Retailers, meet your customers of the future
To mark dunnhumby’s 30th birthday this year, we’re looking ahead to what the next three decades could bring.
There’s no doubt that the world of retail has changed enormously since dunnhumby was born in June 1989. From the launch of contactless payments to self-checkouts and digital shelf edge pricing, the world of commerce has come on leaps and bounds. This begs the question: what changes could the next 30 years bring, for both retailers and their customers? Looking at the direction of travel retail is taking today, here’s what our experts think shopping might look like in the near future…
Food for thought: the menu of tomorrow
While there’ll always be dishes that will never go out of style, certain foods are set to go through some pretty exciting changes. Forget beef burgers – think plant-based protein, or ‘meat’ grown from cells in a lab. Sushi fans will be tucking into Ahimi® – a tuna alternative made from tomatoes. And that delicious bacon served up with breakfast? A meatless substitute made from shiitake mushrooms. But that’s just for starters.
We also expect to see fresh produce harvested from the grow tower or ‘living wall’ in local stores, or even from the roof garden on every apartment building. There’ll be personal genetically-engineered nutrition bars and snacks designed to help meet individual health and disease-state needs too. All produced by a 3D printer that keeps a record of individuals’ DNA profiles. Truly taking the science of personalisation to the next level…
Delivery on tap: food shopping that’s easy as pie
Who will have time to go to the store themselves? Already today one-hour order-to-delivery is common, particularly in urban areas. Yet in 30 years’ time, this will be the norm, with drones, driverless vehicles and food printers delivering the food shop. Don’t want to wait in? Groceries can be securely delivered to customers’ own refrigerators by the ride-sharing service or to electric scooters or hoverboards or jet-packs (whatever modes of personal transport are trending…), ready for them to collect at their leisure.
For retailers, this means much leaner supply chains and super slick delivery models will be essential. Robotic technology is likely to handle many of the jobs such as warehousing, distribution and store operations. Machines will even help consumers decide what’s for lunch and then prepare it for them. And hopefully clean up afterwards too…
Cool customers: the surprising potential of your fridge
We’re already seeing smart technology in some appliances. Let’s take fridges as an example – current ‘smart’ models are able to look up recipes and read the steps out as you cook, or set expiration dates and display notifications to make sure you use food while it’s fresh. But things are set to go next-level in the future. We’re talking about fridges that become ovens, with sections that hold pre-prepared meals and can warm them on demand, all operated remotely by mobile device. Particle detectors within the fridge will monitor gases released by fresh food as it ages, alerting owners when food is near to spoiling. This tech will also have the ability to detect the nutritional value of the food in the fridge. These smart devices will work in partnership with domestic robots who will plan menus for their owners based on nutritional calculations and efficient use of what’s already in stock.
Consumers who prefer to choose for themselves will be able to use VR-enhanced technology from the comfort of their sofa. With the store of their choice projected into their headsets or glasses, they’ll be able to browse the aisles, touching and smelling the products as well as seeing them – all without setting foot in the shop. As if spending wasn’t easy enough already…
High sustainability standards: the norm of the future
Through public opinion and legislation, the grocery industry of the future will become more sustainable. Fewer visits to stores and deliveries made by electric or solar-powered vehicles will reduce the carbon footprint. And the current packaging crisis will be resolved, with plastic likely to be outlawed and biodegradable materials used as standard.
Customers of today are already demanding more local, regional products – and this is a growing trend, so it will be no surprise to see local brands outperforming global ones. To keep them happy, retailers will need to engage with smaller suppliers in the way they do the big brands today, using customer data and working collaboratively to anticipate and meet demand for products produced or grown in more environmentally-friendly ways. Food provenance scandals show that even today, the supply chain is on the brink of scale implosion and use of blockchain technology to improve traceability in food supply chains is likely to become standard practice.
Brick by brick: physical stores are safe as houses
Bricks-and-mortar stores will still exist in 2049, but they’ll look very different to today’s stores. People will still visit shops, but for entertainment instead of necessity. Rather than just pop in for their bread and milk, they’ll visit to check out new brands, watch recipe demonstrations, sample new products or services and see what the latest trends are. If they like what they see, they might take goods-to-go, but more likely will have them delivered.
This means that larger format stores will probably all but disappear, replaced by smaller, easier-to-shop stores that hold less stock. But, most importantly, they’ll still be made of bricks.
The devil’s in the data: the customer is always… first
Data being the driver behind modern retail strategies is something that will continue to evolve – in fact, no retailer or CPG (Consumer Packaged Goods) brand will survive without it. Customer Data Science will have an all-encompassing customer model, allowing deep 360-degree understanding of customer interactions and how different marketing levers impact customer behaviour, purchase intent and satisfaction.
But customer intuition around the value and leverage of their own data will evolve alongside this. Customers will access, control and share the data held about them by others, aided by radical new services and software.
Game on: value versus innovation
With no sign of the pressure on retail margins easing, it’s likely that private label products will overtake brands, making retailers operate more like manufacturers. However, CPG manufacturers will themselves operate more like retailers, selling direct to consumers, and through third-party marketplaces like Amazon.
Private label will continue to compete with brands on value, with branded products continuing to hit back with innovation. And both will have to compete on quality.
Differentiating commoditised goods will be increasingly challenging in the coming years. In 30 years’ time, we may see customers buying subscriptions for unlimited household goods, in the same way that we buy unlimited data on mobile phone plans today.
Customer first, 2049 style
Whatever the future brings, grocery retail will be a very different industry in 30 years time. But one thing that won’t change is the need for retailers and CPGs to put their customers first.
With physical visits to stores no longer driven by the need to replenish, footfall will be lower and retailers will need to provide experiences that inspire and entertain to motivate shoppers to want to visit them. Having said that, physical stores will still offer an invaluable opportunity to build relationships with customers that will be much harder for online-only marketplaces to achieve. For many, ordering online is often not quite as gratifying as the in-store shopping experience.
Wherever they shop, tomorrow’s clientele will demand an exceptional experience from retailers – and providing this will still be founded on a solid understanding of people.
From all of that, one thing is clear: getting to grips with today’s data-driven economy is the best option for any retailer or brand who wants to be prepared to serve the needs of their customers of the future.