The End of Bricks and Mortar Retail As We Know It

I recently returned from Shop.org’s Annual Summit in Boston where two keynote speeches really got me thinking about the future of digital commerce and bricks and mortar retail in North America. The first was called Google Insights on Local, Mobile, and Payments.

Mobile is starting to have a major impact on ecommerce and the retail industry. In the not-too-distant future, we’ll see a web-connected, location-aware consumer, according to Stephanie Tilenius, Google’s VP of Commerce.

Some surprising figures:

• The average US consumer is never more than 3 feet away from their phone
• The average smart phone user checks their phone 40 times a day
• 50% of mobile phone owners use their device to shop online or to assist them while shopping in stores

Integrating Mobile into the Retail Experience

How can multichannel retailers use mobile to enhance the retail experience at every shopping stage – from browse to buy? A few suggestions:

• Connect online and offline via in-store pick-up to drive more foot traffic to physical stores. Consumers will increasing be aware of where inventory is around them. In-store pick-up, adopted by retailers like Walmart and Best Buy, can help them decide whether to buy an item they are looking for online or offline at a store near them.
• Use Quick Response (QR) codes or Near field communication (NFC) to present consumers with very targeted and personal information, creating a new in-store experience. Home Depot have introduced QR codes on products to provide user guides on certain products like plants, while Macy’s are using QR codes on clothing tags to provide celebrity fashion tips.
• Provide mobile devices to sales clerks (and shoppers) so they can browse inventory that is not on store shelves and gain access to customer data. Nordstrom are using iPads to give sales staff information about in-store customers and their recent buys.
• Offer mobile payment as a self-checkout option to help customers beat the checkout queue in-store.

Innovations in Mobile Commerce

Tilenius gave UK retailer Tesco as an example of innovative mobile commerce. When Tesco wanted to expand their market share in South Korea, they focused in on mobile shopping. South Korea is densely packed and has a very high penetration of smartphone users. Tesco put up billboards in subway stations with pictures of their products, accompanied by QR codes.

Time-strapped commuters scan the items they want with their phones and voila, their groceries are delivered within minutes or hours to their homes. Tesco’s virtual shops led them to take the number one position for online groceries in South Korea.

http://www.youtube.com/watch?v=fGaVFRzTTP4

Tilenius ended her talk with this future shopping scenario: She goes into a Gap looking for some jeans. She finds a style that she likes but they don’t have it in her size. She scans the NFC tag for the style, selects her size and buys. The next day, the jeans, in her size, are delivered to her door.

It’s win-win for both retailer and shopper. And coming soon to a store near you.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The second keynote, entitled The Impact of Technological Innovation on Consumer Behavior and Retail As We Know It, was given by Ray Kurzweil. Described as “the restless genius” by the Wall Street Journal and “the ultimate thinking machine” by Forbes, Kurzweil is one of the leading inventors of our time and bestselling author of The Age of Spiritual Machines.

During his Shop.org presentation, Kurzweil explained how technology trends are accelerating opportunities for innovation and how retailers will find new and exciting ways to utilize technology to transform their customer service capabilities.

3D Printing Turns Physical Products into Digital Ones

As an example, he cited the rapidly evolving industry of 3D printing, described in The Economist technology article, Print me a Stradivarius, earlier this year. According to the article, you call up a blueprint on your computer screen and press print. The 3D printer builds up the desired object gradually by solidifying a thin layer of plastic or metal dust using glue or a beam. At the end of the process, the object – whether that is a spare part for your car or a violin – emerges.

http://youtu.be/HdzooQQDWGg

The scale of precision is getting finer and finer as the cost of 3D printing hardware begins to drop. At some point, 3D printing will make it as cheap to produce one, bespoke item as any of the mass-produced thousands that roll off assembly lines today. In a few short years it will likely become possible to buy digital versions of products like shoes, bicycles, or even housing, which you’ll be able to download, print, and assemble, or email to a friend.

When 3D printing finally comes into its own, not only will production lines and waste be eliminated but intellectual property rules will require stiffening to protect product designers. Once objects become digital files, they become fodder for internet pirates who can copy and distribute them at will. As we’ve already seen with music and movies.

Fast forward to the 2025 holiday season. Millions avoid the shopping malls and instead shop from home. You make your selections and rather than having to wait days or weeks for the physical products to arrive at your home, you receive your digital versions immediately, customize them to your taste, and print them on your household 3D printer. (Nearly) instant gifts!

Looking for help with mobile commerce strategy? Contact the Elastic Path consulting team at consulting@elasticpath.com to learn how our ecommerce strategy and mobile strategy services can improve your business results.