An industry which stands at approximately US$25 trillion in 2018 and is expected to rise to approximately US$28 trillion by 2020, is undeniably a big slice of the global economy pie.1

And that’s what global Retail industry is all about – a vibrant and exponentially evolving industry which is defying all claims of reaching dead-end owing to advancement in e-commerce and is setting newer benchmarks with its charismatic transformation.

With companies like Apple, Amazon, Microsoft breaking norms in the space of traditional retail, one can also see the mom & pop stores still surviving. The crests and troughs of the sector have led the ecommerce division to embark upon an altogether new growth journey. So, all in all, the segment is wide and varied with even drastically different branches of it still thriving, proving the strength of the domain.

BUT

We can’t deny that transformation is the survival mantra in today’s age and the industry can be seen well-bitten by the bug of innovation.

UNDERSTANDING THE LANDSCAPE

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While as ambitious beings, humans have a fantastic ability to accept and even celebrate change (though eventually perhaps) but the curious nature bequeathed by nature has always led us to dissect the change and understand its origin.

The million-dollar question – what caused the retail industry to make this shift to modern retail? What led to the replacement of that comfortable friendly neighbourhood seller with that discounted online deal?

The generic answer may be the evident technological revolution which has not only impacted retail but every industry sector and even the life of mankind in a major way. The more domain-personalised reason can be stated as the transformation of buyer into a digitally empowered creed – the hyperconnected consumer and the dynamic Retail landscape fuelled by competing innovation strategies.

With both these conditions, it was a question of getting on the wave of transformation or succumbing on the side lines. Retail chose the first option and the result is in front of us today – a reinvented & technology enabled industry.

LOOKINGINSIDE THE SHIFT

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The world of retail has become an experiential springboard today. However, the sector has gone through various ebbs and flows in its journey to its present stage.

While commerce has been there since the existence of mankind with barter and then various form of currencies becoming exchange metrics for goods and services, the break of dawn of modern retail can be traced back to late 1800 and early 1900.

First cash register (can be said as the first seed for POS systems) came into existence in 1879. The other major milestone was the launch of shopping malls which the 1940s-1970s era brought in. Another major breakthrough was the introduction of ecommerce in the 1990s and the road ahead from there is an enough proof of one of the fastest-paced innovation catch-up ever. Omnichannel existence, personalised experiences, retail becomingretailtainment and so many other trends graduated overtimeto become a norm eventually.

The New Rule: If You Don’t Innovate– Then Stagnate – And Perish

CATCHING UP WITH THE PACE

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Retailers have risen to the challenge of innovation as the understanding of perils is clear with several big brand names disappearing from the market lately. Also, the ability to infuse intelligence into data has shown the industry the grand picture of a reinvented retail.

Let’s look at some numbers validating the stance• By 2025, in-store sales will still make up 75% to 85% of retail sales.2

• By 2023, the global gamification market is expected to reach US$19.39 billion and retail holds the largest share in this market.3

• By 2021, over three-quarters of retailers plan to invest in big data solutions for IoT data and 72% in cognitive computing and machine learning.4

• By 2021, 70% retailers will install in-store beacons for location-based marketing. 5

• By 2021, 65% of retailers plan to invest in inventory and supply chain automation.6

STATISTICS SHOWING THE WAY

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• By 2020, 50% of retail customer service requests will be conducted, at least partially, through conversational AI applications. 7

• By 2020, retailers’ spend on artificial intelligence is expected to increase by 53% by 2020.8

• By 2019, about 40% of retailers will develop a customer experience architecture supported by AI, boosting conversions up to 30% and revenue by 25% through hyper-micro personalization.9

• 62% of smart phone users have made an online purchase via a mobile device and by 2019, there will be more than 5 billion mobile users in the world. 10

Industry Speaks• Expanding unified commerce initiatives (omnichannel) as well as leveraging

social media engagement is a priority for 54% retail brand CIOs.11

• 93% of online retailers believe mobile innovation affects profitability.12

• A frictionless mobile experience is an essential part of the commercial offering for 75% of retailers – 51% are now investing in it.12

• 71% of retailer software decision makers believe that agility is a critical benefit of moving to cloud-hosted software-as-a-service.13

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TheFOUR BOLD MOVESCurtain has risen and its time for action. We have stepped into the world of new intelligent retail.

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The biggest leap of retail – the one which is the reason for all the other shifts, is none other than its transition from a product/service centric industry to a consumer-focussed one. Brands are designing experiences around the products instead of focusing all their energies on the product or the stores or the online portals only.

Constructing Experiences 1

2Another big move has been the increasing acceptance of collaboration-driven ecosystem. With due respect to competition, brands are readily exploring avenues to be able to benefit from each other with the provision of bundled products/services – after all, the consumer of today demands convenience at any cost. Increasing collaboration between manufacturers and retailers is also another leap in optimising a product journey to a consumer’s home.

Imperative Collaboration

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The third significant stride has been courtesy the boom in social media and mobility. There has been an emphasized focus of the brands on assessing and integrating real-time feedback. It’s the era of hyperconnected consumer landscape and even a single dissatisfaction projecting tweet has the power to make thousands of loyalists abandon the brand.

Connected Shopper

With millennials taking up the new TG space and the parallel tech/online revolution, bets were earlier on the demise of offline but the same has been proven wrong with almost 46% of millennials14 still thronging stores for the experience – even if they plan to buy online. Hence, the online marketplace trend can also not be negated. Therefore, perfecting a completely integrated and seamless experience in the omnichannel world is another step which retailers have taken up seriously.

Mastering Omnipresence

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WHAT IS THEROOT OF PUSH IN INNOVATION?Multiple factors can be listed as the trend drivers which are pushing the industry towards its next big leap or we can say the re-invented retail of 2030.

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• Increasing vertical integration with emergence of newer and independent (at times, bypassing distributors) business models.

• Extensive competition in the digital domain coupled with entries of newer players.

• Cost leadership and consolidation aimed efforts spurred by investors.

LET’S LOOK AT A FEW BROAD SEGMENTS

Changing Industry Dynamics

• Changing consumer TG generation and current mass market going into stagnation.

• Growth of fragmented niches with consumer becoming more involved.

• Rise of hybrid shopping with attractive pricing models (read discount).

• Increasing market for E-grocery and the competition for digital placements.

Evolving Consumer Behaviour

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• Tighter regulations pushing retailers for more innovative approach.

• Actions to counter the impacts of fragile global supply chains (political unrest, tariff regulations or natural disaster etc.).

• Evolving lifestyle for not just consumers but for staff as well.

Other External Factors

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The question which every retailer must ponder upon is that if the rush to innovate causing any crack in the foundation of retail – a bedrock formulated by share of mind, average order value, brand engagement scores etc.?

To understand the concern better, let’s take few reasons examples where hurried innovations became the reason for brand’s downfall.

• Treating online & offline customer segments as two entirely different worlds (giving more emphasis on digital channel causing a skew) instead of trying to weave an integrated experience.

• In the age of competitive pricing based on advanced optimisation algorithms, succumbing to the discount race instead of value-polishing the product and keeping it discount-proof.

In both the cases, the extreme excitement to ensure that latest technological innovation is integrated in brand strategy, instead can have adverse impact on the brands because of an imbalanced approach neglecting the basics.

Hence, while it’s critical to constantly pursue innovation, it is even more important to upkeep the domain basics and practice relevant and responsive retailing.

THE BIG Q STILL REMAINS

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While these elements are already been practised by some or the other retail players and being constantly experimented with by multiple start-ups, these trends are all set to see an unprecedented upswing in the future:

• Customer recognition and contextualisation for delivering a highly personalised experience.

• Conversational commerce seeing a rise with significant advancements in natural language processing capabilities.

• Shorter delivery cycles with the help of IoT based delivery devices (drones, robots etc.).

• Gamification seeing exponential increase in adoption by the retailers for both online and integrated offline models.

• Chat and messenger bots becoming integral elements of retail strategies and moving over mere engagements by turning them into sales.

• Increased analytics leverage revamping various functions of domain like merchandising, marketing, audits etc. or geospatial analytics leverage for carving the best omni-channel presence strategy.

A PEEK INTO THE FUTURE

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• Revamped brick & mortar stores as emotion-experience centers with added elements like AI-enabled virtual mirrors.

• Increase in voice-based searches in online retail space based on NLP advancements.

• AR taking a centre stage for customers looking for non-pervasive yet real experience.

• Rise of check-out free payment services with pin/ identity validation etc. getting replaced with elements like facial recognition, fingerprint scan, RFID tag etc.

• Intelligent supply chain models with smart tags and other digital ids on products carrying out communication regarding stock availability as well as sharing product info with the consumer.

• Image recognition rewriting the basics of compliance management as well as field staff supervision.

• 3D printing seeing an exponential rise with on-demand product manufacturing becoming crucial element of personised retailing.

• Social commerce seeing an upswing with people becoming retailer’s incented social evangelist (Ex- companies like MeSpoke and Threads leading the microtrend).15, 16

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It’s time to put on your innovation shoes and step into the race with all your might, however, let’s look at these few quick tips before you take the big plunge.

• Experience per square foot will be the new success measure, hence, customer experience is the most critical element to master.

• While the customer is most important, the on-ground staff or the brand employees are also equally crucial, hence, invest into them as well.

• Maintain the balance between offline and online stores/ sales and don’t neglect one for the other.

• Understand the real fitment of tools and technology before getting into it –leverage AI, Analytics, ML etc. but with full understanding of your requirement and expected impact.

• Invest into trustworthy sales tech partners to enable you on the tech journey of your brand and focus your energies into what is your forte.

TIME TOGET GOING

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