Five Ways Retail Will Fight Back in 2019

January 7, 20195min

Retail disruption is now a market ‘given’ and many think that the future is starting to look brighter. 

Why? Because winning retailers are grasping the technology to innovate; enabling them to develop new business models, drive operational efficiencies, and improve Customer Experience. What happens in retail is driven by consumer choice, how retailers respond to that will determine their future.

Here are some ways retailers will respond in 2019:

1. Retail Therapy: “How does that make you feel?”

More retailers will exploit emotional differentiation, targeting potential customers’ feelings. According to the Harvard Business Review, “Emotionally connected customers are more than twice as valuable as highly satisfied customers”.

This is why John Lewis spends so much on Christmas advertisements, to create an emotional connection with its brand. Part of this drive will come from personalisation, plus retailers have hyper–personalisation (context, real-time) in their sights – for both product and experience.  Artificial intelligence can help with this, but AI relies on quality data so a large constraint will be data availability and collation.

2. Note to tortoise: This time the rabbit wins

Retail keeps getting faster – customers demand things faster and the bar keeps getting higher. Like Gartner said: “For modern retail, lack of speed in decision making is deadly.”

This relates to internal operations – being able to respond in good time. As well as investing in process automation from RPA as a step toward full business process automation, retailers will consider real-time analytics to respond to what is happening with customers, in their own supply chains and in their stores. They will learn how to operationalise AI and machine learning technologies in order to deliver real value.

3. Is IoT a highway to the danger zone?

The Internet of Things may be the road to a successful future for retailers, but many consider it fraught with risks. Concerns about security, complexity, and connecting to the existing IT ecosystem will restrict uptake for a time. Smart retailers will look across what is being done in other industries and seek to acquire a platform with carrier grade security, from a vendor with a proven track record.

4. No man is an island, entire of itself

Ecosystems will become more complex. Retail expert Jon Bird said: “Traditional barriers and frameworks will fall by the wayside. Everyone can be a retailer and every surface a store.”

The most popular way to break down those barriers today is with mergers and partnerships. Examples include Amazon’s relationship with the UK’s Morrisons, using stores as local distribution centres. Kroger and Sobeys outsourced online grocery sales to Ocado, while Kroger also bought meal-kit vendor Home Chef.  These kinds of deals will grow and will only become more complex.

5. Consciously decoupling: Off with their heads

Winners will realise that to innovate they need to decouple back-office systems from the customer touch points; this is known as headless commerce. This gives them flexibility to continuously tweak and improve the customer journey at the front end, without having to constantly re-platform.

As was illustrated in Software AG’s 2018 Retail Digital Adoption Survey, digital leaders are using “third-party integration platforms to insulate digital platforms from change, to increase extensibility, and to gain deployment speed”.

One thing is clear: In 2019, the distance between retail leaders and the rest of the pack will continue to increase. Response to consumer demand will determine success levels. Leaders will continue to actively apply digital technologies to business problems. Predictions of customer choice will drive growth in areas. Without fully committing to digital transformation, the rest will probably fall by the wayside.


Oliver Guy

Oliver Guy

Oliver Guy is Global Industry Director at Software AG.




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