What will happen to retail in 2018 — Part I(an extract from a series of interviews with retail industry experts, translated from Russian)
Julius Kuznetsov, Founder and CEO FINSTICK Innovations LLC:
In order to imagine what will happen to retail in 2018, first of all we need to consider the main technology trends affecting consumers may be even more than retailers.
The rapid development of mobile devices and networks has led to an unprecedented consumer awareness strengthening the status of this party dictating market rules. More and more trading procedures are being transferred from offline to online. Supply chains and consumer product distribution are being adjusted to the dominant online processes too. Retail has actively joined the technological race. From mastering simple IT solutions focused on WEB interface and automating existing business processes (primarily CRM), it has moved to a truly knowledge-intensive sectors of the IT economy, such as big data and the artificial intelligence. Taking into account the universal desire of cost reduction by further improving the concept of self-service in still common offline stores, it is difficult to overestimate the importance of such projects. 2018 shall not make revolution in the development of retail industry. Nevertheless, it will definitely be remembered as a year of adaptation to the new consumer-centric conditions and rules of making retail business.
2018 will be the year of
Showing reduction of the lower and middle level stuff of the offline retailers. The steady sales and business automation along with the progressive introduction of artificial intelligence shall inevitably affect the corporate HR policy and lead to a revision of staffing. This year, computers will continue to actively replace humans at customer service and call centers, legal and financial departments, as well as at offline retail outlets.
Mass introduction of proactive sales model, which will become the key success factor for business development. The leading retail market positions will be successfully taken and consolidated by those players who will be the first to master and use emerging applications based on artificial intelligence and big data. Automated proactive sales will ensure both — the demand forecasting process based on big data analysis and automation of consumer motivation algorithms. Therefore, stories like the one happened to the American teenage girl, whose father found out that she was pregnant later than the retail network offered goods for newborns, shall finally move to the category of everyday in 2018.
Decentralization of loyalty and discount programs. According to a perennial market research, the trend of loyalty market saturation has been confirmed last year. Bond Brand Loyalty Report ‘2017 called «THE BATTLE FOR LOVE & LOYALTY» (in collaboration with VISA) concludes “MEMBERSHIPS ARE UP, WHILE MEMBER ENGAGEMENT IS AT CAPACITY”. In fact, the situation is even worse, since their figures show slight decline instead of stagnation. The number of active memberships have declined from the average 7.8 active memberships per user out of 10,9 (72%) in 2014 down to 6.7 active memberships out of 14.3 (just 47%) in 2017. “Since our 2014 study, the average number of Program memberships per American consumer has increased steadily from under 11 Programs to over 14. Meanwhile, the number of Programs in which Members are active, meaning they have earned or burned Program benefits or rewards, is virtually unchanged at just under 6.7 (47%). This suggests that Americans are willing to enroll in additional Programs, yet their capacity to engage has reached a threshold.” — concludes the report
Thus, in order to overcome this negative trend, retailers and loyalty providers will have to start reviewing their loyalty strategy this year. Indeed, all existing centralized loyalty programs are complicated and costly, especially those having inhouse issuance and redemption process in combination with customized compensation scenarios and proper security level of loyalty transactions. At the same time they hardly reach compatibility with other loyalty systems which can be achieved through regional or industrial coalitions. 2018 shall bring new initiatives and solutions aimed for uniting diverse loyalty programs into a single, decentralized ecosystem which will guarantee proper confidentiality and respected interests of every participating Party. This shall give a fresh impetus to the loyalty market development by expanding it to a new global level. Moreover, decentralization will be able to spare loyalty programs from highly unpopular measures aimed at limiting the amount of deferred liabilities such as proprietary points and miles. An external decentralized intermediary system shall allow consumers to keep their bonuses, thanks to withdrawal option which can be used prior to expiration of proprietary points and miles. Thus the surplus of corporate liabilities caused by constant bonus issuance process will be additionally compensated by this option enabled with decentralized loyalty ecosystem.
Comprehensive simplification of retail purchasing process, increasing convenience for consumers, the introduction of pre-ordering and self-service systems for offline stores, the further development of distance order trading with flexible delivery service. In 2018, buyers will no longer be surprised at the lack of cashiers on exit and cash-desk queues have good chance to turn into exotics already this year. There is a great potential for further development of automated delivery systems for remote and sparsely populated areas using drones and other exotic means but conventional courier delivery business will continue to evolve together with an increase in online sales.
English translation, the article was originally published in
https://www.shopolog.ru/metodichka/kompanii-i-rynki/chto-zhdet-riteyl-v-nastupivshem-godu-chast-1/-----вaш LiqBo.ru
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