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The Future of Retail: Looking Backward to See Forward

Traditional retail is dead. Google it—I promise you’ll find countless articles and commentaries suggesting as much. Of course, it’s November, and chances are you’ve found yourself in at least one store in preparation for the holidays, and the crowds suggest otherwise. Maybe they’re just “showrooming.” Maybe people are just buying certain items like clothes or oil filters. Excluding groceries and convenience items, maybe it’s just a couple of months a year that people actually shop at a physical location rather than online. After all, the convenience and pricing advantage of e-commerce can’t be denied and with same day shipping soon to be a reality, how can traditional retailers possibly compete?

The State of Retail

The standard bearer for online retail,, first opened in 1994. After almost 20 years of e-commerce, the online market has grown to $289 billion in retail sales in the U.S. alone as of 2012. Online shopping has come a long way in a short period of time, and there is little evidence to suggest that this trend will slow anytime soon.

Obviously, consumers have realized that e-commerce has some real advantages over brick-and-mortar locations as they are traditionally configured. For this reason, they’re bringing their own technology in with them. Seventy percent of shoppers during the 2012 holiday season used their mobile phones while they were in stores to do research and many times, purchase. Furthermore, 80% of shoppers want to have access to mobile-friendly information while they’re in the store.

Now, with all of advantages of shopping online and the explosion of mobile—it’s easy to see why market share for traditional retail has eroded—and without question, it has; just not as much as might be believed. In fact, only 8% of retail shopping is happening online (including mobile) and the king, Amazon, is not in the top 10 largest retailers in America; they’re 15th, with annual sales equaling approximately what Wal-Mart does in one month, The rest is still happening in stores. More importantly, when retail analytics firm Synqera polled American consumers, 67% of them said that they still preferred shopping in stores to shopping online.

Despite the poll, it kind of feels like the 2011 USPS commercial in which the postal service tried to convince us that we much preferred receiving a paper billing to automatic online payments (even though we don’t) because we enjoyed opening our bills and envelopes had never been “hacked.” The point is, things are changing whether or not retailers and consumers care to admit it. For brick-and-mortar retailers, maintaining America’s preference to shop in stores must start with a recognition and acceptance of this radical change and implementation of a new strategy that embraces it. Fortunately, it appears some traditional retailers have come to terms and are launching new and exciting initiatives aimed at a retail revolution.

The Future of Retail

As customers demand more technology and stores adapt to integrate it, retail might still happen in the same places, but it will feel different. Here are some of the changes already occurring and likely to become more prevalent:

1. The End of the Checkout Line

Synqera’s research confirmed what most people already know – 73% of customers consider waiting to check out the worst part of shopping. In the U.S, roving checkouts, like those in the Apple store, are gaining popularity and making it easier for customers to get what they want–to pay and get out without having to wait in a long line. Using your smartphone to check out on your own isn’t too far behind. New payment systems and better product tracking could even mean that the future of retail has no checkout process at all. Imagine a store where you pick up what you want and just walk out. No checkouts—just leave the store, the bill is tallied, and your credit card billed. It already exists in Germany.

2. Experience Retail with the Convenience of E-Commerce

What if there was a store where you could find everything on your list, without getting lost, and with the confidence that you’re getting the best price? Sounds like e-commerce (or at least Amazon), right?  Some brick-and-mortar stores are implementing the technology. Whether it comes from customers using their own computer devices like Google Glasses and smartphones using augmented reality or from equipment provided in the store, retail outlets are using technology to help customers interact in new ways.

  • Virtual cosmetic kiosks use facial recognition tools to let shoppers find the right tones for their skin.
  • Toy stores use video game technology to turn customers into on-screen characters that explain products and make recommendations.
  • Interactive screens (a big iPad the size of a wall) are being used to provide updates on availability and send in-store directions to your smartphone guiding you right to the product. No more searching for a clerk, and customer reviews are in your hand.   .
  • Magic Mirrors let customers try on clothing without actually trying on clothes. Just pick out what you like, scan it, stand in front of the mirror, and voila.

3. Social Media Integration 

Most people think of themselves as unique, unaffected by what others believe is popular or trendy. While most have aspects of their life in which this is true, on the whole, it is not. In addition to gaining actual information, we read posts on Facebook and customer reviews on Amazon to ensure acceptance. For this reason, a Brazilian clothing retailer has integrated Facebook “likes” within a digital screen embedded in each hanger. Like this jacket? So do 11,383 other people, buy it. If you absolutely refuse to believe you’re subject to social pressures, it can work for you, too. Just purchase the clothes with three “likes.”

Can the Old Trends Be Reversed?

In the next ten years, will we read about the great brick and mortar comeback? The one that uses the technology in our hands to bring us personalized discounts and allow us to capitalize on our need for instant gratification; no cash or card transactions, but rather grab and walk and let the RFID tags (or some other device) take care of the rest; augmented reality that allows us to visualize in a way only possible online now and probably better; improved sensory experiences through technology that can’t be replicated online. Will all of this be combined with the social element of shopping at a brick-and-mortar location? Unlike the last thirty years, will offline retailers make shopping less about discounts and transactions and more about you and me? In other words, can we get back to the past? We’ll see, but retailers are trying and that is exciting.