Real time is taking over the way retail operates. When consumers make decisions, they act fast, and the companies that are able to keep up with them are the ones that are dominating the industry. As Charles Darwin said, “It’s not the strongest of the species that survive, nor the most intelligent, it’s the one that most adapts to change.”
Because technology is evolving at a rapid pace, we're constantly changing the way we live and shop. Having information in real time was once considered a luxury, but is now expected, and even demanded. Amazon.com has used real-time technologies to drive exponential growth, and is now dominating the direct-to-consumer (D-to-C) market. Meanwhile, those retailers that have chosen to stick to traditional techniques have been left in the dust by real-time retail giants.
The Growth of Technology and Data is Leading to Changing Consumer Expectations
New data sources (e.g., sensors) is resulting in vast volumes of connected Internet of Things (IoT) data. Retailers need to be able to manage these data volumes effectively, and use that knowledge to drive down costs while expanding sales. The ability to understand where every product and customer is can be hugely powerful in delivering the key retail principles: the right product, at the right price, with an easy and fast shopping experience.
We're already seeing benefits of connected real-time data in retail today. Real-time fault detection in manufacturing is made possible by streaming IoT data. Improved fill rates, reduced waste and increased availability are made possible through real-time demand data. Perhaps most importantly, research shows that brands are finding increased loyalty through connected and personalized ranges across the customer journey.
Today, connected data is changing the way retailers are delivering these principles, and we believe that real-time data can drive further innovation. Customers expect ease, personalization and value — and they want it immediately. A recent Kx survey of U.K. consumers revealed that these are the most important factors in retailer selection.
English retailer Argos uses real-time data within its connected supply chain, and was identified as delivering the highest multichannel performance in our innovation survey. This is an example of how real-time data can be used across the product life cycle to enhance the customer experience. Today, it’s no longer true that the “best” brands win; the winners are those that are the easiest to shop with.
Marketplace and D-to-C Are Accelerating in 2018
These emerging trends mean that brands which traditionally sold their products through retailers are now able to sell directly to end users (i.e., customers). Marketplace platforms such as INS within fast-moving consumer goods (FMCG) will result in intensified competition as brands and retailers sell D-to-C in the same space. As D-to-C and supplier integration grow, we're hurtling towards a world of full transparency, and individualized range personalization will be key for both product and price.
Another important trend is dynamic pricing, which is playing into the real-time evolution in retail. The practice saw a slight decline in 2017, as retailers quite rightly approached it with caution due to consumers often being critical of the approach. However, our survey reveals that 76 percent of U.K. consumers use technology to help them find value when shopping. Range personalization will mean that product pricing will ultimately become one-to-one, where retailers deliver individual offers based on your personal shopping patterns.
Real-Time Bidding Will Be Key to Driving Share of Wallet
Brands are competing alongside each other and bidding for the shopper's share of wallet. The retailer that's able to connect and analyze data to react the fastest will win. To enable this kind of quick and powerful decision making, all data solutions and services must be carried out in real time. Machines and algorithms that predict shopper needs as they happen will be critical, as static models will no longer keep up with the pace of change. Retailers need to be ready and adapt to these changes, or risk being left in the dust.
Thomas Hill is the senior vice president of retail services at Kx, a provider of in-memory, time-series database technology.