The article below is the full executive summary of the World Economic Forum & Accenture report on the (bright) future of retail. Retail will not die, but it will change right into it's core. Who continues to define its unique value proposition based on pure commerce will lose to E-commerce.
The next decade is expected to be the golden age of the consumer, with shoppers having more choices and control than ever before. They will be presented with a growing array of products and services, often personalized to their specific needs and wants. Consumers will continue to demand price and quality transparency along with a wide range of convenient fulfilment options.
Overall, the retail experience is poised to become more inspirational, exciting, simple and convenient, depending on the consumer’s ever-changing needs.
The evolution in consumer demand, combined with transformative technological innovations, will continue to drive fundamental changes. The boundaries of “retailer” and “manufacturer” will continue to blur, as companies evolve to meet their customers’ needs.
These forces will cause the retail and consumer packaged goods (CPG) landscape to change more in the next 10 years than it has in the past 40 years. The key drivers of success over the next decade will be centred on building a deep understanding of and connection to the empowered consumer, promptly incorporating disruptive technologies, embracing transformative business models in both the offline and online space, and establishing key capabilities.
To succeed over the next decade and beyond, both retailers and CPG organizations will need to:
Empowered by technology, the hyperconnected consumer is redefining value. The traditional measures of cost, choice and convenience are still relevant, but now control and experience are also important. Globally, consumers have access to more than 1 billion different products offered by a wide range of traditional competitors and dynamic new entrants, all experimenting with new business models and methods of customer engagement. As choice increases, loyalty becomes more fragile, and the consumer becomes more empowered. Businesses will have no choice but to remain agile, and constantly innovate and disrupt themselves by embracing new technologies to meet the high standards and expectations of consumers.
Technology will be the key driver of this industry transformation. Industry participants will only succeed if they have a relentless focus on using technology to increase the value added to consumers. They must, however, do so with a realistic assessment of their costs and benefits.
Over the next decade, the line between online and offline will continue to blur. Emerging business models will continue to proliferate, gaining scale and momentum. With slow-growing incomes in most digitally developed countries and a shift in consumer spending from products to services, the retail industry is likely to see greater value migration (from one company or business model to another) than value addition. In the future, e-commerce penetration is projected to grow from approximately 10% today to greater than 40% in 2026. Averages, however, can be deceiving, and some product categories are likely to register penetration rates of 50% or more, while others may not grow beyond 20%.
Despite growth in e-commerce, the physical store will continue to be the channel that contributes the most revenue for the majority of large multichannel retailers until at least 2026. However, its value proposition will evolve from being a distribution channel to that of a platform for discovery, engagement, experience and interaction. This will be done through leveraging technology for differentiated customer experiences, developing new technology-enabled frontline engagement with shoppers and new collaborations to repurpose the stores and hubs for social interaction.
Honestly, we couldn't have said it better. Needless to say, that with Hello Customer we are building the technology to support retailers in their search for new value creation in their stores.