Some thoughts on retail

I was asked recently to briefly say something about IT, retail, humans and the future.

The first two are easy. The last two less so. What do we mean by future? I met a science fiction writer called Lavie Tidhar once and he defined the future as being “when things get weird.” In that case I’d suggest that the future is now. $19 billion for Whats app is weird. $19 billion is 10% of Facebook’s valuation. Last year Whats app turned over just $20 million. $19 billion is a lot of money for a messaging app and a long list of names.

Anyway, putting that bubble to one side, here are a few thoughts about retail.

My first thought is a general one. Online is going to grow significantly. Having said this I think there are limits, caused more by psychology than technology.

What I expect to happen is that retail will polarise between high tech and high touch. Habitual, commodity retail will become increasing automated and virtual. There’ll be more mobile shopping, more personalisation and more predictive sales and marketing, based not only on past buying behaviour, but on customer location and mental state. In short, where are people right now, what are they doing, and what might they be persuaded to do next?

They’ll also be more personalisation in the sense that homepages and virtual stores could be different for each individual customer, either due to historical buying patterns or due to facial and verbal recognition. What I mean by this is that if privacy isn’t an issue – and it may well be – it’s easy to instantly alter a home page or virtual store layout based upon general observations retailers can make about a person on a particular device. Cameras and microphones linked to software can, for instance, judge not only age and gender, but emotional state too. I believe Microsoft and Toyota have been looking at emotionally aware machines for a while.

And we’ll shop verbally, like we do in the real world, not by typing in words or ticking boxes on a website. Online retail will have more of a verbal interface. Ultimately, we might even order things by thinking about them, but that’s a long way off and definitely weird.

I’d expect speed and convenience would continue to play a vital role in retail so investment will shift away from stores to supply chains and warehousing. Supply chains will shorten, partly to increase speed, but also to improve agility and resilience in the face of volatility and to respond to customer demands for localisation.

Warehousing will become a key battleground, because the focus will be on how fast something can be dispatched. This links to delivery and I’d expect that Big Data and social media will play a role here, working out when the optimal time to deliver goods to customers is and making adjustments in real time.

As for physical stores, and I don’t see these going away any time soon.

Physical stores, be they out of town Big Box stores, seriously smart vending machines or tiny convenience stores, will still have a role to play because in many instances they will remain the most convenient option. For example, this afternoon a significant number of people (especially those aged 18-24) will have no idea what they will eat for dinner tonight and haven’t bought anything yet either. How do you solve that online? You can’t – unless you start to use drop boxes or local convenience stores as collection points. Or perhaps you could have self-driving food trucks containing the most popular dinner options constantly circling cities awaiting orders.

We also shouldn’t forget that a substantial percentage of shopping, especially in supermarkets, is impulse and impulse is related to physical store design, physical packaging design and serendipity.

You can have virtual stores with graphics reminiscent of the very best computer games, you can have other customers wandering through a virtual store in real time, haptic gloves to touch virtual products and aroma pods to virtually smell things too, but it’s not quite the same. The machines can’t smile or ask how your day has been on any meaningful level.

I’d expect sales assistants to disappear in shops like supermarkets soon, and cash registers and checkouts might start to vanish too. We can ask questions via our mobile devices and we can pay for them when we exist a store if the products carry an electronic tag that talks to our mobile or wearable device at the exit. No more shop lifting.

But retail is social, not only the sense of social media, but in a more profound way. Women, in particular, like to forage and chatter in shops in groups and while both can be done online, it’s not an especially rich experience. Add in the sensory and tactile nature of many products, especially luxury goods and specialist retail, and many aspects of the future of retail start to look much like its past.

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One Response to Some thoughts on retail

  1. Bradley says:

    Here’s some data released in the last month to back you up from the Guardian.

    So you’re already correct – ‘only’ 12.2% of shop units in the UK are vacant.

    Not bad for the biggest online retail market in Europe.

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