Retail is a sector in full movement. These are tumultuous times for traders, retailers, producers and everyone involved in the industry. Yet a new trade is about to stand up, a reinvigorated, more customer-centric form of commerce.
Major shopping street shakeup is inevitable
The consumer is better informed, emancipated and connected today than ever before. The internet has armed shoppers, largely removing the need for a physical store to bring products and services to them. Digitalization has turned the world into a global platform of retail. The sector is therefore faced with a radical revolution. According to some experts, the retail trade and certainly the brick and mortar shop are even threatened with extinction.
After all, the traditional store in the high street gets competition from many new forms of retail, such as web shops, e-commerce, flagship stores, pop-up stores, websites, mobile apps, virtual spaces, holograms and so much more. Moreover, anyone can open a store, also a manufacturer who wants to come into direct contact with the consumer, a trend that is called the verticalization of the commerce industry.
In order to survive, a major cleanup must therefore be carried out in the distribution sector: retailers and distributors are forced to critically re-evaluate their commercial real estate, their stores and not least their business models and concepts. Reorganizing, restructuring and even closing down unprofitable stores may be unavoidable. Constant self-reflection and especially innovation has become a must. Everything retail stood for is up for discussion.
Retail will never be the same again
When it comes to the current retail revolution, apocalyptic headlines and pessimism often predominate. A wave of bankruptcies washes over the high street landscape and many shopkeepers fear their future. Usually digitization is referred to as the source of all evil, but the roots of the current revolution are actually much deeper. A combination of circumstances causes a revolution in retail as we know it.
In the new economic and industrial era we are in, the customer journey – also the customer path to purchase – has been redrawn completely. The classic customer journey that begins and ends after the purchase is made, is being replaced by a retail marketing model that is completely omnichannel – or crosschannel, multichannel or optichannel depending on which term you prefer – and where consumers and brands are constantly in touch during many micro-moments of truth.
New retail revolves around the consumer instead of, as was true in the past, the customer reaching out to the retailer. As a result, the customer journey as well as the value chain and the supply chain are now far less linear. Everyone can and will assume the role of distributor, designer, producer and shopper. Digital platforms such as eBay, Etsy and online farmers' markets play an important part in this evolution.
“Retail has changed for good, but there is more of it than ever before. Nowadays, retail is everywhere. You can find it at all times and in all places. Shopping is no longer an activity that you go somewhere to do. Except for an occasional day out or a little bit of pleasure shopping, it is now something you do intuitively, constantly and wherever you like. Today, everything can be a shop or a sales point and everyone is a potential retailer”, as Jorg Snoeck and Pauline Neerman from RetailDetail point out in their book The Future of Shopping.
Retail turns into hyper-personalized Metail
Whether the shopping is done online, offline, mobile, in a flagship store or at the multi-brand boutique, to the consumer none of it matters at all. Customers do not think in terms of channels, they only think about the desired end result. They make no distinction in how they get in touch with brands. That is why omnichannel commerce should not even be a topic anymore: commerce is omnichannel by definition, period. In other words: there is only one channel and that is the consumer.
The main advantage of all these touchpoints is that whoever connects them obtains a wealth of information. Data is the new gold. Thanks to far-reaching knowledge about the consumer and analysis of big data across all points of contact with the customer, we go from retail to metail: retail becomes a highly personal service that proactively and interactively responds to the needs of the individual consumer. In other words, retail is becoming more and more about service, and hyper-personalized service at that.
Yet the physical store still has its place in this data-driven and digitized new form of retail. If the shop as a sales and contact point gets a radical and innovative makeover, that is. For the store as a warehouse packed to the brim with endless aisles and long queues of cumbersome shopping carts lining up at the checkout no longer has a future in the new identity of retail.
New retail combines online and offline benefits
What the Chinese pioneer in innovative retail Alibaba literally calls New Retail is an example that is increasingly being followed worldwide. Its mixture of online and offline shopping is shaped by combining online shopping platforms with physical stores, such as in the supermarkets called Hema – not to be confounded with the Dutch brand of shops carrying the same name.
The Hema stores are great examples of inline retail: customers log in to their personal accounts when they enter the stores by means of facial recognition, they can select fresh food on the spot, but they do not have to wait at the cash register: payment is contactless and mobile via the smartphone. There is no more need for heavy shopping bags either: all grocery purchases are delivered within half an hour, since every supermarket also serves as fulfillment center.
As such, it appears that pure player ecommerce is not the answer to every question. “People are looking for the value to be found in personal contact and service, but served in a rich technological sauce. Modern shopping needs to provide exceptional pleasure or exceptional entertainment that you can't find anywhere else - irrespective of whether your shop is a physical or a digital one”, according to Jorg Snoeck and Pauline Neerman in The Future of Shopping. “We need to convert the classic sales space into a meeting place, stripped of everything inessential, where only service and experience remain.”
“In the near future, no-one will make the effort to get out of their armchair simply to buy their weekly supply of washing powder, toilet paper and cola. They will do it online. By contrast, if you want to learn how to make fresh sushi, share it with your friends, select a few pieces of naturally caught fish to be delivered your home later, while you first try on a few new pairs of shoes... for this kind of experience people are still willing to head on down to the city centre”, so the authors claim.
Agility and cooperation is key
We are on the verge of a revolution in retail and buying behavior. Shoppers are incredibly diverse and attach a great deal of importance to their unique, individual identity. The need for personalization will therefore increase in the future. As such, hyper-personalized products and services are the answer to the expectations of the demanding and particularly well-informed new consumer.
Anyone who wants to prepare for the new retail should, however, be quick and above all agile. Since the speed of change is getting higher and competition can be found all over the world, it is no longer enough to change the ship step by step. Those who do not innovate in time are mercilessly pushed aside. There is no second place in the trade industry of tomorrow. Micromultinationals are therefore the new standard, rather than cumbersome, large structures.
Competition also makes way for coopetition: working together with like-minded people, even if they are competitors, is necessary to stay up to date. Merchants and retailers can no longer keep up on all that innovation on their own. They have to get off their islands and learn to share: not just knowledge and data, but possibly also their backend, logistics and perhaps even real estate or more. Those who dare to open up will rise from the revolution stronger than ever before.