Australia’s retail sector has encountered its fair share of challenges in recent years, courtesy of low wage growth, lacklustre consumer spending, digital disruption and the unstoppable rise of internet shopping – worth a cool $26.5 billion a year, according to NAB’s Online Retail Sales Index of June 2018.
Tough conditions have culminated in the demise of a slew of well-known local chains, including Dick Smith Electronics, David Lawrence, Payless Shoes, Aussie Farmers Direct and, most recently, the long-established menswear merchant Roger David.
So, what threats and opportunities await Australian companies in 2019 and beyond, as they navigate a retail landscape that’s virtually unrecognisable from that of just a decade or two ago?
Here are some high tech trends and developments that will affect the way they do business, online and instore.
5G and the race to build the virtual shopping mall
It’s not here yet but it soon will be. When it arrives, the 5G network will shake up the way things are done in a number of sectors, retail included. The extraordinary increase in performance the network promises to offer – telecoms providers have suggested peak download speeds may, in time, be a whopping 20 times faster than 4G – will see virtual reality and augmented reality become an increasingly standard aspect of the shopping experience. Expect retailers to begin offering consumers the ability to ‘walk’ through their outlets via mobile device, while simultaneously being able to check the specifications and availability of items that take their fancy. It’s technically do-able now but slow network speeds make it a clunky and less than compelling proposition. Once that issue is put to bed, the race will be on to build virtual experiences that showcase the shopfloor to best advantage.
How IoT will shake up the market for routine purchases
The Internet of Things (IoT) is growing fast – the number of active devices hooked up to the net is expected to rise to 10 billion by 2020 and 22 billion by 2025. Many of these smart devices will be smart enough to do consumers’ shopping for them, at least when it comes to generic or repeat purchases. Think the electric toothbrush that can generate its own order for replacement bristles, or the clothes drier that will be able to alert its owner when it’s time to buy a replacement filter. As chips get cheaper, we’ll see a plethora of use cases emerge and the onus will be on retailers to find ways to capture the repeat business these wired-to-buy devices will be able to generate for them.
Voice commerce – when the smart speaker holds the wallet
Home automation devices which can turn on the lights, crank out some tunes and answer rudimentary questions are already part of the furniture in a growing number of Australian homes. Users aren’t yet at the point where they’ll delegate the shopping to Google Home or Apple Home but it’s only a matter of time. The rise of ‘voice commerce’ will see individuals using smart speakers to buy everyday goods, such as pet food, kitchen supplies and basic items of clothing. Will prospective customers use the same key words when ordering a search verbally as they do when typing their request into Google on their phone or computer? If not, retailers may need to rethink their choice of key words or risk losing sales to rivals whose products are better positioned to pop to the top of the oral search results list.
I’ll just run that off at home…the 3D printer revolution
3D printers have been around for a while now but they’re yet to go mainstream. They will, as the technology becomes cheaper and more reliable. As is the case with regular printers, there’ll be one in every household which will be used to stamp out small objects and components on demand – everything from spare parts to toy building blocks.
The blockchain effect
Blockchain and crypto-currency burst out of the computer lab and into the public consciousness – and the global economy – four or five years back. The next 12 months will see this technology find some compelling applications in the retail arena. We’ll see major retailers begin to roll out schemes which allow their customers to convert loyalty points to crypto-currency. There are a number of start-ups championing this technology including Beam, which late last year unveiled plans to launch a network loyalty rewards scheme, and the concept will continue to gain traction as early adopters begin to get on board.
On the supply chain side, blockchain technology will be used to help retailers capture the data they need to provide them with greater control over their often highly complex supply chains. This is likely to usher in an era which has accountability as its hallmark, courtesy of the fact that products will be able to be monitored at every stage of the manufacturing, distribution and marketing process.
By Laura Doonin, Partner and Director at Moustache Republic