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The Future of Retail

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Consumers continue to go to brick-and-mortar stores for shopping (as recognized by 36% of those surveyed in the Total Retail Report 2015 PwC), but the traditional way of thinking about such establishments is beginning to become obsolete; 20% of consumers purchase through their PCs, 11% from their smartphones and 10% from their tablets.

This means that shopping experience of the future will be omnichannel. All retailers will have to evolve their business models and customer experience strategies. They will need to integrate the physical and digital world, allowing them to feature more products in less square meters and customize showcases and display areas depending on the time of day and type of customer who is at that moment in the store.

 

Brick-and-mortar stores are still a key factor in the buyers journey, as they allow consumers to touch and test products (according to 60% of respondents), delivery is immediate (53%) and because it ensures the right size fit (33%). However, changes in consumer behavior have already begun: 68% acknowledge that going to a physical store to see, become familiar with and test products to later make purchases online. The retail sector will undergo a revolution in the shopping experience. In the near future, customers will order a product through their smartphones and pick it up a few minutes later at a store. When they arrive at the store, the customer will receive offers in real time made tailor-made for them, to further stimulate shopping. Retailers will have in-depth knowledge of consumers" habits and likes, making the ability to make adhoc offers possible. This means that the retail channel and the online channel will no longer compete with each other, but will instead be integrated.

Location and space are critical for brick-andmortar retailers, and as these spaces are increasingly scarce and expensive, if the retail concept does not begin to integrate the digital world, it is very likely that it will stop being competitive. Technology will provide retailers impressive showcases by using large format screens that consumers can interact with. They will also be able to use smaller spaces to exhibit the same number of products through a physical/digital display. In fact, soon we will see virtual fitting rooms of great quality, that thanks to innovative technologies, will be able to instantly analyze the sex, age, height, body type, skin tone, hair and eye color of customers – and even the clothes they wear- to determine their preferences. Based on that data, the most relevant products will be presented. There will be no need for the customers to remove clothing. They will see how they look in different clothes and make different outfits quickly. It will even be possible to share clothing choices in real time on social networks with friends.

Customers will gradually become familiarized with new concepts linked to the coexistence of the traditional channel (physical store) and digital (online store) - Click & Collect (shopping online, store pickup), webrooming (search for information on the web/app and store purchase), services known as Bricks & Clicks (shopping online, return in store). In this context of omnichannel sales, staff members should be experts and advise customers. If the retailer is unable to provide a good service, shoppers may be more likely research and purchase products online. Staff members should also have the capacity and ability to connect to the brand website to finalize an order for customers at the point-of-sale, even when the sale is not made in the store. With this in mind, companies will have to change their sales commission strategies to reward employees for such efforts.

The Future of Retail
The Future of Retail
The Future of Retail

We should not forget that mobile technology (mobile phones, smartphones and tablets) are key tools for searching for products (49%), comparing prices with competitors (49%), store locations (31%) or using promotional coupons (25%). For this reason, the retail sector will explore new marketing channels and social networks will gain an even greater level of importance. 62% of customers who have interacted with their favorite brands through social networks claimed to have felt driven to buy more. The main reasons for social networks usage in regards to shopping are getting promotions and exclusive sales (45%), searching for products before purchasing (24%), following friends or experts’ recommendations (24%) or participating in competitions and games (19%).

Brands with the highest growth are those that will offer very good value for money. Today"s customers are increasingly informed, know what things are worth, can easily compare a product while in the store via mobile ... but are willing to pay more if the product or service that they are receiving adds value. This value will largely come not only from the product, but also the shopping experience. It seems that Spanish retailers are getting the message about these new habits because, as stated in Retail Digital in Spain IAB Spain, the delivery time in our country for products shopped for online is shorter than in the U.S. (almost 7% are delivered before 3 days, compared with 8% in the U.S.), but only 12% offer free shipping and free return is only possible in 39% of cases (mainly in fashion, retail and sports).

Businesses are changing and adapting to the new values and habits of consumers, who seek new experiences and want to share them. The retail sector faces the challenge of redesigning spaces and the customer experience. Their success will depend on their ability to evolve and establish a relationship of trust with consumers.

 
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