Black Friday and cyber Monday are upon us again. The 2 events are relatively new in regards to Irish society. This very much an American tradition, but they are still very successful for retailers over here, however snap sales are neither sustainable or viable in the long term. So what can we do to improve our high streets and get us back shopping?
It’s a snowy Saturday in Dublin, but Jo, age 28, she doesn’t care, she needs resort wear for a Caribbean vacation. Five years ago, in 2018, she would have headed straight for the shopping centre or town. Today she starts shopping from her couch by launching a videoconference with her personal concierge at Dunnes Stores, the retailer where she bought two outfits the previous month. The concierge recommends several items, superimposing photos of them onto Jo’s avatar. Jo rejects a couple of items immediately, toggles to another browser tab to research customer reviews and prices, finds better deals on several items at another retailer, and orders them. She buys one item from Dunnes Store online and then drives to the Dunnes store near her for the in-stock items she wants to try on.
As Jo enters Dunnes, a sales associate greets her by name and walks her to a dressing room stocked with her online selections—plus some matching shoes and a cocktail dress. She likes the shoes, so she scans the bar code into her smartphone and finds the same pair for €30 less at another store. The sales associate quickly offers to match the price, and encourages Jo to try on the dress. It is daring and expensive, so Jo sends a video to three stylish friends, asking for their opinion. The responses come quickly: three thumbs down. She collects the items she wants, scans an internet site for coupons (saving an additional €50), and checks out with her smartphone.
As she heads for the door, a life-size screen recognizes her and shows a special offer on an irresistible summer-weight top. Jo checks her budget online, smiles, and uses her phone to scan the customized Quick Response code on the screen. The item will be shipped to her home overnight.
Check out Cisco’s vision for the future of retail below:
This scenario is fictional, but it’s neither as futuristic nor as fanciful as you might think. All the technology Jo uses is already available—and within five years, much of it will be ubiquitous. But what seems like a dream come true for the shopper—an abundance of information, near-perfect price transparency, a parade of special deals—is already feeling more like a nightmare for many retailers. Companies such as Toys R Us, Maplins and Cleary’s have all fallen victim—and there will be more sadly…
Every 50 years or so, retailing undergoes this kind of disruption. Looking over to the US. A century and a half ago, the growth of big cities and the rise of railroad networks made possible the modern department store. Mass-produced automobiles came along 50 years later, and soon shopping malls lined with specialty retailers were dotting the newly forming suburbs and challenging the city-based department stores. The 1960s and 1970s saw the spread of discount chains—Walmart, Kmart, and the like—and, soon after, big-box “category killers” such as Circuit City and Home Depot, all of them undermining or transforming the old-style mall. Each wave of change doesn’t eliminate what came before it, but it reshapes the landscape and redefines consumer expectations, often beyond recognition. Retailers relying on earlier formats either adapt or die out as the new ones pull volume from their stores and make the remaining volume less profitable.
Like most disruptions, digital retail technology got off to a shaky start. A bevy of internet-based retailers in the 1990s—Amazon.com, Pets.com, and pretty much everythingelse.com—embraced what they called online shopping or electronic commerce. These fledgling companies ran wild until a combination of ill-conceived strategies, speculative gambles, and a slowing economy burst the dot-com bubble. The ensuing collapse wiped out half of all e‑commerce retailers and provoked an abrupt shift from irrational exuberance to economic reality.
Today, however, that economic reality is well established. The research Statista estimates that e-commerce is now approaching €4 million in revenue in Ireland with a yoy increase of 11.6% increase alone and accounts for 9% of total retail sales, up from 5% five years ago. The corresponding figure is about 10% in the United Kingdom, 3% in Asia-Pacific, and 2% in Latin America. Globally, digital retailing is probably headed toward 15% to 20% of total sales, though the proportion will vary significantly by sector. Moreover, much digital retailing is now highly profitable. Amazon’s five-year average return on investment, for example, is 17%, whereas traditional discount and department stores average 6.5%.
What we are seeing today is only the beginning. Soon it will be hard even to define e-commerce, let alone measure it. Is it an e-commerce sale if the customer goes to a store, finds that the product is out of stock, and uses an in-store terminal to have another location ship it to their home? What if the customer is shopping in one store, uses their smartphone to find a lower price at another, and then orders it electronically for in-store pickup? How about gifts that are ordered from a website but exchanged at a local store? Experts estimate that digital information already influences about 50% of store sales, and that number is growing rapidly.
As it evolves, digital retailing is quickly morphing into something so different that it requires a new name: omnichannel retailing. The name reflects the fact that retailers will be able to interact with customers through countless channels—websites, physical stores, kiosks, direct mail and catalogs, call centers, social media, mobile devices, gaming consoles, televisions, networked appliances, home services, and more. Unless conventional merchants adopt an entirely new perspective—one that allows them to integrate disparate channels into a single seamless omnichannel experience—they are likely and will continue to be swept away.