MASTERCLASSING

How technology will continue to evolve the retail landscape

Mobile Marketing

Jason Gossett, digital strategy director at IPG Mediabrands' Reprise, discusses how technology is transforming retail and why innovation is key to improving customer experience

Jason Gossett IPG RepriseHigh street retail is suffering, and technology has been a key driver in both the decline in physical stores and growth in e-retail, so businesses have had to adapt. Sir Philip Green’s reluctance to accept that the evolution of retail relies heavily on technology has led to the rescue restructure of Arcadia following sliding sales and profits amid rising competition and costs, recently acknowledging, “The marketplace has changed forever - people want a different kind of service. Should we have seen that three or four years ago - maybe. But now we need to get on with the job” (Philip Green, 2019). Any retail brand unwilling to accept that their business model needs to be focused around technology, and how they can leverage advancements to constantly improve their consumer experience, is ultimately doomed. VF are a prime example of a company trying to reinvent the wheel, from North Face’s new nanospinning technology, to how Vans’ customisation requests influence future product trends, the six-story Axtell Soho retail space in London is a digitally connected building, features custom video walls and cinema surround-sound to immerse customers in each of VF’s brands (Marketing Week, 2019).

The rapid expansion of commercial activity online
eCommerce has rapidly expanded over the past 10 years, which is evident when looking at retail sales in the UK; in 2018, internet sales accounted for 18 per cent of total retail sales, up from 4.9 per cent in 2008 (Office for National Statistics, 2019). The progression of marketplaces, online payment systems and mobile are three key contributing factors to this growth. PayPal paved the way for secure communication and transactions online and Square allowed small businesses to accept debit and credit cards on mobile devices. Amazon, with the launch of Amazon Prime back in 2005, made fast delivery scalable, vastly improving the customer experience of online delivery. Sophisticated technology has made this possible, improving the speed and convenience of online transactions. Fast forward to more recent years and Amazon Prime has now turned into an all-encompassing subscription service that includes video, delivery, music, photo storage and reading. ASOS launched ‘ASOS Instant’ in 2017 by increasing the sophistication of their warehouse and operations technology and giving customers more access to their inventory. A study showed that 67 per cent of global consumers had used or were interested in using a service that delivers an item to a specific location in less than two hours (Foresight Factory, 2019) which shows that immediacy is something people are beginning to expect from online retail.

What does this mean for consumers and brands alike?
Consumers are as busy as ever. They are beginning to expect more from companies, and want products and services delivered as quickly and simply as possible, it is more to do with efficiency than instant gratification (Dhruv Grewal et al, 2017). They increasingly turn to apps that help them organise their lives and are especially intrigued by innovations that help them avoid queues, reduce waiting time, and synchronise their personal information and preferences (Euromonitor, 2019). For example, two major supermarket chains have recently trialled checkout free stores in London. Sainsbury’s opted for a mobile scan-and-go approach, where customers scan products with their phone as they shop and then pay via an app. Tesco decided to go one step further, teaming up with start-up Trigo Vision to utilise the power of AI (Bloomberg, 2019). Using a system of cameras and sensors, the system can tell what items shoppers are picking up and then charges them automatically as they leave using pre-provided payment details. This type of technology also gives retailers insights into how many registers are needed and the expected wait times, using data garnered from infrared sensors over store doors and cash registers, predictive analytics, and real-time data feeds from point-of-sale systems. Amazon are really innovating in this space with Amazon Go technology, all customers need is a smartphone, an Amazon account and the Amazon Go app and they can go shopping in-store without the need to even scan an item. Computer vision, sensor fusion and deep learning technologies automatically detect when products are taken from or returned to shelves and keep track of items in a virtual cart. Enhanced profitability for businesses and increased control for the customer are two benefits to exploring this technology.

The evolvement of the customer experience
Previously shoppers relied on a certain brand or information source to get what they wanted, now companies must constantly innovate, drive prices down and streamline and aestheticise their offerings to entice shoppers (Euromonitor, 2019). The shopping experience has also been elevated by the ubiquity of smartphones, advances have been made with mobile apps, geo location and constant access to the online environment meaning consumer’s expectations have changed and so have retailer’s ability to connect with them, leading to a strong focus on the customer experience as brands can now participate in dynamic conversations with customers. Big data and the means to interpret it into something meaningful has led to higher levels of personalisation in-store and online. Burberry use big data and AI to combat counterfeit products and improve sales and customer relationships – they have a reward and loyalty programs that create data to help them personalise the shopping experience for each customer (Forbes, 2018). Improving the overall customer experience is a top business priority for companies and a main driver behind their digital transformation ambitions according to a study from Accenture, and bridging the gap between brand promise and customer experience will hold clients in good stead for the future (Accenture, 2015).

So, what does the future hold?
In fashion, AI has the ability to help brands and retailers with predictive forecasting, capacity planning and merchandising (Business of Fashion, 2019). North Face are utilising AI to help consumers find the items that are right for them, utilising IBM Watson’s power on mobile, the app prompts a voice-activated conversation to determine what a user might need by posing a number of questions surrounding location, temperature and gender (Insider Trends, 2018). AI based responses can have tremendous positive impact on customers as they shop, whether physically or online. Their answers may be tailored according to consumer’s knowledge, for example, by accessing historical customer data sets and using predictive analytics to recommend relevant information or products.

What effect will the Internet of Things have on consumer engagement? How far away are we from machine-to-machine commerce? There is an abundance of these noteworthy questions, but the focus of this article is on the retail landscape, so I’ll leave this area for scientific researchers to figure out for now. What is clear is that retailers need to continue to innovate as they are currently doing and their focus should be on improving the customer experience, whether that’s providing them with information to make good and more confident decisions, improving the speed at which transactions take place or engaging with them on a deeper level, it should all link back to making their lives simpler. For the bigger players in the market, turn to the brands that are leading in this area like Burberry or Amazon and start to test and learn and build in resource to incorporate some of this thinking into your digital strategy. For small to medium size brands, it’s worth investigating certain areas to see if you can yield better performance, whether that’s using Instagram to launch an AI-powered recipe solution or implementing advanced AI capabilities for visual search, it will give you an understanding of how these technologies can benefit the business and hopefully influence the decision makers to invest more into this exciting area.

References
Bloomberg, Tesco Working on Cashier-less Stores as Competition with Amazon Heats Up, 2019, online at:

https://www.bloomberg.com/news/articles/2019-06-26/tesco-is-said-to-work-with-israel-s-trigo-on-cashierless-stores

Business of Fashion, 5 technologies transforming retail, 2019, online at:

https://www.businessoffashion.com/articles/fashion-tech/5-technologies-transforming-retail

Dhruv Grewal, Anne L. Roggeveen, Jens Nordfält, The Future of Retailing, 2017, Pages 1-6

Euromonitor, Top 10 Global Consumer Trends, 2019

Forbes, Twenty-seven Incredible Examples of AI and Machine Learning in Practice, 2018, online at: https://www.forbes.com/sites/bernardmarr/2018/04/30/27-incredible-examples-of-ai-and-machine-learning-in-practice/#7fb119de7502

Foresight Factory, Megatrend: The Fourth Industrial Revolution, 2019

Insider Trends, 50 Best AI Retail Applications, 2018, online at:

https://www.insider-trends.com/50-best-ai-retail-applications/

Marketing Week, VF reinvent the retail experience, 2019, online at:

https://www.marketingweek.com/vf-reinvent-the-retail-experience/

Office for National Statistics, Retail Sales Index time series (DRSI), Great Britain: 2019

Philip Green: Topshop Empire 'didn't come close to collapse', 2019, online at:

https://www.bbc.co.uk/news/business-48617404

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