Beyond Omnichannel — Future of Retail

I recently wrote a post about how retailers focus so much time on trying to sell customers as many products as possible through as many channels as possible. Problem? Consumers don’t care about the channel — they care about the buying (discovery) and product (post-purchase) experience, not what payment options are available. This is a serious problem for many brick-and-mortar retailers today that try to warp their legacy enterprise systems to deal with the shift from offline to online shopping with mixed success.

Indeed, it seems that more of the focus for brick-and-mortar retailers has been on how to weather the shift from online desktop to online mobile shopping — not offline to online. And given recent news that Apple Pay is coming to the mobile web, this shift may happen sooner than we had ever anticipated. But this in no way means that offline retail is dead. In fact, for all the talk of Amazon’s growth — offline retail still accounts for 90% of all retail sales (see chart below) this year and forecasted to be the same next.

Think about that for a second, on average nine out of ten times shopping is happening in-store not online. Now granted, consumers are definitely using mobile phones much more often before, during and after a visit to a physical store. And sure, there are commodity goods like dish soap and paper towels that are arguably ordered more conveniently online, by pushing a button or better yet by voice — for most other purchases, customers want to see and feel the product. All I’m saying this — do focus on mobile shopping because that’s where the online dollars are going but don’t forget that offline retail is still incredibly relevant to your business.

As much as retailers should strive to have their mobile shopping experience be as good if not better than desktop, what innovations are we going to see in the offline world? It’s a question that I plan to discuss and learn more about in-depth at Shoptalk next month. Conference founders @anilaggarwal and Jonathan Weiner have assembled an all-star cast to focus on exactly this. Aggarwal notes that “today’s consumers expect a wide range of new integrated, on-demand and personalized products, services and experiences. It’s far more than just the incremental shift to omnichannel that dominates today’s dialogue.”

Spot on and let’s take it a bit further. Sure — Netflix, Uber and a host of other companies have changed customer expectations in terms of personalization and convenience among other things. So are we that far off from the reality of the mall scene in Minority Report? If you’d asked me a few years ago, I would have replied with a resounding yes. Iris scans in malls? Not a chance, especially given recent debates centered on privacy related to in-store tracking — and they were only using mobile phones not your eyes. But are there other macro trends overall that could impact — for better or worse — offline retail? Two ideas come to mind.

Self-Driving Cars

The first is self-driving cars. Again, if you’d asked me a few years ago if we were close to a future where self-driving cars were a reality I would have said no but here we are. Suddenly this other scene from Minority Report doesn’t seem that far off. How could self-driving cars help offline retail? What if retailers offered free rides to potential shoppers to visit their store and during the ride learned about customer preferences so that sales associates picked out items to showcase — or better yet provided discounts on particular bundles of products?

Or flip it around and utilize self-driving cars for the delivery — and immediate use — of products that are bought online but opted for in-store pickup. There are a number of iterations here and the trick will be to figure out what will drive the best customer experience and of course improved conversion as well as sales. I’m sure it’s something @traviskal and co. at Uber are looking into — and pretty well placed to execute.

Virtual or Augmented Reality

The other idea is augmented or virtual reality — which is a trend that arguably hurts retailers. I recently got the chance to check out a Commerce VR exhibit at the Shopify Unite conference this past month. What most intrigued me about the experience was the ability to do two things — experience a product in its environs (e.g. virtually seeing Patagonia tents and sleeping bags in situ on a snowy mountain top) and being able to place a product like furniture in my home where I’m using the device to see how it would look and feel a la augmented reality.

Commerce x VR exhibit at Shopify Unite Conference — March 2016

While the virtual experience could arguably be done in-store as well — and given the current price of headsets — this is one way that retailers could improve the in-store experience. But the augmented reality experience for furniture and arguably fashion — if the technology improves — could be an interesting development that makes brick-and-mortar less relevant for some product categories. It’s a long way away but not something retailers can sit back and watch — no pun intended — from the sidelines.