By Brian Walker
CEO & Founder, Retail Doctor Group
In 2022, the RDG trend predictions took on a new format. The RDG 2022 retail trends Bingo card was designed to showcase 22 unique and trending retail concepts that the team at RDG Insights division predicted would stick. By the end of the year in 2022, 19 out of 22 trends had been correctly predicted, resulting in an 86% accuracy ratio.
The burning question on every retailer’s mind as 2023 deepens is “What’s ahead for the Australian retail industry?”. The answer is a bit of a mixed bag which comes with various challenges and hurdles, but there are huge opportunities for growth if you know where to look.
The Future of Changing Retail
Recent factors that have weakened economic growth and market values include Covid-19 and a worldwide recession, to name just a few. Couple this with inflationary pressure, supply chain issues, volatile consumer confidence, legacy network issues to build out omnichannel, ever-changing consumer behaviours, and fast emerging technologies such as AI and the Metaverse, and you begin to see how this series of unprecedented headwinds has made the retail market more challenging than ever for retailers and their suppliers.
However, despite the challenges facing the sector, the future remains exciting. New technologies are shaping the shopping experience to become more immersive, more inclusive, and more targeted towards the consumer’s needs. As a result, new consumer behaviours now drive business model innovations forward, too.
Within a few years from now, retailers will need to take a step forward to define the future shopping experience. They will also need to capitalise on emerging consumer behaviour through change, innovation, technology, and dynamic business models.
Future Retail Trends
These 11 future retail trends will bind effective retail operating models and will help the savvy retailer keep up with customer demands. We look at the first three of these 11 trends:
Meeting Expectations – Rise of an On-Demand Economy
Catch me in seconds – A carefree attitude of impatient consumers to live for the moment and a desire to spend time efficiently when interacting with brands. 77% of Millennials indicate that it is important that retailers offer them options to save time whilst shopping (67% of all consumers). The digital revolution has given rise to an on-demand economy, calling for businesses to take measures to cater to the “right now”, impatient consumer.
The rise of the on-demand economy is expected to continue to have a significant impact on the retail industry in the future. As consumers become more accustomed to the convenience and immediacy of on-demand services, their expectations for retail will also increase. This will likely lead to an even greater emphasis on phygital retail and digital marketing, as well as the expansion of home delivery and curbside pickup options.
TERMS TO NOTE: Phygital (pronounced fidge-it-al) is also known as hybrid retail or retail omnipresence. It is a marketing-related term that refers to the physical and digital integration of data in retail shopping experiences. This data can be pulled from various technological sources such as augmented reality (AR), artificial intelligence (AI), virtual reality (VR) to enhance the retail shopping experience.
Furthermore, retailers will also need to focus on building a strong omnipresent strategy and engaging physical and digital experiences to differentiate themselves in this highly competitive space. Overall, the on-demand economy will continue to drive changes in the retail industry, requiring retailers to be flexible, innovative, and customer-centric in order to stay competitive in the future.
Case Study – Woolworths Supermarkets | Metro 60
To cater to the “right now”, impatient customers, Woolworths Supermarket has enhanced its delivery game with a new app, Metro60. The partnership with Uber promises to deliver groceries within an hour. The app allows shoppers to:
- choose from 4000+ Woolworths products available at select Metro stores
- to then place an order worth a minimum of $20
- and finally, to pay a flat $5 delivery charge to have the order conveniently dropped off at a confirmed address.
RDG Differentiation Tip – Examine customer interactions with your business and identify areas where they may be experiencing difficulty or frustration. Is there an opportunity to offer a service that addresses the specific needs of “impatient customers” to improve their experience?
Advancing Innovative Digital Experiences Between Humans And Machines
The convergence of humans and machines in the retail industry is expected to have an increased impact on the future of retail. As retailers adopt new technologies such as AI, machine learning, and robotics, they will be able to improve the customer experience by providing:
- more personalised service
- faster service
- and better overall experiences.
Automation can help retailers process orders and shipments, while AI-powered chatbots can provide customer service and support.
Additionally, retailers will be able to increase efficiency by streamlining operations and improving warehouse and store operations. This will lead to cost savings for retailers, which can be passed on to customers in the form of lower prices.
Furthermore, retailers will use virtual reality, augmented reality, and 3D technology to create immersive and interactive shopping experiences for customers, leading to increased customer engagement and satisfaction. The convergence of humans and machines in the retail industry will drive retailers to be more innovative and adaptable to changing market trends, resulting in a more efficient and personalised shopping experience for customers.
Case Study – Walmart | Automated AI Solution to Curb Out-of-Stock
Walmart rolled out an automated solution that uses artificial intelligence from Focal Systems to minimise the out-of-stocks. Additionally, the retailer installed Focal’s computer vision cameras, which scan shelves at predetermined intervals and alert workers to restock the shelf when it finds an out-of-stock item. With the use of AI, Walmart is aiming to solve the “frustrating” experience customers and workers face with out-of-stock items on shelves or online.
RDG Differentiation Tip – Retail brands will need to review their current technical business capabilities, systems, and technologies. Plans to integrate or advance their digital transformation structure in the future will also need to take necessary measures to train staff into account as machines converge with the human workforce.
Time To Move From Omnichannel To Omnipresent
In 2022, the number of internet users in Australia amounted to an estimated 22.45 million. This online audience is projected to reach 23.36 million users by 2025.
With the rise of ecommerce and on-demand services, consumers have come to expect convenience and immediacy in their shopping experiences. They expect to be able to purchase products online, in-store, or through mobile devices, and to have them delivered to their doorstep as soon as possible.
In the future, retail will need to be omnipresent in order to meet the changing needs and expectations of consumers. This can easily be achieved by providing a seamless and integrated shopping experience across all channels, whether it’s an online store, physical store, or mobile app.
This will involve investing in technologies such as e-commerce platforms, mobile apps, and omnichannel logistics systems to allow for easy and efficient order fulfilment. Furthermore, retailers will need to use data analytics to understand the customer behaviour and preferences, and to develop personalised shopping experiences.
Retailers that are able to provide an omnipresent shopping experience will be the ones that can remain competitive and successful in the future.
Case Study – IKEA| New Format Store
To meet the consumers’ needs for convenience and accessibility and with a focus on impromptu visits versus planned outings, Ikea has opened the first-of-its-kind store in the UK, which is only a quarter the size of the traditional IKEA megastores.
Known as the Livat Concept, Ikea’s “lively gathering’ is a curated retail space that features pop-ups, events, meeting spaces, and leisure facilities, making it an inspiration for retailers on how to innovate and adapt to new shopping habits and demands on expected shopping experiences.
RDG Differentiation Tip – To expand their presence in the future to include new channels and locations, brands must understand how consumers want to interact with their brand and the brand’s market sector. Future strategies need to take this understanding into account, where brands will use the data on file to accommodate the changes. To stay ahead of the game, data will need to be continuously updated and repurposed if brands are to differentiate themselves in the retail space.
What Else Do You Need to Consider?
In part two of this three part series, we will look at our next 5 future retail trends and how these will affect the retail industry both in Australia, and abroad. Be sure to keep an eye on our socials to know when this goes live.
Brian Walker is founder and CEO of Retail Doctor Group, a retail advisory and consultancy group and the Australian elected partner member of the global retail expert’s alliance Ebeltoft Group. As an Internationally renowned retail expert and experienced retail speaker, Brian understands what makes retailers and brands successful. Want to learn more about the future of retail? Contact us on +61 2 9460 2882 or [email protected].