The fundamentals of retail haven’t changed, selling a product to a shopper at a markup makes it worthwhile to do so. However, in every other regard the retail industry has witnessed incredible change as digital technologies create connections that transform commerce, blurring the distinctions between the physical and digital worlds. Arguably the pace of change will continue to increase, driven by two major trends: ubiquity of mobile devices and the rise of the “new conservatives”.
Consumers are in control
A recent report from Google: Seven Must-Know Digital Trends for Retail in 2015 highlighted the fundamental impact of mobile devices. Empowered by the supercomputer in their pocket, consumers are in control. With nearly every 18- to 54-year-old in the UK now using a smartphone, it comes as no surprise that the value of the mobile commerce market is expected to nearly triple to £17.2 billion in the next three years.
By 2020, 27% of Europe’s consumers will have been born after 1980. Such consumers are incredibly well informed, well connected and conservative, yet open minded. This millennial generation – their attitudes, values and behaviours represents one of the biggest drivers for change in retail and our broader society today.
In a recent discussion for Eccomplished, Mintel’s Richard Cope explained the characteristics and impact of millennials. They spend less on life’s vices. They live at home with their parents for longer, which means they spend more on going out, entertainment, fashion and cosmetics rather than groceries or household essentials. They also have a big influence on their parent’s technology usage, raising parental confidence in terms of device usage and online retail. The millennial generation crave customisation and convenience. They also care far more about who they buy from, going out of their way to buy from companies and brands that support progressive causes such as environmental or LGBT issues.
Millennial spending power on the up
Cope explores the impact of millennials on retail in greater detail in two reports: Shopping with the ‘straight aheads’ – how millennials shop and Shopping with the ‘straight aheads’ – getting it right.
As the spending power of Millennials increases – combined with the digital ubiquity of mobile devices – retailers, brands and technologists must work harder to meet their lofty expectations and deliver fast, personal, convenient, discoverable and socially responsible retailing through any and every channel.
10 billion devices by 2018
This digital ubiquity is set to explode; last year Cisco correctly predicted that the number of active mobile-connected devices would surpass the world’s population by the end of 2014. By 2018, that number expects to grow to 1.4 devices per capita – a total of over 10 billion devices. Adapting to ubiquitous digital connectivity is essential to competitiveness in retail.
Source: Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business.
In its report “Digital Ubiquity: How Connections, Sensors and Data Are Revolutionising Business” they describe the fundamental impact of digital technologies on any business model. “A business model is defined by two things: how the organisation creates value for its customers (the customer value proposition) and how it captures that value (how it makes money). Digital transformation changes both.” Andretail is no different.
Digital connectivity must be the mantra
Most recent discussions in retail have revolved around channels, but that drives wrong behaviour. Digital connectivity must be the mantra:
- How do we digitise manufacturing and production to provide our customers with the ability to personalise and localise production?
- How do we use digital technologies to achieve 100% item-level inventory accuracy and transparency?
- How do we use our customer’s digital footprint to personalise their shopping experiences based on their unique characteristics?
- How do we reach the shopper wherever they choose to search, discover, shop or share information about our products and services?
- How do we allow our products and services to exist deep within social networks?
- How do we use data to optimise prices to match supply with demand?
- How do we ensure our physical stores are optimised for choice, experience and digital connectivity?
- How do we use location data to enhance the shopping experience?
Only by applying a digital lens to every aspect of their business model will retailers maintain and grow in the face of huge social, demographic and technological change.
Post produced in partnership with Stephen Millard at Eccomplished.