I’m certain a lot retail executives wish they had the power to stare into a crystal ball and see the future. Such a gift would have spared many of their companies from the consequences of the retail apocalypse. Douglas Pitassi (@DouglasPitassi) explains, “[During the first part of the 21st century,] thousands of stores were opened across the United States, but in more recent years, the advancement and popularity of the internet have taken these stores into a roller coaster of competition, where it truly has become survival of the fittest.”[1] If Pitassi is correct, the big question is: What does it mean to be “fit” in the retail sector?
Retail trends
When most people think about the retail sector, they visualize transactions between merchants and customers. Increasingly, those transactions are taking place online. Brian Kilcourse, managing partner at Retail Systems Research (RSR), asserts this new retail modus operandi places greater emphasis on supply chain operations. In fact, he calls the supply chain “the next big thing” in retail.[2] “Retailers,” he explains, “understand that they are challenged to assess demand with a greater accuracy than ever before and to fulfill that demand in the ways that consumers expect. … Retail Winners are confidently investing in new data and technologies to improve their supply chain through better forecasting and execution.”
Omnichannel. The importance of the supply chain to the retail sector is mirrored in the rise of omnichannel operations. Daniel Newman (@danielnewmanUV), a principal analyst at Futurum Research and CEO of Broadsuite Media Group, predicts, “This year, omnichannel will become a must as consumers move faster and demand more from their retailers. If your site is down or your product count is off — they’ll be moving to the next retailer who has their omnichannel experience together. Omnichannel may not be one of the sexiest digital transformation trends in retail — but it is definitely the most necessary.”[3]
Cognitive computing. Omnichannel operations only succeed when inventory amounts and locations are known. Cognitive computing platforms, like the Enterra Enterprise Cognitive System™ (AILA™), can help companies with inventory management as well as myriad other challenges facing today’s retailers. Pitassi notes, “Cognitive computing will be used more frequently than ever to understand what [consumers] want and how to give it to them. Though this can be done in-store, it is much easier to track customer behavior on the internet because we can analyze more customers and more metrics. Cognitive computing is a piece of technology whose sole purpose is to analyze large amounts of data to create patterns and allow businesses to optimize their systems and create better customer service programs.”[4] Newman adds, “Cognitive computing will grow exponentially in 2019 — and the companies who do it well will move them to the head of the pack.”
Automation. Most people are aware fulfillment centers (aka warehouses) are becoming more automated and increasingly leveraging robotic capabilities. Software bots are also predicted to become more important in the retail sector. The staff at CXO Today report, “Retailers are increasingly embracing latest emerging automation technology practices such as robotic process automation (RPA) to simplify complex tasks and streamline administrative processes.”
Mobile technology. The consumer path to purchase has quickly become the “digital” path to purchase. Jason Goldberg (@retailgeek), Chief Commerce Strategy Officer at Publicis, reports, “Forrester estimates that 86% of U.S. retail sales still happen in brick-and-mortar stores. … But customer expectations for brick-and-mortar store experiences are evolving rapidly. In particular, Forrester now estimates that 53% of all purchase decisions are digitally influenced.”[5] The most important consumer tool is the smartphone; therefore, one of the most important strategies a retailer must perfect is a mobile strategy.
Social commerce. Social media outlets have received a lot of heat the past few years. Even so, many pundits predict social media will become a major player in the retail sector. In the years ahead, Pitassi predicts, “Social media will become the first step in the sales funnel. … Brands will optimize social media and will resort to selling experiences in their stores, since people can purchase all of the products online.” Chris Walton (@OmniTalk), Vice President of Target’s Store of the Future, bluntly states, “The rise of social commerce is probably the most important trend that will impact retail over the next several years.”[6]
Hyper-personalization. One reason Walton believes social commerce will do well is because consumers provide social media sites with so much information about themselves. This allows them to hyper-personalize offerings. Andrew Busby (@andrewbusby), Founder and CEO of Retail Reflections, explains, “What we will begin to see, through greater adoption of artificial intelligence and machine learning, is a level of personalization never before imagined. Stop for a moment to consider all the content you have put on social media. Wouldn’t it be great if brands actually paid attention to that content, analyzed it, interpreted it and delivered back to you a relevant experience that added real value to your life?”[7] Cognitive computing can play a primary role in making personalization better. For example, the Enterra Shopper Marketing and Consumer Insights Intelligence System™ can leverage all types of consumer data to provide high-dimensional consumer, retailer, and marketing insights.
Concluding thoughts
Just because something is trending, doesn’t mean it’s new. Most of the trends discussed above have been around for a while. Unfortunately, many retailers have not aligned their strategies with these trends. Busby writes, “We know that consumer expectations are like a train running full steam ahead, and we are waking up to the idea that delivery and fulfillment are fundamental differentiators. Immediate delivery has become the default expectation. Fulfillment capabilities will define retail brands in 2019 so for those who have complete visibility of their inventory, the future is bright. Unfortunately, few businesses meet this threshold.” Understanding emerging or ongoing trends is the first step to getting retail strategies aligned with them. 2019 is likely to be another tough year for brick-and-mortar retailers. Fortunately, few, if any, retailers rely strictly on retail store sales. Masters of omnichannel operations will becomes masters of the retail space.
Footnotes
[1] Douglas Pitassi, “Top 4 Retail Trends For 2019 You Need To Know,” WorthvieW, 6 December 2018.
[2] Symphony RetailAI, “Supply Chain Remains the ‘Next Big Thing,’ as Four Out of Five Retailers Say It Positively Impacts Business,” Globe Newswire, 6 December 2018.
[3] Daniel Newman, “Top Four Digital Transformation Trends In Retail For 2019,” Forbes, 16 December 2018.
[4] Staff, “RPA, Automation Tools Are Future For Retailers, Says GlobalData,” CXO Today, 1 November 2018.
[5] Jason Goldberg, “The Future Of Brick-And-Mortar Retail Is Mobile,” Forbes, 26 November 2018.
[6] Chris Walton, “10 Refreshingly Honest Retail Predictions For 2019,” Forbes, 6 December 2018.
[7] Andrew Busby, “5 Retail Trends to Look for in 2019,” Longitudes, 25 November 2018.
