Blog. The future of retail. Part 7 of the series ‘Disruption and new business models’

Futures Studies

Earlier in this series: the future of mobility, insurance, construction, health, work & organization, and legal services.


We live in a fascinating and rapidly changing world. Together, technologies such as robots, artificial intelligence, the Internet of Things, self-driving vehicles, 3D/4D printing, solar energy, nanotechnology, biotechnology and quantum computing are initiating a 4th Industrial Revolution. We are witnessing new products, new methods of production and new business models across all industries. This is Part 7 of the series Disruption and new business models, discussing the future of retail.

Harsh times for the high street

Despite the strengthening economy, many stores and retail chains are in difficulty. The shift from offline to online sales continues, while sales margins are under pressure because consumers are becoming increasingly price conscious. Thanks to webshops and comparison websites, prices are transparent. Online and offline price differences have all but disappeared and discount stores such as Action are doing relatively well.

In the high street, a vicious circle threatens. Due to vacant properties an entire shopping street will become less attractive, decreasing sales in the remaining stores. Attempts to maintain profitability by cutting back on staff, customer services and available stock can have an adverse effect. We should be prepared for further bankruptcies in the retail sector.

The difference between getting supplies and a shopping trip is all about the experience

There is a wide gap between getting supplies and a day’s shopping. The first is all about speed and convenience; most consumers buy similar groceries each week and wish to waste neither time nor money doing so. Shops, both online and off, take advantage of this trend by offering shopping list apps giving suggestions based on earlier buys, and by offering shopping delivery services.

A shopping trip encompasses much more than this. One takes time to orientate oneself, to try on clothes, to touch, smell and try things out. It’s just like a day out. For those born after 1995, the so-called post-millennials or Generation Z, it is all about whether a shopping experience offers enough of a reason to take a selfie and share it via social media.

New retail technology plays a major role in the expansion of the shopping experience and can also help improve efficiency and save on costs.

The in-store robot

Interaction with a robot is, thanks to rapid developments in cognitive computing, becoming increasingly similar to human to human communication. Speech recognition, voice response, artificial intelligence and machine learning technologies make conversations between man and machine possible. For shops, this is a way to offer every client a personal shopper who can quickly learn client preferences and give specific advice based on these.

Less confronting and intimidating is personal advice via a smartphone. Shops which collect a lot of data from their customers can predict purchasing behaviour even before the consumer takes the decision to buy something (predictive analytics). Using in-store beacons, consumers can be sent messages and be made aware of any relevant offers in the shelf they happen to be standing in front of at that particular moment.

Furthermore, video analytics are not only useful for theft prevention, but also as a means to analyse client behaviour, to optimise pricing and to increase convenience. Artificial intelligence is becoming increasingly emotional and can read and interpret facial emotions very accurately.

Augmented Reality

Virtual Reality applications within the retail sector are still playing the waiting game, if only because the special glasses needed for this technology remain extortionately expensive. Augmented Reality, however, is today offering many options by adding a digital layer to reality. This can be done simply via smartphone or iPad. With this technology one can, for example, see if an item of furniture suits the style of your current home’s interior.

Augmented Reality can also be used to give consumers more information about in-store products. If your smartphone is pointed at a particular product, all information pertaining to that product such as where it is manufactured, what it is made of and what it costs will come up on the screen. A store can also persuade consumers to buy alternative, more expensive products by displaying them on the screen together with a personalised discount or offer.

Virtual changing rooms are also a form of Augmented Reality. It is no longer necessary to wait in the changing room queues to see if an item of clothing suits you and looks good. There are also apps for virtual make-up, such as Makeup Genius, whereby the client can try out various make-up shades without using a single brush stroke.

Blurring the line between offline and online

Clients no longer see on and offline shopping as separate stores, and retailers are beginning to think the same way. An omni-channel strategy means that customers are served in the same way, regardless of where they are. The same customer data is available in the store, on the website and at the call centre; the same prices are applied and the client is addressed in the same manner.

Shops that were set up on the Internet, such as CoolBlue in the Netherlands and Amazon in the United States, are also opening physical stores. These stores act as showrooms where customers can see, touch and try the products on offer. In addition, these stores are used as local warehouses, able to deliver items to the consumer within just a few hours.

In order to offer the same customer experience both online and offline, you need to do more than offer the same look and feel; operational processes must also be integrated. By accessing the same stock management software, online customers can also see current in-store availability.


Online stores make every effort to simplify the shopping experience and this extends to various forms of delivery. This means customers can collect or have items delivered at different times. Furthermore, experiments are being conducted using drones and robots, by Domino’s pizza delivery service in Amsterdam, for example.

Checkout-free shopping

The checkout queue is almost obsolete. Some supermarkets have for some time permitted (regular) customers to scan their own groceries while shopping or at the exit. In stores with lower turnover rates, sales staff are equipped with mobile ATMs. In the United States, Amazon is currently experimenting with ‘just walk out’ – a cash register-free shop. Thanks to a combination of sensors and cameras you can take what you want and just walk out of the store without going through the checkout. Purchases will be automatically debited from the customer’s bank account. At the time of writing, this shopping experience is only available to Amazon employees.

Privacy and data protection versus convenience

Analysis of your buying behaviour, predictive software and location based messages can take away the consumer’s sense of privacy. The question remains whether the convenience is worth the invasion of privacy. It is important that retailers keep an eye on this balance; however, we do not currently see consumer movements protesting against stores that collect and use data for customised marketing.

In fact, customers now expect familiarity from shopkeepers from whom they regularly make purchases. This customer expectation is not only based on their experiences in various stores, but also on their use of Internet services and social media. That Facebook, Instagram, Google and Apple know everything about you and decide on what you see is a fact of life for younger consumers.

Build a business model from outside in

Due to a number of prominent bankruptcies, changes in the retail sector appear to be taking place at a rapid rate. However, the digital transformation of this sector is nowhere near complete and there are still huge investments to be made in order to adapt to the demands of the digital consumer, especially where the existing players are concerned.

In a competitive environment in which consumers, through social media, are in close contact with each other and exchange experiences, fulfilling customer expectations is key. There is no alternative to a customer-centric strategy. Therefore, the necessary transformation of the retail sector does not begin with more efficient processes, but with the customer journey. Customer needs and customer experience are paramount and the rest shall follow.