Research by Planet Retail has led to a prediction that retailing will become more personalised, collaborative and socially-influenced in the future, which means retailers should begin preparing themselves for another few years of significant structural change.
by Natalie Berg, Retail Insights Director, Planet Retail
Retailing has undergone seismic shifts over the past five years and we believe that further fundamental changes are just around the corner. By 2020, we predict that shoppers will have to pay for home delivery, traditional points-based loyalty cards will become a thing of the past, pure-play retail will largely cease to exist and checkout-less stores will become a reality.
Our Future of Retail: 10 Trends of Tomorrow report features case studies from retailers around the globe and a key theme is the need for collaboration. While the report looks at all sectors of retail from countries around the globe, its findings will be relevant for progressive convenience retailers.
Retailers are finally beginning to recognise the benefits of working together both in bid for differentiation and providing a better service for the customer. We expect more retailers will join forces by 2020, primarily through in-store concessions or collection points for online orders.
Retailers must follow their own golden rule by putting the customer first. For many, this will require collaboration with some unconventional partners to improve speed and quality of service while providing additional choice for customers. The key will be to collaborate with non-competing chains that share an overlap in customer demographics, thus allowing the retailer to benefit from increased footfall and shopper satisfaction without the risk of sales cannibalisation. It’s for this reason that we are expecting more retailers competing in different sectors – e.g. convenience and home entertainment – to join forces in the name of providing a best-in-class click & collect service.
The store of the future will be heavily influenced by technology. We expect more retailers – particularly the spacious, SKU-heavy hypermarkets – to invest in instore navigation capabilities. In addition to the opportunity to better understand shopping habits, this technology is incredibly powerful as it enables the retailer to engage with shoppers just moments before potentially making a purchase.
In the not too distant future, we also expect more shoppers to pay for items via their smartphones. The highly publicised launch of Apple Pay has certainly created a buzz around mobile payments, but we believe it will be some time before shopper usage catches up with awareness. In fact, our own research shows that only 20% of shoppers globally have used their mobile phones as a method of payment.
Concerns over privacy and security must be addressed in order for mobile payments to be accepted beyond those early adaptors. Convenience, ease of use and providing tangible benefits for the shopper are essential. For example, some retailers have been testing checkout-less stores, allowing shoppers to use their smartphones to scan and pay for items as they add them to their basket.
Retailers should also consider rewarding shoppers, potentially linking to loyalty schemes, as an incentive to make mobile payments. It’s for this reason that we believe in the long-term success of a more comprehensive mobile wallet as opposed to mobile payments as a standalone option. Although such technologies can help retailers to differentiate today, it’s important to bear in mind that this will also lead to greater customer expectations and in the next five to 10 years such technologies will simply become the norm.
We also believe the end is nigh for points-based loyalty cards. The rise of shopper promiscuity and general strive for more honest, transparent pricing has had a detrimental impact on traditional loyalty schemes. That said, the notion of rewarding your most loyal, most profitable customers will never go away. The future will revolve around personalisation, digitisation and gamification. We would also encourage retailers to look towards value-added perks – as opposed to money-off vouchers – such as providing VIP checkouts for cardholders or free hot drinks in-store.
So, retailers must be prepared to enter a new phase of mass personalisation. Historically, bricks and mortar players have struggled to replicate the level of personalisation that can be found online. However, recent advances in beacon technology mean that targeted, real-time offers are now a reality. What’s more, Planet Retail research shows that 38% of global shoppers want to opt in to receiving relevant discounts when compared to the 15% of shoppers currently doing this. This combination of shopper enthusiasm and in-store technological capability means that bricks and mortar retailers should be looking to take personalisation to new heights, driving both customer loyalty and spend.
