7 Predictions On The Next Era Of Digital Retail

“When Amazon launched in 1995, only 3% of Americans had ever been on the Internet, let alone purchased anything online. Both the concept of the web and e-commerce were startlingly new. Just a year earlier in fact, the New York Times had run a story with the headline: “Attention Shoppers: Internet Is Open,” breathlessly reporting the first online transaction, the sale of a Sting CD.

Also in 1995, Auction Web went live, which was to become eBay. The first sale on the site? A broken laser pointer – to a collector of broken laser pointers no less – for $14.83. The “Long Tail” had begun.

1995 was the dawn of the first era of digital retail. This age was all about the Internet as a research and shopping tool, largely anchored to a desktop PC, accessed via a dial-up connection. (Remember that dial-up sound?) The shift to online commerce, while slow to begin with, shook up a physical retail world, which at the time was dominated by “category killers.”

The second era of digital retail started in 2007 with the announcement of the iPhone. The new invention included “an iPod, a phone and an Internet communicator,” said Jobs, “Are you getting it? These are not three separate devices. This is one device.” The whole world “got it,” and over time the smartphone freed the shopper. The iPhone launch kicked into gear a decade of tremendous growth in computing power, a corresponding drop in processing prices, the rise of the cloud, and the birth of the “Internet of Things” (IoT) and “omnichannel” shopping.

Over the last six months, David Roth (CEO The Store WPP, EMEA and Asia) and I have been on a mission to define the “Third Era of Digital Retail” – and we just released our report at the WPP Global Retail Forum. We were informed from working closely with the world’s leading technology companies and keeping a close eye on what’s emerging from the most advanced markets, particularly China. We then overlaid our base knowledge with qualitative and quantitative research.

An augmented reality app is used in the new Starbucks Roastery in Shanghai, China. Photographed on Friday, December 1, 2017. (Joshua Trujillo, Starbucks)Joshua Trujillo, Starbucks

We tested our hypothesis via 60 in-depth interviews with a diverse range of senior professionals from VML (my company) and WPP globally. Our subjects were invited to forecast four years into the future – providing a view to 2022. (Why four years? This horizon is far enough out for the world to be different, but not so far ahead that it feels like predicting the impossible.) Some valuable observations came from those conversations. For instance, Jason Ferrera, group creative director, VML told us: “Shopping will be ‘hidden’ in 2022. More automated and more integrated in our everyday lives.” The interviews also served to shape questions for our quantitative research.


For the next phase of research on the Third Era of Digital Retail, we used an ingenious tool – Swarm AI, from a company called Unanimous AI. The technology won “Best-in-Show” at the 2018 SXSW Innovation Awards. Swarm AI is modeled on nature, where organisms like birds, bees and fish amplify their intelligence by forming unified systems through “hive minds.” Swarm AI allows groups of people to do the same, by connecting online and rapidly coming to a consensus on a range of questions.

Optimism about the outlook for shoppers, brands and retailers in the East. The West sees a positive future for shoppers but is more cautious for brands and retailers.
AI is forecast to have a huge impact on retailing in the next four years.

Mobile payment for “everything” will become a reality.

Product experts and style consultants are the humans in retail least likely to be replaced by technology.

Shoppers’ biggest concern about technology will be protection of personal information from data hackers.

Tech-based companies (particularly Amazon, Alibaba, Google) will drive the greatest change in retail between now and 2022.

Governments are expected to start regulating the dominant online retailers.

There was also some interesting divergence in opinion between the West and the East, particularly around the continued growth of e-commerce and mobile payment. The West believes e-commerce will increase from an estimated 10.2% of global retail sales in 2017 to 33% in 2022, while the East suggests a much higher figure of 60%. We were so taken aback with this number that we re-ran the question, but the answer came back the same. (Our own view is that the lines between online and offline channels will dissolve, but nevertheless these statistics are directionally revealing.)

In terms of mobile payment, the West says that 37% of global consumers will use their mobile or smartphone for regular purchases in 2017, up from 14% in 2017. The East is much more bullish – raising that target to 80%. That makes sense, seeing as how much commerce is already concentrated on mobile devices in China.

The two Swarms differed too on their attitude towards Amazon. The West proposed that 71% of global consumers would be shopping with the online giant in 2022, up from PwC’s estimate of 56% in 2017. The East believes that Amazon’s dominance will drop sixteen points to 40%, reflecting perhaps the relative rise of the likes of Alibaba and JD.com.

We are now a generation in to digital retail, but change continues to accelerate. In the Third Era of Digital Retail, traditional barriers and frameworks will fall by the wayside. Everyone can be a retailer and every surface a store. There will be new competitors from outside the sector as well, reimagining what retail can be.

Thriving in such challenging conditions requires entirely different combinations of skills and the courage and creativity to rethink entire business models – not just adapt them.

I am Executive Director, Global Retail & Shopper Marketing, for VML, an award-winning worldwide marketing communications company. Based in New York, I focus on retail as part of the connected consumer experience. Prior to VML, I headed up Y&R’s global retail shopper…”

Source: www.forbes.com/

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