7 Major Themes That Will Dominate Retail in 2018
Markus Linder, CEO at SMARTASSISTANT, picks the 7 digital trends that are set to impact on retail this year from AI and increasingly personalised experiences through to voice shopping and brands finally becoming retailers.
As clichéd as it may sound, 2017 was a year of genuine change and disruption. Technology is empowering anyone and everyone and is relentlessly changing the game, as evidenced by the number of high-profile retail and brand casualties in 2017.
While the year 2020 was once only a convenient target for futuristic predictions and prophecies, it’s just 2 years away now. The conversations around AI, voice shopping, predictive hyper-personalization, same-day delivery and other advancements that once seemed far away in the future, are maturing. Brands and retailers have to buckle up and get serious about fully embracing digital technology to innovate and transform their outdated business strategies. We will continue to see even bigger changes and disruptions – no category is off-limits.
These are the seven major themes that will dominate commerce in 2018. I’ll revisit my predictions at the end of the year.
1. Simplicity Still Reigns Supreme
Even if we don’t always want to acknowledge it, we need machines to help us manage the overwhelming amount of complex and confusing data to simplify and augment our decision-making. As a business leader, customer, as a human being, it’s become almost impossible to both understand and keep up with all the information we generate and collect.
This is as true for the CEO who needs to decide whether to invest $x million to extend an existing product as it is for the consumer who needs to decide which pair of sneakers to purchase.
It’s one of the reasons why AI has leaped to the forefront of the global discourse in 2017. And there are many signs that AI won’t be going away in 2018: corporate interest in AI has advanced, more students are enrolled in Stanford’s introductory AI and machine learning classes, the volume of AI papers created has mushroomed, and the number of active AI startups has increased by 14x since 2000.
In 2018, we will see technology giants like Google and Amazon focus on artificial intelligence even more aggressively, and more businesses will figure out how to harness conversational chatbots, intelligent digital advice, and smart virtual assistants to give people what they want: smart simplicity.
At the end of the day, you will not be judged by the technology you use but by the value you can bring to customers, with that value being measured in time, convenience and experience. How can you simplify interactions with your company? How can you help your customers be more efficient and smarter? How can you help them discover solutions they didn’t know existed? How can you help them choose the right item for their needs faster? And how can you help them make a buying decision if they are on the fence about a product?
Helping people simplify their complex purchase decisions was one of the core drivers when we started our company, SMARTASSISTANT. Ten years later, it’s interesting to find that smart simplicity still reigns supreme!
2. Humanizing Digital
Over the years, the ubiquity of technology has blurred the lines between people’s digital and offline lives. It has created a blended experience in which people don’t separate the two and want to navigate between the two worlds seamlessly. Technology acts as the enabler, the glue that connects relationships that exist in the offline and online world.
A shopper’s favorite business needs to be part of this human/digital experience by essentially becoming more human – offline and online – to build and grow relationships.
In 2018, we will see businesses that focus on creating personalized online and offline experiences winning. These are companies that understand customer preference, ask the right questions, and use customer data to make shopping simpler, easier, and more reliable. The experiences they create increase the feeling of a human connection and authentic in-person relationships.
Abigail Posner, Head of Strategic Planning, and her team at the ZOO, Google’s creative think tank for agencies and brands, urges businesses to understand the “little whys” to decode the larger “whys” related to human behavior, impulses, actions, and perspectives. From there, businesses have context for the “how” to provide high-quality, engaging and relevant experiences.
Did a customer buy a pair of running shoes from your store? Do you know their intent? Do you know why they bought it? Don’t send them an email with another set of running shoes. Instead, for example, follow up with a personalized email about the best ways to train to reach their goal.
At SMARTASSISTANT, we support businesses with Digital Advice solutions to help them gain a better understanding of customer needs to fuel these kinds of seamless, tailored online and offline engagement strategies.
That’s why I can only second Don Scheibenreif, a Gartner VP and distinguished analyst who said: “The first step to being more digital is to be more human. Help people realize their dreams and goals.” The way to do that, he said, is to be a digital humanist, not a digital machinist. The former puts customers at the center and uses technology to help them achieve a goal or solve a problem; the latter uses technology to take people out of the equation. “Don’t try to engineer people out of the process,” he said.
Humanizing Digital is also the theme of Digital Advice Live! June 28th, 2018, in New York. Find out more about the conference here.
3. Being a Trusted Advisor
As technology is already so meshed into our daily lives, we tend to be overly reliant on speed and brevity. The paradox is that the more technology, and with that, information, we introduce into our lives, the more important human judgment, transparency, and underneath it all, trustbecome. The amount of content far outweighs our ability to digest and evaluate it all, so we use trust as a mental shortcut.
People want to trust that businesses have their best interest at heart. They want to trust that they’re dealing with knowledgeable experts in their domain of expertise.They want to trust that the data they share with the company is safe and put to good use.
However, the 2017 Edelman Trust Barometer shows that there is a high level of mistrust, not only in the government and public institutions but also in businesses.
In 2018, it will become mission-critical for companies to rebuild trust by educating customers, assisting them, providing valuable, trusted content, focusing even more on delivering on promises, being honest and genuine – before, during, and after their interaction with your brand, offline and online. It’s all about creating a trusted relationship. Businesses essentially have to become trusted advisors.
For example, Apple’s recent admission to deliberately slowing down aging iPhones has landed them in some hot water. Not only is the company facing class-action lawsuits, they’ve also jeopardized the trust of their most loyal customers, as depicted by the outcry in forums and on social media. Apple quickly issued an apology and will launch a range of programs intended on winning back consumer trust (and mitigating further financial backlash).
What this shows is that the typical image of the nameless, faceless corporation that operates behind cold stone walls disappeared a long time ago and 2018 will make this more apparent. Simply existing as a company is not enough. While it has been about the transaction in the past, it’s increasingly becoming about building a trusted relationship with customers on human terms.
Trust will be the most important differentiator among companies in 2018 and the years to come. It will be more important than price, features, and appearance. These can be replicated easily and are quickly becoming commodities.
4. Brands Become Retailers, Retailers Become Brands
Time to say ‘goodbye’ to the clear separation between brands and retailers. Many many years ago, brands were able to hide away from consumers in some industrial parks where they focused on creating new products. Retailers on the high-street distributed them to the masses.
But with the internet and social media taking on bigger roles in the consumers’ lives, this line isn’t as clear anymore.
While brands primarily had to focus their marketing efforts on driving sales at channel partners, they now have to do more to stand out – online and on store shelves. 89% of shoppers visit brands’ websites during the purchase journey, 1 in 3 consumers shop directly with brands, and 87% of customers prefer to buy their goods direct if the option is available. This means that brands have to take on a more consumer-centric rather than product-centric perspective. They have to foster a deeper connection, so when shoppers do visit a retailer to make a purchase, that brand is at the front of the customer’s mind.
In 2018, we will see leading brands ramp up their direct-to-consumer strategies by
- Investing more in consumer education at different touchpoints and channels
- supporting and accelerating the customer journey with intelligent omnichannel solutions
- collecting and leveraging data from purchases and information about consumer preferences to communicate with them on a more personal level.
In this highly-competitive environment, it’s the only way for brands to increase (or maintain) loyalty and market share.
Brands taking ownership of the purchase experience and retail consolidation is also putting pressure on traditional retailers. They are no longer only suppliers of goods, they are curators.
Take Amazon’s acquisition of Whole Foods, for example. Apart from its push into the brick and mortar business, there are two interesting details that paint a vivid picture of where the industry is going: (a), Amazon now has access to masses of data Whole Foods has about its (mostly affluent) customer base. The company can now use that data to test and experiment with innovative concepts to create more convenient experiences, such as predicting shopping behavior for each shopper to hyper-personalize interactions. And (b), with Whole Foods’ 365 brand, Amazon now has access to a strong private label product range.
The value of private label brands to retailers cannot be understated. Not only are they far more profitable than branded products, private label goods are fast becoming a point of differentiation in a retailer’s product range. These items can speak to niche audiences and customer values, such as fairtrade, energy efficient, vegan or paraben-free.
We will be seeing more of such acquisitions by Amazon and other companies and in many more categories. Amazon founder and CEO Jeff Bezos has already told us (or perhaps threatened) that he desires to sell everything to everyone, everywhere.
2018 will be the year for both retailers and brands to ultimately define their differentiator and evolve their value proposition. At its core lies the ability to interpret data to better understand their customers’ needs and foster deeper relationships to generate longevity and retain a loyal customer base.
5. Self-service and Self-care
Instant gratification is another keyword businesses have to focus on even more in 2018. Today’s consumers crave instant gratification. Technology has made them expect more in less time, and also showed them how self-reliant they can be if given the right tools.
Instant gratification has been the catalyst for a host of innovative business models. Fifteen years ago, if you wanted to travel somewhere, you were at the mercy of travel agents to help you choose the right flight. Now, websites like Google Flights and Skyscanner allow you to find any flight you need with a few clicks. Need a cab? A few taps of a smartphone and it is on its way. Need a crib? A few clicks and you’ll have a great accommodation at your vacation spot.
According to Gartner, 72% of customers prefer using self-service technology to get things done and resolve issues immediately on their own as opposed to picking up the phone or sending an email.
This trend towards minimum social friction and maximum self-reliance is affecting and disrupting several industries. In the banking sector, for example, N26 has created a completely paperless, branchless banking system that account holders can operate entirely from their smartphone.
In 2018, we will see more companies re-evaluating their self-service strategies and guided troubleshooting approaches to enhance the digital experience and remove unnecessary barriers for B2C and B2B customers.
Because everything other than self-service will be inevitably considered friction for the instant gratification generation. People have seen it work and know that they can expect it. For them, 10 seconds waiting on hold now feels like 10 minutes, so businesses will be on a drive to modernize through 2018.
6. Voice Shopping
On 25 December 2017, Amazon’s Alexa app was downloaded 474,000 times, making it the most downloaded application from Apple’s US App Store.
Echo Dot sales have been surging from quarter to quarter, with 20 million units sold before September 2017, and it was Amazon’s best-selling product over the Christmas period.
Google has sold 7 million Google Home units in the US between June 2017 and September 2017.
One in five US customers has already made voice purchases through Amazon Echo or other digital assistants. Another 33% plan to do the same in 2018.
So why this number flailing?
It’s to show how a technology that was once only an idea is quickly becoming commonplace. The trend towards voice-activated assistants has been bubbling for some time and is expected to explode in 2018, as more consumers begin to understand the convenience they offer.
Voice-enabled shopping is becoming the method of choice for millennials, 43% of whom have made a purchase through voice.
Voice is simply the most natural interface for humans and the most effortless way for us to communicate. After point (mouse, e-commerce) and touch (finger, mobile commerce), voice (language, v-commerce) is the logical progression – way before gestures, facial expressions, and emotions… but that’s another story.
While only a few companies have built strategies around voice technology, this will change in 2018. Businesses will be forced to start thinking about the role they can play in this environment, about how they can make their own shopping experience seamless via voice. If they ignore voice in 2018, there’s a real danger they will be left behind.
Digital Advice is an essential technology in an environment that relies only on voice input.
7. Mobile CX
But even before stepping into voice shopping, many businesses will still have to fix their mobile experience. Did you know that already a quarter of all dollars spent on e-commerce in the US come from a mobile device? On Cyber Monday alone, 33.1% of revenues ($2bn) came from smartphone transactions and almost half (47.4%) of all visits.
In the US, mobile devices currently account for 19% of all e-commerce sales with that figure projected to rise to 27% by the end of 2018. In the UK, mobile shopping is expected to account for two-thirds of e-commerce by 2020. In fact, by 2021 m-commerce’s share of global online retail is expected to exceed 50%.
When it comes to researching (and increasingly buying) products, people are whipping out their smartphone and bypassing their desktops completely. But that doesn’t mean you can expect customers to automatically migrate from your desktop site to your mobile site. You have to make it an inviting prospect. It has to be seamless. The last thing consumers want to do is fiddle about enlarging their screen to use rigid product filters or scroll through reams and reams of products.
We are seeing that integrating digital advisors is an effective way for businesses to optimize their mobile site. A digital advisor finds out the core needs of your customer with a few questions before curating and recommending suitable products – so no pinching or scrolling necessary.
And this is crucial: 85% of consumers will not return to a mobile site if they have had a bad experience shopping. The good news is that very few customers are currently content with most of their mobile shopping experiences, so there is an opportunity to jump ahead of competitors by getting to work improving your mobile CX.
In 2018, brands and retailers will have no excuse for a subpar mobile experience. Mobile is the go-to platform during a consumer’s research phase prior to a purchase. If you don’t develop your mobile customer experience strategy, trying to grow your e-commerce business will be an uphill struggle.
With so much change occurring at the same time, it’s crucial to stay focused. To recap, the main themes to pay attention to in 2018 are:
- Simplify the customer journey
- Understand customer needs
- Become their trusted advisors
- Create the best of both worlds: brands <> retailers
- Don’t force shoppers to speak with you: Make self-serve a breeze
- Allow shoppers to use their voice
- Deliver a frictionless mobile experience
This article orginally appeared here.