The future of shopping
It’s a snowy Saturday in Chicago, but 28-year-old Amy needs resort clothes for a Caribbean vacation. Five years ago, in 2011, she would have turned straight into the mall. Today, she starts shopping from her couch by starting a video conference with her personal concierge at retailer Danella, where she bought two clothes last month. The concierge recommends a few items by placing their photos on Amy’s avatar. Amy immediately rejects a couple of items, goes to another tab in the browser to investigate customer reviews and prices, finds better offers for multiple items at another retailer, and orders them. She buys one item from Danella online and then goes to a nearby Danella store to test her existing stock.
When Amy enters Danella, the trading partner greets her by name and goes to the dressing room, which has her online choices, as well as several matching shoes and a cocktail dress. She loves shoes, so she scans the barcode on her smartphone and finds the same pair in another store for $ 30 less. The sales partner quickly offers to match the price and urges Amy to try on the dress. It’s bold and expensive, so Amy sends a video to three stylish friends asking for their opinions. The answers are quick: three thumbs down. She collects the items she wants, searches the website for coupons (saving another $ 73), and pays using her smartphone.
When she walks to the door, a life-size screen recognizes her and displays a special offer on the top of the irresistible summer weight. Amy checks her budget online, smiles and uses her phone to scan a custom quick response code on the screen. The item will be sent to her home overnight.
This scenario is fancy, but it’s neither as futuristic nor as fancy as you might think. All the technology Amy uses is already available - and in five years, most of it will be everywhere. But what looks like a buyer's dream - an abundance of information, near-perfect price transparency, a parade of special offers, already seems more like a nightmare to many retailers. Companies like Tower Records, Circuit City, Linens ’n Things and Borders are early victims - there will be more.
About every 50 years, retailers experience such disruptions. A century and a half ago, the growth of growing cities and the emergence of rail networks led to the creation of a modern department store. Mass-produced cars emerged 50 years later, and soon supermarkets lined with specialized retailers hit the emerging suburbs and challenged the city’s department stores. Discount chains - Walmart, Kmart and the like - became widespread in the 1960s and 1970s, and soon after that large “categories of killers” such as Circuit City and Home Depot all damaged or damaged the old-style mall. restructured. . Each wave of change does not remove what was before, but it does change the landscape and redefine consumer expectations, often unrecognizable. Retailers, relying on previous formats, are either adapting or dying when new ones pull quantities from their stores and make the remaining quantities less profitable.
Like most disruptions, digital retail technology has begun weakly. A group of online retailers in the 1990s - Amazon.com, Pets.com and just about everything These young companies raged until a combination of ill-considered strategies, speculative gambling and a slowing economy tore up the dot-com bubble. The collapse of half of all e-commerce retailers later collapsed and provoked a sudden transition from irrational abundance to economic reality.
Today, however, that economic reality is well established. Research firm Forrester estimates that e-commerce in the United States alone is approaching $ 200 billion in revenue and accounts for 9% of total retail sales, up from 5% five years ago. The corresponding figure is around 10% in the United Kingdom, 3% in the Asia-Pacific region and 2% in Latin America. Globally, digital retail is likely to account for 15% to 20% of total sales, although the share will vary
What we see today is just the beginning. It will soon be difficult to even define e-commerce, let alone measure it. Is it an e-commerce sale if a customer goes to the store, finds that the goods are out of stock, and uses the store terminal to have another location send it to their home? What if a customer buys in one store, uses their smartphone to find a lower price in another, and then orders it electronically to pick it up at the store? What about gifts that are ordered online but exchanged at a local store? Experts estimate that digital information already affects about 50% of in-store sales and that number is growing rapidly.
With the development of digital retail, it is fast turning into something so different that it needs a new name: retail across all channels. This name reflects the fact that retailers will be able to communicate with customers through a variety of channels - websites, physical stores, kiosks, direct mail and catalogs, call centers, social media, mobile devices, game consoles, TVs, online devices, home services. plus. Unless regular traders take a whole new perspective, allowing them to integrate different channels into one seamless omnichannel experience, they are likely to be swept away.
Similarly, the industry is stuck
Why will digital retail continue to grow so fast? Why does he soon someday reach a peak or not even understand how it was the last time? Everyone who shoots a lot online knows at least part of the answer. The selection is wide, but extremely easy to find. Prices are good and easily comparable. It’s convenient: you can do it at home or at work without using gasoline or struggling to build. Half of online purchases are delivered free of charge to US consumers, an increase of 10 percentage points over the last two years. Many refunds are also free. Product reviews and recommendations are comprehensive. Not surprisingly, the average American customer satisfaction index for online retailers such as Amazon (87 points) is 11 points higher than the average for physical discounts and department stores.
The benefits of digital retail are growing as innovation floods the market. For example, Amazon has already earned patents for valuable key innovations such as 1-click billing and an online system that allows consumers to exchange unwanted gifts before they receive them. Digital retailers drive innovation by spending a lot on recruitment, salaries and bonuses to attract and retain the highest technical talent. They were also among the first to use cloud computing (which significantly reduces entry and operating costs) and increased marketing effectiveness through social networking and online advertising.
Customers are waiting for this omnipotent revolution. Until 2014 Almost every cell phone in the U.S. will be a smartphone connected to the Internet, and about 40 percent. Americans will use tablets like the iPad. If you are unsure whether consumers are ready for technology-based retail solutions, find a “silent” video screen in any public place and look for fingerprints on the screen - evidence that people expected it to be an interactive touch screen.
Traditional retailers, meanwhile, are lagging far behind. Online sales account for less than 2% of Walmart's and Target's revenue. Traditional retailers also do not interfere with digital innovations in other channels, such as mobile shopping and call centers, or seamlessly integrate these technologies into their most important channel, physical stores.
Not surprisingly, these retailers are coming to an end. As a consultant, I often walk around stores with senior retail leaders with an impressive knowledge of physical retail: they know exactly where the fixtures should be, exactly how lighting can affect sales, and which colors work best in which departments. But as a group, they are shockingly inadequate in computer literacy. Some retail executives still rely on their assistants to print emails. Some admit to never buying anything online. Technophobic culture permeates many great retail organizations. Their IT systems are often old and awkward, and young computer savvy people avoid them as jobs.