The shopping journey has changed radically over the past few years. And yet, its essence remains the same.
Serving consumers’ wants and needs always has and will always be the top-line priority for retail. But how stores and brands deliver on that is changing — quickly — as a surge of future-forward innovations redefine the category in real time.
Unfortunately, not everyone’s able to grasp the changes afoot. The brick-and-mortar business has had an especially rough ride: According to Cushman & Wakefield, which tracks real estate trends, 9,000 or so stores shuttered last year. Even worse, closures are expected to rise to 12,000 this year.
Compare that to e-commerce. The U.S. Commerce Department figures online sales account for roughly 13 percent of total retail sales in the U.S., with a year-over-year growth rate of 16 percent.
Some of those e-commerce operations are outposts of the bricks-and-mortar. That’s notable, not just as an isolated trend but also because digital-first businesses are increasingly realizing the value of physical locations. The lines are blurring — whether that’s Walmart’s order-by-text service, Neiman Marcus’ Snap, Find, Shop app or the explosive acceleration of the “buy online, pick up in store” trend, which now accounts for nearly 30 percent of online retail revenue.
The blending of digital and physical retail is in high gear. And with the spate of new technologies and business models, that likely won’t slow down anytime soon.
After years of ramping up, in some cases decades, several emerging technologies out of Silicon Valley and other corners of the tech landscape are poised to leap off the bench. Here’s a look at a few tech trends the retail sector needs to keep an eye on.
A decentralized technology that bills itself as virtually unhackable seems like it was custom-made for the era of data privacy concerns. That’s particularly salient for retailers and brands, as they capture more and more personal information from customers — from payment details to preference data and sizing measurements.
The system can be a bit esoteric, but it essentially works by ensuring that there’s no single repository for the information, as housed in a shared ledger — so there’s no single target for a malicious attack — and access is granted only by an encrypted key.
Mainstream attention has been largely fixed on blockchain’s currency potential, i.e. Bitcoin. But that just scratches the surface. A nascent industry is bubbling up around blockchain, with uses for authentication, universal shopping profiles, back-end logistics, fraud prevention and even verification of authenticity in luxury markets like the diamond industry.
“I think using AWS [Amazon Web Services] for these things just doesn’t make sense,” said George Avetisov of HYPR, a blockchain start-up. “We are moving certain things to the cloud. But there are things we will never move to the cloud.”
The AI movement is everywhere — from music streaming to fashion recommendations and styling. For retail, the promise of automating certain tasks, like answering basic customer service questions or providing shipping info, is to take the load off human workers while giving customers more convenience.
That many of these systems can actually learn on its own, without being specifically programmed for particular features, sounds like the stuff of futuristic films.
AI powers everything from realistic augmented reality make-up try-ons from the likes of ModiFace and Perfect Corp. to the growing crop of cashier-less stores, fueled by Amazon and Microsoft.
What’s next for AI? Well, academic researchers, as well as fashion start-ups and tech companies such as Amazon and IBM, are exploring the use of AI in fashion design.
“The goal was to equip the next generation of retail leaders with new skills and bring informed inspiration to their designs with the help of AI,” said Avery Baker, Tommy Hilfiger’s chief brand officer, in an IBM blog post. “AI can identify upcoming trends faster than industry insiders to enhance the design process.”
In Amazon’s case, the scenario’s even more fantastical: The e-commerce giant and wannabe fashion house has been experimenting with AI-made creative fashion design.
It’s not at all clear that consumers are actually buying things through gadgets like Google Home or Amazon Echo speakers — though Amazon insists that millions of its customers do shop by talking to its tech. Critics say that people just aren’t keen to buy things sight unseen.
But the nature of voice assistants in the home is evolving. Last year, Amazon released the Echo Look and the Echo Show, its voice-enabled fashion camera and display appliance. And a few weeks ago, Google officially joined in, partnering with Lenovo on its first voice speaker with a built-in screen. This is just the first of what looks to be an army of screen-equipped Google Assistant devices.
During Lenovo’s product announcement, Bibo Xu, product manager for Google Assistant, pointed out that — like with Alexa — consumers could already shop with Google Assistant on Google Home and other similar speakers. “Shopping on Smart Display builds on that experience by offering multiple product options at once, images, reviews and touch commands to select and add items to your cart,” he told WWD.
Augmented and Virtual Reality
Augmented reality is already changing the face of beauty retail. The premise of trying on innumerable looks without a single swab of makeup remover is compelling, and the ease of buying within the same app makes ones such as YouCam and ModiFace extremely compelling. In-store applications in places like Sephora also help spread the word, not to mention generate sales.
This layering of digital visuals over a real-world view of a person’s face or other environs has a direct and immediate appeal for retail. Customers are already getting acquainted with the scenario through use cases in cosmetics, furniture and other categories.
AR’s cousin, virtual reality, has more of a schlep to haul before it becomes mainstream. After all, AR can work quite well on a phone, tablet, magic mirror or souped-up glasses. To get a real sense of VR, the user has to don goggles that effectively seal the person off from the physical world and immerse them in a digital environment.
But the technology is getting better all the time. Oculus Go improves on the smartphone-based offerings — such as Samsung Gear VR — without the deep investment or complexity of full PC-based systems. The apps are still minimal, but becoming more sophisticated. Meanwhile, Oculus continues working on its Santa Cruz — an even more powerful stand-alone device that can actually track the person’s location in a room.
For now, VR doesn’t quite have the traction or the sophistication to give AR a run for its money. So far, in retail, the uses have been mostly to provide entertainment or information, like branded customer experiences, or functional help in things like store planning or merchandising for retailers like Rebecca Minkoff, who uses VR to organize its stores.
Firms such as Kantar Consulting help clients use VR to “design physical retail environments down to the shelf-level ranging in virtual reality and simultaneously forecast the revenue impact of those decisions,” according to its site.
But there could be more on the horizon. Facebook, Oculus’ parent company, took to its F8 developer conference in May with a slew of nascent initiatives to make the VR experience less isolating and more social.
Why this matters: The last large-scale virtual environment that allowed for social interactions was Second Life, a virtual world in the early Aughts that grew to a million regular users and became a major VR commerce platform for digital goods — including clothes, furniture and real estate. In fact, it spawned the world’s first virtual real estate mogul and millionaire, Anshe Chung, and nabbed her a Time magazine cover story.
If Oculus, or rivals like HTC or Sony, can bridge the gap between real and virtual worlds, the commerce potential could dwarf Second Life.
While AR is transforming the consumer retail experience, VR is changing the business side, according to Forbes. VR is helpful for visualizing and redesigning stores, and testing different layouts without having to physically rebuild the store.
Other Tech Trends
The growing breadth of wearable devices comes with a few important nuances.
Fossil’s latest smartwatches now pack NFC, or near field communication, technology — which means even more fashion-conscious consumers will have mobile payment capabilities, not to mention access to loyalty cards and other mobile-wallet friendly items.
But there’s more beyond watches. Health and wellness sectors, as well as serious healthcare innovators, are looking to an array of wearables — from smart garments packed with sensors, to a growing crop of “hearable” devices, some of which are paying more attention to style and design. (They are worn so close to the face, after all.)
Smart buds are storming the market, like those from Nuheara and Bragi, whose augmented hearing devices would make for a great pitch as “bionic ears,” to serious hearing aid companies like Signia, whose latest Styletto takes cues from fashion. And, as the Centers for Disease Control and Prevention discovered, hearing loss among Millennials and younger kids is no small matter. Researchers estimated roughly 17 percent of people ages 12 to 19 years showed evidence of noise-induced loss in one or both ears.
Things are changing, even for more traditional tech. Smartphones are boasting better cameras and more powerful processors capable of some AI computations, which means more people will be able to do more with their phones.
Expect an upward surge in consumer expectations around features like facial recognition technology or computer vision. Retail translation: Capturing looks on the street and shopping them quickly and easily will become more of a fundamental expectation.
Retail’s transformation has been long under way, but it’s not nearly complete. The one question WWD regularly asks tech and e-commerce experts is what shopping could look like in the next five to 10 years. Few dare to even offer a guess. That’s because it’s now inextricably linked to technology, and tech just can’t remain still. It keeps moving and morphing all the time.
That’s the exciting, maddening and thrilling nature of innovation. And now, retail.