THE THIRD ERA OF DIGITAL RETAIL

Article by: Asst.Prof. Suwan Juntiwasarakij, Ph.D., MEGA Tech Senior Editor

Take a look at where you can shop. The scale of the change coming our way means that making traditional minor tactical adjustments or course corrections on the go just won’t cut it. According to WPP Global Retail Forum, we today are in the second era of digital retail in which wearables, smart shelves, drones, and robot have changed the way people shop and the way stores do business. However, the view will look very different to where we are today. The view of the third era of digital retail will be less about phones, devices, and screens, and more about seamless, intuitive human experience. What we are about to witness is not just evolution, but revolution.

DIGITAL RETAIL ERAS

The first era of digital retail began in 1995 with Amazon and eBay launching online in the US. This age was all about the internet as a research and shopping tool and was largely anchored to the desktop via phone-line connections. While slow to begin with, this shift to online shook up a physical retail world that at the time came in one size, extra-large. The early and mid-90s were all about the “category killer.” Stores and malls were big and getting even bigger. Retailers aimed to generate a “wow” factor with the largest array of products possible in a physical location.

The second era of digital retail started in 2007 with the launch of Apple’s iPhone made possible by a decade of tremendous growth in computing power, drop in processing price, the rise of the cloud, the birth of the Internet of Things (IoT), and omnichannel shopping. Mobile devices freed the shopper, and connectivity was the goal for the retailer. Brands and retailers began experimenting with new technologies such as robotics and drones. In physical retail, the Apple Store redefined what shopping was about: experience, interaction, and service. The old extra-large scale of retail was replaced with Customer Experience (CX).

The third era of digital retail will be marked by the rise of data analytics and the increasing sophistication of AI. We have already progressed from XL to CX and now CX is moving to Me, “me” which is the individual. Retail will become truly personal and the customer experience will take a much more intuitive, human form. The third era of digital retail is gathering momentum now, and retailers and manufacturers alike need to act fast to secure retail opportunity has to offer.

CUSTOMER EXPERIENCE

Consumer experience is significantly elevated by employing digital across in-store processes: merchandizing, marketing, and promotions. The Digital customer journey encompasses the complete lifecyle from discovery to royal and is increasingly becoming complex. However, retailers continue to invest in apps which are deployed on mobile devices provided to store associates. In order to truly create a customized experience, retailers should look at providing information the customer’s device itself.

Various customer engagement techniques through AR, VR, and AI are gaining traction and bringing changes in customer interactions at a faster pace. While driverless vehicles and drones are yet to reach desired maturity levels globally, technologies like AI and VR provide consumers with exceptional immersive experience while at home, virtually trying items without factually going to the fitting rooms along with personalized store assistant.

VR FOR CUSTOMER ENGAGEMENT

Virtual reality (VR) technology creates value by integrating both physical and emotional feelings onto online shopping experience. According to HBS Digital Initiative, it allows sellers who do not have physical stores to reach out to a broader pool of customers. Alibaba sells millions of products on its e-commerce platform. Turning them into 3D models is an expensive and long process. Even though the company has a deep pocket, the majority of the products on its platform are sold by small- and medium-sized sellers. Most of them have no incentives to display photos of the products for avoiding the IP issues on the Alibaba website.

Alibaba debuted a meta mall “Buy+,” and on day one, an hour after it launched, 30,000 people had tried the platform. Buy+ is the latest and the largest in a cluster of recent attempt to write RV into shopping in the future. IKEA let customers design their own kitchen via an HTC Vive headset, Audi does the same the cars in its showroom. eBay Australia and Mayer launched “the first Virtual Reality Department Store.” Startups in the US and Europe boast of shopping simulations with hyperrealistic shelves and robot assistants, and of disruption to come. According to Vice, Goldman Sachs estimated the market for virtual and augmented reality retail would be worth $1.6 billion by 2025.

THE SIDE EFFECT

Despite of the benefits of VR shopping, less-than-desirable experience does occur. According to Vice News, customers who participated VR shopping at Buy+ reported that they received stranger and lonely experience since the shopping did not resonate shopping mall atmosphere and the liveliness. To shop in Alibaba’s VR universe, you stare at the thing you want and are pretty much re-presented as a bodiless avatar. It is a lonely and surreal take on the consumer experience, and perhaps a microcosm of some of what is dissatisfying about shopping as a whole.