10 TRANSFORMING TECHNOLOGIES IN RETAIL
Yiğit KULABAŞ, PhD
Redesign Business CEO & Co-founder
Retail is in a continuous change. Stores of tomorrow will be totally different compared to todays. Customers, money, order, payment and delivery methods of tomorrow will bring many novelties with them. This new era will be called “phygital”. When a “physical” experience is reshaped by “digital” world and transforms itself, we name it “phygital”.
Digital transformation is something we’ve been talking about for 20 years now. “Clicks and mortar” was a popular term at the start. The term “bricks and mortar” was transformed into “clicks and mortar” to engage the traditional business models with the Internet. It was a must for every company to have a website, an online shop and online customer services. In other words, corporate systems were required to be integrated with the Internet to survive. Amazon, Expedia and CommerceOne were the new comers and shown as success story examples. Companies had to resist their digital/online competitors, seize the potential in the clicks and turn it into their advantage with the support of their good old bricks. The digital transformation story of Barnes & Noble bookstores was everyone’s favorite.
Those were the days when dot com bubble hadn’t exploded yet. The Internet was not this big and we didn’t have smartphones in our pockets. Google was new to our lives and we hadn’t even heard of Facebook, Twitter, Instagram, Linkedin or Wikipedia. Today, digital world is much more powerful and broader. The power shifts towards digital. Although the initial aim was to adapt and simplify our chores with digital tools, today the common attributes of digital world blends in with our physical world.
New business models play an important role in phygital transformation. Let’s have a look at 10 groundbreaking technologies that will transform shopping experience and retail.
1 Big Data
Retail is detail. More data about consumers, customers, products, locations, time, channel, experience, and key influencers is collected every single day. Basically, data is the petrol of tomorrow. Data has an important position and will be a door that opens to a miraculous world. To collect the data, clean and transform it have always been perceived as a duty of the technology teams. However even more important is to read and understand that data, create scenarios, and make assumptions based on what that data means. Therefore, each company needs data literates. It is possible and easier to find the right target audience, attract their attention, get in touch with them at the right place and time, offer personalized services, create a unique customer experience and build customer loyalty by analyzing big data.
2 The Internet of Things (IoT)
By 2020 more than 50 billion objects will have communication skills and not only within themselves, but also with humans, nature, and systems. Communicating objects triggers the start of a new era called “Internet of Things”. Since sensors are much cheaper, interfaces are easier and screens are more common compare to past, even ordinary objects and tools have senses and they are willing to get social. We will soon communicate with objects not because we want to save on or control things remotely, but also for fun, convenience and sometimes just because of curiosity. The examples mentioned in Customer of Tomorrow section give us a broader picture of IoT era. Hangers are able to interact with the clothes hanging on them and track how many likes that the clothes have on social media. Smart dashes mentioned in Order of Tomorrow section are likewise a service triggered by IoT. Moreover, the new cash register has the potential to empower its position with this technology and starts to manage all supply chain systems behind the scenes.
3 Wearable Technologies
First our phones got smart, then our watches and glasses. So what is next? Today we are able to track our sleep quality, count our footsteps, check how many calories we burnt, track our daily route with smart wristbands. This is only the beginning though. Soon technology will be in different forms and shapes. It will be wearable, washable, drivable, enclosable, and portable. Therefore, both sides of shopping will change as well. This new kind of technology will be used both by customers and sellers of tomorrow.
4 Blockchain Revolution
When we talk about the new technologies that are changing the world, everyone suggests the similar ones. Cloud, big data, the Internet of Things, augmented reality, autonomous tools, artificial intelligence and others… And now, we have a new addition to the list: Blockchain. Blockchain establishes a trust protocol on virtual world and eliminates the middlemen such as banks. Even though everybody associates Blockchain with Bitcoin and other new currencies, it is not only about financial services. It also protects your identity, existence and personal information. With Blockchain revolution you step into the trace free system and are not obligated to give all your personal information to other companies/parties anymore. In this new world virtual you is under protection. Blockchain will have a huge impact especially on digital retail experiences.
5 Open Banking with PSD2
Payment Services Directive 2 (PSD2) is on its way to accelerate the race in financial industry in Europe and disrupt everything we know. PSD2 introduces us “open banking” and new payment solutions namely Payment Initiation Service Providers (PISP) and Account Information Service Providers (AISP). In this new era retailers will be able to ask customers for permission to access their bank details. Once they get the access, the retailer will receive the payment directly from customers’ banks without any dependency on intermediaries. Basically banks will be obligated to share their customers’ information with other parties. In this scenario banks will either be a utility or if they adapt to this change they can position themselves as a platform in their customers’ eyes to be play a central role in their daily lives.
6 Screens Everywhere
Today, screens are far more advanced, interactive and cheaper. They have impressively better picture and sound quality. They got thinner, flexible, and curved. Sometimes they are small to be a part of any device and sometimes we find ourselves surrounded by gigantic ones on buildings as billboards and displays. Walls in showrooms and flagship stores are not dull anymore, they are vivid with the giant screens on them. Digital panels are an essential part of shopping malls and even kiosks. And screens bring digitalization with them. Therefore, they also trigger transformation of stores, devices, and experiences. When screens are used right, they could be the key for miracles.
7 Virtual Reality / Augmented Reality
We got used to new realities - namely augmented reality (AR) and virtual reality (VR). Both AR and VR are key enablers of phygitalization. There is a small, yet important difference between these two. AR is about adding a virtual layer to reality. PokemonGO and Snapchat are good examples to describe AR. With VR the user literally steps in to virtual world. In order to do this, an additional device like Facebook’s Oculus Rift or Microsoft’s HoloLens is needed. On the other hand, Google blends the real and virtual world with its Magic Leap. It is assumed that by 2020 the A/VR market will hit to 150 billion dollars. All these advancements show that our perception of reality will change dramatically and our physical world will phygitalized with brand new digital experiences.
Current physical reality technologies usually appeal both to of our sight and hearing senses. Soon it will be more advanced and our other senses namely touch, taste and smell will be on this list as well.
8 Robots, Autonomous Devices and Flying Objects
Robots… We think and talk about them more frequently than ever. Yet, this time it is not only about the human-looking robots that we see on sci-fi movies. Autonomous cars, drones/ flying objects, talking and moving objects are a topic of our talks as well. In fact, today it is possible to create a robot from your smart phone. Romo is a device that looks like a toy at the first glance. However, the minute you sync it with your smart phone they start to work together and become a moving and talking robot.
All these autonomous and programmable systems are triggers for new business models and shopping experiences.
9 Microlocation/ Beacons
After microlocation technology stepped into our lives, the answer for “where?” question changed from coordinates to proximities. With point shot, it is easier to reach out to new customers, make them unrejectable offers and establish communication with them. It is possible to track how long your customer spends in each aisle, come up with new methods to trigger purchase and make them personalized offers. To make effective propositions, it is essential to develop omni-channel strategies. Customers can be tracked by their traces they leave while wandering around your store in addition to their actions on the Internet or at the cash register. Hence location is reexplored and redefined, it is likely that the loyalty programs will be redesigned, more personalized services will be offered and real-time marketing will gain more importance.
10 3D Printers
It is believed that 3D Printer technology is revolutionary. It will have an impact on almost every area including production, sales, construction, retail, logistics and automotive. Yet, this revolution has the potential to eliminate many intermediaries of production process. We are about to start a new era: Consumers and designers will get together, houses will become small factories and the need for stores, production lines and carriers will dramatically decline. Therefore, this new era is also called the new industrial age. For now, it is still an expensive technology, yet soon every house will have one. Therefore, 3D printers are designed smaller, become cheaper and a variety of raw material is supplied. 3D printer technology creates opportunities for retailers who aim to go beyond ordinary.
