7 trends disrupting retail

7 Trends Disrupting Retail Today

And How You Can Come Out On Top

Mobile Apps, Mobile Strategy Comments (1)

There are at least seven trends that are disrupting the entire retail enterprise in North America and will have an accelerating impact in the near future. These trends are:

  • Digitization
  • Datafication
  • Demographics
  • Disintermediation
  • Displays
  • Distribution
  • Disposal

Let’s look at each of these trends in turn:

1. Digitization

As Nicholas Negroponte noted in 1995, “becoming digital” marks the end of the industrial age, and has profound implications for our individual experiences of reality.

Infographic on how to create irresistible mobile experiences for retailWe can now create many sensory experiences through computer programming, and the ability to transform products based on algorithms and data has made change inevitable, unrelenting, and rapid. With global digital networks in place, information about new ideas and research findings can be disseminated rapidly, and lead to startling innovations. Digitization has led to the development of mobile software (or “apps”) that is rapidly transforming the experience of sourcing and buying products online and in stores. 

These trends are adapted from part of our infographic, Creating Irresistible Mobile Experiences For Retail>>

2. Datafication 

Once information is turned into 0s and 1s, it can then easily stored and retrieved at will. Today, immense amounts of data about customers and retail operations are being collected and stored, and are allowing companies to predict trends and consumer buying patterns down to the household and individual levels. “Big data” on consumers are stored in “the cloud,” and are being made available to marketers for a small fee. At the same time, consumers want more instant information about the products they are considering buying, which also requires the storage and retrieval of vast amounts of data.

Datafication also refers to the fact that daily interactions of living things, such as friendships, thoughts, and purchases, can be rendered into a data format and put to social and commercial use. Andrew Waitman, CEO of Pythian, a data infrastructure management and consulting firm, said in an interview in Information Week, “What’s happening in the world of data is that more and more businesses are fundamentally data businesses. Even if you think of online retail, online grocery stores, even Western Union, they don’t operate without their data infrastructure.”

And, the sheer amount of data being collected is phenomenal. The accumulation of data allows for new forms of analytics that can predict customer behavior, forecast staff needs for training, or suggest solutions to problems before they arise. Big data is increasingly the enabler of business intelligence, and many large retailers are quickly embracing it.

3. Demographics 

The Boomers are retiring, and Generation X is taking over the management of companies, while “born-digitals” are setting the agenda for the future. Big data on demographics is allowing retailers to personalize offers to customers via their phones and tablets based on predictive analytics.

The rise of the baby boomer generation has had a huge impact on the retail industry. Unfortunately, the demand created by all those babies born in the 1950s and ’60s is starting to dissipate, as people need less, and tend to buy less once they reach the age of 50. This is one of the main reasons for the slump in demand at the retail level, but the picture is more complex than that.

Different age groups can be segmented by the technological generation they are in. While boomers grew up with television, Generation X had personal computers at their fingertips from an early age, and Generation Y (also known as millennials) are the children of the mobile age. Generation Z (those under 18), may be smarter and more demanding than any previous generation. The needs, desires, and behaviors of each generation are quite different, and have an impact on how they shop and what appeals to them.

In addition to age-based cohorts, there are also demographic distinctions that need to be made in terms of customer engagement on the basis of gender, ethnic background, income levels, and even personality.

4. Disintermediation 

The design and creation of products is moving toward more consumer input and control, both by individuals and by crowds. Instant information through mobile phones is threatening the role of sales staff, while mobile payments from the store floor are eliminating checkout lines. New fashion websites, available on mobile, become the new intermediaries of taste in home décor. Much more information on ever-changing products is available online via mobile devices than an individual staff member can possibly learn.

While many current retail jobs are disappearing in the digital economy, new types of jobs to replace them are also being created. This means new investments in training, recruiting and performance support, as well as provisions for those who have lost their jobs.

5. Displays 

Online presentation of products has changed the game of retail, while in-store digital signs and interactive displays have altered the customer experience of shopping. The use of entertaining videos and games on mobile devices is becoming one of the new forms of marketing.

Traditionally, retail stores have laid out physical displays of goods for customers to peruse before purchase. Part of the shift from small merchants to big stores was the liberation of customers to touch and feel merchandise freely before buying. Physical displays were used to highlight brands that were being promoted, or to attract customers to a specific category of goods. With digitization, retailers have many more choices of how goods are displayed, including online, kiosks, electronic signage, interactive displays, augmented reality overlays, and immersive experiences.

Because customers are often in a hurry, and have invested time and energy into getting to a store and purchasing an item, they want it to be a convenient and enjoyable experience, especially when compared with ordering online in their own home. Online merchants have the advantage of being able to display many more items than can be physically shown in a store, but the advantage of a store is that items can be picked up and examined, tried on, and carried away on purchase.

6. Distribution

Digital communications networks have led to highly distributed supply chains for creation of personalized products.  Digitization has also radically changed methods of delivery of goods.

First, many information-based goods, such as books or movies, can be now rendered in a digital format, and delivered through downloading.

Second, computer networking and high-speed computers have enabled efficient worldwide courier services, such as FedEx and UPS, that can deliver items anywhere in the United States or Canada overnight. While stores have the advantage of being able to supply an item on the spot if it is in stock, this advantage is gradually being eroded as delivery services become faster and cheaper. New methods of delivery are on the horizon, as evidenced by Amazon’s experiments with delivery by drones, and the rapidly growing use of 3-D printers to manufacture items on the spot.

New same-day delivery options for online stores means that the advantage of store pickup of products is becoming less important. Using predictive analytics, trucks holding merchandise roam big city streets, carrying products that algorithms have predicted that consumers will want immediately after they order them. The race in selling is between pickup and same day delivery. In 2014, Wired Magazine described Amazon’s vision of having trucks preloaded with inventory that “could even carry products that you haven’t ordered but that Amazon’s algorithms predict you probably will.” In the new digital economy, speed in delivery is a big differentiator.

7. Disposal 

With the increased awareness of limitations on natural resources, and the need to reduce carbon emissions and waste, remanufacturing in the “circular economy” is on the horizon.

According to a report from McKinsey and the Ellen MacArthur Foundation, “The essence of the circular economy lies in designing goods to facilitate disassembly and re-use, and structuring business models so manufacturers can reap rewards from collecting and refurbishing, remanufacturing, or redistributing products they make.”  

Stores are becoming disposal centers for high-tech products, which in turn creates another selling opportunity. Already, chains like Staples are accepting defunct computers and toner cartridges, to be either stripped for parts and materials for recycling, or, in the case of the toner cartridges, for remanufacturing. Caterpillar is remanufacturing industrial products and claims it saved 59,000 tons of steel, 91 tons of cardboard, and over 1,500 tons of wood in 2010. British Telecom has a free service for customers to return unwanted routers and set-top boxes for recycling. Philips is turning lighting into a service rather than a product as it embraces the principles of the circular economy.

These seven disruptive trends are already having an impact on the methods and speed of how products are designed, developed, manufactured, distributed, sold, and disposed.  As we work with retailers and develop new technologies to assist in retail operations, Float is keeping these trends front and center in order to help our clients meet the challenges of the new world of retail. If you want to talk with Float about your needs, please contact us.

(Image credit: Moyan Brenn)

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Gary Woodill is a senior analyst with Float, as well as CEO of i5 Research. Gary conducts research and market analyses, as well as assessments and forecasting for emerging technologies. Gary is the co-editor of "Mastering Mobile Learning," author of “The Mobile Learning Edge,” and the co-author of “Training and Collaboration with Virtual Worlds.” He also presents at conferences and is the author of numerous articles and research reports on emerging learning technologies. Gary holds a doctor of education degree from the University of Toronto.

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