Covid Aftermath: Designing the New Retail Paradigm
Rapid technology advancements and rising customer expectations have disrupted the global retail industry in the past decade. Outdated retail store concepts, new generations of consumers, and new points of commerce (voice commerce, for example) have also disrupted the industry; however, COVID-19 has been the key disruptor.
Due to these disruptions in the retail industry, there have been changes in various touchpoints in the consumer journey. Consumers can now find, buy, and receive products in a multiplying number of ways. Where shopping was a chore, it now gets done in a few clicks. Where it was a pleasure, it has expanded into a journey of discovery. All this depends on a stream of innovations — in fields as diverse as online interfaces, store operations, and delivery. But innovation often means disruption, with new business models being created. Many of the new models will come from new participants in the sector, acting either independently or in strategic link-ups with incumbents. As new models gain popularity, businesses will drain away from others, particularly in the shift to online stores. The revamp of the entire ecosystem can be implied along the 3 aspects:
Retail Space — In a post-COVID world, physical retail stores will not become redundant. More than 80% of global retail sales are still carried out in physical stores; however, to compete with the convenience of online shopping and the endless aisle assortment it offers, retail stores will have to offer meaningful customer experiences and pursue brand engagement activities. In addition, retailers must understand and prepare themselves for customers’ growing emphasis on the personalization of purchases. There will be an evolution of the physical store with the advent of novel box format. New formats, including experiential and convenience stores, will begin to replace traditional stores. Big box stores will evolve to small-sized, novel box stores that cater to the needs of a particular geography. A fundamental shift (from transactional stores to stores that offer a complete ownership experience) will drive loyalty-building and brand awareness efforts.
Inside the novel box, we can find instore experiences becoming the focus. An emotional connection with buyers can be built using cutting-edge technology, including smart shelves and smart mirrors. Smart shelves automate inventory management through weight sensors that initiate the process when a product is removed from the shelf. These shelves also guarantee robotic refills, thereby ensuring that the shelves are always fully stocked. In addition, smart shelves use vision sensors to capture information about customers visiting the store, and products can be displayed according to customer choices and preferences. Smart mirrors will enable trial rooms to become selling spaces. These mirrors will play the role of fashion consultants and make useful recommendations. AR-based fashion apps linked to smart mirrors will help retailers understand customers’ choices and suggest trending styles according to customers’ interests.
Ecommerce — With advancements in technology, points of commerce have expanded from retail stores to online retail platforms, mobile applications, and digital assistants. Advancements in technology have accelerated the creation of new points of commerce, such as home ambient commerce and in-vehicle commerce, further driven by the advent of contactless commerce due to COVID-19. In addition, the rise of the Internet of Things and the growing trend of sensorization (the increasing usage of sensors in devices) will mandate that retailers and brands develop new strategies to be able to compete and lead in these new points of commerce. Increasingly, commerce will happen anywhere and anytime, facilitated by image commerce and voice commerce. The process of scan/talk-compare-purchase across online and offline channels will become the norm. For retailers, the focus will be on offering what the customer wants; moreover, customers should be able to make purchases anytime, anywhere, and through means they prefer. This will lead to the seamless integration of online-to-offline commerce channels. Digitalization will enhance the online retail experience through product recognition software, image based commerce, and digital reality solutions. With the help of voice assistants, smart devices will enable the transition to an all-encompassing retail experience.
Technology-induced disruption- Smart retail involves the use of digital technology by retailers to manage supply chains, enhance customer experience, and improve operational efficiency. Contactless technology will gain significance in the post-COVID world. Companies will increasingly invest in digital services, including AR, VR, 3D printing, AI, and data analytics, to gain a competitive advantage.
The retail space will undergo massive changes as the age of disruptive technology, exacerbated by COVID-19, continues to impact consumer behavior and buying trends. Physical stores will reinvent themselves; they will evolve from small boxes to novel boxes, and the emphasis will be on customer engagement and experience. New points of commerce will emerge, and Gen Alpha will influence purchases. Advanced analytics, purchase automation software, and virtual assistants, among other technologies, will revolutionize all aspects of retail, leading to a personalized, fulfilling customer experience. In this constant state of flux, retailers should understand the market and prepare strategies to retain customers and gain an edge over their competitors. Understanding the disruptions that impact retail and the constant influence of technology on this industry will help companies develop strategies to overcome potential challenges.