Global Retail- 5 Hot Trends

Over the past few years, retail industry has been both enabled and disrupted by technology. Online retail has created newer service levels for consumers, thus, challenging traditional retail to catch up.  Traditional retail, in turn, is re-inventing the customer experience at stores and experimenting with omnichannel. In this context, the 5 hot retail trends to watch out for are:

• Personalization – Retail is moving from a ‘one-size fits all’ model to a personalized model. The key driver in this trend has been online retailers (like Amazon), which churn out millions of personalized offers for its customers. It is enabled by technology which can identify individual customer preferences and offer related content about promotions, events, product launches, etc. resulting into higher conversions. Departmental store retailer John Lewis is making use of beacon technology to deliver personalized messages in-store.

• Omnichannel, the anytime anywhere retail – Omnichannel retail is the peak of maturity wherein a retailer operating in multiple channels (like store, online, mobile, TV) provides consistent shopping experience to the customer. Fashion retailers like Macy’s, Nordstorm are pioneers in providing visibility into their inventories and customer data across channels. Others face challenges in terms of tweaking business processes for cross-channel fulfillment, customer returns, attributing sales to a channel and the like.

• Shrinking Stores – Retailers are stringently reviewing operational costs as more sales are being poached by online retail. Real-estate being a major cost, loss-making stores are being shut down and new stores are being launched in smaller square-foot area. Even though US has the highest retail square footage (47 sq.ft. per capita), sales per square foot is continuing to decline. In 2016, Macy’s shut down 36 stores, Best Buy closed 30 stores and Walmart has announced 269 store closings.

• Experiential Retail – E-commerce evangelists may pronounce the end of physical retail, but it will merely transform to a more experiential form providing social gratification. This new era of experiential retail will convert a mundane shopping experience into fun through value-added services (like coffee-shops) or technology enhancements (like augmented reality, interactive technology,etc.). French sports retailer Decathlon has created basketball and volleyball courts besides it's stores in India, where people can play free-of-charge. 

• Technology Disruption- The current technologies are more of disruptors than mere enablers. In the store, beacons, mobile and wearables technology are enabling personalized shopping experience. Virtual reality is offering shoppers an option to virtually try-and-buy products. Robotics is being experimented for shopping carts by Walmart. Artificial Intelligence (AI) is powering voice recognition technology to place orders and automation through bots. Internet of Things (IoT) is connecting millions of low-cost micro-devices to collect data and provide valuable insights in customer buying behavior, with the help of advanced analytics.

Disclaimer: The blog is based on my personal experiences and strictly reflects my individual opinion.

Moving over from Physical to Experiential Retail

E-commerce evangelists are busy pronouncing the end of physical retail. Being an e-com enthusiast, I believe that e-com is here to stay. However, being a retail passionate, I also believe that physical retail can never die. It will just transform to a more experiential form providing social gratification.

A recent NRF article corroborates this- “The challenge for a retailer today is to rise above a line item on a to-do list; it’s to provide a solution to shoppers’ needs — in a way that gets the shopper to emotionally slow his pace and breathe.” This is being called as the new era of experiential retail, which I couldn’t agree to lesser.

Experiential retail could be described by some as converting a boring experience of browsing, trying and buying into something fun and exciting, using things like augmented reality and interactive technology (Source). Innovations in store technology like beacons, virtual mirror and advent of IoT can surely change the way we shop.

Additionally, there are examples which have less to do with technology but more to do with the value added services provided at the store or the expertise of their sales staff. Two such retailers (both in sports retailing) are worth discussing.

Image Source: Decathlon India website

1)   Decathlon – It is a one-stop solution to amateurs’ sport needs covering around 40 sports. Some of the best things about the store are - huge store size and wide-spaced aisles that give plenty of space to test equipment like cycles, kid scooters; trial rooms located right at the end of aisles selling apparel for specific sports; clear labeling; helpful staff; long selling hours (10 am to 10 pm) and ample parking space.

Decathlon develops and sells its own products, which have a decent quality and affordable price. This makes them more penetrable to the masses. 

However, the highlight of the Decathlon stores is their basketball courts available for playing free-of-charge. In countries like India, where community sports spaces are grossly inadequate, this is a welcome change. The shop-front courts provided a lively aura to the Decathlon store that I visited (situated on the outskirts of Hyderabad, India). 

2)  The Bike Affair – As the name suggests, it deals with everything around cycling. Not just the core product – cycles (or bike), but all the accessories related to it. Along with that they provide maintenance services, rent bikes, arrange knowledge-sharing workshops and cycling events.

Their loyal customers are cycling enthusiasts who come to them not for the product or the discounts, but for the know-how of its staff. Although this is a boutique store, but I can’t resist to compare it with Apple stores which are famous for their ‘Genius Bar’. 

It would be worth-while to see more and more retailers take on a transformation journey to move from transactional to experiential form.