Another holiday shopping season has come and gone, and in its wake most major retailers are scratching their heads, wondering how earlier-than-ever Black Friday openings translated into retail’s smallest growth rate since 2008 (a measly 0.7 percent).
While a myriad of explanations have been offered for America’s softened interest in shopping -- bad weather and personal economic issues being the most cited -- another view is that traditional retailers are beating back against the technological revolution in retail.
Between our collective move towards e-commerce, the new technologies being introduced into stores and an increasing reliance on smartphones and apps, retail is undergoing a massive tech transformation.
Retailers of the future would be wise to come on board.
A changing tide: the online retail market's steady growth
Just as predicted, the ease and comfort that online shopping affords us is in many ways besting the traditional in-person shopping experience. Case in point: though many traditional retailers struggled this winter, Amazon sold 306 items per second on Cyber Monday (27 million purchases in total), setting a new record.
In general, the online retail market has grown steadily: It is now valued at $226 billion, and is estimated to rise to $327 billion by 2016 -- a 45 percent increase. Though retail giants like Amazon and eBay may dominate the market, venture capitalists are pouring money into the sector, with flash-sales sites like Fab.com -- which raised $105 million in July 2012 -- reaping the benefits.
1. E-commerce is replacing physical stores. In fact, e-commerce is set to replace physical retail spaces altogether in some parts of the world. American companies like Toys“R”Us, looking to gain a foothold in foreign markets, plan to open mobile-friendly retail websites in places like China, Australia and France.
The way of the future is clearly to commit fewer resources towards opening brick-and-mortar stores and instead, cultivating virtual ones. More and more companies are acknowledging that this is where the real opportunity lies.
2. Smartphones are forcing retailers to keep prices competitive and websites active. This e-commerce explosion is thanks in no small part to the increasing use of phones and tablets for Web surfing and shopping. But our use of mobile devices isn’t limited to shopping on-the-go or from the couch.
A study by Pew Internet shows that more than half of all adult cell phone owners used their device to help with purchasing decisions while already in store. People either called friends for advice, used their phones to look up product reviews or investigated the prices of items they wanted. Smartphones give us direct access to the world’s information on nearly every retail product, which forces retailers to keep their prices competitive and their Web presence active -- lest they lose out to more aggressive online retailers and flash sale sites.
3. In-person shopping is being transformed by technology too. Tech in retail is not limited to the Web, of course. Impressive inventions that will transform the in-person shopping experience -- making it more interactive, personalized and helpful -- are on the horizon. These include interactive “magic mirrors” that can display how an outfit will look on you (without actually trying it on), suggest accessories and point you in the direction of similar items; virtual greeters that can handle everything from conducting eye exams to offering discounts through QR codes; and 3-D printers that consumers can use to create their own products on the spot, such as towels, utensils and clothes.
Some analysts are predicting that the in-person retail experience may become something else entirely -- stores like the Gap and Best Buy will simply become “touch-and-feel” locations, test centers where people can browse options before getting the actual merchandise shipped to them at home.
Any way you look at it, innovations in technology are having -- and will continue to have -- a major impact on the way we shop. Thanks to the convergence of mobile devices, big data and new innovations in retail tech, we can see commerce transform before our very eyes: retailing becomes e-tailing, trying on becomes testing and expansion becomes buying a new domain name.
Technology has already altered the shopping season, from Cyber Monday deals to bargain hunting on our phones. But let’s face it -- the true transformation is yet to come. Is your retail business ready?
- Courtesy of YEC
Zach Cutler is a dynamic marketing entrepreneur and founder of Cutler Group, a New York-based tech PR agency focused on innovative edtech, biotech, app and software companies.
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
