The future of retail is set to undergo significant changes in the next five years, according to insights from top industry executives. The disruptions caused by the COVID-19 pandemic have accelerated transformations in the retail industry, leading to the growth of curbside pickup, increased use of mobile apps, and changes in consumer demands. As retailers build businesses for the future, they are making changes that will transform the industry.
One major change expected in the role of stores is their transformation into smaller, efficient, and omni-channel locations. Retailers are moving away from large, unproductive stores and focusing on providing a more intimate associate experience. These stores will be strategically located where customers demand them, ensuring financial viability and a balance between foot traffic and digital orders.
The role of stores will also become more experiential in the future. Consumers will expect a higher purpose for a store beyond just shopping and transactions. Stores will become mini distribution centers, reducing the need for additional distribution centers and improving convenience and speed for customers. Retail-tainment will also play a big role, with stores offering multisensory experiences that transport customers to another world.
Brands and retailers will need to adapt to disruptive forces in the industry, such as technology, data, machine learning, and AI. These technologies will help retailers forecast demand, personalize experiences, and improve operational efficiency. Conversational commerce, where customers can interact with digital assistants using voice or text, will become more prevalent. Social media and platforms like TikTok will continue to have a significant influence on retail.
Artificial intelligence (AI) and automation will also transform the retail industry. AI will be used for personalized experiences, fit recommendations, and improved customer support. Automation will augment the work of retail associates, freeing up their time to engage with customers and provide better service.
In terms of where consumers will do the majority of their shopping in five years, it is expected that there will still be a balance between online and in-store shopping. While online shopping has grown, physical stores will remain important hubs for returns, exchanges, and pickups. The younger generation may lean more towards online shopping, but the majority of transactions will still happen in-store.
The most influential and dominant players in the retail industry will be those that embrace new tools, personalize experiences, and meet the evolving expectations of consumers. Brands that cater to a balanced lifestyle and offer value for money or the lowest possible prices will thrive. Luxury brands that provide a unique, human connection and an experience beyond just shopping will continue to exist.
Several changes will become standard in the retail industry that are not yet prevalent today. These include a focus on customer service as a lost art, the elimination of traditional cash registers to reduce transactional friction, inclusive sizing becoming the norm, and customization becoming standard across various retail categories. Just-in-time inventory management, sustainable energy practices, and the role of retailer apps as centralized hubs for personalized experiences will also become standard.
Overall, the future of retail in the next five years will be characterized by smaller, efficient stores that provide experiential destinations for customers. Technology, AI, and automation will play a significant role in personalization, operational efficiency, and improving the customer experience. The industry will continue to evolve and adapt to meet changing consumer demands and expectations.
