Review and Outlook 2019
As we prepare to turn the page on another year it is natural to look back on the past 12 months and dream about what is to come.
2018 will go down as the year we finally put the rhetoric on the retail apocalypse to bed. No, retail is not going anywhere. But yes, retailers do need to adjust their business models, strategies, and tech stacks to compete in an increasingly competitive and digitized world.
Those that are able to create a differentiated and memorable experience for shoppers will thrive in the customer-centric age. While the stubborn retailers who refuse, or are unable, to invest in the tech-fueled experience customers demand will continue to fade into obscurity.
Every retailer knows they need to invest to compete and grow. But pinpointing the experiences and technologies that will help them connect with shoppers and set them apart from the crowd is the trick.
Predicting the future is never easy — but it is always fun to try. To help understand where the industry is headed over the next year, RIS convened a panel of retail’s movers and shakers and asked them two simple questions:
“What do the next 12 months hold for retail? And what are the major trends and technology that will define 2019?”
Below are their insightful answers to two very tough questions:
President, IHL Group
We are in a time of tremendous transformation. With 55% of all US households and 69% of those with incomes over $100,000 now having Amazon Prime, the first question many consumers ask when they need something is 1) Do I need it less than 2 days? And 2) Am I willing to pay for expedited delivery? The reasons that these consumers are choosing to go to the store is because they “need it now” or they need to touch and feel the item or get some expertise on the product. This is a clarion call to retailers to optimize their operations to be able to service these consumers.
It comes down to three primary areas of investment for most retailers. First, making sure their customer systems are integrated across channels and they are focusing their merchandising and offers towards their top customers based on that information.
Second, they must make the investments to make sure their inventory counts are accurate. This is where many retailers are falling short. Most retailers are out of stock in one of four items that a customer is coming into their stores for in the first place, and new click-and-collect options are exposing previously hidden inventory problems. Now with the proliferation of Amazon Prime, once you are out of stock on the items consumers “need now,” Prime members are far more likely to simply write off that bricks-and-mortar retailer for future purchases.
And third, smart retailers are investing in tools to help empower their associates with the knowledge to be experts on their product lines. This includes product knowledge, inventory levels as well as accessorizing options.
Retail has changed fundamentally in the last few years. Consumers used to have to shop and now they must want to shop. Retailers who have recognized this fact and invested in their IT and customer solutions to improve the experience are
not only surviving but thriving as we enter 2019.
Managing Partner, RSR
The notion of the “Retail Apocalypse” is dead. The retail industry overall is outperforming the GDP. But retail is certainly going through a rejuvenation, and 2019 will see an acceleration of that process. The retail face to the consumer has fundamentally changed — it’s no longer about selling channels, but a selling environment that is a combination of digital and physical touchpoints that blend in some way to deliver each retailer’s brand value.
The industry tends to get hung up on touchpoints — this year the buzz has been about voice activated interaction, service bots, and cashierless stores — and using technologies like artificial intelligence and machine learning to empower those touchpoints. But it can become a “forest for the trees” problem. I’d rather that we talk about brand experiences — how all the different ways that a consumer can interact with the retailer work together to deliver an experience. Every retailer delivers a brand experience, either purposefully or by accident. The question for each retailer is, what combination of context, content, community, and (of course) commerce creates a bias for what the brand has to offer?
2019 will be the year that retailers really examine that question — what do they want the brand experience to be? Then they can start talking about how to layer in information and technology to enhance the experience in a purposeful way that is highly relevant to the customer and profitable for the business. Everything — the customer- facing side of the business, the supply chain side of the business, and all the operational processes that link those together, needs to be examined in the context of what each retailer wants the brand experience to be — for the consumer, for the employee, and (lastly) for the “owners” (stockholder and investors).
Then we can talk about how best to position the latest technologies, how to encourage innovation, how to optimize the supply chain and all the non-selling functions, and how to infuse the selling environment with exciting technology. All of that is really interesting — but first, let’s talk about how to design the perfect brand experience.
Vice President, Information Technology,
The Art of Shaving
Retail is not dead, it is evolving quickly and doing so out of necessity. The retail and e-commerce landscape is changing at an extraordinary rate, adding new challenges as well as opportunities to all brands to get their product into the hands of consumers.
What caused the landscape to change?
E-Commerce. Quick access to products, pricing and competitors has made this the most competitive channel. Millennials are more educated, they know what they want and where to go get it. They do their homework, they price shop for discounts and sales. They follow influencers who in turn lead them to your brand.
Mobile Devices. Shop on the go! How times have changed, shop without interrupting your daily activities.
Omnichannel. Never out of stock, seamless inventory has now made it easier for retailers to fulfill most orders. Buy online pickup in store (BOPIS) is today’s new hot trend. Can it be any easier for consumers to get their merchandise?
Artificial Intelligence. It’s all about the data, where it comes from, what it is used for, and how to use it. We can all easily fall into the paralysis by analysis trap. We must maximize data to learn all types of behaviors to help better understand the consumer.
Learn your customer’s habits. Retailers that are able to decipher and master CRM will survive and become leadersin their space. What are your customers buying? And when? Make recommendations based on past purchase and viewing history. It takes time and effort to build this data and to build it correctly, but this will be a key driver.
Senior Vice President, Enterprise Business,
Hughes Network Systems
We are seeing a tectonic shift in retail as the online shopping segment continues to grow. Contrary to what was once predicted, the popularity of online retail is not a death knell for brick and mortar. In fact, it is driving an evolution of the in-store experience, which remains critical for driving brand loyalty.
In 2019, smart retailers will strive to make the in-store experience as compelling and valuable as the virtual one. That means incorporating new and more advanced technologies to engage both shoppers and employees. Functions like buy online/pickup in-store, “smart” mirrors, mobile payment systems, targeted in-store marketing and loyalty apps are just a
few examples of the ways retailers are bridging the gap between physical and digital retail and bringing more value to in-store shoppers.
The store associate is still the front line of the in-store experience, and we are seeing that job evolve from sales enabler to personal consultant. With unemployment at all-time lows, retailers need to work hard to keep the staff they have. Training, tools and technologies like video-on-demand will contribute to retail success throughout the employee lifecycle — from recruiting to onboarding, training and development.
The year will see greater use of AI, analytics, data, video and voice computing — all driven by cloud-based apps delivered over a wide area network (WAN) to the store. With increased in-store dependency on cloud-based apps, IT teams will be called upon more than ever in 2019 to provide greater bandwidth, speed, reliability and security for an ever-growing and constantly changing technology portfolio.
Chief Operating Officer, Lucky Brand
Collecting and stitching customer data at every consumer touchpoint to get a complete view of the customer will be a focus for many retailers in 2019 — this will be the year of the customer data platform. This data will be used to enable more granular customer segmentation to drive one-to-one marketing and more effective customer experiences, both online and in-store. Personalized web experiences tailored to customer’s needs and wants will be table stakes. Catering and focusing resources on the most valuable customer segments will be the key to profitability.
Supply chain is the other area that will be driven by data and analytics. Supply chain speed and flexibility, with test and react capabilities are key. Leveraging analytics using crowd sourcing platforms for pre-season digital product testing will continue to gain traction.
Store specific assortments have always been the Holy Grail for merchants but execution has been illusive given the massive resources required. Planning and allocation platforms driven by AI and machine learning are now making this possible and allowing retailers to drive localization. This is a very exciting time to be in retail.
Global Retail Segment Manager, HP
While predicting the future can be inexact, it’s fair to say 2019 should see the consumer experience continue to be a critical area of focus for brands and the driver for increased investment in brick-and-mortar retail. Leveraging the retailer’s staff to deliver compelling consumer engagements and position physical retail to thrive will require an acceleration of the store digitization strategy enabled by advanced technologies.
Successful retailers will empower associates with seamless access to real-time and relevant information. From product information and availability to customer purchase history and preferences, allowing brands to deliver experiences not merely curated for the market but that are deeply personalized to the individual consumer. Both the business analytics to create this insight as well as the delivery of the content, when and where needed, are critical. As such, the adoption of associate-facing mobile devices is expected to accelerate across all retail segments.
In addition to mobility, many retailers will move from experimenting with immersive technologies to full deployments to reimagine the customer journey. From virtual reality and smart surfaces to conversational commerce and innovative checkout solutions, successful retailers will implement novel ways to engage with core customers while attracting new ones. Underlying much of this is an interconnected architecture where
IoT and edge compute are pervasive and quietly and reliably run the operation.
Finally, delivering these compelling experiences is predicated on detailed consumer information, so trust and security remain vital. Successful retailers will be those that not only inspire the consumer with engaging experiences, but also can be trusted to do so while protecting consumer data and respecting consumer privacy.
Vice President /Principal Analyst, Forrester
In 2019, retailers need to identify technologies that make them better retailers, not just better innovators. But it’s also important to find the sweet spot with customers’ shopping needs: if you invest in tech too far ahead of customer expectations,their response (or lack thereof) can lead to abandoned programs and wasted capital expenses. But neglecting to invest at all in emerging technology will leave you vulnerable to more agile and savvier competitors.
Where to focus? Quite simply, harness tech that improves the core competencies of understanding customers and serving up great experiences. Leading retailers are making investments in proven revenue generating programs such as omnichannel, personalization, advanced analytics, and digitizing the physical store (including digital store tools for store associates).
But smart retailers are also keeping an eye on key emerging technologies that solve customer pain points and improve operational efficiencies. For example, we see retailers like IKEA and Wayfair using augmented reality in cases where a customer needs to see a product in relation to a space or other objects. We also see a strong uptick in retailers that are interested in various forms of artificial intelligence, an evolving tech category that is improving analytics, operations, and even marketing already today, and will likely have a significant impact on customer-facing retail experiences in the years to come.