Retail outlook 2018: The future of ‘Intelligence’ retailing

Retail outlook 2018- The future of ‘Intelligence’ retailing

The year is mostly away from brick mortar outlets, swanky offers online on multi-brands to lure customer footfalls and technology-driven approach to gain sales momentum is finding opportunities for investments in the retail sector.

Here are the top retail trends, predictions, and implications for suppliers of all sizes to adapt to these market forces.

Sneak Peak: Forrester expects that cognitive technology, including AI and automation, will replace 7 percent of U.S. jobs by 2025. This means retail companies could significantly reduce the costs of labor and make their shopping processes far more efficient.

The retailers are betting big on technology that it is redefining global retail economy to the e-retailing format with the latest technology tools. The retail companies are motivated with the strong consumer base on the multi-brand portal so are experimenting with brick and mortar store i.e. Nordstrom Local in LA and Sephora Studio, for return and same day pickup of an online order.

The retail traders association National Retail Federation’s  (NRF) outlines: “Online and other non-store sales, which are included in the overall number, are expected to increase between 10 and 12 percent.”

Speaking of process, in the world of retail consumption, a product or service makes the journey from producer to consumer in five stages – planning, sourcing, producing, distributing and selling.

Let’s have a look at the retail trends which are going to glitter the year 2018.

1.Technology advantage

The scope is now wide with the artificial intelligence with the AI options on customer recommendation. We can delve upon the various technologies verticals pushing for retail this year:

(A) Logistics and delivery– Dominos prototype delivery robots DRU pilots were introduced in Australia, New Zealand, Belgium, France, the Netherlands, Japan, and Germany boast of robotic delivery of food and other goods. Amazon Prime Air is described as a role delivery system for transporting and delivering up to 5-pound packages in less than 30 minutes.

 (B) Sales and CRM applications – Japan’s Softbank partnered with French robotics manufacture Aldebaran to develop customer service robot Pepper. A pilot of the Pepper in California’s ‘b88ta’ stores attracted a 70% increase in foot traffic in Palo Alto, and 50% of Neo-pen sales in Santa Monica were attributed to Pepper.

The AI creation in apparel stores the ‘Ave’, experienced a 98% increase in customer interactions, a 20% increase in footfall and a 300% increase in revenue. Multinational food product company Nestle announced in January 2016 that it planned to acquire Pepper robots to operate in 1,000 of its Nescafe in Japan.


(C) Payments and payments services

Digital payments are going through the advancements as digital transactions according to, “Total Transaction Value is expected to show an annual growth rate (CAGR 2018-2022) of 11.1% resulting in the total amount of US$1,412,295m in 2022.”

Amazon GO is designed with automated sensors to track the objects customers pick up and put in their basket, and customers’ Amazon accounts are automatically charged after exiting the store. A study by LexisNexis found PayPal’s approach to transaction security reduced fraud rate to 0.32% of revenue, which is 1% less than the average rate seen my most e-commerce merchants.

2. Artificial intelligence

AI will allow the retailer to the greater level of personalization shaping future. It can take the customer to unique experience to purchase products they are wearing and offers data collected on cloud storage and laser light will take you to the mall with AI driven car experience.  The smaller retailer may have barriers to utilize between the retail giants and SMBs, at least until AI is readily available to the mass market. According to market firm Tractica, global revenue from AI will see a huge increase from $643.7 million in 2016 to $36.8 billion by the year 2025.

Online home store Wayfair has launched visual search tool ‘Search with Photo’, that leverages AI to assist users to find the wide range of products among its selection of more than 8 million home furnishings.

3. Retail automation

Inside the stores, advanced technology is changing and taking shape, Amazon Go is having experimentation in Seattle. It doesn’t have any queues, simply walk – pick out and walk out. Amazon Go is calling this a “Just Walk Out” shopping experience

How it works:   It works by using the same types of technologies found in self-driving cars, such as computer vision, sensor fusion, and deep learning.

This technology can detect when products are taken or returned to the shelves and keeps track of them in your virtual cart. When you leave the store with your goods, your Amazon account is charged and you are sent a receipt.

It is happening with beauty retailer Sephora recently created an app that allows users to find the right shades and products simply by uploading a photograph of themselves.

+ More AI

4.Voice-based shopping

The stalwarts in retail Walmart experimenting with assisting customers with the trendy virtual assistants. Along with technology giant, it announced to enable voice shopping through Google Assistant through ‘Google Express’. The delivery service currently guides to retailers, including Target, Costco, Kohl’s, Bed Bath & Beyond, PetSmart, Staples, Toys R Us, and Walgreens.

According to virtual assistants are changing the scenario in America. Its study revealed, “35.6 million Americans will use a voice-activated assistant device at least once a month,” appreciation of 128.9% over last year.

Amazon’s Echo speaker will have 70.6% of users; Google Home will trail far behind with just 23.8% of the market. The remaining portion will be shared among smaller players, such as Lenovo, LG, Harmon Kardon and Mattel.

“The heaviest users of digital assistants are people between the ages of 25 and 34. They represent 26.3% of virtual assistant users. In terms of generation, more than one-third of millennial (33.5%) will use a virtual assistant this year.”

5. Online grocery trend

The online grocery space is most promising medium to jump to five-fold over the next decade and spending will upsurge to $100 M in delivery at home items by 2025, study unveils. The Amazon, Wal-mart, and Kroger attract sales from their online ventures and study by, points out this channel is going to become firmer.  Around a quarter of American households currently buy some groceries online, up from 19 percent in 2014, and more than 70 percent will engage with online food shopping within 10 years, according to report by “The Digitally Engaged Food Shopper“.

“Grocery shopping will reach digital maturity and saturation faster than other industries that went online before, such as publishing or banking,” said the report. “Younger, newer and more engaged digital shoppers adopt digital technologies more quickly, and will hasten the expansion of digital grocery shopping further.”

Sneak Peak: Last year’s online sales were the equivalent of 764 grocery stores, based on store volume; by 2025, the digital share could become comparable to nearly 3,900 stores.The report points out that grocery retailers are already experimenting with different business models and approaches to online.

“Retailers have a natural survival instinct and a natural growth instinct,” said Thom Blischok, global retail strategic advisor to Nielsen. “But profitability going forward is really the key.”

6. Private brand

The idea of promoting Private Label in retail is building in last few years. A report by  CSP Daily says 61% consumers are purchasing private brand now than they were using two years ago. Its report shows how private labels are in vogue, “Since the start of 2017, private-brand sales have increased 4%, which is eight times the amount of national brand sales.

Moreover, these brands have contributed about $50 billion in the margin to retailers, a $2 billion increase since 2016.” And private-label products are being purchased regularly, as 81% of consumers said they do so on every or almost every shopping trip.

The USP of private brands is

  • The high rated products under the umbrella of the private brand are value for money.
  • The uniqueness of private brands in retail makes consumer visit more frequent, hence profitable.
  • The private brands in health category grew 17%.
  • The feedback from customers makes more valuable products. About 77% consumer has opted to personalize products and private labels do so often.
  • 10 Most popular private label trends for 2018

7. Data Driven

Most consumers are using trendy apps, social media, chat, etc. and glued to the internet over mobile phones. The retail industry collects real-time data through promotion and campaign on consumer purchasing and behavior and this is a viable tool for retailers to outreach customer through membership, social handle, loyalty program, and interaction.

Technology has opened the floodgate for the retailer for transferring information, sending products, offers services, social mediums, and chat to deal/cost conscious customer and improve sentiments towards the brand.

8. New customers/retail store apocalypses closures

The Millennial consumers or Gen Y customers are converting shoppers are ahead in buying decision, capacity and drives brand loyalty and often plugged into mobile and social shopping.

Sneak Peak: The mighty 80 million millennials in America represent about a fourth of the entire population, with $200 billion in annual buying power.

The recent finding of Hanover Research found interesting habits of this generation shopping habit.

  • They continue to spend despite the economic recession. Only 20% of millennials reported spending less on apparel, vs. 32% of non-millennials. In the survey, 52% of millennials were more likely to make impulse purchases than any other generation.
  • They use smartphones for purchases. 50% of millennials use mobile devices to research products and reviews while only 21% of non-millennials do the same.
  • They are more brand loyal than their parents. 78% of millennials are more likely to select a brand with a loyalty/reward program than a brand without one.
  • Top 14th retail trends that will redefine the industry

The NRF’s 2018 Retail’s Big Show backed the technology trends where AI was an overwhelming theme of the show. The participated companies seek to transform shopping journey applying the most recent advances in artificial intelligence, machine learning, facial recognition, big data, robotics, conversational commerce/digital assistants and more.

Final thoughts:

The retailers are not surviving to the old retail models, new techniques are evolving and augmented reality, AI, retail automation helping to push retail market beyond limits. The B&M (brick and mortar) business is backbone will stay experimenting in different ways.  The future is ‘intelligence’ for retailers who adapt to the needs of their customers. The merchants who will find innovation 2018 and beyond are the ones that can successfully go forward along with consumers.

Off course, technology will come at a cost and that too high and unaffordable for the small-scale retailer. The market dimensions are changing day by day this calls for the change as of now the technology is driving the momentum. Businesses are more focused on the consumer with the available data with the best use in the complex yet evolving market.

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