One would be hard pressed to think of an industry that is changing more rapidly and profoundly than retail. Most could not imagine, even three to five years ago, that a self-driving truck would make the world’s first autonomous delivery. Or that anything more than two days would be considered an unacceptable length of time to wait for a delivery. Or that the world would see its first pizza delivery by drone. Or that phones would go from essentially zero to being well on their way to the device on which shoppers place the most orders.
We have a unique perspective on these disruptions by virtue of working with our retail partners around the world, and our subject matter experts have weighed in with our predictions for commerce in 2017. Now, we’re not just holding up our finger to see which way the wind is blowing. Our predictions are based on our daily conversations with our technology partners, industry thought leaders and, most importantly, leading retail brands.
Expanded predictions follow the video.
1. Stores will focus on flexibility in 2017
While the need for physical stores to change is evident, they will not “rip and replace” their technology infrastructure, but rather will experiment with flexible alternatives. Since labor is the largest controllable non-product expense, retailers will move from labor scheduling to labor flexibility including cross-training associates and managers. There will be a decrease in traditional brick and mortar locations but an increase in physical presence with non-traditional formats like pop-up stores and mobile stores. Few retailers will reach a state of unified commerce, but all eyes will be on the few trailblazers that take major steps in this direction. — Kathryn Murphy, Vice President Engineering
2. Chat, mobile and AI will converge to finally form a killer app for mobile commerce
AI chatbots facilitating commerce on mobile platforms will break out and go mainstream at all stages of the customer journey. And companies from all corners of the spectrum will get into the game. Some examples: retailers are building robust chatbot services for messaging platforms that improve the customer experience both in-store and online; handset makers are embedding native AI capabilities; semiconductor companies are spending billions on deep-learning chips; not to mention the enormous investments being made by Google, Amazon, Facebook, IBM, Apple and other heavyweights. Bottom line: by this time next year we’ll wonder how we ever shopped without these intelligent bots. — Rama Ramakrishnan, Chief Data Scientist
3. Consumer and retailer adoption of mobile wallets will soar
Use of mobile wallets will grow dramatically in both digital commerce and in-store, signaling a slow decline in the use of ATMs as more consumers ditch cash in favor of their phone or credit card. Today, only 20% of American’s monthly spend is in cash. In fact, a forthcoming study, “The Future of Money,” by NTT Data Inc., Ingenico ePayments, Oxford Economics and Charney Research finds that only 27% of consumers expect to pay for transactions the way they do today in ten years, with one-third expecting payments to be made mostly via mobile device. — Rick Kenney, Head of Consumer Insights
4. Asia-Pacific will lead the world in adoption of virtual and augmented reality
North America may have invented Virtual Reality, but it will be mainstreamed in 2017 by China where low cost, scalable manufacturing, a hot investment climate, international support and VR-friendly demographic are converging to make China “the epicenter of the global VR market’s growth.” Alibaba and Taobao are making extensive investments in VR “stores,” and will showcase best-in-class examples of VR-enabled commerce. Some examples: Taiwan’s HTC will open 10,000 out-of-home VR experiences throughout China in partnership with offline electronics retail giants. Alibaba’s recent Singles’ Day showcased Buy+ virtual shopping experiences for the first time. — Vinod Kumar, Head of Analytics and Intelligence
5. There will be a major budget shift to support same day or accelerated delivery
Why? Mainly because a) Amazon, with more than 60 million Prime members, has conditioned online shoppers to expect it, and b) fast delivery has become a competitive differentiator. However, brands can’t go at it halfway. Same day delivery is a complex, expensive undertaking, requiring multiple strategically-located fulfillment centers, distributed order management solutions and partnerships with delivery partners and/or middlemen like ShopRunner, Instacart, Deliv and Postmates. — Kristyn Levine, Senior Director, Global Retail Practice
6. Voice will be the next user interface for shopping in 2017
Consumers will increasingly use services like Amazon’s Alexa, Google Home and Allo, and Apple’s Siri not only to search for but ultimately to purchase the products and services that they love. As such, typing, tapping and swiping will decline as input mechanisms on mobile devices as intuitive and natural voice capability gets further built into our daily lives. As a Wired review of smart home devices aptly put it, “You never realize how many times you pull out your phone for one tiny, insignificant thing, until you finally have a better way to do it.” — Rob Garf, Vice President, Industry Strategy and Insights
7. Buy online, pickup in store will finally become as convenient as it sounds
In 2017, brick and mortar stores experiment with self-service checkout and more efficient ways to execute on online order pickups. Walmart, for example, has installed a huge vending machine in one store where online shoppers pick up online orders. Target is remodeling its stores and assigning dedicated associates to online pickup. Amazon’s move into physical stores will set the pace, and are likely to include some variation of this as it looks to replicate the convenience of its online experience. Look for department stores to experiment with self checkout similar to the grocery store experience.– Nancy Darish, Director, Product Marketing
8. Global brands entering Europe in 2017 will forego mature markets like the UK, Germany and France
They will focus instead on niche markets like Portugal and Belgium. Why? Mainly because mature markets are already well-established and dominated by local players, which means that successfully entering these markets is a heavily resource-intensive proposition with lesser ROI upside. At the same time, global premium and luxury brands will rediscover the Russian upper class who are now shopping digital first. Setting up operations in Russia isn’t easy, but the investment will be well worth it for certain brands. — Daniel Reckling, Industry Principal, Retail Practice
9. Customer centricity will become everyone’s responsibility
Customer centricity will become formalized at all levels of the organization, which is the next step beyond new high profile roles like Chief Customer Officer. Global brands will make customer-centric enhancements to individual responsibilities (e.g. the trend for UX roles to incorporate aspects of customer insights and advocacy), and these will work their way into job descriptions at all levels. We’ll see explicit policies where these new functions, incentives and – above all – attitudes become the clinchers for hiring decisions. To embed a customer-centric culture, brands will embrace the maxim “hire for attitude, train for skill.” — Julie Rousseau, Industry Principal, Retail Practice
10. Customer-obsessed brands and retailers will ditch “best of breed” solutions
Best of breed commerce solutions will decline in favor of integrated platforms that better serve shoppers on their unique journeys. Why? Because every shopper journey is unique, and the only way to truly serve the customer is to understand the context of their journey from product discovery to last mile delivery. Leading brands, which are seeing diminishing returns from integrating best-of-breed solutions, will seek out platforms that deliver intelligent engagement across every touchpoint, from discovery to engagement to transaction to post-sale service. — Dwight Moore, Senior Director, Retail Product Marketing