The retail landscape has gone through a significant transformation over the last decade. With the rise of e-commerce, traditional brick-and-mortar stores have had to adapt to keep up with changing consumer behavior. Today, retailers must combine online and offline channels to deliver a personalized shopping experience to their customers. And the pace of disruption does not slow down. What will the future look like?
In an increasingly connected world where commerce is a seamless part of daily life, how will consumers engage with, and buy brands in the next 5-7 years?
In this article, we will try to find answers to this question, exploring four emerging models in commerce that are set to revolutionize the retail landscape. Check out our tips for businesses looking to implement these emerging commerce models.
Understanding Consumer Behavior and Its Impact on Retail
Before we dive into the emerging e-commerce models, it's important to understand consumer behavior and its impact on retail. Modern consumers are digitally savvy and demand convenience, speed, and personalized experiences. They expect to be able to shop wherever and whenever they want, and they want their shopping experiences to be as frictionless as possible.
Another important trend in retail is the rise of mobile shopping. Consumers are increasingly using their smartphones to shop, and retailers must ensure that their websites are mobile-friendly and easy to use on a small screen. The basics are not enough anymore - the new generation of consumers needs immersive experiences, excitement, engagement, and convenience.
Finally, retailers are also focusing on sustainability and ethical practices. Consumers are becoming more aware of the impact that their shopping habits have on the environment and on society, and they are looking for retailers who share their values.
This shift in consumer behavior has forced retailers to rethink their business models. Brick-and-mortar stores must now compete with e-commerce giants like Amazon, who offer fast and free shipping, easy returns, and a huge assortment of products. To stay competitive, retailers must leverage technology to improve the shopping experience and make it as easy as possible for customers to buy from them.
The Future of Retail
As we move further into the future, emerging models in commerce are set to revolutionize the retail landscape. The future of retail is likely to be shaped by emerging technologies like artificial intelligence, augmented reality, and the Internet of Things. These technologies have the potential to transform the way we shop and offer new opportunities for retailers to engage with their customers. Let's immerse into those four scenarios and see what the future of retail can look like.
1. Data Dominance
The rise of robots? Or just next-level of automation and customization?
Imagine this reality: big data and AI algorithms have enabled the complete automation of shopping. Convenience & personalization are essentials, with consumers willing to share a wealth of personal data in exchange for never having to plan or shop again. In a shift to grocery-as-a-service models, deliveries are curated to your individual needs and arrive when you need them.
Next-gen shopping assistants can serve as personal shoppers, curating, recommending, and purchasing products automatically, and at the right time.
- Shopping on auto-pilot
Websites are fully cognitive & hyper-personalized to each unique shopper, displaying a highly curated selection of recommendations.
- Re-imagined & re-defined brick & mortar
Offline, physical stores are still around, but they have changed dramatically; smaller in footprint, carrying only essentials and top-selling SKUs, as well as being used as fulfillment centers for online and click &collect orders.
It's not an imaginary scenario - the industry is already going in that direction.
“The tech we built uses deep-learning AI to consider hundreds of variables - size, type, brand, price, aggregate shopper data, individual customer preference, current inventory & more - in real-time to determine the best next available item. It then preemptively asks the customer to approve the substituted item or let us know they don’t want it, an important signal that’s fed back into our learning algorithms to improve the accuracy of future recommendations”
2. Freedom of Creating
Everyone and everything on sale? Or a new way of leveraging creative power?
This world sees an explosion of creative energy & the birth of a new online economy fueled by individual creators. Through decentralized platforms, it is easier than ever for creators to build & monetize audiences, create their own products &become brands themselves. This people-powered commerce represents an extraordinary growth opportunity for brands but their success will hinge on empowering & supporting this new breed of creators.
- Creators As Brands
Armed with a wealth of content creation, monetization, and distribution channels, creators have become full-fledged brand houses. To avoid competing, brands have brought top creators in-house, co-creating the next generation of brands.
- Social Commerce Tops $6T in sales
Social commerce is part of your regular shopping routine. New video-driven social platforms have created purchase experiences that are both interactive and seamless. TikTok has built a global warehouse and distribution network while others have teamed up with Amazon.
- Evolution or Death of the 100-year-old brand
Brands come and go in line with the latest trends. With consumer preferences changing seemingly overnight, developing brands to last a lifetime is no longer a winning proposition. This world sees new brands and categories come in and out of existence aligned with real-time trends and hyper-local needs.
3. Immersive Economy
Hijacked by augmented reality? Or leveraging disruptive technology to create memorable experiences?
The preference for experiences over things has reached critical mass, driven by the enormous spending power of Gen Z and Millenials. Winning retailers have adjusted their physical stores to deliver beyond the product, using experiences and services that can’t be provided online to keep people in stores for longer. Augmented and mixed-reality enhancements have become part of people’s daily lives, allowing for more seamless and engaging shopping experiences both online and in-store.
- The “Store of the Future”
When you enter the store, a push notification greets you to see if you want your usual items picked, packed, and ready to go at checkout, giving you time to visit the live-stream beauty demo or get a 15 min health screening at the pop-up clinic.
- Virtual Stores are the new brand (dot) com
E-commerce storefronts have made the switch from 2D to 3D, replacing websites you click with places you can enter, visit and explore. Avatar“digital twins” function as people’s alter egos in these new shopping environments.
- AR beats VR
The immediate success of Apple Glasses has shown the potential for hands-free AR to augment every aspect of our daily lives including browsing and shopping, and eventually replace our phones entirely.
‘’There are companies out there that are personalizing the sounds you hear in the store & the scents you smell. They’re personalizing what the associates know about you to help you find the right product more quickly. You’re going to see digital mannequins that quickly change what they’re wearing based on who you are and what you might be holding in your hand. You’ll see a lot more in-store experiences to help you engage with the product, touch and feel it & get to know it.’’
4. Sustainability and Convenience
Just a fleeting fashion? Or a new, responsible trend that's here to stay?
With the climate at its tipping point, sustainability has become the most important purchase driver. Winning brands have differentiated themselves by creating a world where eco-friendly and convenient can coexist which required a shift from mass market to hyperlocal production and commerce. Supply chains have finally evolved into nimble supply networks, bringing the manufacturing of products ever closer to the consumer.
- Shop Smaller & Local
Brick & mortar is downsized and optimized, stocking top-selling SKUs and more locally made goods, thanks to a rise in “nano factories”, or plug-and-play manufacturing plants that brands can operate wherever and whenever needed.
- Micro, Micro, Micro
Retailers and online-only marketplaces have built networks of micro-distribution centers and ghost kitchens, bringing products closer to end users and enabling convenient, but sustainable on-demand delivery.
- Unexpected Collaborations
Making sustainability accessible has forced an ecosystem of non-traditional partnerships. Starbucks has become the gas station of the future after a successful collaboration with Volvoand Chargepoint to drive EV adoption. Brands begin to prioritize the planet over the competition, collaborating on universal packaging, multi-brand refill stations, and zero-waste stores.
‘’There’s a real authenticity to the Gen Z generation in saying they want to breathe new life into what corporate responsibility looks like. And one of the biggest elements has been the focus on values. They’re looking beyond tangible products and actually trying to understand what is it that makes the company tick. What’s its mission? What’s its purpose? And what is it actually trying to build for us as a society? ‘’
Tips for Implementing Emerging Models in Commerce
If you're looking for tips to implement one of the emerging commerce models we've discussed and become prepared for whatever the future of commerce holds, here they are:
- Start small, test the waters, and launch pilots before committing fully to a new model. The more information you gather the better you'll be prepared. Set yourself up for success.
- Focus on providing a seamless and personalized shopping experience for your customers.
- Use technology to streamline your operations and make it as easy as possible for customers to buy from you.
- Be transparent and communicate clearly with your customers about any changes to your business model.
- Leverage innovation models - scan the market, see where others invest, and understand the possibilities created for your brand.
The retail landscape is constantly evolving, and businesses that fail to adapt risk being left behind. By embracing emerging trends in commerce and leveraging technology to improve the shopping experience, retailers can stay competitive and continue to grow in the future.
If you're interested in learning more about the future of commerce and the future of retail, be sure to let us know - we specialize in cracking the code of disruptive innovation and we're happy to spill the beans.
Did you enjoy the trip into the future?
Those 4 scenarios are just some of the directions the market is shifting towards. They create many opportunity areas for your business to stand out and thrive in the new reality. If you want to analyze them more - let us know! We'll tailor them to your business needs and explore the plausible future with you!