By 2023, e-commerce will cease to be a differentiator in the retail marketplace
Retail can’t survive and thrive by e-commerce alone. E-commerce is ceasing to be a stand-alone differentiator in retail success. Unified retail commerce meshes together the digital and physical worlds. Amazon generated $141.92 billion in product sales in 2018, up 19.7% from $118.57 billion in 2017, according to Internet Retailer’s figures. This equals approximately 49.1% of all online retail spend in the country, and 5% of all retail sales. Additionally the FTI report predicts that it will take Amazon until 2023 to take 50% of U.S. e-commerce and it may not progress further. Seemingly, unified retail commerce is expected as customer demands continue to evolve. Retail Scenarios for 2025 and beyond leverage customer expectations.
Execution is the point of differentiation for customer experiences
Retailers must understand customer’s expectations, meeting brand promise by delivering a reliable experience that takes advantage of its unique competencies. Digital remains the “front door” for retail as consumers use web, mobile, social and the Internet of Things (IoT) to browse for products. However, customer demand for speed and immediacy of acquiring products requires increased use of the physical store. The convergence of digital and physical assets will continue to prove more powerful than digital on its own.
Retail scenarios for 2025 and beyond
The future of retail is foundational to building an adequate, or better yet, an optimal digital business strategy. Retailers are changing operational business models much faster than they are building out effective digital support structures. (seeRetail Change Outpacing Digital Business Strategies). Therefore lack of a cohesive digital business strategy is resulting in further erosion of profitability. Others are losing market share to more nimble competitors and new disruptive players. Shopko is the most recent example now facing liquidation. Assisting interpreting current and predicting future retail business models, Gartner developed a groundbreaking set of research on the four scenarios for 2025 and beyond.
A brief description of the retail scenarios for 2025
To gain greater understanding, Gartner clients can read extensively about each scenario, obtain usable graphics, reading detailed examples by clicking the links to view the research documents in detail. The overview is a PowerPoint presentation Retail Scenarios for 2025 and Beyond: The Future Is Yet in Your Power. Each of the scenarios is described at a high level here, with a link to in-depth analysis:
- Speed – “Retail Scenarios for 2025 and Beyond: Speed Drives Growth by Excelling at the Basics”
- Customers purchase what is offered, expect consistency, availability and fair prices.
- Retailersleverage technology that supports transactions, speeds through the execution with durability.
- Strength –“Retail Scenarios for 2025 and Beyond: Strength Drives Growth with Human-Centric Experiences”
- Customers expectations are exploratory, revolutionary, co-creative, innovative, and personalized.
- Retailersleverage technology that supports transactions, muscles through competing with human-provided, personalized experiences.
- Dexterity – “Retail Scenarios for 2025 and Beyond: Dexterity Coordinates Activities Behind the Scene to Deliver Enhanced Customer Experiences”
- Customers expect the basics and want choice that is more aligned with their tastes.
- Retailersleverage technology that empowers but feels behind the scenes, through a connected hub that efficiently runs execution.
- Elasticity – “Retail Scenarios for 2025 and Beyond: Elasticity Stretches by Leveraging Technology to Serve Customers”
- Customersexpectations are exploratory, revolutionary, co-creative, innovative, personalized, rapidly changing expectations for products and services.
- Retailersleverage technology that stretches to meet customer demands for personalized experiences at scale and speed.
Considerations for developing the retail scenarios for 2025 and beyond
Retailer’s primary business or brand dwells in one scenario. Retailers will use combinations or all of these approaches for diverse reasons. There are some organizations that operate in multiple scenarios simultaneously. Take a few minutes to consider where your organization operates today, and how well its current scenario aligns with customer expectations. A few other considerations as you use this research:
- There is no one “best” scenario; retailers will continue to operate successfully in any of the four.
- Organizations having multiple brands, geographic regions, formats or channels can operate in more than one scenario.
- While described using extremes, the primary factors are a spectrum. It’s unlikely that a retailer will operate at the extreme edge of any one scenario.
- While a retailer’s primary business is in one scenario, there may be opportunities that require the application of aspects from another scenario.
- Retailers have moved, and will continue to move, between scenarios, and at some point, customer expectations will drive movement. Retailers frequently move horizontal, from left to right, or vertical, from top to bottom, other possibilities do exist.
Unified Retail Commerce
Unified retail commerce first involves understanding how customers use technology in their everyday lives. For that reason deploying technology that makes their lives simpler, better, easier and safer is the key. The intersection of these customer processes is the focal point of a customer-centric experience:
Browse — Enable customers to find what they need, as well as discover new and different products and services that will enhance their lifestyles. Provide by stores and online channels, as well as mobile, social, Internet of Things (IoT)-enabled devices, artificial intelligence (AI) and augmented reality working together to deliver an immersive shopping experience.
Transact — Enable a seamless capability for the customer to transact within and across channels, regardless of the product or the combination of products and services, without inconvenience or delays. Provide through modern, interconnected point of sale (POS) applications, mobile applications and the excellent customer-facing execution of processes.
Acquire — Enable customers to acquire goods and services using a variety of methods, including physical shopping, click and collect, in-home delivery, automated replenishment and lockers, as well as partnerships with external organizations. Provide by executing highly flexible fulfillment models, including traditional, in-store shopping and last-mile delivery options.
Consume — Enable customers’ enjoyment and enhances their consumption experience. Provide through enhanced information and services, connected devices, auto-replenishment, and voice-enabled interactions.
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Tags: ai algorithmic-retailing amazon competition consumers customer-analytics customer-centricity digital digital-business digital-strategy ecommerce multichannel omni-channel retail revenue scenarios stores trends unified-retail-commerce