In some ways, the debate over retail’s impending demise is a little like the debate over climate change. There are factions on both sides of the argument. Like climate change, there are those who are sounding the alarm of rapidly impending doom and those who are calling the whole notion overblown and suggesting flawed science.  In the end however, Mother Nature really doesn’t care what we mere mortals believe. She will ultimately have the final word. No amount of disbelief, debate or discussion will reverse the melting ice caps, slow the rising seas or cool the heating planet. Soon, regardless of what we believe, we’ll hit a point of no return. 

The same is true of the retail market.

Whether we like it or not, retail, as we know it, is over. And rather than wasting time and energy debating the evidentiary data, we’d be better off working to adapt to a retail future that will be entirely different than the market of today.

Here are some of what brands and retailers need to be preparing for.


  1. The Majority of Commerce Will Move Online

Math doesn’t lie. U.S. online retail is growing at a rate three times greater than offline retail.  In some global markets the multiple is almost ten times higher. The mathematical reality is that within 6 years, online retail will likely account for 20-25 percent of total U.S. retail.  And assuming the trend continues unabated, ecommerce transaction values will overtake offline retail within 15 years. What’s more, we project that by as early as 2020, three companies – Amazon, Alibaba and will own 40 percent of ecommerce globally.


  1. The Dawn of the Replenishment Economy

Today there are approximately 25 billion connected devices on earth.  Within 10 years, that number is expected to balloon to as many as 500 billion connected devices. Our homes, cars, appliances, offices, clothing and even our own bodies will be infused with connective technologies, allowing previously inanimate and unintelligent items to become “smart” and communicative. Within a decade, this new level of connectedness will usher in what I call the Replenishment Economy, a world where the connected products and devices around us begin to monitor, measure and manage our consumption and buying activity. The AI in our homes, the machine learning capabilities in our appliances and even sensors built into products and packaging, will begin to guide the replenishment of products we use on a routine and regular basis and all with little to no intervention on our parts.


  1. Media Will Become the Store

Soon, every form of media and every medium at our disposal will serve the traditional purpose that physical retail stores filled for centuries – only far more capably.  The ability to merchandise millions of products in a compelling, efficient and interactive way, to impart reams of product knowledge, and to transact sales will become the wheelhouse of online stores. Advances in technologies such as mixed reality, algorithmic fitting, and artificially intelligent customer service bots will only add to the innate confidence of online shoppers.

Advertising will become adverbuying, as every branded message becomes a direct and immediate portal to purchase, in the moment.


  1. The Store Will Become Media

As we become increasingly tethered to and dependent on technology to manage the more routine aspects of our consumer lives, we will, even more profoundly, value and seek out the joy of physical discovery. Where stores once acted as the end-point for consumer engagement with a product or brand, they will increasingly become the starting point. Physical stores, across categories, will evolve from being the mini-warehouses they are today and become spaces where the primary objective is to convey brand and product stories – to enable inspiration, education, fun and entertainment. Retail spaces will be lightning rods for communities of affinity around brands and product categories. This is not to say that product sales will cease to matter; they will indeed.  However, the primary product that will differentiate one retailer over another will be the experience they deliver to shoppers. In essence, the experience will become the most important, valuable and memorable product of all. Physical stores, as a distribution model for products, will soon become outmoded by online efficiency, but the store as a media channel for powerful experiences is just emerging.


  1. A New Economic Model for Retail

The wholesale to retail economic model is imploding.  Brands are reclaiming their destinies, working to develop direct-to-consumer strategies in record numbers, in part because they can, but in many cases, because they have to.  Many brands are awakening to find that the mass distribution they coveted in the retail world of old is now siphoning the essential brand equity that makes them viable in the retail world of tomorrow. This direct to consumer phenomenon will put an increasing number of retailers in direct competition with the very brands they previously called “partners.” It’s a situation that will eventually prove untenable. What we face is less a “retail apocalypse” and more a “wholesale apocalypse.”

The consequence of this fallout will be the emergence of a new breed of experiential retailer that uses its on and offline assets to design and curate powerful customer experiences across categories or brands. Physical retail will transform from a distribution channel to a powerful media channel where brands will pay for inclusion in powerful physical experiences much the way brands purchase media today. Experiential merchants will care less where the sale ultimately consummates. All that will matter is the delivery of an experience powerful enough to galvanize a relationship between the consumer and the brands represented in their space. Experiences will be the product.


  1. The New Consumer

Millennials are perhaps the most over analyzed yet least understood generation in history. And while we can debate the nuances of this cohort, one thing clearly sets them apart from all generations that came before them. This is the first generation in the history of humankind that has documented every significant event in their lives, from childhood forward, online.  Whether it was MySpace, Facebook, Instagram or Snapchat, every meaningful moment in a Millennial’s life has been captured and most often publicly archived. The result is that experiences – not products – are social currency for this generation.

Consequently, it follows that more than three quarters of Millennial consumers in one credible study suggest they’d rather spend their disposable income on experiences with friends and family than on material possessions, representing a marked departure from the attitude of Baby Boomers or Gen X. Successful retailers of the future then will find ways to marry their products and services to unique, memorable and Instagram-able experiences. The question for the new age of retail is “are your retail spaces selfie-worthy?”

So, is retail dying? Who cares? What we do know is that it’s changing beyond recognition and every retailer is confronted with a choice; to use this time to prognosticate endlessly or to prepare diligently. In the end, futurism is less about predicting the future we get and more about engineering the future we want.

CenturyLink has helped many retailers embrace the retail and digital revolution. Let us help you. Contact a CenturyLink expert today or join the conversation on Twitter with the hashtag #RethinkRetailChat.

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