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The Future of Retail

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Consumers go to physical stores for shopping (as recognized by 36% of those surveyed in the Total Retail Report 2015 PwC), but the traditional conception of such establishments is beginning to become obsolete; 20% of consumers purchase through their PC, 11% from their smartphone and 10% from their tablet.

This means that shopping experience in the future will be omnichannel. All retailers will have to evolve their business model and customer relations strategies; they will need to integrate the physical and digital world. It will allow them to have and expose more products in less square meters and customize showcases or display areas depending on the time of day and type of customer who is at that moment in the store.

 

Physical stores are still the main selling point as it allows to touch and test the product (according to 60% of respondents), delivery is immediate (53%) and because it ensures hit with size (33%). But change in consumer behavior has already begun: 68% acknowledges that goes to the physical store to see, to know and test the product to later make the purchase online. Retail sector will suffer a revolution in the shopping experience. In the near future, the customer will order a product through his or her mobile phone and pick it up a few minutes later at the store. When he or she arrives to the store, the customer will receive offers in real time made exprofeso for them, to stimulate the shopping. Retailers will have a great knowledge of their habits, likes… making adhoc offers. This means that the retail channel and the online channel will no longer compete with each other, but instead will be integrated.

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

Customers will know gradually new concepts linked to the coexistence of the traditional channel (physical store) and digital (online store), as the Click & Collect (shopping online, store pickup) webrooming (search for information on the web/app and store purchase) or all services known as Bricks & Clicks (shopping online, return in store…). In this context of omnichannel sales, staff member should be experts and advise customers. If the retailer is unable to provide a good service, shopping will be online. Should have the capacity and ability to connect to the brand website and close an order for customers at the sales point, even when the sale is not made in the store. And its leaders will have to change their way of commission sales to pay 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 products (49%), comparing prices with competitors (49%), store location (31%) or using promotional coupons (25%). For this reason, retail sector will explore new marketing areas and social networks will gain even more presence. 62% of customers that have ever interacted with their favorites brands through social networks claimed to have felt driven to buy more. Main reasons for social networks usage are getting promotions and exclusive sales (45%), searching for products before purchasing (24%), follow friends or experts’ recommendations (24%) or participation on competitions and games (19%).

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

Businesses are changing and adapting to new values and habits of consumers, who seek new experiences and share them. Retail sector faces the challenge of redesigning spaces and customer experience. Coping mode, and the relationship of trust established with consumers, will depend on its success.

 
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