Insight: Retail store of the future
July, 2023
The role of AI in streamlining Supply chains & Logistics
Re-imagining the Customer journey in challenging times
The retail industry is undergoing a seismic shift, spurred on by technological advancements and changing consumer behaviour. The ongoing digitization of retail has accelerated — leading to the emergence of new business models and the transformation of physical stores. While e-commerce has significantly grown, brick-and-mortar stores continue to play a crucial role. However, the concept of the retail store is evolving dramatically, blending the digital and physical realms into a seamlessly integrated experience. This article takes a forward-looking perspective on retail and how it may redefine the shopping experience.
So what does the retail store of the future look like? Let's delve into some defining characteristics and innovations that are set to shape the next generation of physical retail.
The rise of “phygital” store
“Phygital” retail is born out of consumers' desire for the convenience of online shopping and the experiential satisfaction of in-store experiences. According to a report by GlobalData, as of 2022, 65% of consumers globally were using a combination of both physical and digital shopping channels. The same report indicated that 79% of consumers who shop both in-store and online are more likely to make impulse purchases, emphasizing the potential profitability of the “phygital” trend. While this innovation caters to the contemporary consumer's demand for convenience and experiential satisfaction, it also sets the stage for the integration of other vital aspects like sustainability and data driven strategies to enhance personalized customer experiences and customer retention.
Several pioneers brands have stepped up the lead into this “phygital” revolution as Amazon Go which offers a unique effortless futuristic shopping experience with their app-based, cashier-less shopping : 54% of their customer rated their shopping experience as “excellent” and 23% as “good”.
Burberry, a luxury brand has pushed the boundaries of the “phygital” concept with their latest world live flagship store in Bond Street - London. The store offers a seamlessly blurring digital and physical world with interactive mirrors that transform into personalised screens or even global events broadcasted live as well as their digitally enabled cultural space to reinforce their immersive shopping experience.
Beyond Convenience: Sustainability, Personalization, and Data Analytics
The retail industry's future lies in more than just offering a seamless online and offline experiences. Other elements such as sustainability, personalization, customer retention, and data analytics are also essential.
A 2022 study by First Insight found that 62% of Gen Z shoppers prefer to shop from brands with sustainable values while 73% are willing to pay more for sustainable products. They are instrumental in driving the demand for sustainability in retail, making it a key differentiator. In light of the UK government's 2050 net zero target, it is prudent for businesses to align with these goals and communicate their sustainability efforts to their customers.
Moreover, data analytics play a crucial role in this evolving retail ecosystem. The use of AI and ML allows for intelligent customer segmentation, tailoring assortments and promotions to individual consumers, leading to improved customer retention.
“Phygital” stores of the future are also likely to offer more payment options and in-store education, mirroring the level of engagement and convenience typically seen in online shopping. Digitisation of operations maximizes efficiency and offers a wealth of data that can be leveraged for business decisions and strategies.
The Imperative of a Resilient Supply Chain
The backbone of this transformative era in retail is an optimized, diversified, and digitized supply chain. Today's supply chains must be agile enough to respond to abrupt market changes, resilient enough to withstand shocks, and efficient enough to maintain seamless operations.
In this context, AI and ML provide predictive analytics and automation capabilities to foresee disruptions, optimize inventory, and streamline logistics. Blockchain technology comes into play by ensuring transparency and traceability, fostering trust and efficiency. Simultaneously, digital technologies like Internet of Things (IoT) and cloud computing facilitate real-time monitoring, analytics, and scalability.
Conclusion
In conclusion, the future of the retail industry promises a dynamic blend of innovation, sustainability, and personalisation. The “phygital” store stands as a testament to how far the industry has come and a symbol of where it is headed, pointing towards a transformative retail landscape that is responsive, resilient, and most importantly, centered around the evolving consumer.
“By pioneering on Generative AI, we want to be one step ahead and invent the Retail of tomorrow”
— Alexandre Bompart, Chairman and CEO of Carrefour Group
