5 Retail Predictions for 2019

Throughout 2018, the retail industry explored new ways to reduce costs, increase services, and completely transform traditional store methods. We watched e-commerce juggernauts such as Amazon.com, JD.com, and Alibaba reimagine both digital and in-store shopping experiences for consumers. In today’s digital world, companies must make the necessary investments in the latest retail technology in order to keep pace with evolving consumer demands. Based on the retail advancements we witnessed last year, here are five predictions industry leaders should keep an eye out for in 2019:

1. Rise of the Machines

The retail value chain is ripe with opportunities to automate and lower labor costs, however, going too far can easily turn-off customers. The highest returns come from warehouse investments. For example, companies like Amazon Kiva, Ocado, Fetch, and Takeoff are focusing on faster picking, as robots can quickly locate items and ready them for customers with little need for human help. Such advancements have the potential to finally make ordering groceries online profitable.

For customers, there will continue to be progress with online chatbots as they move beyond answering simple questions to actually making personalized recommendations. As Google Duplex showed us last year, it will soon be difficult to distinguish human conversations from machine conversations.

2. HAL for Retail

The cloud affords retailers a cost-efficient opportunity to harness huge amounts of computing power to process big data into actionable information. Retailers have always been vigilant in collecting data, but they've been hesitant to make use of it. To date, the focus has been on optimizing the supply chain with more accurate forecasting, pricing and replenishment. Great strides have been made in those areas for retailers like Walgreens, Kiabi, and Crate and Barrel. Furthermore, the next frontier is for retailers to use hyperpersonalized marketing in their customer interactions. In 2019, consumers will likely see more customer-specific deals and more precise targeted offers.

3. Online-to-Offline Commerce

E-commerce has certainly taken the world by storm, but it represents only a fraction of total commerce. Physical stores still garner the majority of sales, and that's not likely to change in the near future. The combination of bricks and clicks may be most appetizing to consumers as it gives them more choices for shopping. Therefore, pure-plays that once eschewed stores are now learning to pay rent. Online-to-offline (O2O) commerce will continue to funnel customers into physical stores.

Amazon has a dozen “Go” stores, approximately 300 Whole Foods locations, and a future partnership with Kohl’s to have a store-within-a-store. In China, Alibaba plans to open 2,000 grocery stores, and JD.com is franchising thousands of convenience stores. Brands that made their names online like Casper, Bonobos, and Warby Parker have all opened stores as part of their O2O commerce initiatives.

Back in 2013, Marc Andreessen, creator of Netscape turned startup investor, declared that e-commerce would overtake traditional retail. To date, this hasn't been the case. E-commerce has certainly pushed weaker retailers into bankruptcy, but there are new entrants that have taken their place.

Physical stores make sense for perishables, fashion and bulky items that are difficult to ship. Furthermore, stores can process returns, which can average 30 percent for online purchases. In 2019, there will be pure-plays to open more stores.

4. Brand Sounds

Digital assistants are great at specific, simple tasks like playing music, getting the weather report, or setting timers. For retailers, they're excellent for checking on shipping orders. Google Home even allows customers to order items via Google Express. This is great for repeat items that need to be replenished in the home like paper towels, toothpaste and batteries. However, shipping doesn't work for all items.

In 2019, brands will need to start developing their own unique sounds. Companies like Microsoft and Intel already have a mini jingle that's played when their logo is shown in TV commercials. These short sounds permeate voice commerce and help people find the brand they're searching for. These less-overt forms of advertising will hit smart speakers in 2019.

5. Walk-in Vending Machines

In China, companies like BingoBox and Tao Café have been leading the charge with unmanned stores that use automated checkout. Amazon and Walmart are attempting to implement similar checkout systems in the U.S. These types of stores use RFID, QR codes, or visual recognition to identify items and determine what's in the cart. These technologies can even identify the shopper and their choice of payment. These “walk-in vending machines” will make checkout friction melt away. Likewise, these types of stores are sure to be popping up in 2019.

New digital technologies helped the retail industry make major advances last year to better the shopping experience for both companies and consumers. And there's no doubt that 2019 will continue to advance this trend. As we've witnessed over the past few years, retailers that keep a pulse on the latest innovations and implement technologies that can have the greatest impact on their bottom line will continue to dominate the industry in 2019.

David Dorf is vice president of retail at Infor, a provider of enterprise ERP software cloud products.