As we rapidly approach the end of 2014, it’s the time of year where we take a good look into the crystal ball to determine what Australian retailers can expect in the year ahead.
What is clear is that the pace of change that the retail industry has undergone in recent years shows no sign of slowing down. Indeed, I’d suggest that the coming year will see the speed of change accelerate for retailers; however it is the direction of this change and disruption that is often unpredictable.
We recently teamed up with Frost & Sullivan to examine what is driving disruption in Australia and how the modern business is responding. The study of 200 Australian businesses across a broad cross-section of industries (including retail) revealed that 26 percent of Australian businesses believe their industry is rapidly changing, a significant increase from 13 percent in 2010.
In response, many retailers have been forced to reassess their strategies to not only keep up with the pace of transformation, but ultimately to remain viable in this rapidly changing marketplace. Mobile payment technologies, evolving consumer behaviours, new and unexpected competition and more, will require retailers to continually adapt and evolve.
But there is much to be optimistic about. For every retailer downsizing their operations or going out of business, there are new startups emerging and existing retailers opening additional distribution channels and entering new markets.
From working with our retail customers across Australia, we have gained valuable insights into four emerging trends that we believe will help smart retailers survive and thrive in 2015 and beyond.
- Cloud computing unifies the retail chain
An increasing number of Australian retailers will embrace complete cloud-based omnichannel commerce solutions in 2015 to tightly integrate ecommerce, order management, fulfillment and inventory management, and operate these critical business functions as a single entity. The move to the cloud is all about gaining control over and insight into all retail-related operations to the mutual benefit of both the retailer and its customers. Think of it as a marriage between a customer-centric view of a perfect order – right customer, time and product – and a retailer-centric view – optimal location, cost and time.
At the same time, other retailers will move more gradually into the cloud by migrating one or more on-premise pieces of their retail operations, such as available-to-promise, order orchestration or order fulfillment.
- Brick-and-mortar stores add the personal touch
More retailers will apply the lessons they’ve learned online to their brick-and-mortar stores by providing shoppers with a personalised experience. Retail operations with tightly integrated ecommerce, customer relationship management (CRM), inventory and order management systems in the cloud, will be able to target individual shoppers with offers based on their personal profile data and previous purchasing history.
Store assistants will have real-time access to all that rich customer data via tablets and can actively engage with shoppers both before a sale (by swiping their store loyalty card to identify an individual) and during a purchase. The assistant will be empowered to recommend items likely to appeal to a particular individual and will instantly be able to offer the shopper a range of purchase and delivery alternatives if an item is out of stock. As same-day fulfilment becomes more common, brick-and-mortar stores will also have more opportunities to compete with much larger pure-play online rivals.
- Multiple retail channels will blend
Purchases initiated via one channel may be completed in another or channels may intermingle. For instance, a local store may look to use its online presence as a staging post to encourage shoppers to visit its store. A shopper can go online and choose all the items from that retailer that they’d like to see, feel, or try on and then make an appointment to visit the store. When the shopper arrives, all their items will be ready to be viewed or tried on. The store assistant will also be on hand to make additional product recommendations. The store could also package up this kind of online/in-store activity to be part of specific occasions, such as birthday or wedding celebrations.
- Paying by phone becomes more commonplace
While probably less developed in Australia than the above trends, it is worth noting the rising focus on mobile payment technologies. Major Australian banks have made mobile payments a priority tech initiative this year and are in various stages of rolling out technology that lets customers pay with smartphones. While some have already been in the market for a few months on devices like Samsung’s Galaxy S5 using the Commonwealth Bank or Westpac apps, ANZ Bank and National Australia Bank (NAB) are not too far behind.
If we take a look at the US market, the recent launch of Apple Pay in September 2014 has acted as a catalyst for real market change, with retailers sitting up and paying attention – some are signing up for the Apple offering and others hard at work on creating their own alternative or adopting other vendors’ technologies, such as Google Wallet.
While we are a long way from mobile payments becoming a popular method of payment in the Australian market, I believe we’ll start seeing increased interest and adoption in 2015, as the wallet providers resolve initial teething problems in their technologies and consensus grow among retailers on mobile wallets they’ll accept. This will largely be determined by the technologies consumers adopt.
What’s clear from the above trends is that they’re occurring rapidly and retailers need to ensure that they can move as quickly to take advantage of what’s happening. Think of emerging technologies as the best tools to enable you to innovate. Approach all these new developments as if your business was a start-up and roll-out the new technologies as fast as you can without disrupting what you already have.
Doing business the way customers demand it today is of primary importance. Future proofing requires agility, flexibility and scalability, not to mention the assurance that the technology behind each transaction will never grow stale.
The ability to adapt to whatever is most relevant to the customer will be a top characteristic of Australia’s top retailers in 2015.