampered service. The price customer pays is often higher price and limited selection.
So, in the world of new retail how the retail process will change?
In the developed countries consuming is changing. People have enough goods and the ecological thinking is growing. Consumers are often looking a solution, which may by just the service, or renting something or even borrowing something from other consumers. Therefore in the new retail the products may be new, re-cycled or customized on the spot, e.g. 3D-printed in the store. The product is combination of the product and necessary services, customer decides, what kind of combo she/he needs.
In the developing countries retail is more conventional, although same global trends are visible also in these market areas.
Due to the online retail, the meaning of retail space is changing heavily. Although physical stores are still there, they are smaller, often temporary, changing places according customer flows and the spaces have also flexible interior. They have all the possible devices, such as AR, VR, beacons or something similar to monitor customer behaviour, self-service pay-points, intelligent shelves etc. But, they have also retail specialists, serving customers.
This change in retail space is going to have a big impact on real-estate investors and opens new possibilities for utilizing not-required retail spaces. How you can re-use let’s say 50 000 sq. mall?
This change also have a big effect on retail service providers – the big box stores – 10 000 sq. and more – were full of store fixtures made of metal frames. In the new retail the stores are much smaller and the ambience is changing from warehouse look to the experience full and interesting environment. Who is going to be supplier for the new retail’s stores?
The price will be important in the new retail too. But if you are looking for the price, you have to go online and you must be prepared to do everything – I mean everything – by yourself. The pricing is going to the same direction as in the low-cost airlines, where every part of the customer process has a price tag. You want to pay by card? Yes, 2 cents per transaction. You want to get some advice from our retail specialist? Yes, 10 € per 15 minutes discussion. You want to use the shopping trolley? Here you are, 2 € per visit.
On the other hand, if you are looking for excellent service and outstanding customer experience, there is a price for that. Usually, it is in the product’s prices, but it can be also priced separately. This we have already – think about buying a coffee from Starbucks or some convenience store.
The value of human contact is going to be highly valued in the new retail. And that is good news for the retail specialists or shopping assistants or however the new retail service people are called. Since web and tech applications have teacher us to do everything by ourselves we will continue to do just that – that way we get the cheapest prices. But if you want to get personal service, be prepared to pay for that. In the future there will be two types of assistants in the store: people and robots. Robots are cheaper for the customer, but their service skills are limited. Highly trained human retail specialists make our shopping trip memorable, but with a price. The good news for the people working in the store, is that they are better paid, since they require lots of talent. But there are less people and more robots in the store.
Marketing is personalized, predictive and just on time. It is guided the all-knowing AI that knows our shopping behaviour better than our parents. Marketing is targeted to our own devices and to the digital surfaces in the store. The surfaces can be screens, but they can also be just reflexions on the window, on the floor or any other suitable, flat surface. Marking also has smells, sounds and maybe even haptic. And clearly as in the online store, also in the offline store our customer path is fully mapped by intelligent sensors.
There is going to be a big change in our buying process. Part of our buying process is automated, part is changed to 3D printing and part is changed from visiting stores to home-deliveries. We still visit stores, but not just buying things. We are looking for experiences, meeting friends, and looking for social contacts etc., when we decide to go to the store. But basic purchases, like buying bread, milk, tissues, household chemicals etc. is done automatically, e.g. by Alexa or some other assistant or by our intelligent cooler unit, that sends order to the retail partner. Some stuff can be made at home, using 3D-printer, but more likely 3D printing is done in the neighbourhood printing centre, that has better equipment and larger selection of materials for printing.
Retail is a social event. When people by new clothes from Zalando, they take selfies wearing the new garment and share it in the social media. New fitting rooms are equipped with a camera and web-connection so that we can share our shopping trip. When we go to the store, we want to be part of the shopping tribe and share the experience. Whether we are buying online or offline, we enjoy the social aspects of shopping. Thus both online and offline should enhance the social elements of shopping. They are the best security for staying in the new retail’s playfield.