Retail software & tech trends

Ask any retailer what keeps them awake at night and the majority will probably answer Amazon. The combination of product range, price, availability and delivery infrastructure has caught many asleep at the wheel. Just when everyone thought ecommerce was king, along came Amazon with the acquisition of a bricks and mortar store format, plus alliances with the likes of Morrisons for grocery delivery. This reinforces the view that the holy grail for a retailer or brand is to achieve a single view of its customer across all retail, and ultimately social media channels. “We’ll continue to see marketplaces and traditional retailers converge. It’s happening both ways, where market places like Amazon are moving to forms of traditional retail and traditional retailers …are making the move to marketplaces to stay relevant in the digital economy,” said Greg Chapman, SVP business development, Avalara. This is now increasingly pushing innovation in retail technology with a continuing drive towards providing an infrastructure for retailers of all shapes and sizes to compete on level terms. This has been fuelled by COVID-19, which in many commentators’ eyes, has just served to hasten the high street’s demise by at least five years. The likes of Shopify have clearly been successful in building a white label proposition and they and many others increasingly look to build functionality and data insight to help retailers maximise their return from their consumers.  

We’ll continue to see  marketplaces and traditional retailers converge – Greg Chapman, Avalara

And just to add to the urgency of this, we are not alone in foreseeing a consumer bounce in the second half of 2021 as many consumers spend some of their savings accumulated over the last 12 months. Retailers that will have struggled in this period can ill afford to miss out on this potential windfall. So what do we see coming down the track that helps level this playing field?

  • Top of the list is increased sophistication in the delivery and returns space. Customers want product quickly and want an easily facilitated returns process for convenience, limited contact and low cost. Both of these factors drive customer loyalty, albeit at a price. There’s an increasing drive towards autonomous delivery solutions on the outbound for example and on the returns side there has to be an increasing use of data on the consumer to ensure that the individual is a customer you wish to retain or grow – too many are habitual users of free returns and the cost of this needs to be properly understood. COVID-19 has also had a lasting impact on consumers’ desire for BOPIS (buy online, pick up in-store) or Click and Collect which adds further complexity to customer visibility, payments and stock management. Supporting all of this is the emergence of automated warehousing, utilising digital and robotics technology for order fulfilment.
  • Reality tech is gaining significant ground, reinforced by lockdowns, with consumers seeking real life experiences nearer to home and this is closely aligned to the gaming industry where we have seen a significant increase in M&A activity amongst gaming businesses.
  • Mobile shopping will receive a further boost with the advent of 5G – even without this mobile shopping has been a net winner for some time and increased band width will continue this trend.
  • Digital payment solutions is a very active area, coupled with identity verification given the increasing security risks seen across the digital world. Many people will be familiar with facial recognition on their mobile devices and possibly voice recognition in their interactions with financial services. Increasingly we’re seeing the use of two factor authentication to tackle the surge in online fraud.
  • Product customisation will be increasingly prevalent. Nike has delivered this for some time now and with the rapidly reducing cost of 3D printing, we see much greater opportunity for customers to personalise what they buy, coupled with more flexible configuration software.
  • In addition to all this is the rise of payment flexibility. Klarna are leading the way here with established operators such as PayPal also expanding their offering. That said, we believe it’s inevitable that we’ll see more political scrutiny over these models.
  • The sophistication of advertising will increase significantly, driven by the introduction of more engaging content that builds brand equity and customer affinity. Content is increasingly becoming seen as the core plank of customer engagement and distributing this in a wide range of formats, brand compliant and in multiple languages across multiple channels is a real challenge to marketeers. Cracking this can really differentiate the consumer brand.
Amazon continues to emphasise and release opportunities for brands to tell their story and build brand equity – Zak Semitka, Tinuiti

“Amazon continues to emphasise and release opportunities for brands to tell their story and build brand equity across its platform with content. With this comes the introduction and adoption of new-to-brand metrics and the beginning of tracking the impact of these efforts. I believe tracking metrics will inevitably become increasingly interested in understanding the impact of these efforts. I believe tracking metrics will inevitably need to continue to expand as brands become increasingly interested in understanding the impact their advertising and creative strategies have on attracting new consumers to purchase,” said Zak Semitka, senior specialist, marketplaces at Tinuiti

  • In the consumer space many categories are now well established online and it’s easy to find categories where 10 percent and more of volumes are transacted online. There are other categories, typically larger ticket purchases, where penetration is much lower. A great example of this is automotive retail where circa 80 percent of browsing is done online and less than one percent is transacted. New arrivals such as Cazoo, Hayfin, cinch and Drover etc. are rapidly influencing consumer behaviour here in both the used and new car market.  Also in the new car market, CaaS (Car-as-a-Service) is starting to gain more traction as technology facilitates the proper integration and tracking of services and assets. This has influenced a number of OEMs to look at adopting different models, such as JLR’s subscribe and drive package.

There’s no doubt that the last 12 months has seen some seismic changes in the retail landscape and consumer behaviour that the software industry is responding to in exciting ways.  

Richard Sanders is a partner at Alantra