Why New Retail Will Face Old Obstacles in 2018

Trends
Chase Buckle / December 14, 2017

The digitization of retail is opening up new channels for consumers to use in their purchase journeys, blurring the boundaries between online and offline commerce.

Alibaba Founder and Chairman Jack Ma first popularized the term in a letter to shareholders in October last year, defined as “the integration of online, offline, logistics and data across a single value chain.”

Focusing on mobile, ‘New Retail’ may include location-based services, augmented reality and voice command tools made popular by the likes of Amazon Alexa, Microsoft’s Cortana and Apple’s Siri.

In giving brands access to powerful consumer data, these technologies offer the potential to create a more personalized and customer-centric retail experience.

This new form of retail continues to attract much attention among brands and marketers, promising to offer new and exciting shopping experiences that are underpinned by smartphone technology and rooted in convenience. Although mobile-enabled New Retail shopping solutions will allow brands to manage and coordinate new and valuable consumer data, potential privacy concerns mean brands will need to tread carefully.

Mobile Retail Promises New Growth

33% of online adults have used a voice command tool in the past month on any device, and mobile is the go-to device for this behavior at 23%.

The development of voice assistants will be a key space to watch in the coming year due to their strategic importance to brands, with the likes of Amazon and Alibaba routing all commerce requests directly via their own retail platforms, and Google teaming up with Walmart in the U.S. in the same manner.

Among retailers with the resources to make use of it, this tech has already become an essential tool in future growth strategies. While smart speakers have largely introduced consumers to these AI assistants, mobile will be the device to deliver them to the masses. This is why we’ve seen Alexa added to Android and iOS recently.

But thanks to mobile, all of these New Retail technologies can be part of the same shopping experience. Pokémon Go – despite its short-lived hype – already highlighted the potential that lies in combining these experiences. And with Apple’s iPhone X having been created with augmented reality in mind, as well as the company giving the green light to location-based marketing, one of the world’s most iconic and innovative mobile brands clearly sees a future in these technologies.

The Privacy Question

Privacy concerns could stand in the way of uptake here, however.

Consumers’ awareness of their engagement with this technology is already lacking. The seamless integration with Google Maps and Apple Maps for any mobile-based retail service means that many consumers are likely to be unaware that their location is being tracked by companies.

62% of internet users are already concerned about how their personal data is being used by companies.

This demonstrates the responsibility brands have in being transparent with their customers regarding the use of their personal information.

Our online privacy research illustrates the scale of these concerns. The most popular measure adopted among internet users is to delete cookies from their browser, which 46% did last month. 41% are also using private browsing windows, and, perhaps even more strikingly, over 1 in 4 are willing to employ VPNs (Virtual Private Networks) to access the internet each month. This gives some indication of how keen these consumers are to cover their online footprints.

Improving the User Experience

Ad-blocking is one of the most notable examples of consumer behavior undermining data collection efforts (45% blocked an ad last month).

But it’s important to bear in mind here that the rapid spread of ad-blocking has been driven primarily by poor user experience. Significantly fewer users attribute privacy concerns as a motivation to block ads compared with those who display a general dissatisfaction with ads compromising their online experience.

So, what ad-blocking has clearly demonstrated is the consumer’s willingness to take action on anything that impedes their online experience.

But since New Retail is geared towards improving the user experience, there’s a strong chance that it will fall into the consumer’s favor as it gains momentum in the coming year.

While many digital consumers express privacy concerns which may cause issues, it’s notably less who are willing to act on them.

Privacy aside, the new mobile-first commerce landscape, as well as significant investment set to be poured into the tech from the major retailers, will safeguard New Retail’s development in 2018. While location-based services, and especially AR, will stay at the fringes of the retail space for now, it’s voice command tools which represent the most pivotal resource for retailers to maintain a competitive advantage in the immediate future.