Retail industry is facing four forces with the potential to redefine the retail industry radically including – Radically shorter design-to-deliver times, zero inventory, from products to services and most importantly from stores to platforms. These trends mirror those we see in other industries.
Customers are, of course, still in the driver’s seat. Their habits, preferences and priorities continue to quickly evolve, a fact which led to 77% of retail CEOs saying they’re concerned about the impact of shifts in consumer spending and behavior – considerably higher than CEOs in other sectors.
Sometimes changes are hard to predict and beyond any historic trend. For example, Chinese e-commerce site Alibaba overtook Walmart as the world’s biggest retailer. So a brand without physical stores is now making the greatest volume of sales in the world. No one could imagine such quick shift before . The landscape will change so fast that change in next 10 years will be significantly more than what happened in last 40 years.
According to a recent Insight report form World Economic Forums- Technology will be the key driver of this industry transformation. Industry participants will only succeed if they have a persistent focus on using technology to increase the value added to consumers. They must, however, do so with a realistic assessment of their costs and benefits.
Next decade is going to be the golden age of consumer with more choice and control then ever before. The retail experience is self-assured to become more inspirational, exciting, simple and convenient, depending on the consumer’s ever-changing needs. The evolution in consumer demand, combined with transformative technological innovations, will continue to drive fundamental changes. The boundaries of “retailer” and “manufacturer” will continue to blur.
The key drivers of success over the next decade will be centred on building a deep understanding of and connection to the empowered consumer, promptly incorporating disruptive technologies, embracing transformative business models in both the offline and online space, and establishing key capabilities.

The landscape will change so fast that change in next 10 years will be significantly more than what happened in last 40 years

According to a recent data, globally, consumers have access to more than 1 billion different products offered by a wide range of traditional competitors. As choice increases, loyalty becomes more fragile. Friends and family much more influential than celebrity endorsement/blogger on loyalty (43% vs 24%), social influences are a leading driver (Accenture 2016 Global Consumer Pulse Research Survey). Businesses will have no choice but to remain agile, and constantly innovate and disrupt themselves by embracing new technologies to meet the high standards and expectations of consumers.
Despite growth in e-commerce, the physical store will continue to be the channel that contributes the most revenue for the majority of large multichannel retailers until at least 2026. At the same time, the shift to e-commerce will drive a reduction in physical retail footprint, whether the sheer number of stores and/ or their respective size.
There are three must-have capabilities for retail organizations:
  1. To keep up with the rapid pace of technological change, all participants will have to develop a culture of collaboration, rather than just rely on building their own capabilities.
  2. For e-commerce to become cost-effective, eco-friendly and consumer-responsive, last-mile delivery challenges will have to be solved specially in developing countries.
  3. Businesses will have to accelerate the journey from simply collecting consumer data to using it to scale and systematize enhanced decision-making across the entire value chain.

Disruptive technologies

Three new technologies are expected to disrupt the retail industries, offering unprecedented opportunities. They will be adopted at different rates, but each will fundamentally change some aspect of the end-to-end value chain and redefine the core operations of the retail industries.
The four technologies are: 1. Internet of Things (IoT), 2. Autonomous vehicles (AV)/ drones, 3. Artificial intelligence (AI)/ machine learning, and 4. Robotics. To better understand how and when these technologies will impact the industry, there are three things to consider:
(i) Business benefit – What can each technology do for the business?
(ii) Readiness level – What is the maturity of each technology, now and going forward?
(iii) Transformational effect – Which technologies will be truly game-changing for the business?
Evaluating the business benefits, application across the value chain and time to maturity for each of these technologies will help contextualize how and when they will revolutionize the specific area of retail industries.
These four technologies stand at different levels of readiness today. Over the next decade, each will take a different route in terms of advancing to maturity at different rates.
TECHNOLOGY!
TIME TO FULL
READINESS
KEY ENABLERS FOR FULL READINESS!
INTERNET OF THINGS
2-5 Years
Advanced capability to synthesize data, identify insights. Global standards for data collection
AUTONOMOUS VEHICLES / DRONES
6-10 Years
Technology needs to mature
ARTIFICIAL INTELLIGENCE/ MACHINE LEARNING
2-5 Years
Advanced capability to synthesize data, identify insights and act on them on an ongoing basis across the organization
ROBOTICS
2-5 Years
TRANSFORMATIONAL EFFECT
Based on Widespread application, Resulting efficiencies and Impact on labour , these four technologies are projected have the greatest impact on the industry. And these are –
Internet of Things – will drive a high business value as it secures proprietary consumer data to create personalized experiences in connected stores, and delivers cost efficiencies in inventory-management. It will revolutionize the in-store experience for both consumers and organizations, providing unparalleled insights based on the data collected.
Autonomous vehicles/drones – will bring cost savings from automated long-haul trucking of goods and last mile delivery. These developments will also increase utilization, make deliveries faster and improve road safety.
Artificial Intelligence/machine learning – can increase revenues through a deeper understanding of consumer behaviour, while saving costs associated with supply chain optimization. In-store pricing and assortments will be optimized and, when combined with predictive recommendations, will clearly benefit consumers and the organization itself.Business models will also transform to accommodate these consumer and technological evolutions. The traditional retail model is quickly being replaced by brick-and- mortar stores with evolved value propositions and transformative business models in the online space. To thrive, organizations will need to aggressively pursue innovation and be willing to disrupt themselves.
Robotics -will drive cost savings through operational efficiencies, primarily in warehousing and distribution. Software bots can also work faster to complete simple and repetitive tasks. Robotics will enable higher utilization, greater flexibility, improved accuracy and faster transaction times.

CASE STUDIES

Amazon Go – A check out-free shopping experience
In December 2016, Amazon introduced Amazon Go, which is a 1,800 square foot grocery store in Seattle, Washington (USA) with the most advanced shopping technology so customers can shop and then walk out with their products without waiting in lines or checking out. Shoppers use the Amazon Go app and the store is enabled with their “Just Walk Out” shopping experience, which leverages multiple technologies such as computer vision, sensor fusion and machine learning. The virtual shopping cart tracks items and when leaving the store, the shopper’s Amazon account will be charged. 
Last year, Domino’s Pizza made the world’s first food delivery via drone. Domino’s Pizza Enterprises Limited (Domino’s) and drone delivery partner Flirtey delivered the first order, a Peri-Peri Chicken Pizza, and a Chicken and Cranberry Pizza, at 11:19am (GMT+13) to a customer in Whangaparaoa[1], 25km north of Auckland
While in the UK, JustEat launched its first food delivery robot.
When a restaurant receives an order from Just Eat, it will have the option to request a robot delivery. While the meal is being prepared, the robot will travel autonomously to the restaurant from a local depot.
When the robot arrives outside the customer’s door, they will receive another text message with a code to open the cargo hold of the robot and take out their food

CONCLUSION

As I said earlier, consumers will be central to shaping the future direction of the industry. As their expectations around cost, choice, convenience, control and experience continue to climb, they will challenge the industry to keep up. At the same time, new and disruptive technologies will fundamentally impact the end-to-end industry value chain, benefitting both the industry and consumers. Business models will also transform to accommodate these consumer and technological evolutions. Industry players will need to build the right capabilities to ensure they are ready for success in this new world and critical capabilities includes a partnership mindset, last-mile delivery and advanced data sciences.
– By Mamun Seraji Based on Report from World Economic Forum, Accenture and PwC.

 

Mamun Seraji

Author: Mamun Seraji

A technology professional, blogger and an eternal student of life helping Corporations to win, succeeded and progress with the use of cutting edge technology through transformation.

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