This article is part of Raydiant’s new Future of Retail series which interviews the world’s leading retail experts to better understand how the industry has evolved and most importantly, where it’s headed.
The following is from a recent interview with RSR Research LLC Managing Partner Brian Kilcourse.
What personally excites you the most about the retail industry?
BK: What excites me most in retail is the concept of “personalization at scale” – essentially, the idea of offering relevant and focused offers to consumers in the context of the lifestyle need that they are trying to address. The reason this excites me is because the challenge to get it right is all about using information as a fundamental part of the value equation. Retailers have used information to make decisions about what products to sell, where, and at what price – but now retailers need to also understand who they are selling to, and why they are buying.
What has been the most dramatic change you’ve seen in the industry over the past 3-5 years?
BK: The retail model for the entire 2nd half of the 20th Century was all about pushing as much of a product through a channel as possible. A big assumption of that model was that demand was almost always triggered within the 4 walls of the store and fulfillment happened in the store as well. What that meant is that demand (consumers) had to come to where supply was (the store). In the 21st Century, demand can be triggered “anywhere” and fulfillment of that demand can happen in a number of ways. That means that supply has to go to demand – that could be the store, the home, or some other place. The value chain isn’t 1:N as in past times, but N:N – that’s vastly more complicated and ever-changing. This challenges every aspect of retail planning and operations.
What are the top trends you see shaping brick and mortar retail in the next 3-5 years?
BK: Shopping is entertainment. People enjoy being entertained – but what has changed is how people entertain themselves. Nowadays it is with digital content, available to them via technology they carry in their purses and pockets. If retailers want their stores to be a better experience for consumers, they have to embrace the “entertainment” aspect of shopping. And that means to have the ability to interact with consumers in highly relevant ways while they are in the store.
What technology do you believe will have the biggest impact on the retail industry in the next 3-5?
BK: Without question, Artificial Intelligence and Machine Learning technologies will have the biggest potential for impact in the next few years. It’s impact will be profound, whether we’re talking about merchandise planning, supply chain, customer interactions in the digital domain, employee empowerment in the physical domain, or process automation. Right now AI/ML takes someone with an advanced degree, but technology providers are learning how to “democratize” the science in ways that even small retailers will be able to take advantage of. Consumers will expect what AI/ML enables retailers to do – it will become a barrier to competition for those retailers who lag.
What’s the future of brick and mortar retail?
BK: I believe there will always be a place for physical retail – it just won’t be the same as we’re used to. The next generation of shoppers take “digital” as a birthright, and shopping is a 24X7 activity. Stores have a place in that reality – but they won’t be the “center” of retailing, just one part of a bigger “selling environment”. This will happen faster than most people expect, and many retailers aren’t ready for the change.