2018 was a big year for retail, bringing with it some major technological breakthroughs, such as Amazon Go deciding to scale out to circa 3,000 stores by 2021, and the beginnings of smart retail. That being said, we believe 2019 will be the first year such concepts become truly mainstream- to the extent where their availability extends beyond just newspaper headlines and into local stores near you. We think 2019 could also represent a turning point in retail technology- in that older generation tech such as under-performing self-checkouts or RFID scanners begin to be phased out in lieu of solutions that truly personalize the shopping experience.
From the interactions we’ve had with our retail partners, the consensus is clear- they want solutions that actually work, products that truly enable new ways of doing business, and products that attract customers to their stores. We firmly believe 2019 will see the introduction retail technologies that can achieve this objective. Why not earlier? Not for a lack of need or desire, but because the technology simply wasn’t ready- but now it is close.
Below we have compiled a list of 4 key trends and technologies that will take off in 2019:
1: Back to the customer
The old saying goes “the customer’s always right”, well- this is as true today as ever. Customer expectations are increasing at a rapid pace, and from a retailer’s perspective, this could either been seen as a threat, or as an opportunity. For those who refuse to adapt and embrace new trends, it may very well be a threat, and unfortunately many have actually decided to go down this path before only to meet a dead end- think Sears, Radio Shack et al.
For those who actively jump on the latest trends, success is not guaranteed either- however it is often the willingness to adapt and change that has proven key to long term business success. The current retail landscape is dominated by one major factor- choice. Due to the abundance of choice from a consumer’s perspective, brand loyalty has declined. This means, in order to retain old customers and gain new ones, retailers must now be hyper-focused on their customer interactions, and the level of service provided each time a customer visits their store. Pain points must be quickly recognized and addressed- customers aren’t waiting around.
2: Amazon Go; Everyone’s watching
Amazon generated significant media attention and excitement when they announced their first trial store in Seattle back in early 2018, but that excitement has dropped off somewhat after most customers realized they didn’t live close to one of the Go stores. We believe this is about to change in 2019, as Amazon has big plans for expansion. The goal for Amazon is to open around 3,000 of its Go stores by 2021. This timeline suggests significant developments are planned throughout 2019, and many more customers will be able to experience cashier-less shopping for the first time. It will be interesting to see what Amazon has planned for Wholefoods, which it acquired back in 2017 for $13.7B (USD)- could these be perfectly suited for conversion into Go stores, or would it be cost prohibitive to implement Go technology on large format stores? Another aspect to consider are the looming privacy concerns of tracking people and faces that these roof-based systems rely on. Either way, this is something that both consumers and retailers should be keeping an eye on, albeit for very different reasons.
3: SMARTCART- A revolution is coming
Given Amazon has no intention of selling or licensing its Go technology to other retailers, and the fact that other retailers don’t want to miss out on the benefits, we believe products like our SMARTCART will become commonplace throughout 2019 and beyond. The benefits of SMARTCART over Amazon don’t stop at its availability to the wider market, but also includes its low cost and ease of integration.
In terms of capability, SMARTCART easily competes with Amazon Go, offering many of the same conveniences, but at a far more accessible price point for our retail partners. Instead of needing to construct a new store in order to accommodate an extensive array of sensors and cameras, as well as the over aching operating cost due to bandwidth requirements, our SMARTCART solution completely eliminates the need for new infrastructure, and additional hardware purchases can be drastically reduced… basically retailers don’t need to worry about changing the layout of their stores or investing heavily in roof-based systems or arduous staff and customer training.
Functionally, products like SMARTCART offer the benefit of extreme simplicity- a must if mass adoption is to be achieved. Customers simply scan in, do their shopping, and leave. One of the biggest current pain points for both retailers and customers is the manual checkout, necessitating long wait times, and requiring significant company resources to operate.
With such an understanding, SMARTCART was designed to truly modernize the retail experience, and bring shopping up to 2019 standards.
4: Bricks and Mortar is actually doing pretty well
Once you look past the dramatic headlines detailing the demise of bricks and mortar, you’ll see the market is actually ripe for expansion. Take our home country of New Zealand for example- an island nation of just 4.8 million inhabitants- not somewhere you’d expect major* investment into physical retail, right?
Well, in Auckland alone, several large format shopping malls are being constructed, including a $220M+ (NZD) expansion of the Sylvia Park mall, the $200M+ (NZD) redevelopment of the Downtown Shopping Center, and the ~$800M (NZD) redevelopment of the 277 Mall in Newmarket. This is in addition to the recent announcements of IKEA’s long-awaited arrival in NZ, representing an investment of over $60M (NZD), as well as this week’s announcement of 27,000sqm Nido store and the rumored arrival of Costco to the NZ market- all of which suggest a robust future for the physical retail industry.
One trend is emerging however- each of the new malls are designed to act as a precinct, rather than purely an amalgamation of stores. This further reinforces the point that yes, physical retail will continue to thrive, but the experiential aspect of malls will grow in importance. On a mall level, this might involve the provision of leisure and dining options, but on an individual store level, a retailer may wish to invest further into technology that enables a fundamentally more personalized experience for each customer.