You’ve probably heard from the naysayers that online shopping is killing the retail industry. I believe that the opposite is true. Online shopping has not only saved the industry and encouraged spend, it has completely revitalized the retail marketplace.
And now, by harnessing technology to enhance the shopping experience, some of the world’s biggest retail brands could see their revenues sky rocket with additional sales of £235m by 2014, according to new research from Conlumino, commissioned by eBay.
That’s a potential direct boost of £2.4bn for the retail industry as a whole over the next two years.
The research highlights that the retail industry is on the cusp of a “third wave” of technological revolution. The first, of course, was online, the second being mobile.
However the third wave will encompass more than one technology – it’ll be a whole new basket of goodies.
First on the shopping list is Interactive TV. Analysts predict that by the end of 2014, one in four (25%) people will regularly use interactive TV to shop.
Bringing together TV and the internet will generate nearly £750m worth of direct sales by the end of 2014. The good news is this isn’t as far away as it sounds.
Microsoft has been busily working away at interactive TV for some years and is looking for advertisers to endorse products used in programming already.
The other technologies that will come to the fore over the next two years include the much hyped platform, Augmented Reality (AR) and Image Recognition.
AR enables consumers to bring the real and virtual worlds together by overlaying digital information onto real products, spaces and places. This will range from allowing shoppers to view 3D projections of products that aren’t physically present or allowing them to virtually try on clothes. Sounds futuristic but this technology has been around as long as iPhones have been.
Image recognition will allow existing devices to identify consumers or objects based on their attributes. Consumers could perform visual searches for products they point their devices at, and more significantly micro QR codes could replace barcodes and help retailers bridge the gap between tracking on and offline behaviour.
Lastly, smart devices will become more integrated into our daily lives and our menial tasks.
Our everyday pocket technology, such as smartphones and tablets are still evolving and our appliances are increasingly becoming more intelligent and empowered too. For example, Panasonic has an air conditioner that you can turn on and off from any location using your smartphone while there are even some refrigerators that can make recommendations on what food you need to buy when next visiting the supermarket. Imaging that linking up with your local Sainsbury’s and coming home to those groceries delivered to your door. Again, this isn’t very far away from becoming reality.
Angus McCarey, UK Retail Director for eBay, agrees that we are entering a period of transformation in the retail sector.
He believes that consumers are driving the change as they demand more choice, more interactivity, specialist knowledge and price transparency.
“Third wave technologies are about meeting those demands and presenting information back to consumers in ways that haven’t been possible before: using virtual reality to try clothes on, or watching your favourite show on TV and buying the box set at the same time,” said McCarey.
“The opportunity for the retail industry over the next two years lies in identifying which technologies will yield the most return on investment. But it’s tough because it means thinking differently about what is driving sales – individual technologies or even individual stores may not yield significant direct sales, but their value may lie in customer engagement and brand loyalty.”
However, retail analyst at Conlumino, Neil Saunders, warns that retailers have work to do in order to catch up with such consumer demand.
He explains: “Retail is changing as the focus shifts from the channel to the consumer. Brands need to move their thinking from channels, loosely comprising of stores, online and mobile, which will become less relevant as new technologies continue to blur the lines.
“Channel convergence was born out of the rise of mobile a couple of years ago and is set to accelerate at an unprecedented rate. Just as major players adopted mobile, they must invest in these new technologies now if they are not to limit growth in the coming years.”
And while the technology is all in place to make our shopping lives easier, there are still a few barriers to making all of these a reality now – adoption and adaptation.
By investing in these technologies now, retailers could see sales growth of up to 4% by 2014. It doesn’t sound like much, but compared to flat or minimal growth many have experienced over the past few years it’s certainly a reason to spend money to make money.