Moving Walls Blog

Three Trends Driving Retail in 2018

On Sep 25, 2018

Physical stores still dominate the retail industry. Despite experiencing double-digit growth, e-commerce companies still lag behind offline retailers. In the US, for example, Amazon is the only online company that features among the top 10 retailers.

It's difficult to make predictions about the retail space. A few years back, most believed that online shopping would quickly overtake offline sales and lead to the demise of major traditional retail brands. 

Instead, it now looks as if the future of retail is a blend of online and offline shopping. Thriving retailers are able to bring together the best of e-commerce - real-time data and convenience and brick-and-mortar - store experience and immediate fulfilment. 

Here are three trends that we see driving the retail experience in 2018.

Physical Stores Digitise their Stores and Selling Process

Amazon Go plans to open more than 3,000 of its "checkout-less" stores by 2021. The e-commerce giant will reportedly spend as much as $3 billion on these deployments according to an analysis by Morgan Stanley's Brian Nowak. Why is Amazon spending so much on a project that is not backed to generate much in terms of revenues and profits?

According to an analysis by The Motley Fool, the Amazon Go project may be more about data collection than profits: "Amazon Go may be yet another way to gather data on consumers. Every time someone walks into an Amazon Go location, they scan an app on their smartphone, which allows the cameras to link a person to an online account for billing. The store keeps a running tab as you take items off the shelf (and subtracts them if you put the item back)."

Physical retail brands are looking to build similar capabilities. They already have the edge in the form of having an established physical presence. The challenge is to implement a data management framework that enables them to measure physical customer movement.  

In-store movement analysis has multiple use cases from resource planning to measuring marketing effectiveness. Some interesting case studies include:

  • Kroger used sensors and shopping data to reduce customer wait times from four minutes to less than 30 seconds.
  • IKEA used insights from their online store to drive the right audience to their physical stores for their "My Kitchen" campaign, resulting in a 464% ROI.

Direct-to-Consumer Brands Benefit from Physical Presence

The 2018 Retail Resurgence Survey asked  shoppers their reasons for choosing to visit a physical store. Over 77 percent of them cited that they wanted to touch and feel the actual products. There just isn't an alternative for this physical experience and it remains one of the major reasons brick and mortar stores continue to thrive.

It is no wonder that pop-up stores have become an attractive option for online stores. This Business Insider article has identified 22 direct-to-consumer brands that started online but now have a physical presence. 

Rather than killing off the brick-and-mortar experience, these brands are revitalising traditional retail. Many of them design their physical stores based on the insights they have garnered from the customer's online experience. 

Physical Stores Prioritise Experiences

As consumers are able to immediately fulfil their shopping needs online just as well as offline, the main physical edge that remains is the in-store experience. This is the area brands are investing heavily into. 

Here is one case where a physical brand successfully transformed the in-store experience by integrating mobile payment and digital rewards features:

Starbucks' company philosophy is related to tying the in-store experience with digital innovation like its digital rewards platform and mobile "order-ahead" offering. Mobile payments now account for more than 30 percent of transactions at most of their stores.

Physical stores will always be part of the shopping experience. But so will technology. The key, for physical retailers, is to be able to integrate various digital aspects that make the physical shopping experience better - mobile payments, personalised recommendations, and digital signage information are just a few examples. 

At Moving Walls, we're all about using online to enhance the offline experience. This could be through our Location Intelligence platform - Moving Audiences Analytics - or our interactive experiential offerings. Watch some of our case studies to learn more. 

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