HomeOPINIONThe future of retail, today

The future of retail, today

Over the next several years, some very big forces will hit the retail industry. New payment types and variable store footprints will change how and where goods are stored and sold. Data analytics tools like predictive modelling, simple, staff-based stock tracking apps, sensors and ‘always on’ digital technology will make it possible for consumers to interact with retailers in new ways. Retailers’ ability to adapt to these forces will affect customers’ perceptions of their brand for years to come.

So, where is the retail experience headed? Technologies that connect the back of the store to the front, in real time, as well as the analytics techniques that continue to learn from shopping experiences, already exist. They have implications on everything retailers can do or offer.

Inventory management

This really is where the back of store meets the front. It’s the ability to use sophisticated displays, sensors and mobile devices to allow customers to access the full range of sizes, colours, and features for any product, regardless of location.

As retailers develop their capacity to manage distributed inventory, the lines between stores and warehouses will continue to blur. This will allow them to carry far less inventory and have a more accurate ability to trace this inventory all the while offering more stock options to the customer, such as, “I’m sorry, we don’t have that right now, but please take this to the till and it will be delivered to your house tomorrow.”

Loyalty programmes

Customers will expect rewards that reflect their unique value better.

As retailers learn more about customer behaviour and preferences, they’ll move beyond discount or points clubs to benefits that recognise what a particular shopper values most, with an offer that is relevant at the time of delivery. Some companies in New Zealand are already doing this and loyalty programmes are expanding to incorporate non-purchase interactions, such as online engagement or in-store visits. Some retailers are introducing gamification, which is applying game-design thinking to things like online marketing, to appeal to customers’ sense of progression, status and competition.


Retailers will use technology to help their staff recognise and develop a relationship with each shopper.

By giving staff meaningful information like customer purchase histories, retailers enable them to have more helpful interactions with shoppers. This can create a shopping experience that is different from and more valuable than a faceless online transaction. Just make it simple, and helpful. Test and learn… don’t be creepy.

Space planning

Merchandising models will reflect a changing navigation process.

Today’s planograms, or diagrams that shows how and where specific retail products should be placed in a shop to increase customer purchase, are based on a variety of assumptions about how consumers walk through a physical store. But by using tools to understand what attracts shoppers’ attention – like where they move quickly through and where they linger – retailers will be able to make dynamic decisions about promotions and traffic flow. The subtle use of sensors and apps to understand the consumer is likely to be where the winners emerge.

Location and personalised pricing models

Customised couponing is changing attitudes toward dynamic pricing in the offline retail environment.

Retailers will be able to target specific customers locally with discounts and incentives. This will create opportunities to generate more foot traffic, deepen customer engagement and manage inventory more effectively. When linked with loyalty programmes and improved service options through mobile devices, this can create a genuine reason for the consumer to download and regularly engage with a retailer’s app.

Added-value services

Physical stores recognise that they have become virtual showrooms for online sales channels and they are developing more effective responses to keep the sale.

Omnichannel retailers can define the unique shopping experience of the future. Some stores will focus on in-store amenities and sophisticated algorithms can identify meaningful relationships to shape this approach. Others will bolster online tools that allow a seamless transition from in-store research to purchase and fulfilment.

Social marketing

Expectations are moving quickly and retailers will be expected to lead, not follow.

Many brands are leading, facilitating and participating in online discussions. But the power of social networking goes far beyond sharing information. Increasingly, social media helps shape customers’ decisions and even tastes. Retailers will try to enable purchases as soon as a potential customer shows interest with ‘one click’ transactions to convert browsers to shoppers straight from social platforms. Social listening tools can make more accurate demand forecasts and analytical insights about market segmentation.

Staff utilisation

The role of a shop assistant is changing. This has significant implications for training techniques, competency models for hiring and even compensation.

By giving salespeople more information about their customers’ interests and histories, retailers will enable the consultative selling approach most customers prefer. To be effective in this new environment, just having product knowledge won’t be good enough. Even in mass-market stores, tomorrow’s sales assistants will need to be researchers and diplomats, adept at using technology and making connections with customers.

Checkout lanes

The checkout process is changing with the evolution of payment preferences and the rise of cash alternatives.

For some retailers, checkout lanes could actually disappear. Mobile technology will enable any shop assistant to take payment to complete a sale and it may expand the use of self-checkout tools. This will allow assistants to engage in higher value, consultative activities, rather than waiting to process a shopper at the end of their visit.

Loss prevention, privacy and cyber security

Vulnerabilities in any one channel represents a threat to all of them.

By creating ever larger and richer data stores of information about customer interests and behaviours and providing store staff real-time access to that information, retailers are also exposed to new security risks and privacy concerns. Self-checkout models challenge existing loss prevention schemes, too. Retailers need to anticipate and guard against new vulnerabilities across multiple channels.

It’s a long list of considerations for any retailer and reflects the underlying theme of digital opportunity we’re seeing across all industries. Customer change, digital technology and data combine to deliver fundamental business change. We’re moving beyond the stage where a digital strategy governs decisions about how to best leverage this change. In retail, you need a business strategy for the digital age; one that starts with the customer and considers your business from source to consumption.

This copy originally appeared in NZ Retail magazine issue 740 October / November 2015.

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