This post is part of our new Retail Influencer series where we interview the world's leading retail experts to get their take on the state of the industry, the top trends to watch for, and what the future holds.
1. How has the retail industry evolved in the past 5 years?
BVP: Retail will change more in the next 5 years than the last 50 years, and it is happening quickly. The pace of change in retail has never been greater and retailers must truly go after their customers to keep up. The change is not just driven by economic, product or industry trends (although they have an influence) but rather shaped by new transformative technologies, new behaviors, needs and demands of shoppers. The sharing economy has changed how we travel, where we stay, and how we do most things. Traditional store formats may be on the decline, but innovative stores — ones that offer great shopping experiences — will continue to emerge. But as always, Everywhere and Experience will remain KING!!
2. What are the top retail technology trends you're seeing?
BVP: What we see happening over the last few years – and this trend will continue – is that the key drivers of success are centered on building a deep understanding of and connection to the empowered consumer, promptly incorporating disruptive technologies, embracing transformative business models in both offline and online retail, and establishing key capabilities.
With this, of course there will also be challenges to solve by retailers for change and implementing the required technologies and address issues related to store closures, employment (job loss/re-training) and potential adverse environmental impacts.
3. How will AI change the retail industry?
BVP: Automation is now more than just a buzzword in retail. AI is a step forward in automation that is already changing the retail industry. AI enables retailers to drive sales and anticipate demand, improve inventory management and optimize supply chain, to gain a better understanding of consumer behavior and to offer highly accurate individualized promotions and scale up the use of customer data.
➡ Automation is now more than just a buzzword in retail. AI is a step forward in automation that is already changing the retail industry. 💸💰💳
All in all, artificial intelligence simplifies the shopping process and provides personalized experiences that turn shoppers into customers who keep coming back for more. But, shoppers aren’t the only ones who benefit from AI. The innovative, always-learning technology is contributing to higher sales and better customer experiences that improve the retail brand and bottom line. Taking into consideration that the retail service level in emerging markets like Asia and Latin America is even much lower, that makes the added value of e-commerce and artificial intelligence devices significantly greater than in the West.
4. How will blockchain change the retail industry?
BVP: Blockchain has emerged as an exciting new development across the retail industry that can improve our processes, gain trust from customers and ensure health and safety regulations are met.
Blockchain will allow transparency, authenticity, and accuracy of data, while logistics and tracking shipments and food supply chain processes are becoming safer and easier. Subsequently, payments and e-commerce processes are improved while tracking transactions and ownership of crypto-currencies like Bitcoin and can be successful in creating a secure and trusted system to streamline the returns and refunds process.
5. What's the future of retail?
BVP: Retail, the largest private-sector employer in the world, is a notoriously tough industry, and the pressure on margins has never been greater. Retail is being redefined, and new set of rules apply.
But, in my opinion, the future of retail is looking bright. As Steve Dennis puts its out very clearly in his article in Forbes, physical retail is not dead, but boring retail is, and it is not a good time now to be boring. I believe brick & mortars will play a major role in shaping the future of retail as a more convenient, connected and customer-dictated industry. We will see much more of pure play eCommerce brands opening brick & mortars in the coming years.
Technology keeps changing all the time, so whatever we see today as our roadmap could be completely irrelevant or very different in a few year’s time. Business models will also transform to accommodate the consumer and technological evolutions. Consumers will be central to shaping the future direction of the industry. As their expectations around cost, choice, convenience, control and experience continue to climb, they will challenge the industry to keep up. At the same time, new and disruptive technologies will fundamentally impact the end-to-end industry value chain, benefitting both the industry and consumers.
The Short term-ism we have seen so much within retail in the last decade all across the world is no longer viable, and retailers need to take the long-term view, as pioneered, for example, by Amazon. And there is no doubt that Amazon will continue to disrupt distribution, in particular in the chore side of retail that not many of us like. Shopper expectations have been raised and more than ever, data will (and should) drive retail decisions.
But retailers that proactively figure out how to enhance customer experience and add value through services and product innovation will be the ones who thrive. What is certain is retailers need to be at the top of their game and be “remarkable”. If you can’t be relevant to your customers or stand out from the competition, then you don’t stand a chance. Struggling retailers and traditional store formats need to pick a lane, while under-performers will be rooted out and, undifferentiated, will be exposed.
Many retailers are in a world of hurt, and if they don’t raise their game right now – spurred by Amazon or not – they will definitely get crushed. Now, it's either #InnovateorDie. Tomorrow’s success will belong to those retailers willing to break from yesterday’s patterns and practices and fully embrace a consumer-driven future. They recognize the role and purpose of the store has to change and become a genuine destination, an engagement space, a “Town Square (Apple), a place to discover, to play, to work and to eat, and do all kind of things, and not just buy.”
But there is also no doubt that retail is becoming more vibrant and diverse. Which means more independent, stores not fewer; more artisan products; more carefully curated sets of products for one to fall in love with and cherish. It has never been easier to run a retail store, and technology is driving this.
Personalization will still be a key retail trend in 2018, and beyond. Allowing shoppers to build and personalize products not only fulfills those standards, but it also make shopping itself a lot more exciting. We’ll also see more robots online, in the form of chatbots. Bots will play a bigger role in supporting retail operations and within fulfillment centers to help pack and ship items (e.g. Amazon).
Mobile commerce is on the rise and social media is likely to be a bigger part of that in the future. Retailers that step up their social media strategies will thrive. We can already see this happening. We’ve already seen “buy” buttons incorporated into social media platforms, enabling instant, immediate purchases, so it’s only a matter of time before this model is taken to the next level. Advertising costs have never been lower, because of the power of social media. Independents can develop a following at a relatively low cost if they have a product or service that people are passionate about. Even the smallest retailer or brand now has tremendous opportunity to launch and thrive with community partnerships and offering great and differentiated shopping experiences. It hands us a deep understanding of the customer across the multitude of touch points including social, mobile, eCommerce, and stores, brands will get a comprehensive view and sophisticated analytics to benefit each customer segment at relatively low cost.
Mobile shopping is going to continue to move away from just mobile browsing or shopping and more into mobile transactions. Mobile applications and cloud-based solutions are enabling retailers, brands and commerce to quickly set up shop with minimal investment. Because of this, we’ll be seeing more independent stores enter the market as well. I believe that brick-and-mortar retail is alive and well. We will be moving from stores to stories and a sound evolution and re-purposing of physical retail spaces and hubs with strong local flavor, capitalizing on the leisure, convenience, rich interaction and ultimately differentiated experience elements of shopping, enhancing the customer journey from discovery to purchase.
About Bonno van der Putten
Bonno van der Putten has extensive international experience in the Retail & Food Service Industries. Since April 2010, Bonno has held the position of Managing Director of Monarch Capital Partners, an independent Private Equity and Asset Management Group, mainly active within Retail, Tech, Food and Food Service industries. Bonno van der Putten has served a number of Non-Executive Director and Adviser roles with a.o. Brightpoint Capital, Carrefour Property/Carmila, Grupo Rodilla, Eroski/Caprabo, Dia, Kaufland, Bergé Automocion, GBH International, Dimensys and VIPS. Prior to joining Monarch Capital Partners, Bonno worked for CVC Capital Partners as Managing Director for several CVC portfolio companies. Previously, Bonno held several senior management positions for Carrefour, MAKRO, METRO AG and METRO International across Europe, Latin America, Asia and the United States.