Future of retail report shows digital impact
The retail and consumer goods industries will change more over the next 10 years than they have over the past 40.
This is the conclusion Accenture Strategy comes to in Painting the Digital Future of Retail and Consumer Goods Companies, a new report based on an analysis it did for the World Economic Forum in January of this year.
In the report, Accenture identifies four key steps successful retail leaders will take to manage the impact of digital over the next decade. Here is an overview of those steps:
1. Use digital to understand and connect with consumers
Consumers today have more retailers and more products to choose from than every before, thanks to the rise of digital players and ease of cross-border purchasing. The fallout from this has been more fragile customer loyalty with standards that continue to increase – from preferences on responsibly sourced raw materials to speedy delivery.
To win on a bigger playing field, retailers and CPG companies need to become masters of the traditional levers – cost, choice and convenience – but also master providing a stellar customer experience. Digital technologies can help throughout all areas of the business, from personalization to last-mile delivery.
2. Adopt game-changing technologies now
The pace of change is rapid, and technologies that seem futuristic today will be second-nature in 10 years’ time. Consider the fact that Apple debuted the first iPhone 10 years ago. Companies must begin now, if they have not already, to strategically apply digital technologies to their value chains as rapidly as possible.
Accenture suggests the following eight technologies will play a key role through 2025: Internet of Things, autonomous vehicles/drones, artificial intelligence/machine learning, robotics, digital traceability, 3D printing, augmented reality/virtual reality and blockchain.
It expects all these technologies – except for autonomous vehicles/drones, 3D printing and blockchain – to be at full readiness by 2020 and some by 2018.
3. Test new business models
With slow-growing incomes and a shift in spending from products to services, the retail industry is likely to see value migration from one company or business model to another.
The physical store will continue to be the largest revenue producing channel until at least 2026, but will continue to evolve from a distribution channel to an experience platform. Physical footprints will shrink, while omnichannel strategies that drive customer engagement through technology will play an important role.
But the online/offline mix isn’t the only change. Digitally enabled business models, such as the sharing economy (rental and secondary markets), the personalisation economy (curated subscriptions), the replenishment economy (auto and smart ordering) and the services economy, are becoming more popular.
Adapting business models to accommodate these new trends could be highly profitable, with US$2.95 trillion of potential value for the industry and consumers.
4. Know must-have capabilities to thrive
Retail leaders have to develop new skillsets to manage change over the next decade. Partnerships will become more important, as consumer expectations for things like personalisation and the customer experience increase.
Last-mile delivery capabilities will be necessary to make digital commerce cost effective, eco-friendly and responsive to consumer preferences. And advanced data science will crucial, as collecting consumer data is no longer enough.