In 2017, researchers presented the results of the study “Total sales. Ten retailers’ investments in an uncertain future. “As the study showed, retail sales have been growing very slowly over the past three years. This is challenging all traditional retailers. How to develop further to keep a business? Today gives three answers: mobile site, analysis of large data, Amazon strategy. Here are the three main technological drivers which will move the trade in the coming years.
Trade more and more goes online
As part of the study, more than 24,000 consumers from 29 countries (including Russia) were interviewed this year. Russia for the fifth time takes part in the global survey of the consumers on the Internet trade sector.
Most traditional retailers reported a decrease in sales in stores. Sales growth in 2016 was observed only through online trade channels. The leader in online shopping in Russia for several years is the segment of consumer electronics and computers. This was noted by 47% of respondents. People began to buy online and other goods, even food. 14% of respondents in Russia said about this. In Russia, as well as all over the world, the mobile sales segment is rapidly developing. Mobile sites have become the fastest growing sales channel. They significantly stimulate the increase in trade volumes.
The most important factor influencing the purchase of goods in online stores is lower prices. 43% of respondents in the regions and 41% in Moscow and St. Petersburg think so. 36% of residents of the two capitals also note the convenience of shopping online.
Strict competition and low GDP growth
For independent retailers, the times of tough competition have come. It was not the case before. This is the first factor that changes the approach to investment. Retailers have to fight for market share with online stores Amazon. 28% of respondents around the world admitted that they make fewer purchases in retail stores because of Amazon, in Japan it is 39%, in the USA — 37%. 24% of Chinese is less likely to shop at retail stores because of Tmall.com (owned by Alibaba), a Chinese counterpart of Amazon.
Brand manufacturers are trying to create their own distribution networks, without involving retailers in the sales process. The aim is to interact directly with consumers. Sometimes companies have to sell the product by subscription or even acquire another company that has established a direct connection with consumers. An example is the purchase of Unilever by Dollar Shave Club.
The second factor changing the approach of retailers in the field of investment policy is the reduction in GDP (gross domestic product). The growth rates throughout the world, even in China. GDP acts as a measure of the volume of production and income in the country and often correlates with the level of consumer demand.
Thirdly, retail sales, even in the US, increased by only 3.8% over the past year. While in the current year they will be approximately at the same level. At the same time, the main increase is expected in Internet sales. The growth in sales in conventional stores is only about 1%. Thus, traditional retailers have no reason, and often opportunities, to invest in offline trading. The most successful of them offer consumers convenient options for buying from anywhere: in the store, from a computer, mobile phone or tablet. So, Saks Fifth Avenue opened stores in the center of Manhattan, resembling its site. Best Buy offers individual technical assistance. In the UK, Marks & Spencer integrates the store and online offerings.
Most retailers face a real threat of losing their business if they do not invest in their future.
In what to invest
Researchers have identified ten areas of investment for retailers who are thinking about the future.
· Mobile site
· Large data analysis
· Amazon strategy
· Personnel, customer loyalty
· Brand presentation
· Showrooms
· Platform security
· Authenticity
· Health and a healthy lifestyle
The main channels for generating sales are “shops” (79%) and “site” (73%). Only 25% of respondents chose “mobile applications”. Therefore, the common advice is to invest in a mobile site, not a mobile application. Mobile applications offer additional bonuses to customers. Users do not want to download a large number of applications on the phone which are not so often used. Buy through the site was more convenient. In China, instead of creating mobile applications, most brands and retailers are integrated into the mobile wallet WeChat (owned by Tencent). In a survey of retail executives conducted by Shop.org, it turned out that most of the technological investments in 2017, 39% of respondents will be directed to mobile technology and only 6% — “to develop stores.”
According to the advice of researchers, it would be better to invest in the analysis of large data, and not just their collection. Ultimately, the store should learn how to create a personal offer for each customer. It can be sent by e-mail or in the form of a text message. A third part of the respondents still cannot do that. Another third one believes that doing this is not quite as they should.
It is also advised to invest in the strategy of Amazon. This company has introduced a number of innovative solutions that make shopping even easier and more convenient. For example, Amazon Echo for voice orders, Amazon Dash button for quick ordering of repeated purchases (coffee, washing powder, etc.), Amazon drones accelerating delivery, Amazon Go stores without Amazon Studios for the distribution of films. More than half of the respondents are Amazon customers. In the US, Japan, Germany and some other countries, this figure has exceeded 90%. Amazon is not a technology company, and similar gadgets are on the market. For example, the recently appeared Google Home is predicted victory over Amazon Echo. Amazon is a global online trading platform. Its shares are along with Apple shares, Alphabet, Google, Facebook, buy leading hedge funds.
The researchers also note a new trend of turning a shopping center into a center for providing some medical services. In the US, clinics belonging to drugstore chains Walgreens and CVS, are consistently rated by clients higher than visits to ordinary doctors. So, a quarter of respondents would gladly have done an MRI or ultrasound in a pharmacy. There is another area of interest for retailers — goods for health or sale of wearable devices that monitor the performance of exercise, diet, and sleep, the state of vital signs and physical fitness. In the US, Pursuant Station’s robotic kiosks offer Americans free access to information on blood pressure, vision, body mass index, etc., as well as about local doctors, clinics, and medical services. The location of such booths can be also shopping centers not only in the US, but all over the world.
In addition to technological drivers for retail other areas of investment matter. In the era of the Internet boom, these directions are also changing. So, if to discuss personnel, today, from the top management of the trading network, people expect not only the ability to manage stores like real estate and merchandising (placing goods on the shelves), but also skills in digital technologies, multichannel trading and the ability to offer new services to keep regular customers.
