In January 2017, the World Economic Forum has published together with Accenture, an interesting report about a very controversial and hot subject: The future of retailing.
The report starts with a very commonly accepted assumption: ” the next decade is expected to be the golden age of the consumer”. Although many trends are supporting this starting point, the growing movements around protectionism in the world may affect the prices (increases) and affordability of many products and therefore, instead of looking for much more contents and enriched experiences, the price will come back as the main decision factor for consumers. But this is another angle.. so let’s have a look at the report ´insights.
Trends Driving the future of retail: The empowered consumer
As the first dimension to consider, the price will be still a major decision factor for consumers, whether it is for high-quality articles or to secure accessibility to a function for all customers. The report stresses that what will be new is the number of available data that will allow the consumers to have a clear view of the offer. However, if this is practically true, it already exists today (Cf. article about price comparison – Keepa.com) and retailers like Amazon have found a response by modifying their prices very often following the very well known example of the airlines. Finally, as commented in the introduction, I also believe that this will still be (and even more) the main factor to consider from a retailer offering products with competition on its market. See article about the impact for food retailers of price perception.
The second dimension part of the “empowered consumer” will be the choice. It will not be only about a choice of products but moreover about the “personalisation” and the complete consumer journey. In this second dimension, I see two different parts not necessarily compatible. The personalisation of the product will for sure be the perfect solution to secure the maximum perception of choices. It will also allow having a pricing that won’t be able to be compared and technology like 3d printers may rather quickly turn it affordable. On the other hand, the multiplication of the choices within the consumer journey will only drive costs up for the retailers offering the maximum options of services and has a high risk of penalising the main target group of consumers to please a “niche” of potential consumers.
The third dimension needing attention and development is about the convenience. The convenience to shopping, when, how, where and what the customer wants. This is also a clear trend but like the “choices” during the consumer journey, there are some contradictions with offering the best price. Once more the airline’s offers are a good example of consistently keeping offering a terrible experience sacrificing what the customers wish to only focus on price war and with still quite some good results (CF. Ryanair). The same applies for the fourth dimension highlighted by the report: customer want to control and influence the entire purchasing journey. The increasing presence of retailers and consumers in the social media is creating a new field of interaction that is just at its beginnings and will need to be handled carefully.
The fifth dimension driving change for retail will be the customer experience. The report classifies it as a new dimension but its description sounds like pure physical basic retailing. The key issues for the future will be about layouts, ambience, staff and product selection. If physical stores will be still needed this operational excellence will be the new average. The key to success will clearly need better education and service minded co-workers. when looking at the average quality of services in different part of the world there are still enormous potentials to create an advantage against competition within the country.
The 5 dimensions of a more empowered consumer present a continuing trend regarding price competition, variety of choices, convenient and seamless shopping experience with consumers keeping control (and able to change) of the purchasing process.