The future of mobile commerce may be closer than it seems, and retailers ill-equipped to meet it head on could get left behind.
A new report from market research firm IDC, released this week, paints a bracing portrait for brands and retailers. According to the study, close to a fifth of the world’s smartphone shipments will come with powerful new technologies in as little as four years — a rather narrow timeframe to prepare for the new bar in consumer expectations.
“To keep up with the increasing demand for the new AI [artificial intelligence], AR/VR [augmented reality/virtual reality], contextually aware and 5G functionalities headed to the market, we expect growth to come from improvements in overall core functions in the near term,” said research manager Anthony Scarsella. “Improvements in speed, power, battery life and general performance will be critical in driving growth at a worldwide level as the smartphone evolves into a true all-in-one tool.”
Many of the emerging techs that IDC listed speak to retail innovation — whether for AI that drives product recommendations and trend predictions, or computer vision and machine learning capable of realistic AR shopping experiences.
Such initiatives require data. A lot of it. The more, the better. Unfortunately, a sound data strategy is in short supply for many retailers.
“The more ‘branded’-oriented retailers are falling down on the customer data side, so in many cases, they don’t know who their best customers are — they have no idea,” said Steve Sarracino, chief executive officer of Activant Capital. “[Let’s say] you love Chanel purses, as you should. And you have six of them and you bought them all in the last year. You go to the store, Chanel should know.”
Sarracino believes luxury brands, in particular, should offer a “clienteling” experience that knows the customer and caters to their preferences with extra service. But for big-box stores and retailers with lower average selling prices, or ASPs, the data quest is even more important. “It’s all about the data and inventory management, and being able to sell wherever the consumer is,” he added. “They don’t know — they will run out of Pampers. Moms will go to these stores to buy a bunch of baby stuff, and they will run out of diapers. That happens, and it happens frequently.”
Data collection, analysis, security and other factors may seem like heady challenges for some brands and retailers — particularly those struggling to deal with internal data on inventory needs. If a store can’t keep top-selling products in stock, developing a deeper customer data initiative may seem like an insurmountable feat. But in an increasingly Amazon-driven retail world, they put it off at their own peril.
The need for a sound data approach eclipses more than phones. But what e-commerce customers see and experience often takes place on a mobile device. And those AI and AR features are becoming standard fare on increasingly powerful and faster iPhones and Androids.
That reality is already coming into focus with the cosmetics industry, for instance. Tech innovators such as Modiface and Perfect Corp. are making virtual makeup application an essential part of beauty e-commerce. Meanwhile, the AR showroom or virtual fitting room for apparel and eyewear is maturing. Consumer expectations have already shifted, and they’re set to explode as devices evolve. Innovation-minded brands in beauty and fashion — from L’Oréal and Sephora to Tommy Hilfiger — are carving a path, gaining deeper insight into their customers. Macy’s Inc. recent signs of life may, in part, be driven by insights and analytics they’ve gotten from their data strategy. Such players understand the need to meet consumers where they live and shop. And increasingly, that’s on their phones.
Consider this: During the holiday season, mobile commerce outpaced desktops. According to figures from Akamai, a cloud services provider and one of the web’s leading content delivery networks, less than 35 percent of all retail traffic leading up to Christmas came from desktop computers. In 2017, mobile shoppers brought in $1.35 trillion in sales — this, during a year that phone shipments actually fell. IDC noted a 0.5 percent dip last year, the first decline since the advent of the modern smartphone.
Given the demand for more sophisticated features, IDC sees a smartphone comeback in the works. And, as more advanced devices hit the market, they’re set to bring more shopping opportunities along with them — at least for those retailers preparing now to meet the future.