Over a six-year time frame, from here to 2025, retail will increasingly become invisible, omnipresent, and deeply personalized. The industry will become something we would scarcely recognize from today’s perspective. Big Retail will be a shadow of its current self. The consumer relationship will be owned not by major names in retail, but by a data platform managed by consortium where every player, big or small, has equal ownership.
The following trends and industry events will connive to make retail fundamentally different from the what it is today:
Commerce becomes invisible and omnipresent. With Amazon Echo and Google Home shipments inching towards ten million units globally, and reaching an installed base of 50 million in the US, every indoor place is now a retail store. And transactions do not even require typing in an URL or downloading on app and plodding through multiple menu levels. There is no store front separating a retail establishment from the rest of the world. All that matters is a retailers mindshare. Google Shopping Actions which allows product search results to be added to an always-present, universal cart, and Instagram’s recent pilot of native shopping capabilities, make the act of buying a seamless, and barely noticed part of contemporary life.
The preponderance of intent, transaction, profile, social, and demographic data. The last quarter century, since the world wide web went mainstream, has been a gigantic exercise in user profiling. Collectively, Facebook, Google, Amazon, Apple, and (lest we forget) Equifax, know more about the average resident of the western hemisphere than her mother, significant other, and best friend combined. The next ten years are going to see the sprawling “user-profile capture industry” up the ante through Echo and Home, and ubiquitous home IOT.
The consolidation of that data into a single platform; (let’s say) Amazon owned. One to one personalization will increasingly become an expectation. The data, the ability to resolve the different data points into a single identity, and the ability to use machine learning to crunch the data and deliver the right proposition at the right time – will all improve steadily. In addition, the data will be more unified. Currently, user information is spread across disparate sources. Amazon owns the transaction data, Facebook the social graph, and Google – the intent data. However, each giant is trying to expand its scope. For example, note Google’s Shopping Actions. Also, note Amazon’s foray into Google’s territory through its advertising program. This arms race to profile the customer, and the usual forces of industry consolidation will lead to convergence of transaction data, intent data, and the social graph.
Data consolidation improves the shopping experience. The coming together of data of different aspects of the consumer’s life will take shopping into hitherto improbable areas. To illustrate, integrating the social graph into the mix will enable shopping modes such a mother or a sister buying apparel for a male relative, or a camera enthusiast aiding a photography neophyte’s purchase of her first DSLR.
Antitrust’s transfer of ownership of the data from Amazon to consumers. The tide is turning on antitrust. Current antitrust thinking focuses on short-term consumer welfare, which makes Amazon kosher. After all, the Seattle giant is forever slashing prices. But this focus on prices is a historical anomaly. In the past, a stricter view was taken on creeping monopolies. Concerns regarding a structural reduction of competition led US antitrust authorities to go hammer and tong after the biggest retailer of the 1940s and 50s – The Great Atlantic & Pacific Tea company. The din around regulating Amazon is getting louder, and is coming from legal scholars, the FTC, and US legislators. We are likely getting to the point where the pendulum starts swinging in the other direction. One of the possibilities with an antitrust drive against Amazon is making users the de facto owners of the data they generate. If a “mid-90s Microsoft”-style move actually happens, the data ownership might be transferred from Amazon to the user, which effectively implies a new platform – a “demilitarized” zone where brands and retailers share ownership, and both cooperate and compete.
The resulting blockchain based platform owns the customer relationship. We call this future all-inclusive data platform, OneSystem. The platform, with a widely shared ownership and management model, will own the customer relationship. It is analogous to the current marketplace model of ecommerce where, Amazon owns the customer relationship and shapes expectations, and the individual sellers are little more than an user rating between 1 and 5 and set of product reviews. OneSystem will likely be blockchain based. Why blockchain? A distributed ledger-based platform is not strictly necessary, but it would go a long way towards driving the right sort of PR for a repository that must have shared ownership.
A digital twin of every consumer emerges to which many delegate much of shopping. The end result of the all the data accumulation and identity resolution is a digital simulacrum of the individual. Let’s call it the digital twin. The digital twin’s response to a given retail stimulus is indistinguishable from that of the individual it represents. Consumers will increasingly delegate routine buying decisions to their digital twins. The interaction between their digital selves and brands would often be purely in the digital realm. The brand will make personalized offers, and the digital twin will accept or reject, or propose a better deal. If you think such delegation is too far-fetched, consider Stitch Fix’s 2.7 million active customers who have essentially empowered an algorithm to pick their wardrobe.
Delivering an individualized experience is all important – fulfilment becomes commodity. The retailer’s role will be much diminished. The value as an aggregator that retail brings to the table will become less important. Retailers traditionally reduced the consumer’s cost of discovery through its broad and deep assortment, bringing together numerous categories and brands under one roof. That mantle will now be borne by OneSystem, a place where consumers voluntarily park their data, hang out, browse, receive personal offers, and shop. Retailers will fade into the background, and will relegated to the role of “dumb pipe” fulfilment providers. Brands will rise into prominence once again.
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