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Commerce 13 Jun 2018

What will shopping be like in the future? Between the digital and the physical

Amid the apparent decline of physical shops, new technologies are offering new opportunities to future consumers who will continue to visit stores, but with the help of artificial intelligence on their smartphones.

News about shopping mall closures in the United States, the explosion of online commerce giants like the North America’s Amazon or China’s Alibaba, the opportunities for e-commerce that arise out of new technologies like artificial intelligence…

A first glance, one could think that the familiar shops we’ve known our whole lives are destined to be relegated to the sidelines in a matter of years. But reality is more complex.

In another of the many battles between the digital and physical, one might think brick and mortar shops would be condemned to in the long term to defeat. However, the growing sophistication of online commerce is compatible with the presence of physical stores. This is the main conclusion of the 7th edition of the study, ‘Global Consumer Insights Survey‘ (GCIS), compiled by the consultancy PwC based on a survey of more than 22,000 people in 26 countries around the world.

The study outlines a commercially diverse, sophisticated, and complex reality highly segmented by gender and geographical area. For example, Chinese consumers are more likely to make frequent purchases on the smartphone than Americans, 52 percent as compared to 16 percent. But essentially, all niches see the stability and strength of physical shopping existing side by side with the emergence of the smartphone as a fundamental shopping tool, either as a direct purchasing channel or as a guide using artificial intelligence solutions, or increasingly, augmented reality.

What influences consumers?

The combination of online and physical experiences is now translated into new acronyms to describe this behavior, like ROPO (“research online, purchase offline”), which reflects the practice of browsing on the Internet, but making the final purchase in a physical shop, or the inverse phenomenon, or so-called showrooming, where the consumer browses in physical shops but later makes the purchase online.

So, what influences the consumer to buy online or in the store? According to the study, a number of factors come into play, such as the customization of offers and privacy. A significant fact: asked about shopping experiences they found satisfying, 53 percent of those surveyed spoke about interaction with a good sales person as opposed to 40 percent who cited customized offers, and 39 percent who stressed in-store screens that showed product lines.

Faced with this landscape, the authors of the study – PwC’s John Maxwell, Claire-Louise Moore, and the prestigiousWharton School of Business’ Denise Dahlhoff – believe that the battle for the market giants lies in rooting themselves in consumers’ habits, while keeping the increasingly important role of new technology and social media in mind.

Their thesis is that the consumer is a creature of habit, and these habits are changing. Activities like filling the shopping cart once a week, stopping in shopping malls using discount coupons, and even “Black Friday” are losing their pull and being replaced.

What are these alternatives? The study points out that habits are moving to a more personalized consumer journey, enabled by smartphones and personal assistants, and totally coordinated with new approaches to logistics, such as picking up goods from the store without having to get out of the car and same-day delivery, which is still seen as a “premium” service for which it makes sense to pay extra.

Going back to the store, the consumer will continue to visit it, but in a different way. First of all, the shop itself will have changed, since the trend of the big markets is to support flagship stores that enhance the brand and facilitate providing a superior buying experience, integrating the online option as simply another department. Zara, the primary brand of Inditex, provides an example of this trend in London, consisting of the closure of less representative shops in shopping areas with little momentum.

The consumer will visit the more sophisticated stores in different ways.  Helped by machine learning algorithms, the smartphone will “tip off” the consumer that a product he or she looked for online ten days ago is now on sale, or that there is a date in their calendar, which might call for a visit to the barber or beauty salon. There will be a huge amount of personalized offers at hand, and customers will be able to shop online and receive products in a matter of hours, maybe even by drone. But none of this means that physical stores will disappear.

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