The battle for market share in 2015 will be fought with technology

Oliver Guy, retail industry director, at Software AG looks ahead in 2015 and speaks to Talk Retail about what will affect the market share for the rest of the year.

Retail is the fastest-changing, most exciting industry on the planet right now and that is unlikely to change over the next 12 months and beyond.

The disruptive forces of competition and technology are compelling retailers to innovate as they meet challenges from multiple points – most obviously from Amazon who are planning a global expansion of their AmazonFresh same-day grocery delivery service from the US.

This will force the more forward-looking supermarkets and online grocers to overhaul their customer experience and supply chain operations before Amazon opens up in their country.

At the same time, small-scale operators will continue to use eBay to compete with the longstanding department, electrical, clothing or hardware chains. Competition will also come from overseas as major retailers around the world set up foreign language websites allowing customers in different countries to order from them.

In addition to these developing pressures, conventional shopping loyalty will continue to wane, a process that began with the 2008 financial crisis and was hastened by the dramatic market entry of discount grocers. Card-based loyalty schemes, previously a mainstay of supermarket retail, will carry on declining, as shoppers hunt for value between brands, formats and channels.

However, while traditional loyalty may be struggling, new technology-based Loyalty 2.0 initiatives are already appearing, based on real-time personalisation. Commencing with retailer smartphone apps, these initiatives give businesses the ability to tailor an offer, advert or other product or service to the customer at exactly the right time and place to make an impression and drive sales.

Alongside this, customer relationship systems will be linked to offer-management and combined with streams of data from in store devices such as smartphones, iBeacons and in store displays as well as social media feeds, weather patterns and competitor pricing. Face recognition will also start to complement smartphones in terms of identifying customers and plotting their position within the store.

To bring all these elements together to make the right decisions that achieve real-time personalisation, retailers will adopt Big Data solutions that move beyond predictive analytics and into the realm of streaming analytics.

Together with this cutting edge technology, attempts to match Amazon’s speed of fulfilment will boost the installation of delivery lockers at convenient locations, including stations, airports and town centres. Customers will be able to pick up their purchases without making special journeys. And while Amazon’s drones have been largely dismissed, for now, we can expect to see further innovations in delivery.

Technology is also likely to play further roles in clawing back market share for store owners. Firstly, to encourage footfall and create a buzz, there will be more eye-catching initiatives like Walmart’s experiment with novelty in store 3D printing devices for customers.

Secondly, the phrase ‘real-time supply chain’ will become part of the everyday lexicon of successful retailers. This will signify a sharper focus on in-store inventory management, waste-reduction, vehicle-tracking and real-time automated decisions based on specific events.

Finally, as well as initiatives based on creating personalised offers, there will be growth in the provision of information in store – be that product specifications and stock availability, customer reviews or competitive pricing. In fact anything to give the bricks-and-mortar customer access to data that is available to the online shopper and makes him or her feel it is worthwhile stepping through the door rather than clicking on Amazon.