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Retail trends 2019

(Image credit: Image source: Shutterstock/Maxx-Studio)

Recent technological innovations have opened up avenues for retail transformation at an unprecedented pace.   With the rapid ascendancy of the Internet of Things (IoT), Artificial Intelligence (AI), Augmented Reality (AR), Virtual Reality (VR), Smart Sensors, Blockchain, Chatbots, and much more, retailers are often left paralysed by the daunting task of navigating through today’s labyrinth of technology.  

Therefore, as retailers stand on the precipice of a new year of technological discovery, it is hardly surprising that so many have chosen to spend time demystifying the existing technology landscape before allowing themselves to be seduced by the next wave of innovation.   While the upcoming year will not be without its fair share of technology breakthroughs, many retailers are starting to press the proverbial pause button in order to better understand the value of prior investments, distinguish hype from reality, and find creative ways of translating the infinite possibilities of digital technology into meaningful and scalable human experiences.   As retailers embark on this journey two questions will dominate: how do we eliminate the siloes between different technologies to create entirely new integrated realities; and, how can we better align human and technological capabilities in ways that enhance the value of both assets?

With that said, 2019 will prove to be an exciting and progressive year for traditional retailers with a number of trends set to characterise the retail landscape.  

Omnipresence will become the new Omnichannel

As the “physical boundaries” of commerce continue to dissolve, in 2019 we’ll enter the age of “Experience-Driven, Unified Commerce”.  In a new retail paradigm where connectivity is ubiquitous, retail exists without borders, and payment credentials are stored in the cloud, consumers will seamlessly interact with a host of “gateway” devices including smartphones, tablets, voice assistants, smartwatches, appliances, clothing, fashion accessories, automobiles, and more…anytime and everywhere.  In the new order of things, there will be no such thing as in-store sales or e-commerce; it will all just be commerce. For most retailers, online will drive offline, offline will drive online, and most consumers will be active in multiple channels within the context of a single, frictionless shopping journey. More retailers will embrace customer-first, channel-agnostic strategies, where the experience itself is seen as the only channel that really matters and where digital marketing, content, data, and AI-powered analytics all fuse with commerce to provide customers with a constantly personalised and immersive experience across the entire customer lifecycle.   Also, in order to keep up with the increasing demand for quick resolution and 24/7 accessibility, customer service will become increasingly automated, with AI-enabled live chat and virtual assistants becoming dominant communication channels.

Intelligent Stores will help to bridge the gap between the digital and physical worlds

It is impossible to comment on the big retail breakthroughs of 2018 without paying homage to the rise of the intelligent store, ranging from the launch of Amazon’s cashier-free ‘Go’ stores, to Nike’s hyper-personalised and localised ‘Live’ concept stores. This trend will continue to accelerate in 2019 with more and more retailers looking to establish brand distinction through an enhanced and personalised in-store experience, bringing together the best of the digital and physical worlds along four key dimensions: openness, coordination, connectedness and intelligence.

The physical store of the future will be a significantly more digitalised version of what exists today, with multiple smart devices working together on a single IoT platform to deliver hyper-personalised, adaptive and context specific experiences.  While much of the technology will be invisible to the consumer, shoppers will have the opportunity to interact digitally within the physical store environment in a way that provides real-time experiences and addresses their underlying needs and preferences, when they matter most. Moreover, these in-store experiences will be viewed as a seamless extension of the online experience, such that consumers will not be able to determine where one stops and the other starts.   In the short term, an increasing number of retailers will start to replace much of today’s expensive, cumbersome and static in-store technology with more cost efficient, dynamic, mobile and interactive technology.   In the longer term, we will see retailers adopt digital workplace strategies that effectively optimise the combined strength of humans and machines operating in unison within these environments.

Artificial Intelligence will start to live up to the hype

Artificial intelligence, which generally refers to the ability of machines to exhibit human-like intelligence, has moved swiftly from science fiction to reality in the last few years.    In 2019, we will see AI adoption among retailers continue to rise as technology finally catches up with imagination, the number of devices fuelled by AI proliferates, and retailers begin to gain access to the mass amounts of data necessary to power the technology.   AI will soon be applied across the entire retail product and service cycle, in areas such as product design and manufacturing, demand forecasting, supply chain management, price and assortment optimisation, merchandising, promotions, customer experience personalisation, and post-sale customer service.   Retailers using AI to its fullest potential will be able to influence purchases in the moment and anticipate future purchases, guiding shoppers towards the right products at the right time in a continuous and highly localised and personalised manner.

As we look to 2019, a number of AI-powered innovations are likely to take flight across the retail sector.   One of the most prolific will be the use of AI to optimise product search, including camera-based search that uses neural networks to understand images without a search query.   Consumers will have the opportunity to use their smartphones to snap an image of a product they like and be taken to a place where they can buy the product.   Visual search is a big step toward ‘queryless’ search where search engines either preempt or interpret a consumer’s intent without the need for an explicit query.  Visual search has the advantage of being able to search for items when we can’t think of the words to describe them.   Similarly, the upcoming year will see significant improvements in the accuracy of AI-enabled voice search.   As the algorithms fuelling virtual assistants become increasingly sophisticated consumers will be able to ask questions like “ should I_?” or “_for me” and receive personalised recommendations that draw off a wide range of contextualised preferences, previous product purchases, personality characteristics, and behaviours.  Consumers will be able to overcome decision paralysis by turning to virtual assistants to guide them through difficult product choices.

AI-powered personalisation will also be a major focus for a number of leading retailers in 2019 as these retailers look to enable and empower their consumers in new and innovative ways.   While personalisation has been a hot topic in the retail sector for a number of years we are now beginning to see breakthroughs in a number of areas, not least the use of AI-driven content curation.   In this emerging reality of tailored experiences, machines will use browsing patterns to learn about the consumer’s interests, style preferences and shopping habits, and by the time they reach the retailer’s website or open the mobile app, the AI has assembled a curated, contextualised and personalised gallery of content, images, and product recommendations that are most likely to resonate with the customer at that precise point in time based on where they are in the shopping journey.

Further, in response to the recent public outcry directed at retailers such as Burberry, H&M, Nike and Urban Outfitters for destroying unsold merchandise, look to see significant investments by these retailers and others in 2019 to improve demand forecasting.   Using AI and deep learning, retailers can use prediction analysis to determine which products might not sell under certain conditions – including market, economic, competitor and weather related factors - and create a combination of targeted discounts, dynamic, pricing, free shipping, enhanced services, product combinations etc., to clear out the inventory that is most likely not to sell after a certain period.

Content will remain King and immersive experiences will become the new jewel in the crown

Content is at the heart of today’s shopper experience as retailers strive to build loyalty, trust and authority with their customers by providing relevant, valuable and compelling information at a time and place where it matters most.   With less reliance on traditional media outlets to tell their stories, retailers are constantly searching for new and innovative ways of finding, defining, and communicating their own editorial voice across an increasing number of channels – and being able to do so in a manner that resonates with customers.  

As we enter 2019, retail experiences will become increasingly immersive with high quality content being distributed through a combination of augmented reality, virtual reality, and mixed reality.     With digital signage now the norm and the mobile revolution well underway, the new extended reality (AR, VR and MR) is set to transform the shopping experience, replacing existing pain points with captivating, interactive experiences that both inform and entertain.

While Virtual Reality jumped out to an early lead in the retail sector, the upcoming year will see Augmented Reality gain in popularity and emerge as a clear ‘winner’.   According to Zion Market Research, the global AR market is expected to rise up to $133 Billion by 2021.  For retailers, AR has continued to outshine VR in its ability to effectively transcend the physical and digital worlds throughout the shopping journey while providing customers with experiences that are not only entertaining and interactive but also possess a high level of utility.   

AR will continue to grow rapidly in usage as we move to larger smartphone screen sizes and enhanced smartphone capabilities, including the incorporation of AR functionality into smartphone operating systems.   Already we are seeing significant increases in the number of AR apps in the market and in the next year we will see this number increase into the tens of thousands.   From a retail perspective we will see real-world applications of AR technology across a number of components of the retail value chain including but by no means limited to immersive product catalogues, the ability to virtually try on products, the ability to find products quickly in a physical store, and the ability to bring products to life and inspire ‘the buy’ by appealing to human emotions with sensational interactive experiences.

2019 will be far from the endpoint for AR.   There will be many subsequent years of evolution and the quantity of premium AR devices will swell and lower barriers to entry.  The next iteration of AR will leverage dual cameras and 3D sensors to create even more realistic experiences.  Apple’s newest iPhones, for example, have front-facing 3D sensors that project infrared light into the real world to improve depth perception and detect image patterns.   Other leading smartphone manufacturers are expected to roll out similar technology, which will further elevate the role of AR in retail and help retailers appeal to the customer’s five senses to create truly immersive moments.

Talk, Talk, Talk…voice will replace touchscreens as the dominant customer interface

By the end of 2018 more than two billion people will be using voice assistants on a regular basis and by that point, a fair share of those will want to do more than ask about the weather or to hear their favourite song – they will be looking for ways to find, research and buy products.   As retailers and consumers alike begin to realise the unique possibilities inherent in voice technology it is inevitable that voice will eventually replace touchscreens as the dominant customer interface.  Voice-assisted commerce already has the unique advantage of making the product-search process a dialogue versus one-sided, wherein the user searches for the desired product using the search box on a website.   Thus voice commerce makes the shopping experience more engaging while also providing the retailer with the ability to make more intelligent, real-time recommendations based on what the AI-fuelled digital assistants learn through their interactions with the user.   Moving forward, voice controlled digital assistants, either alone or in tandem with digital screens, will enable and support a much more complete and seamless end-to-end shopping journey, providing personalised recommendations and guidance throughout the process of researching, selecting, purchasing and even assembling and using the products themselves.  In time, these conversational platforms will adopt more human-like characteristics and will incorporate expanded sensory channels that will allow the platform to detect and react to emotions as revealed by voice tone or even facial expressions.

In summary

While it is impossible not to get excited about the next wave of emerging technology, retailers need to avoid chasing the shiny new object and instead think holistically about how these different technologies fit into a larger cohesive vision for transforming customer experiences and creating unique value.    In so doing, retailers need to assess how new technologies can connect with existing devices and systems as well as to each other in ways that deliver distinct and meaningful human experiences.  As retailers navigate through the digital tsunami and plan for the year ahead the focus will be on making technology more ‘real’, more human, and more scalable while bridging the gap between the physical and digital worlds.   For retailers who can accomplish this and better align human and digital capabilities in ways that elevate the brand value proposition, the opportunities for growth and expansion are endless.

Scott Clarke, Chief Digital Officer and Global Consulting Leader for Retail, Consumer Goods, Travel and Hospitality, Cognizant (opens in new tab)
Image source: Shutterstock/Maxx-Studio

Scott Clarke is the chief digital officer and global consulting leader for retail at Cognizant, with over 20 years of experience consulting businesses on digital transformation and business innovation.