Shyam Gidumal, principal at EY, contended that even though e-commerce is growing 30 percent year over year — physical-store sales will still dominate.
When it comes to e-commerce, there are two beliefs that proliferate consumer consciousness — and they are both about delivery. The first is that delivery is ubiquitous and the second is that delivery is free.
But neither is true, according to Gidumal. In order to provide those services to customers, a retailer would need more than a dozen distribution centers.
“That’s a meaningful amount of infrastructure. It’s neither ubiquitous nor free.
“If you look at minimum order sizes as a way to cover delivery, it doesn’t,” Gidumal said. “If you actually look at the cost of a very well-known online retailer, the cost of delivering goods versus revenue they are receiving is billions of dollars a year.”
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He added that a leading retail trend is a generation shift — resulting in a society that within five years will be mostly comprised of Millennials and Generation Z’ers. These two groups differ, though: the former typically creative, entitled, self-centered and dependent while those in Gen Z are persistent, innovative, self-aware and reliant. Millennials are the first digital natives and Gen Z are the first mobile natives.
These consumers are less concerned about selection and price within a store and are increasingly seeking knowledgeable brand associates to engage with them. Engagement is central — and a set of new technologies, from body scanning to 3-D printing and rapid customization, will make these stores even more enticing to visit.
Gidumal explained that until this point, changes in the retail landscape have been largely infrastructure based and in the back end. Scanners, point of sale and enhanced inventory are all welcome updates, but customer experience must change, too.
“The focus will be engagement, basket, attachment, entertainment, social and community.” Gidumal said of the “store of the future” that retailers must adapt to.