The Future of Retail And How It Will Affect The CIO

A few years ago, if you had asked me what I thought retail came down to, I would have said managing the transition from physical to virtual and building brand loyalty.

Being multi-channel enables stores to offer customers both the virtual and physical store option, and brand loyalty enables retailers to retain customers and build advocates.

Retailers realized a couple of years ago that having a large number of stores was no longer viable for all but the biggest players, and focusing on the customer would become increasingly critical.

Recently this trend has accelerated, with a growing group of customers (particularly Millennials) expecting speed, convenience, low prices and ethical production methods in far greater numbers than before.

While this new kind of customer still values brand names, brands such as Warby Parker, Everlane and Macy’s have shown that retailers are relying ever more on their IT stack to ensure a positive customer experience.

Here are a few thoughts on how we expect retail to evolve in the future.

Big Data Will Solve The “Showrooming” Problem

Retailers currently face a big problem with “showrooming,” where customers visit high street retailers, and then go online and buy the same good for a cheaper price.

According to a study by Ad Week, 60% of consumers intentionally “showroom” and buy from the same website, and less than 10% buy from the same website as the store they use to showroom.

“The messaging has to be more about the brand, the offer, the product, the benefit and less about a channel. While you want people to come to the store, you need to talk about the brand as an experience that you can get in three or four different channels” explained Allen Adamson, managing director of Landor Associates in New York.

Bloomingdale’s has introduced fitting rooms that can be used to get more product information or to call a sales associate for help, and Macy’s has introduced Image Search, which allows users to submit a photo of an outfit they like and match it with similar apparel from Macy’s to purchase.

Offline retail presences that fail to adapt will be reduced to well-decorated showrooms for other retailer’s products if they’re not properly optimized for multi-channel.

As the showrooming phenomenon grows, businesses are diversifying advertising spend. According to research from Kantar Media, retail Internet advertising grew 41% from 2010 to 2012.

What it means for CIOs

So how do you position yourself for this shift? Gartner recommends retailers make better use of Big Data to provide a more integrated customer experience.

Zara is currently introducing an RFID stock control system, which makes use of radio frequencies to tag clothing. This means that Zara is able to access data on what is selling faster, allowing them to replenish and reproduce faster. Zara is aiming to achieve supply chain mastery – where it can recreate street and runway trends as they are happening.

Despite some innovative trials however, a recent survey by eCommera found “only 23% of UK retailers feel they can quickly make sense of the data available to them to take the right business decisions.”

To leverage Big Data fully, CIOs need to get better at drawing the path back to purchase, and connecting the dots between the individual customer touchpoints (online, retail, etc) that lead to a decision to buy.

Mobile Payment Will Go Mainstream

For many years, the payment a customer makes at the point of sale has been essentially stagnant. Retailers owned the process and could more or less choose how customers were going to pay them.

However, with the rise of apps such as Venmo, which gives consumers a way to pay without reaching for their wallet, consumers are gradually doing away with cash. According to a recent study by, 51% of Millennials prefer to use plastic over cash for purchases under $5 compared with 12% of consumers over the age of 65.

The mobile payment ecosystem has been nudging towards its own solution for payment for years now, but the introduction of Apple Pay has definitely given the process more momentum. Macy’s and Bloomingdale’s have announced that they will be amongst the first retailers to support the new Apple Pay mobile payment system for iPhone 6 and iPhone 6 Plus.

Macy’s and Bloomingdale’s have also introduced “My Wallet”, a system that provides customers with a “digital house” for coupons and offers for those enrolled in their loyalty programs.

What it means for CIOs

Mobile Payments is a great opportunity for the CIO to move payments beyond transactions into relationships.

Until this point, the CIO has been responsible for ensuring that payments work by applying IT to front-office and back-office processes.

By applying IT to out-of-office processes, the CIO can become much closer to the customer than before.

Instead of treating their payment system as transactional, next-generation CIOs are using payment systems to build customer relationships and loyalty.

Next Generation Mobile Apps Will Emerge

Refreshed and constantly updated mobile apps are also a great way to build loyalty. Young consumers are increasingly gravitating toward visual forms of communication, with 60% of Millennial consumers believing that by 2020, everything “will be done on mobile devices, much of it through images

Let’s start with some stats:

  • Consumers spend up to six times more in retailers’ apps in December 2013 compared to a year earlier (Source: Flurry, 2013)
  • Retailers’ apps with store mode gather five times more engagement. (Source: Point Inside, 2013)
  • Retailers’ apps take up the most of consumers’ time at 27%, followed by online marketplace at 20%, purchase assistant at 17%, price comparison at 14%, and daily deals at 13%. (Source: AdMedia Partners, 2013)

In response, retailers have been hard at work improving their mobile app experience, and partnering with third party providers to do so. Macy’s and Bloomingdale’s recently launched brand new shopping apps for Android and iOS.

Even retailers that have opted against large-scale overhauls of their apps are on the move. Target and Nordstrom are both using Like2Buy, a platform that links photos posted from an Instagram account to pages where people can buy the product.

Similarly, up and coming app Spring integrates with retailers’ e-commerce systems to allow products to be purchased through the app with a swipe. CMO Ara Katz told MTV Style:

“We’ve curated a community of hundreds of brands that’s much more about the way we shop. No one dresses head to toe in one price point. It’s high-low. We wanted to figure out how to get fast fashion, emerging designers, luxury, beauty, lifestyle—everything—while creating an experience that brings new stuff to people every day.”

What it means for CIOs

For starters, it means that moving forward, integrated technology systems that support physical, online and mobile environments are a must.

CIOs are still wrestling with the problem of developing IT systems and processes that can support customers shopping online from computers, such as smartphones and tablets – and there are no easy answers.

However, CIOs need to learn to embrace risk in implementing new customer-facing technologies, and bring other stakeholders on the journey with them. History has shown that companies that fail to adapt become endangered species.

Retailers Will Get Better At Providing Personalized Deals

Traditional retailing has been about convincing everyone to buy something, or convincing everyone that they need something. Over the last few years, retailing has become about winning people over by creating unique, personalized experiences.

In order to capture the attention of connected consumers, retailers will have to make their marketing more customized. Robin Lewis of the Robin Report recently predicted the death of the mega brand:

“This scenario suggests a future marketplace with an infinite number of finite brands and retailers micro-marketing to an infinite number of finite consumer niches that are more like small, social communities than cohorts. And brands and retailers will need permission and invitations into these communities vs. talking ‘to’ or ‘at’ them. So, my message to mega brands and retailers: change your game from an infinitely growing mass brand, to a strategy of infinite growth into finite niches—think ‘universes of one.’”

Macy’s has recently introduced a trial of shopBeacon at its Herald Square, New York and Union Square, San Francisco stores. The iBeacon/BLE implementation integrates with Shopkick to provide users with highly personalized deals, discounts and recommendations and rewards.

Retailers that embrace personalization are able to rise above the noise and speak directly to the consumer, building a strong customer relationship. By embracing personalized marketing through its “Share a Coke” campaign, Coke was able to reverse a decade-long decline in U.S. Coke consumption.

Incidentally, the trend is stretching beyond retail too. Dish Networks recently announced that it is going to be launching a new app allowing for personalized streaming content, which they hope will “shake up the landscape and target a hard-to-reach generation.”

What it means for CIOs

In the future, personalized marketing will play an ever-increasing role.

This is actually good news for CIOs who are always thinking about ways to use IT to drive improved customer experience. In fact, this is the kind of centralized initiative that can only come from the office of the CIO. All of this will increasingly become key to retailing effectively.

How do you expect retail to evolve over the next few years? What is your company doing to evolve with it?

Published by

Kristian Carter

Kristian Carter is a marketing technology advisor (MTV, Global Radio, Coca Cola Japan, Uniqlo, Tesco, Automic, Featurespace, MidVision), and has had work featured in The Next Web, Forbes, Huffington Post, and TechCrunch. Kristian has been called a “social media maven,” and has spoken at conferences including LikeMinds, Media140, WebTrends due to his expertise in targeting the youth market. He is a graduate of Oxford University, receiving a B.A. (Hons) in Philosophy, Politics and Economics.

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