Future of Retail

We are at a tipping point where everything we know about shopping is about to change. Retailers who accept this challenge will begin to think more strategically to define a modern retail experience for its consumers.

E2X Limited

Mon Apr 15 2019

Looking back over the past few years, it’s hard to remember picking up a newspaper that doesn’t discuss the closure of a large number of high street stores or the casualty of a well-loved retailer such as House of Fraser, Marks & Spencers and Toys R Us.

But what’s to blame? Is this trend of the collapse of the physical store really what’s happening? Yes, it’s true that global economies are suffering, living wages are increasing and business rates continue to rise, but in contrast retail remains one of the largest private sector industries around accounting for 1 in 10 UK jobs and £358bn total sales in 2018 proving that consumers are still spending!

The real issue is changes in the way consumers shop. Historically, retailers have led the definition of the consumer experience, initially with a bricks and mortar stores and later on ecommerce websites, but many have left it there. With technology such as IOT, drones, VR/AR and AI now moving from concepts previously seen on the silver screen into the hands of everyday people, the modern day consumer has demanded engagement with retailers in a very different way, connecting both physical and digital spaces in an integrated and seamless manner.

We are at a tipping point where everything we know about shopping in-store and online is about to change. Retailers who accept this challenge will begin to think more strategically to define a modern retail experience for its consumers.

What is driving the change of retail?

The future bricks and mortar store will be unlike the ones we’ve seen before. Previously the main stages of shopping were done in-store: 

  • Investigate
  • Decision
  • Purchase
  • Delivery
  • Loyalty & rewards

Going forwards, there won’t be such a hard line between digital and physical as the two will interact seamlessly across the shopping stages. The challenge for retailers will be understanding the context of a user at each stage to determine the right digital and physical touch points.

What do consumers want? Consumers understand they can complete all shopping stages without leaving the comfort of their own home. However, they’re human and enjoy a day out with friends and family — this can still be the high street if they can have a meaningful experience. With this in mind, 2018 saw a number of businesses start using the physical store during the investigation stage differently, focussing on branded experiences by providing interaction with both the brand and the product.

1 - Investigate: For many years, brands have carried out advertising and marketing stunts around the investigation stage everywhere except in stores. We’re now seeing stores offering a branded experience to build a connection with the consumer as they investigate what product to purchase.

Examples: This has been done by brands who are looking to connect with a local audience by tailoring the store design such as Target Small-Format, who offer a reduced selection of their overall product range tailored specifically for the local area, other brands have wanted to provide an immersive experience, for example Dr Marten, who has set up a store in Camden with a virtual factory tour, boot customisation space and an in-store live band space. Similarly, Starbucks Shanghai provides an interactive AR (Augmented Reality) brewing experience.

2 - Decision: In the future, retailers will enhance the investigation anddecision stages of shopping by moving away from the traditional layout of browsing stock on racks, trying-on and purchasing. Stores will complement the digital experience where a consumer’s preferences and previous searches are already understood and will provide product recommendations on arrival into store. This development will mean consumers can browse and try products both physically and digitally using their phones, tablets, smart mirrors and VR (Virtual Reality). 

Examples: A number of retailers, including Sephora, the originator of try-before-you-buy make-up, was one of the first to launch ModiFace on mobile and in-store 3D AR mirror to enable consumers to virtually try on makeup and receive guidance. Rebecca Minkoff stores partnered with eBay to create a fitting room mirror which recognises RFID tags on each product, which allows shoppers to view product information and browse items with similar styles. This technology helps consumers make more informed and quicker decisions. It also significantly reduces the inventory space required by the store. This in turn could reduce rental costs retailers could use smaller stores or it could enable the retailer to do more exciting things with its brand in the remaining space. Finally, FarFetch have taken a very different approach, developing an operating system that links customer and store data to allow assistants to understand specific customer needs and to update their digital profile by tracking the customer’s interaction with products.

3 - Purchase: For the third stage of the shopping journey, a number of retailers are looking to move product purchase away from being the biggest bottleneck to a nearly unconscious frictionless moment. 

Examples: Stores driving this agenda are Apple; with the checkout in the hands of each assistant, and Amazon Go and Alibaba’s Hema Supermarket who are moving towards invisible payments like Uber. Amazon have pulled a large number of advanced technologies together allowing a consumer to touch their mobile as they enter the store, then literally pick up products and walk out without any further scanning. Unfortunately, Amazon’s proprietary technology may not be available to other retailers for a number of years. However Alibaba’s Hema Supermarket uses existing phone technology enabling scanning and payment of products via a simple app without the need to queue. This accessible technology is easily scalable to other stores and has the potential to significantly reduce loss of sales caused by long wait times at the checkout.

4 - Delivery & returns: Further stages of the consumer experience that are in the early stages of advancement are delivery and returns. With the rapid move to full omni-channel integrated experiences, customers will look to receive and return products via different channels. In many cases, customers place an order in store for delivery to their home or office. 

Examples: We’re already seeing innovative delivery solutions from Amazon with Amazon Key (delivering directly into your home), Amazon Locker (to collect your parcels from a nearby locker), and in the near future, drone delivery. We’re also starting to see stores accepting returns from online purchases and vice versa, and the use of fulfilment services such as Collect+ allows consumers to return through nearby shops. The question is when will returns be handled direct from home with drone or Amazon Key?

5 - Loyalty & rewards: There’s a range of loyalty and rewards programmes which generally require the consumer to carry an additional card. The simplest of these is a cardboard stamp card to record the number of purchases before a free product is offered, others include supermarket loyalty swipe cards recording spend and allocating points to your profile, and finally branded credit cards. With the move to smart phone payment, retailers need to shift from physical to digital and remove the unwanted extra cards. This comes with the added benefit of data gathering to better understand consumer trends.

Examples: A number of small digital businesses are making a play in this space, including Fidel who link a consumer shopping profile to their bank cards, so every time they pay it recognises them and links the points to their profile. StampMe removes the cardboard stamp in place of the StampMe app which scans a QR code during purchase, this could be built into a branded app. Finally, the simplest format would be to hold the barcode seen on the current loyalty card on the branded app for scanning when in store.

6 - Sustainability: An additional element that consumers are looking for across the modern retail experience is sustainability. With the significant rise of the eco-consumer, brands that demonstrate their commitment to a sustainable future will likely connect with more consumers. A number of retailers have demonstrated this by educating their consumers about their sustainability initiatives, others directly sell eco friendly products in an eco friendly way. Timberland Tree Lab takes a consumer’s water bottle and recycles it in store into shoe laces and shoe linings, and refill zero plastic stores are quickly becoming a social norm.

What are the important technologies to consider?

There are a number of businesses and start-ups experimenting with new retail concepts as seen at the Consumer Electronics Show 2019 (CES) and in future of retail articles. There are a few common technologies used both in-store and in the consumer’s own world that are important to note.

These technologies each offer some unique and interesting use cases and once a retailer has defined its consumer experience and needs across the buying stages, it should consider which technologies are best placed to help deliver its future vision.

1 - Investigate

  • Understand the brand: In-store tablet interactive experience | Marketing/advertising to email, website, TV | Tablet/screen — In-store branded experience (history, interactive, play etc)
  • Search & compare: Voice — recommendation | Mobile — photo recognition & recommendation | Ecommerce | Social | Mobile — in-store navigation & information | Mobile/tablet/Point of Sale — product information | AI — recommendations | Smart mirror — dressing room store staff communication & stock check | AI store layout improvement | Beacon/RFID — in-store consumer tracking & notifications | Robotic inventory management | Robotic shop assistant
  • Receive recommendations: Social media tracking (preferences, views & likes) | Voice recommendations | Mobile push notifications | AI smart mirror 
  • Receive offers: Mobile near-store push notifications

2 - Decision

  • Select & tailor product: Mobile/tablet/desktop — product configuration, personalisation and select appropriate size | Smart mirror product selection | Point of Sale — stock check | Visualise product
  • Visualise product: AR smart mirror — view virtual product fit (digital dressing room) | VR room — product environment | Mobile AR/VR — see product in home environment, in own mirror, layered onto photo
  • Repeat purchase convenience items: Voice recommendations | Home IoT devices

3 - Purchase

  • Pay for product: Biometric recognition for invisible payment | Mobile payment (+ product scanning) | Point of Sale
  • Subscription: For repeat goods setup 

4 - Delivery

  • Track order: Voice confirmation and tracking | Standard ecommerce confirmation
  • Receive order: Drone delivery | Click & collect | Smart control of home entrance

5 - Loyalty & rewards

  • Collect rewards points: Credit card linked to rewards profile | QR scanning to track purchases | central app to show loyalty barcode

So what next?

The final question is “How do I define my future retail strategy and what technologies are relevant to my consumers”. At E2X we work closely with our clients to define their digital strategy and help execute that with our design team and our partners 20 years experience in omni-channel retail technologies. In my next article I will cover how to define your future retail vision and important considerations, but if you‘re interesting in discussing the topic further please do get in touch.


In preparing this report we have drawn useful insights from third parties who’ve conducted wide industry quantitive and qualitative research. We have absorbed this and provide our own thoughts and viewpoint.

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