8 Predictions for the Future of Retail Technology
CHICAGO -- JLL, an investment-management company, released a new study predicting technology transformations in retail over the next 25 years.
The report covers 12 growing tech trends that JLL believes will have the largest impact on the future of retail, including evolution in payment technology, virtual reality, drones and more.
CSP Daily News combed through the report to extract trends that are most likely to affect convenience stores.
Here are eight tech trends and how they might affect the future of retail …
Geofencing allows retailers and other businesses to access information about consumers through their mobile devices when they enter a digitally marked area. This allows retailers to peek in on where consumers go before and after they visit their stores.
The technology sounds a little Big Brother-ish, but the report says it’s already allowing retailers to release more targeted promotions. “Apparel retailer American Eagle Outfitters turned to geofencing to boost both foot traffic and revenue at its outlet stores by pinpointing shoppers who entered the geofenced mall parking lot and offering them promotions. The campaign resulted in tripled sales,” according to the report.
The report marked this technology as something that could become more widespread in the next five years or so. “Using geofencing as a tool for market research and customer loyalty will become even more common over the next few years. According to a recent report by MarketsandMarkets, location-based services are forecast to grow up to $39.87 billion in 2019, up almost five-fold from $8.12 billion in 2014.”
The JLL report says that Apple Pay and Google Pay are the current rulers of the mobile-payment sphere, but that could change as the technology evolves. “The research firm eMarketer estimates that by 2019, the total value of transactions made by tapping a phone on an in-store terminal will reach $210 billion, up from $8.7 billion in 2015. By 2020, 90% of smartphone users will have made a mobile payment.”
According to the report, 22 million shoppers are using Wal-Mart’s mobile payment app, which connects to a debit or credit card, so this technology is already being used in mainstream retailing. Aside from simply sounding cool, smartphone payment could allow employees to spend less time behind checkout counters and more time stocking shelves and assisting customers.
3. Drone delivery
The drone-delivery trend looks like it’s going to take a little longer to become widespread. “Stores using drones will have a small impact on efficiency and customer service in the next five to 10 years," the report says. "The bigger impact will be on supply chain logistics but it won’t be felt for 15 to 20 years.”
The idea of flying robots delivering packages is exciting to consumers and retailers. But the reality is very complicated. “Drones may be an efficient solution in mountainous terrains and on islands, but regulations in areas with sophisticated infrastructure make last-mile drone delivery a complicated undertaking,” said the report.
There’s also the question of using drones profitably. “While drones will likely hover over our heads in stores before they deliver a package to our doorsteps, neither concept has yet been profitably deployed,” according to the report.
4. AR vs. VR
Virtual reality (VR) is a big leap for today’s consumer. The report said that consumers are reluctant to use VR devices unless it’s for gaming. While those attitudes may change over time, augmented reality (AR), which combines the virtual and real worlds, seems to be more widely used and accepted.
There are already real-world applications of AR. The report lays out one example from Lowe’s: “The home improvement retailer is rolling out an AR app that tells shoppers the fastest way to find items in the store. Powered by Google’s Tango, an indoor-mapping technology, the app overlays a yellow line along the aisles, guiding users to the next item on their list through their phone screens.”
AR may be closer to widespread adoption than VR at the moment, but it’s likely only a matter of time before customers grow used to more VR technology. “Virtual reality devices will have a medium impact on the ecommerce shopper experience and may help to decrease retail space demands in the next 10 to 20 years. Augmented reality will have a big impact on the in-store shopping experience over the next 10 years,” said the report.
In the meantime, investments in the technology are growing quickly. The study cites data from the Harvard Business Review suggesting that retailers’ investments in AR and VR could be as high as $30 billion by 2020.
5. Artificial intelligence
Artificial intelligence (AI) and its potential future impact is a little harder to quantify than most subjects. Machine learning is becoming more robust every day, and there’s really no telling where it could take retail overtime.
Even so, AI is already entering the lives of consumers. The report uses Macy’s On-Call, a mobile chatbot used by the retailer to answer customer questions, as one example of existing AI tech. The report suggests that AI will have a large impact on retail in the next 10 years as it becomes more common.
One already clear way to use AI is through dynamic pricing, similar to Uber’s surge-pricing model. “Dynamic pricing depends on real-time data to perfect the supply and demand model. Online stores have already embraced it, so further impacts in that arena will be minimal. Expect bigger impacts for physical stores in 10 to 15 years, when the technology is broadly available and affordable,” according to the report.
6. Internet of things
The internet of things (IoT) is already everywhere. From smart refrigerators and thermostats to Amazon and Google’s smart speakers, the homes of consumers are connected online in more ways than ever before.
The report predicts that IoT will have an even bigger impact on real-world shopping and e-commerce in the next 10 to 15 years. The rationale for marking IoT as a more long-term development was that IoT systems are complicated and, like AI, we’re still figuring out its capabilities.
In the meantime, the number of IoT devices and their economic impact will continue to grow. “BI Intelligence predicts that by 2020, there will be more than 24 billion IoT devices on earth. The potential total economic impact of IoT will range from $410 billion to more than $1 trillion per year by 2025, according to McKinsey & Co.,” said the report.
7. No checkout
“Self-checkout technology has been around for many years and seems to be getting better, but no retailer has created a truly cashierless store, where shoppers can stroll in and out freely while an all-seeing technology keeps perfect tally,” according to the report.
By now, self-checkout counters are ubiquitous in grocery stores and drug stores, but that technology is just the beginning. According to the report, the future is technology that allows shoppers to simply walk out of the store when they are done, similar to what Amazon Go is aiming for. While no-checkout technology is too expensive right now to be widespread, retailers should expect a moderate impact on stores and a full rollout of self-checkout payment systems in 20 years.
8. Self-driving vehicles
While some cars are starting to come with autonomous features like self-parking and highway auto-pilot, it will be a while before truly self-driving vehicles are a regular part of our lives. The report predicts that the impact of driverless cars on retail will be large, but it won’t be fully felt for another 25 years.
The report focuses on societal impacts of autonomous vehicles. They will change the way cities are planned and built. More people could start leaving cities as longer commutes become easier to bear. There will be fewer parking lots.
If drivers aren’t focused on what they’re passing on the road, walk-in or drive-thru traffic to stores could lessen, which could put a strain on c-store traffic. On the other hand, foods that are difficult to eat while driving, like pizza, could see more business as riders of driverless cars have the opportunity to enjoy a wider variety of food on the road.