The Future of Retail: 2018 and beyond


‘Business as usual’ is not an option in the retail sector, thanks to new technologies, changing patterns of consumer behaviour, and the influence of pioneering digital-first companies like Amazon.

Digital transformation is affecting all aspects of our lives, but the retail sector is experiencing particularly severe turbulence at the moment.

On both sides of the Atlantic, there are regular news stories about store closures and job losses on the high street, and the underlying dynamic isn’t hard to identify: an accelerating shift away from in-store shopping towards e-commerce, particularly via mobile devices (a.k.a. m-commerce), with Amazon the keystone species in the new ecosystem.

This trend doesn’t necessarily mean that the high street is heading the way of the dinosaurs. However, the selection pressure on retail businesses is changing, and those that fail to adapt certainly face decline and even extinction.

Today you can research a product, compare prices, order and pay for it, and often have it delivered to your door the same day — all from an internet-connected computer or smartphone (and increasingly, simply by instructing your smart speaker to make the purchase). That’s why traditional retail businesses based on brick-and-mortar stores urgently need to update their business models for the Amazon age.

There’s a wealth of analysis and survey material available to elucidate these trends, with suggestions as to how retailers should adapt to them. This introduction explores some of these studies and extracts the key messages. Check out the rest of ZDNet’s ‘Future of Retail’ special report, including specially commissioned research, for more detail on the companies, vendors and technologies that are leading the digital transformation of the high street.

Predictions for retail in 2018

In any sector with an attendant ecosystem of analysts and pundits, the start of each year usually sees a plethora of articles setting out predictions for the coming 12 months. Gathering a large sample of these offerings and assigning the predictions to a subset of emergent themes is a good way of taking an industry sector’s temperature and identifying its likely direction of travel in the short to medium term.

We’ve done this for the retail sector, examining 17 turn-of-the-year articles containing 135 predictions, which generated 13 emergent themes. Here are the results:

The top themes emphasise the challenges facing the retail sector: getting to grips with emerging technologies such as augmented reality, voice, the Internet of Things (IoT) and 3D printing; the need to offer improved in-store experiences; the importance of personalisation in customer relationship management (CRM); the evolution of brick-and-mortar stores (into click-and-collect locations, for example); the advance of e-commerce and novel payment options; and the pressure for faster product development and speedier fulfillment.

Let’s unpack some of these.

Emerging technologies

Vend expects augmented reality (AR) technology to become more sophisticated in 2018, citing IKEA’s Place app, which is built on Apple’s ARKit. Place lets you see how different IKEA products would look in your home: you just scan the room using your iPhone and select the required product. Elsewhere, payment platform provider Ayden predicts that AR will become “an everyday shopping reality” in 2018.

Ayden also predicts that voice-driven shopping will go mainstream in 2018, noting Target and Walmart partnerships with Google Home in 2017. CPC Strategy agrees, naming 2018 as “the year of voice-first shopping” thanks mainly to the popularity of Amazon’s Echo Dot and Google’s Home devices.

Samsung’s Insights blog predicts growing use of IoT beacons, which can help customers quickly find items in a store and notify them of discounts, for example, via their smartphones. Data gathered in this way can also help retailers understand customer browsing and buying patterns, says writer Craig Guillot. According to, “Retailers will continue to explore ways to use IoT in the coming year for everything from keeping better tabs on their inventory to managing losses from theft and connecting with shoppers.”

Another emerging technology to watch is 3D printing, or additive manufacturing, which notes is “quietly growing and has the potential to shake retail’s foundation.”

Improved in-store experiences

Rather than customers just shopping for goods and leaving with them, Ayden highlights the trend for retail stores to become ‘town squares’, where customers can have more social experiences (a.k.a. ‘retailtainment’). For Deloitte, “Retailers need to ensure that their stores remain relevant and are places that consumers want to keep coming back to. Experience is more important than ever, and retailers’ stores need to be more than just places to transact.” Chain Store Age predicts that “More stores won’t hold inventory at all and will simply become ‘guide shops,’ where consumers can touch the products and sales associates can educate customers.”

Personalisation & CRM

Technologies like IoT, mobile apps, beacons and new POS systems will allow retailers to discover more about their customers, which in turn will facilitate more personal customer experiences, says Samsung’s Insights blog. Bluecore reckons that “the most advanced retailers will expand their focus from narrow personalisation efforts like product recommendations and site changes in order to pay more attention to the entire marketing stream.” This will not only require more customer data, says the email marketing specialist, but also better tools to connect and activate that data. Be that as it may, if Facebook’s recent data governance scandal results in significantly less user engagement, CPC Strategy’s prediction that “Facebook will be the biggest social investment for retailers” may need re-assessing.

Brick & mortar evolution

“We’ll finally witness the death of the death of retail,” is the headline 2018 prediction from Bluecore, which notes that, despite widespread store closures, many retailers — especially those that leverage data and listen to their customers — are expanding. Vend echoes this sentiment, on the basis that: “Mobile applications and cloud-based solutions are enabling merchants to quickly set up shop with a minimal investment. Because of this, we’ll be seeing more independent stores enter the market.”

CPC Strategy also disputes the brick-and-mortar-is-history theory, arguing that stores will downsize or shift roles, either becoming more of a showroom or integrating online and offline so that customers can buy online and pick up in store (BOPIS). This new ‘click-and-collect’ role is mentioned by several observers.

Several pundits cite Amazon Go as a next-generation brick-and-mortar store. This replaces cashiers and checkout lines with a smartphone app and AI-driven Just Walk Out technology: you activate the app on entering the store, choose what you want, and your virtual cart is charged to your Amazon account when you leave. Microsoft is also reportedly eyeing up this space.

E-commerce, mobile POS & payment options

A key theme is the need for retailers to keep up with the digital transformation of payment systems — e-commerce and m-commerce. As NPD points out: “The manufacturers, retailers and restaurant operators that best leverage digital will win in today’s challenging environment.” Mobile commerce, in particular, is on the rise, says Shopify, which notes that “consumers aren’t just browsing content on mobile: they’re making purchases.”

Samsung’s Insights blog also highlights the importance of in-store mobile POS systems for enhanced customer service and the need for flexibility in payment methods, including support for mobile wallets.

Other themes

Further down the list of predictions are more important topics for retailers in 2018 and beyond: the need for ever-faster product development cycles and delivery fulfillment (perhaps using drones, for example); leveraging artificial intelligence, machine learning and big data analytics to drive retail decision-making; providing and managing multiple channels through which customers can do their research and ultimately make purchases; creating greater visibility into supply chains (to satisfy customers’ ethical and environmental concerns, for example); the emergence of new groups of consumers (in China and the far east, for example) and ways of shopping ( ‘chore’ versus ‘cherish’, for example); the continuing evolution of Amazon and its influence on the retail sector; the increasing importance of data security and governance; and the possibility for job losses, or changes in job descriptions, in retail.

Categories: Business, China, E-commerce, Retail, Technology

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