The Future of Retail

At one point or another, anyone discussing the future of personalization in offline retail has quoted the film Minority Report, where virtual billboards scan Tom Cruise, and immediately customize their message. The virtual assistant in Gap refers to the last time he entered the store, and inquires about his recent purchase.



Now, 13 years later, some of these technologies are becoming mainstream. For example, large retailers like Target and venues like the new Levi’s Stadium are equipped with beacons to customize your experience.



At Target, customers are served with aisle location information and interactive maps, deals on products, recommendations on nearby items, and the ability to request the help of a nearby team member (albeit a “real” team member, not yet a virtual one). This is the type of adaptation that is critical for retailers to maintain a relationship with millennials, who will represent one third of the adult population and 1.4 trillion in spending power by 2020.



So, what drives this segment? Price comparison shopping, a sense of adventure fueled by the need to discover and share new trends on social media, a demand for instant gratification, and a focus on brand values are all key characteristics that define this slice of the market.



So what comes next for the industry?



Connected Devices

There are a few obvious areas of investment happening today, such as leveraging new connected devices like the Apple Watch. These investments have focused most on identity, with use cases like unlocking hotel room doors and paying for your Starbucks coffee. Some of these devices — like virtual reality (VR) headset Oculus Rift — have the chance to revolutionize e-commerce, while other technologies are set to change the in-store experience.



While some believe VR technology might displace brick and mortar, I’m of the opinion the impact will be felt more on e-commerce. The Facebook acquisition of Oculus means we’re in for a social-media enabled VR future: think 3D malls, potentially reinvigorating the “social shopping” fad from a few years ago. Brands will have a new, enhanced medium beyond Web, mobile and TV to engage with customers in their homes. This, of course, exacerbates the omnichannel problem, increasing the need for technologies to deliver a fluid customer experience across channels.



Embracing Comparison Shopping

Across all generations, price is 5x more influential on a purchase than any other criteria. The study also showed that 90% of people look online for deals before they go shopping. It’s also no secret that shoppers, at least 40%, compare prices online while shopping in a physical store. Further, 45% of those shoppers surveyed actually ended up buying the item through a channel other than the store, such as a mobile app or through a website (and not necessarily the retailer’s properties). So how can a retailer compete?



In addition to loyalty and incentives, retailers should look to transitioning the dynamic pricing that has been successful online into in-store environments. Digital displays with dynamic prices can change in real-time, and can even include quotes from bloggers or social media influencers. These messages can be delivered through a companion app as well, and are important since 33% of millennials rely on outside validation (like blogger reviews) before making a purchase. Competitive intelligence software and “big data” software on the market today even allows retailers to automate this experience.



3D Printing

Millennials crave finding and sharing, discovering unique or rare items and trends, including the latest in clothing or shoes. This desire for rarity and the need for personalization, presents a compelling case for on-demand 3D printing of retail products with limited production runs. The urge to share these unique items on social media will drive brand awareness. In fact, 62% of millennials said they are more likely to become a customer if a brand engages with them on social media.



Another use case of 3D printing could be modification, rather than creation, of existing retail products. This can incentivize store visits to personalize the fit of the item, a la a virtual tailor who knows your sizes and preferences.



Smart Clothing

In the future, retailers will be able to leverage embedded technology in clothing. Already, Google has partnered with Levi’s on a project codenamed Jacquard that has the potential to dramatically change the in-store experience. Imagine clothing that can react to a nearby shopper.



For example, you walk by a sweater fashioned from fair-trade cotton, a brand value important to you, in a size that matches your preferences. The sweater changes its hue, or even slightly motions for you to come closer (which sounds either creepy or wonderful, depending on your world view). You go into the changing room and try on the sweater. The item detects this as well, and immediately sends you a push notification with a discount to reward you for the effort. Although in the short term it’s more likely for your smartphone or watch to vibrate with excitement, versus the sweater itself, these types of interactions may be what it takes for a retailer to embrace and sustain brand loyalty in the years to come.



Coordination Between Brands and Stores

Most retailers offer a wide selection of products from a variety of brands. Each one of these brands has its own digital presence and data about their customers’ buying habits and interests, which could be integrated into the physical store experience.



The emergence of cloud APIs means it’s easier than ever to build these integrated experiences — although privacy questions persist. For example, let’s assume you opted in to a few brands you trust to enhance your shopping experience at Macy’s. The sales rep can now be equipped with data from both Macy’s and Nike, in order to showcase a new shoe or the latest fitness gear that matches your preferences. Macy’s can even reward you with incentives for that run you took the other day, reported by your Nike+ app.



On-Demand Economy

Instant gratification is why Amazon is testing out same-day delivery, and many companies will turn to drones to meet this need in the future. Retailers can compete with same-day delivery if they look toward order fulfillment partners. Companies like Google and Uber, and startups like Postmates can provide these services.



But why is this service so important? Surveys show 62% of millennials versus 50% of overall shoppers showed interest in same-day “offline pickup” of items purchased online, and almost half said they would consider paying higher delivery charges for same-day delivery. Same-day delivery has a huge impact on e-commerce but can also impact the in-store experience. For example, rather than lose out on