In
the Future of Retail, We’re Never Not Shopping
Most retail outlets — whether conventional
brick-and-mortar shops, digitally enhanced stores like Macy’s in
the U.S. or Burberry in the UK, or online
stores — assume a traditional three-stage consumption model. The customer
experiences a need, shops to satisfy the need, and then consumes or uses the
product purchased (I need shoes, I buy shoes, I wear them).
The vocabulary of retailing reflects this
model, assuming in particular that shopping is the central component of this
model. Marketers will talk about shopping trips, shopping missions, shopping
baskets, shopping lists, and destination trips. What’s more, current practice
for the most part still rests on the idea that many decisions on which
particular product to buy are made in the store — whether physical or
online. Hence, brands engage in an arms race of persuasion and hard-sell
tactics (prices, promos, presence) at the point-of-sale order to sway the
customer when she is ready to transact.
But winning in retailing today is less and
less about control of the shopping experience because there is no longer a
clearly defined shopping stage. The model is changing as new technologies allow
people to bring the purchase of the product that satisfies their need closer to
their first perception of it. And this makes the perception of the need —
rather than the shop — the stage that marketers need to control.
This paradigm shift — and it really is that —
is apparent in three ways:
Instant purchasing. To
begin with, consumers increasingly transact right when the demand (need)
occurs. Today, when you discover in the shower that you have run out of
hair conditioner, you can order a new bottle through Amazon Prime then and there. And
tomorrow, perhaps, when you’re watching a streamed movie or browsingPinterest,
you’ll will able to point and click on a character’s suit or tie and buy it right
away — without ever going to a retailer’s site. This change obviously
simplifies consumers’ lives but it is also rendering the traditional retailer
store largely obsolete.
Automated purchasing. We’re
increasingly seeing many types of product being purchased automatically — Amazon’s Dash button
is an obvious move in this direction. The move to “intelligent” products is
another. The latest generation ofWhirlpool washing machines, for example, can
autonomously order a pre-specified amount of washing detergent after a set
number of cycles. Especially for fast-moving-consumer-goods, this development
will also significantly push non-store based sales.
Subscription-based
purchasing. The growing popularity of subscription-based platforms are
also undermining the primacy of the store as the main customer touchpoint. In
categories as different as music (Spotify), video (Netflix), transportation (Zipcar),
underwear (MeUndies) home delivery restaurant meals (Delivery Hero),
groceries (Blue
Apron) news (Blendle), and razors (Harry’s or Dollar
Shave Club) a subscriber can either pick conveniently and
immediately from a broad selection at the moment of need, or simply sign up and
receive a regular delivery — without engaging directly with any other
intermediary. It’s not so difficult to see the subscription model evolving in
other ways (which is perhaps why there are so many new entrants in this area).
In this environment, shopping as a discrete
activity in a given place and time takes a distinct back seat. Rather,
the transaction becomes an ambient activity that is executed
everywhere (at home, on the go, at work, in leisure) and anytime. In addition,
all steps in the entire cycle of “need occurrence,” “shopping” and “actual
consumption” become more and more naturally integrated into the daily mental
and physical routine of consumers. As a physical store is largely superfluous
in this emerging purchase process, the traditional value-adding functions of
the store-based retailer (creating an assortment of products, providing product
information, enabling the transaction, providing physical distribution
services) are also called into question.
In a digital economy, then, there may be relatively little need for
stores as we traditionally understand them, and the retail business will change
to reflect this new reality.
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