In 2018, KPMG published a comprehensive report on possible development trends in the retail sector. The following article presents them and discusses whether they are still accurate forecasts for 2020.
Me, myself and I
KPMG predicts, among other things, that increased investment in deep retail will lead to hyper-personalization. Deep retail" refers to the precise understanding of user preferences in customer research. Whereas previously there was only general research on the smartphone user, today even more attention is paid to details, for example, eye movements or emotions when using a mobile phone are studied. In order to create personalized shopping experiences, products and services, companies will continue to invest heavily in researching their customer groups. One example of such a company is the American "Function and Beauty" brand, which manufactures personalized hair care products.
Increased price awareness
The increasing awareness of pricing strategies compared to the actual value chain also affects the purchasing behavior of many customers. KPMG found that 75 percent of consumers no longer assume that the quality of a product will increase parallel to the price. In addition, 81 percent of consumers research online before committing to a purchase. Consumers therefore demand more cost transparency. This could be achieved above all by technologies such as blockchain. Apps such as "Shop Savvy" already enable customers to compare prices in various online stores and nearby shops using the barcode of a product.
The rise of the AI
With increasing enthusiasm for new AI advances, the willingness to communicate with them has also increased. Intelligent loudspeakers and chatbots are particularly popular in the retail trade. The number of users of intelligent loudspeakers rose from 14 to 27 percent within one year (2017-2018). KPMG predicts that by 2020, chatbots will be involved in 85 percent of all types of business and consumer interactions. An example of a chatbot is HelloAva. It is used to recommend customers skin care products based on their skin type.
Today more than ever, the focus is on the customer's experience. Young Germans are already saying that around 52 percent of their holiday spending will be spent on experience-oriented purchases. Older generations have indicated that only 29 percent of their spending will go in this direction. IKEA is one of the leading examples, as it has organised an overnight stay in one of its stores for over 100 customers.
Environmentally friendly please.
Sustainability is no longer an option in retail. The next green generation wants to see sustainability in action. Ekoplaza has launched the world's first plastic-free supermarket in Amsterdam. Over 700 products from fresh meat to lentils fill the shelves packed in compostable biomaterials.
One in three millenials uses social media as a primary instrument for interaction with companies. Social currency is the resource resulting from presence in social networks. BirdsEye, an international brand for frozen foods, used a pop-up restaurant in London, for example, to increase its presence. They paid for it by posting a picture of their food with the Hashtag #Birdseye inspiration.
Apart from all these trends, apps such as ApplePay are increasingly making cashless payments in the retail sector. Macroeconomic trends that can be expected in 2020 include revenue growth, high employment rates and price increases. At the same time, retailers need to use their resources more sparingly, which will lead many to work more closely with the supply chain company. In addition, qualification programmes for personnel recruitment must be expanded. Otherwise, there will be a shortage of qualified employees.
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