5 questions – 5 answers: The key for the future of retail? Experience-ing

Jon Stine’s -Research Affiliate of the Massachusetts Institute of Technology (MIT) Auto-ID Laboratory and Consulting Affiliate of The Sprosty Network – point of view on the future of retail and stores.

1 – What do Darwin and retail evolution have to do with each other?

Darwin teaches us that the species that survive (and ultimately thrive) are the ones that most quickly adapt to environmental change.

In the last ten years or so the world of retail has changed dramatically.  Look at the growth of e-commerce and the rise of social media; look at the use of data, the new capabilities of the store, the new personal technologies.  The result?  Consumer expectations have been completely re-shaped.  It’s a new world.  And the pace of change is not slowing down – it’s speeding up.   We are in a period of accelerating transformation that will leave on the field new winners and more importantly, new losers.  Which means that retailers must adapt to this new world – they need to evolve into being leaders in this new world.

 2) And what is it that companies need to do in order to survive?

Perhaps not today, but certainly tomorrow — all retail companies will be digital.   Retail will soon be driven by digital expectations, digital behavior, and digital technologies. Even physical stores -which will continue to exist- will be part of digital retailing.

The famous 4 Ps – Place, Price, Product and Promotion – will still be relevant .  But those 4P’s will succeed (or fail) in the market due to the retailer’s abilities in data analysis.  It’s will be about the retailer’s ability to acquire and analyze data and transform it into unique insights – and then turn those insights into action.

To answer your question, in order to survive companies will first need to become digitally savvy, learning how to analyze, interpret, and use data.  They’ll need to become familiar with the tools and advantages of artificial intelligence. Of course this is already happening. I’m not talking about the future here – I’m talking about what must happen now.

3)  In this very digital and complex context, what will the role of physical stores be? And what about human capital?

I call this the Paradox of Digital Retailing: with digitalization, stores will actually become more and more important, and for two reasons:

• Ultimately, we’re social beings, and shopping is a social act. We want to experience things (to touch, to see, to try) and we want to converse with people who can help us.  That will happen in a physical environment.
• In the digital world, the purpose and the capabilities of the store will change – and especially in ways that allow and encourage digital shopping. Shoppers will order online, and pick-up products in the local store – or have products delivered from the local store.  Having local stores – stores near dense population centers – is so important in this new digital retailing age.

I should also mention this: the human capital of the retail store will also become much more important in the digital age.  Because of the new function of retail stores – experiencing products and services, sales assistants and store managers alike will need to be able to interact with customers to explain usage and purpose and offer suggestions throughout the entire shopping experience.

Experience, both in terms of practical observation of facts or events and of feeling an emotion, is the key to the future of retail.

4) What is the next big thing after the internet revolution for the retail world?

I am going to pick two things:

• Artificial Intelligence. We are going to have more data analysis done faster, and this is going to represent a great opportunity for companies to learn more about their clients and offer them better and more customized products and services;
• The new Voice interfaces. Voice recognition will connect multiple devices, the internet of things will make everything and everyone more interconnected.

5) What is your ultimate message, the one thing you would like readers to understand?

“Don’t wait.”  The clock is ticking.  The water is rising.  The industry is changing at a rapid and accelerating rate.   .

Going back to where we started, companies must adapt and change in order to survive. This has always been true, but it is even more true in the digital era we are living in.

Jon Stine is a technologist who’s been born and raised on the business side, with more than thirty years of experience in the filed. A recognized worldwide expert in value creation for companies, a process that starts with the study of consumer behavior across channels and cultures, he will soon participate as a speaker at Retail Tomorrow’s conference in Milan, Italy (May 22-23).