Report: Retail will look dramatically different by 2030
Converging channels, customization and constant connectivity are expected to change the shopping sector in the years ahead.
That is the main theme of a new study by Synchrony Financial, which examines consumer perspectives and shopping trends that are expected to change the retail industry by 2030.
“The future of retail will look dramatically different in 2030 than it does today,” said Whit Goodrich, CMO retail card, Synchrony Financial.
According to Synchrony’s Future of Retail: Insight and Influences Shaping Retail Innovation report, technology will bring a new era of DIY shopping – changing how shoppers access, select and pay. The self-serve retail model, 24/7 stores with robot-assisted drive-thru windows, and interactive mirrors will become mainstream. Nearly half (47%) of consumers surveyed ranked interactive touchscreen mirrors in dressing rooms among the top three most exciting innovations of the future.
“Findings show shoppers seek self- and on-demand service, increased customization, and seamless home and in-store integration,” said Goodrich.
Brick-and-mortar stores of the future will focus on delivering genuine brand experiences to build both trust and loyalty – tapping into consumer desires. More than half of study participants (55%) are excited about blended in-store and entertaining experiences such as coffee shops, cafés, music, bars, or complimentary samplings of products or services.
In other findings from the report:
• Consumers will expect retailers to tap into the personal information they willingly provide to deliver better customized products and offers. From RFID in phones and wearables to biometrics such as finger and palm scanners, retailers will know shoppers well enough to direct them to preferred in-store items and send immediate and individualized sales offers. In-home chat bot devices and unbiased experts within “digital assistants” will become popular.
“One of the biggest disrupters in retail in the future could be 3D printing – footprints to create shoes and ways to produce many things faster and more inexpensively in a manner we never could before. It’s mass customization,” said Courtney Gentleman, CMO, payment solutions, Synchrony Financial.
• Increasingly, technology will give rise to a more demanding shopper base – one that expects what they purchase to be instantly available or returned. Among consumers surveyed, 77% anticipate better ways of making returns from online purchases in the future. Instant gratification will be an important part of the shopping experience offered in the form of stores on wheels, trunk stores, pop-up shops and subscription services; return buttons in retailer apps that re-package and pick-up items; and real-time inventory views and better ship-to-store options.
• The confluence of channels and high-definition camera technology will enable shoppers to access an interface through virtual or augmented reality to see how a new sofa, fabric and paint, garage door, flooring or other items will look in their house. Consumers will be able to secure in-home retailer services, purchase on demand using smart labels or QR codes, shop in 3D and use instant try-on features.
“Shoppers will be able to take a perfectly dimensioned picture of a person’s body, type and form and upload it to retailer apps. Bart Schaller, CMO, Synchrony Financial. “Without moving from the sofa, a pair of pants will arrive at their doorstep ready to go.”
• Instead of appealing to everyone, 57% of consumers agree that retailers must streamline and focus on doing one or two things well. Specialty retailers will remain a go-to in high-involvement categories, while online and automated reordering will reduce the need for as many one-stop-shop stores. Regardless of category, brands of the future must have a strong reason for being.
The Future of Retail report was developed from multiple research phases conducted January-February 2017 on behalf of Synchrony Financial with consumers and industry experts.
RetailNext: Stores not dead but do need to be reinvented
Despite the growth of online shopping, brick and mortar stores are still critical to retail success.
“Retail stores are not dead,” said Shelley E. Kohan, VP of retail consulting at RetailNext Inc. “The retailers who continue to embrace change in their business models will be well positioned for today and in the future."
With digital shopping behaviors firmly established and store sales continuing to decline according to the company’s latest Retail Performance Pulse report, many brands in the United States are crippled with too many stores and too much space, according to Kohan. Consequently, “it's critical for stores to be reinvented in order to blend seamlessly with a brand's established digital touchpoints,” she explained.
Kohan cited the case of formerly online-only brands such as Amazon, Warby Parker, Bonobos and Rent the Runway that have opened brick-and-mortar stores in the last two years, resulting in profitability and low-cost customer acquisition.
"This is not a case of 'build it and they will come.' Instead of opening stores in areas where traffic needs to be driven, brands should invest in building out attractive stores in areas that already have high traffic,” Kohan advised. “Use the traffic-driving budget instead to deliver an exceptional in-store shopping experience and market toward shopper retention and loyalty.”
Also, the same actions toward addressing shopping trip abandonment online need to be applied in-store through customer service to eliminate friction points for the customer and achieve higher conversion rates.
“While each shopping touchpoint, digital or physical, has its inherent advantages, none will ever be able to do it all alone,” Kohan said. “The reinvention of stores to integrate with online platforms is essential to a brand's future success."
Grocery giant partners with Uber to expand home delivery
The Kroger Co. is testing a solution to solve “the last mile” of omnichannel retail — the post-purchase operations focused on getting merchandise into shoppers’ hands quickly and efficiently.
The supermarket giant bolstered its home shopping model in 2016, by adding more than 420 ClickList and ExpressLane locations, a move that now gives it more than 640 online ordering locations, Rodney McMullen, the chain’s chairman and CEO said in the company’s earnings call on March 2. ClickList is a service that enables shoppers to order online and pick up merchandise in-store.
Eager to streamline how shoppers can receive these orders, “We are also experimenting with ways to solve the last mile equation,” he said.
For Kroger, that means testing Uber deliveries in several locations.
Pending positive results, Kroger plans to expand this program later this year, enabling customers to “order through ClickList and choose to have their groceries delivered by a local Uber driver,” McMullen said, adding the company is working on other home delivery tests, as well. He did not give specifics about these programs.
Some industry observers are leery of the grocer’s partnership with Uber. This is mainly due to recent attention the livery service has received due to labor and wage discrepancies related to its “gig-economy” model — a concept that enables individuals to work day-to-day without a fixed contract, according to Fortune.
In the meantime, the grocer continues to learn from pilots and build its digital experiences.
“More and more customers are connecting digitally with Kroger,” he said. “We are leveraging refined customer insights from 84.51 [data analytics], as well as years of online shopping experience from both Vitacost.com and Harris Teeter to develop a sophisticated understanding of our cus-tomers’ behavior when shopping with us online, in store and both.”
Using this data, Kroger is making more accurate decisions about where to offer ClickList, “what are the right assortments and promotions to engage customers online, and how can we offer the quality and convenience online that customers’ have come to expect from a Kroger brick-and-mortar location,” McMullen said.