The Harvard Business Review ran a great blog post: The Future of Shopping. The post pointed out that every 50 years or so, retail undergoes a major transformation.
Every 50 years or so, retailing undergoes this kind of disruption. A century and a half ago, the growth of big cities and the rise of railroad networks made possible the modern department store. Mass-produced automobiles came along 50 years later, and soon shopping malls lined with specialty retailers were dotting the newly forming suburbs and challenging the city-based department stores. The 1960s and 1970s saw the spread of discount chains—Walmart, Kmart, and the like—and, soon after, big-box “category killers” such as Circuit City and Home Depot, all of them undermining or transforming the old-style mall. Each wave of change doesn’t eliminate what came before it, but it reshapes the landscape and redefines consumer expectations, often beyond recognition.
There are a lot of indications that the next great shift is underway. This time the consumer, empowered with mobile technology and constantly connected, is the driving factor. This time the consumer is redefining their expectations, and has left retailers scrambling to understand and meet them.
As retailers strive to meet rising consumer expectations, they start at a disadvantage they have never faced before. That is, the consumer has more powerful technology than the retailer. Most retail systems are decades old at best. The cost to maintain and upgrade those systems takes a serious chunk out of the precious little operating margins most retailers make.
In order to effectively navigate this transformation, retailers must begin to embrace the same technologies that are empowering their consumers. Those technologies are the same as the ones that dominate the headlines today: Social, Local, and Mobile (SoLoMo) – all connected and enabled via the cloud.
As retailers embrace SoLoMo, something interesting will happen. Commerce as we know it will begin to change. Really, commerce has not changed much since the widespread deployment of the barcode four decades ago. Many of the core systems in place today have been around since then. Sure they have been added onto, modified, and upgraded, but ultimately the limitations of these decades’ old systems are holding the evolution of commerce back.
As the systems of commerce are rebuilt around SoLoMo, and move to the cloud, the possibilities for new capabilities, and benefit to the consumer, are seemingly endless.
Imagine a world where a consumer’s preference for commerce (type of goods they prefer, how they like to pay, related purchases, social influences, allergies, sizes, etc.) would follow them from retailer to retailer, online, and in mobile.
I could walk into the grocery store, and instantly have a shopping list created for me based on a recipe a friend shared with me. Better yet, I could forward the list to the store prior to arrival and have the goods waiting for me, or delivered to my home. Any foods I may be allergic to would be avoided, my preferences for brands acknowledged, and desire to substitute based on coupons or deals leveraged.
I could walk into an electronics store, interested in new optics for a camera I already own. The sales associate would immediately have access to the type of camera and accessories I’ve already purchased (regardless of where) and have an informed conversation about the type of lens and equipment I need.
The next great transformation in retail will be about, and led by, the consumer. That means retailers will undergo a major technology transformation. The silos that have been developed within retail organizations (the reason why no product looks the same from the store, to the flyer, to the web site, to the mobile app – for the same retailer) will be broken down. Perhaps more interestingly the silos that have existed between retailers will begin to break down. Retail will become a consumer-centric industry, not a store specific industry. Differentiation will no longer come from scale, but on focus. Differentiation won’t be based on the amount or spend on technology, but on how well technology is used to create a tremendous customer experience. In short, differentiation will come based on the importance the retailer places on their customer.
It’s an exciting time, and we are just entering the beginning of this shift. The infrastructure is being put in place and refined. POS (Point of Sale) technology in the cloud and on mobile (like Square, X.Commerce). The social graph (Facebook) connecting and capturing consumer preferences. Communication platforms (Twitter) enabling the real time sharing of product information. And finally the cloud-based platforms of product data (1WorldSync) that power new systems and innovation in technology.
I’m thrilled and fortunate to be a part of it!