Suparna Goswami Bhattacharya

May 26, 2015: A couple of months ago, Tesco hit the headlines when it opened the world’s first virtual supermarket store in South Korea’s Seoul subway station. The pillars and platform screen doors of the subway station have been plastered with images of life-size store shelves filled with goods such as bananas, milk, sugar or chocolates which each carrying a barcode. Shoppers have to download a related app on their smartphone and make purchases by taking photos of the barcodes. In fact, if the barcode is known, consumers do not even have to stop by the subway station. For instance, if they want to replace a jam bottle, all they need is scan the barcode and the products are delivered later at home or office.

Though the above may not be a mass trend soon, since the web grocer model still has to mature and develop as a profitable one, the retail industry is surely at the cusp of change as the consumer’s path to purchase is experiencing a fundamental change.

For one, mobile devices are now a necessary part of purchases — on-device, online and in-store. “Our 2015 State of the Market Report predicts that nearly 86 million consumers will make a purchase on their device in 2016 as growing consumer confidence in the technology fuels the drive towards buying on smartphones and tablet computers,” says Theo Theodorou, general manager EMEA at xAd, mobile location based targeting platform, which allows retailers to map consumers nearby and attract them into stores with relevant and targeted ads.

In particular, apps which recognise a consumer’s location at any given time represent a large and growing subset of the mobile application marketplace. “These apps are changing the way we shop, travel, eat and connect.  With an understanding of consumer movements, impulses, preferences and purchases, brands have the knowledge to meet the expectations of a generation of consumers who are looking for instant service access at any time, from anywhere.”

Though mobile will continue to drive change as it witnesses a rapid growth in international markets, many more changes in the retail space are expected to take place over the next couple of years. And Tesco’s virtual supermarket store is still only the tip of an iceberg. “We’ll see many more exciting changes in retail over the next couple of years. Consumers will expect to personalise their shopping, leisure and marketing experiences to a granular, person-by-person level and will continue to interact with stores via multiple channels, often at the same time,” says Giulio Montemagno, SVP of International at RetailMeNot, an American multinational company headquartered in Austin that maintains a collection of coupon websites.

And for retailers to survive in this competitive world, factors like reduced time to market, less inaccuracies, no manual latency will play a differentiator role. “We’re entering an era of change in the way retail companies look at IT. It has become a critical differentiator in how leading retailers operate – a real strategic asset. Retailers who combine an industrial mindset with strategic process automation to make back office work less tedious, risky and time-consuming will gain a definite competitive edge and be on the front foot to react to market changes and implement new technologies,” says Neil Kinson, VP EMEA at Redwood Software, a leader in enterprise process automation, offering solutions across the financial and retail space.

And thanks to the many channels available today, customers often demand and expect a seamless and a continuous, uninterrupted experience between store, online and call centre. This is challenging for retailers since for them it becomes all the more important to remove infrastructure-related bottlenecks.

“See, it is mostly retailers who think in channels, shoppers think about brands and they don’t care so much about where they shop. If a virtual store delivers a satisfactory shopping experience, is faster than an online order and less of a hassle than a purchase at a regular supermarket, they will most likely come back,” remarks Montemagno. If on the other hand it is just a concept to stir some buzz and offers no real advantage, shoppers will be less inclined to follow.

What is certain though is that the lines between the different channels are blurring and will continue to do so. Consumers are ordering online and retrieving their products at the store, or they may order the product online directly from the store when the product or size they’re looking for is not available online. “Going forward, retailers will certainly use digital channels more to bring shoppers into their stores where they can get not only the products they’d come for but also buy additional items they’ll discover while they’re there,” says Montemagno.

Dwight Hill, partner, with McMillan Doolittle, LLP, an international retail consulting firm  feels that going forward most stores will be a combination of both online and offline. Though brick-and-mortar models developing ‘in-store digital’ experiences is common, there are online players who are setting up offline stores as well. “We are seeing pure-play e-commerce retailers opening stores like Warby Parker, Bonobos and Suit Supply. We are at our infancy in seeing how these efforts will play out,” says Hill.

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April 1,2015: The United States continues to lead e-commerce among the most Internet-friendly markets surveyed in North America and Europe, according to an international study commissioned by RetailMeNot, the world’s largest marketplace for digital offers. The study, carried out by the Centre for Retail Research, reveals that despite having a smaller population than the eight combined European countries surveyed and one of the smallest projected year-over-year growth rates, the United States still leads e-commerce sales with an expected revenue of $349 billion (compared to $254 billion in projected sales in surveyed European countries).

United States consumers also have the highest average order value (AOV) of $115 per purchase online, a 26% increase over all eight countries surveyed in Europe ($85); 21% greater than consumers in Sweden ($91); 22% greater than consumers in the United Kingdom ($90); and 15% greater than the average Canadian purchase ($98). That growth in online sales, across the 10 countries surveyed, is largely being driven by consumers’ collective adoption of mobile commerce.

The country also appears to be adopting the shift to mobile at a faster rate than other countries surveyed. Mobile commerce is projected to represent 27% of total e-commerce sales in the United States ($93.6 billion) in 2015 versus 20% of e-commerce in the eight countries surveyed in Europe ($61.5 billion).

“New generations of smartphones are changing the game in mobile commerce. Consumers in North America and Europe are growing increasingly comfortable transacting over these devices, thanks to increased connection speeds and bigger screens that make anywhere, anytime shopping effortless,” said Josh Harding, vice president of global operations at RetailMeNot. “As the United States continues to lead e-commerce growth, and mobile commerce maintains its momentum, retailers globally should reevaluate the prioritisation of impending technology investments to ensure that they have an optimized mobile experience and fully capture this meaningful revenue opportunity.”

The International Opportunity for Retailers

Outside the United States, where e-commerce sales are projected to grow by 14% in 2015, other markets in North America and Europe continue to be attractive for retailers interested in a bigger international base of customers.

In particular, Germany, France and the United Kingdom combined represent 82% of all e-commerce sales among the eight countries surveyed in Europe.

Credit Cards, Online Payments Enable Sales

In a world where credit card adoption and online payments have fueled the e-commerce opportunity, Canada does hold one distinction: it leads the United States and other countries surveyed with online purchases made via credit cards. Credit cards are used for 64% of transactions versus 42% in the United States. Alternative online payment methods, such as PayPal, seem most dominant in the United Kingdom and Poland, where they make up 20% of online payments.

Press Release

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