The future of shopping
Shoppers now live through multiple micro moments in their everyday lives. Therefore, their shopping habits are changing fast. And with the proliferation of mobile internet and smartphones, they want to know more about the products they are looking for before they actually shop. They also want better information about retail outlets before they decide to go there. Shoppers' buying decisions are influenced by multiple sources today and they want to know all the details about a product before buying it. Therefore, leading retailers in Bangladesh, as well as in other parts of the world, have to keep pace with the changing habits of shoppers by enhancing such micro moments with the help of technology.
Traditionally, shoppers would carry their purchased items to their homes. Nowadays, a common way of shopping is to place an order online and expect the packed product to be delivered at one's doorstep. However, while online shopping is growing at a high rate, it is still under 15 percent of global business-to-consumer (B2C) commerce, according to the Global Consumer Insights Survey 2018 conducted by PwC.
Therefore, delivery has become an important area for retailers. Existing logistics businesses are struggling to cope with this huge growth with the kind of infrastructure they have. At the same time, shoppers are increasingly emphasising timeliness of delivery and return of goods. Many of them are even willing to pay extra for same-day delivery of the products they buy. Moreover, several young shoppers would like to explore new modes of delivery such as delivery by drones.
The future of shopping is also going to be shaped by algorithms. Computer algorithms are becoming so powerful that they can process a diverse set of data, including biometric data, to understand shoppers better. Their capabilities are improving fast to understand shoppers' wishes, predict their choice and respond according to these predictions. Such powerful algorithms will give a significant competitive advantage to retailers who are willing to adopt these algorithms earlier than others. In Bangladesh, some leading retailers have started experimenting with technology to predict shoppers' buying habits.
However, computer algorithms will not only be available to retail enterprises. With computing getting cheaper every year, similar algorithms will be available to individual shoppers as well. And as algorithms begin understanding shoppers better, shoppers will increasingly delegate many of their shopping-related tasks to algorithms.
For example, today, many commuters and drivers rely on directions provided by smartphone-based map solutions to reach their destination, instead of relying on their own judgement. Such reliance did not begin when the map service was launched. Over the years, smartphone-based maps started showing better results than an average driver or commuter, and subsequently, drivers started relying on the maps more and more.
When shoppers will start delegating their shopping activities to such algorithms, the business of retailing will take an interesting turn. Retail businesses will no longer interact with human customers only. Instead, customer interactions will also become algorithm-to-algorithm interactions.
The use of voice assistants marks the beginning of such a trend. Voice assistants provide conversational interfaces to shoppers and use artificial intelligence (AI) to do so. According to the Global Consumer Insights Survey 2018, male shoppers in the age group of 18-24 years use such interfaces and AI to do their shopping.
They are usually optimistic about the future of the economy, and prefer expedited delivery of goods and experiential purchases. For example, such shoppers would prefer to enrol themselves for a paid cooking class before actually buying a certain set of crockery. Such emerging habits are expected to drive a significant transformation in the retailing business as more retailers try to reorganise their business verticals and rebrand themselves.
Today, around half of the population in Bangladesh is less than 27 years old. This makes the country uniquely poised to adopt new technology and become AI-enabled shoppers. It will be an interesting transformation when retailers focus more on the young population, and this group of shoppers adopts new technology for shopping.
Among these changes, the role of physical retail stores is getting stronger. In the retail industry in Bangladesh, organised retail is mainly conducted through physical retail stores. Worldwide, there is a perception that e-commerce will eventually make physical retail stores obsolete. However, PwC's survey reveals that consumers are increasingly visiting physical stores to get a wide range of experiences. Therefore, retail businesses in Bangladesh should focus on strengthening their retail presence and drive their future growth. However, the role of technology will continue to be important.
Today, retail stores in developed countries are increasingly using virtual reality (VR) and augmented reality (AR) to deliver extraordinary experiences to shoppers. In fact, most innovation in retail stores is enabled by a combination of AR, VR, Internet of Things (IOT), and AI, giving rise to a new theme called extended reality. Some retail companies in Bangladesh have already started thinking about such innovation-led renovation of their stores. Consequently, in the future, newly formatted retail stores may come up in the country.
Building trust has become more important than ever before. In markets such as Bangladesh, there are concerns about safety of food being sold in the market. Sale of counterfeit products is another area of concern. Some globally large retailers have already taken the initiative of using modern technology to address such issues. Blockchain technology, coupled with AI and IOT, are helping them innovate new solutions and automate trust.
Automated trust is the new theme that is emerging to provide the much-needed confidence to customers and retailers. Therefore, in the future, retailers in Bangladesh may also adopt these technologies to automate trust and deliver value to their customers.
The writer is a partner at PwC. The views expressed here are personal.