Digitalisation is having a profound impact on industries like retail. The arrival of the smartphone triggered the ‘silent revolution’ that’s been changing retail over the past decade. Combined with other influences such as the global recession, the smartphone and other digital technologies kick-started a transformation that has seen traditional retailers struggling like never before, while new disruptors innovate.
Three’s head of enterprise, Karl Duffy recently had the opportunity to discuss retail trends with Matthew Brown, the founder of Echochamber, a specialist consultancy that specialises in tracking new developments in retail around the world. Matthew shared valuable insights on how Irish bricks-and-mortar stores can use technology to help bridge the physical and virtual worlds, which is key to their ability to compete and survive.
Matthew spoke about how digital technologies have given consumers unprecedented access to a wide range of high-quality products at value prices. It has created a golden age for consumers, even as this era has claimed some high-profile victims among retailers both here in Ireland and abroad.
WATCH: Karl Duffy, head of enterprise at Three, discusses the future of retail and its implications for Ireland with Matthew Brown of Echochamber
All channels, all the time
First, some encouraging news: the often-predicted "retail apocalypse" won't happen. Physical stores are here to stay. In fact, bricks-and-mortar stores in the 27 EU states are expected to grow their turnover by 2 per cent this year. What's more, brands that started as online-only, from Amazon and Bonobos to Warby Parker and Zalandos, are making moves into physical retail.
So, the successful retailers of the future will have a combination of bricks-and-mortar and digital stores. And for the consumer, this "omni-channel" model gives the convenience of many different ways to buy, while the retailer will have multiple ways to connect with those consumers.
Data-driven retail
As well as connecting with customers, retailers can also gather insightful data by using technologies like IoT sensors to compile information about shopper behaviour once they arrive in-store. The insights derived from heat maps of shoppers’ movements in-store helps inform decision making, for example, how to optimise store layouts or where to place popular products to maximise sales. The IoT sensors can also track customer dwell times, how long customers queue and the proportion of shoppers who go on to complete their purchases.
What’s next in store?
Looking beyond what's possible today, augmented reality will be the next big revolution. Today, the online experience is about connecting people via their smartphones to a database. Five years from now, augmented reality will be commonplace in retail environments, enabling storytelling through creating a virtual world overlaid on a real-world space to give customers really memorable in-store experiences. The Hipanda ghost house in Tokyo is a good example of where this is going. The store uses a combination of light and augmented reality technology to create personalised pathways for customers as they search through t-shirts and hoodies in search of an invisible 'ghost'.
Closing time
So, who will be the winners and losers from all of these emerging trends and disruptive technologies? One thing is clear: boring retail is dead. At a time of so much choice for customers, any mid-market player that doesn’t compete on price, product range, service or experience has a limited future ahead.
On the other hand, the future is bright for retailers that are either big brands focused on customer innovation or small players that are nimble and quick to respond who offer a personal touch to their service. Now is the time for traditional retailers to identify new and emerging technologies that will enable a more joined-up and consistent customer experience digitally and in-store, allowing them to compete more effectively with online-only retailers.
Throughout the year, Three will be producing a range of eGuides, blogs and videos looking at how technology can help retailers meet these challenges. To make sure you get notified as soon as we publish new content, visit the Three Business Learning Centre to sign up to our mailing list. Register now: join Three's Business Learning Centre.