Five key features that will shape the online retail store of the future

By Lester Wan contact

- Last updated on GMT

The store of the future will give shoppers a frictionless combined offline and online shopping experience. ©Getty Images
The store of the future will give shoppers a frictionless combined offline and online shopping experience. ©Getty Images

Related tags: Stores, China, Supermarkets, omnichannel, Data, Igd

Online grocery sales in China will grow 286% by 2022 — accounting for 11.1% of the country’s total market — as the retail market continues to undergo unprecedented change.

That’s according to a recently-launched report from grocery research organisation IGD, published in association with The Consumer Goods Forum.

It reveals what online stores of the future will look like and highlights key investment opportunities in digital commerce.

Other aspects of note include online and offline retail merging — with an online store vital to complement physical stores.

Furthermore, based on a survey of 223 senior industry members across 42 different markets and a series of in-depth interviews, IGD predicts dramatic changes in the competitive retail landscape.

Among the industry respondents, 78% think shoppers will use online price comparison services more regularly to switch to the cheapest retailer, while 67% believe shoppers will be able to choose from a wide range of specialist online retailers underpinned by a common and consistent delivery service.

Additionally, 75% expect more manufacturers to sell directly to consumers online.

Combining industry input with the insight from IGD’s global team, the research further sheds light on the online store of the future and five key features.

1. Personal micro store

The online store of the future will be a shopper’s personal micro store offering individualised and online-exclusive products, personalised promotions, recommendations, advertising and loyalty schemes.

Of the respondents, 77% think almost all digital communication to consumers by retailers will be personal.

In high-value categories, products will be customisable such that one can create his or her own shampoo or cereal.

“AI will help to unlock personalisation,”​ said Simon Mayhew, Online Retail Insight Manager at IGD.

“If you need a meal for tonight, your homepage will display only the relevant solutions. When generally browsing, you will only see the products and pack sizes likely to meet your needs.

“Gamified” loyalty schemes to reward you and keep you coming back can also be expected.

2. Your personal assistant

The store will also act as a smart personal assistant, connecting with various devices, preventing shoppers from running out of products and supporting their lifestyle goals.

Nearly two-thirds (60%) of those surveyed predicted that smart devices automatically re-ordering products will become a firmly established way of shopping.

Also, 71% of respondents expect some retailers to provide a service to offer personalised dietary guidance.

“Shoppers will subscribe to have their favourite products delivered regularly and AI will predict when you may run out, and make or suggest a reorder,” ​added Mayhew.

3. The efficient store

For shoppers, the online store will also be more efficient, being easier and quicker to order products. Login and payment will be available through facial, voice or touch recognition technology.

Shoppers will even incur less waste, with a greater choice of pack sizes and meal planners to help manage quantities and advise on using leftovers. A better fulfilment service will be on offer with more deliveries, on time and in full, and with products delivered with the right quality and freshness.

“Data from the online store will guide product development. Retailers will see gaps in their ranges through unfulfilled search requests and have a better understanding of product quality through ratings, reviews and feedback to chatbots,” ​said Mayhew.

“Fulfilment will benefit from robotics and supply chain forecasting will be more accurate. This will mean online pickers have fresher products to select, helping overcome one of the biggest barriers to shopping online.”

Unattended deliveries to homes, cars, and even ‘straight to the fridge’, will be expected to grow in popularity. Amazon Key already offers such services.

4. The frictionless store

The store of the future will give shoppers a frictionless combined offline and online shopping experience. People will switch seamlessly from shopping online and in-store with data cross-referenced between the two.

This will help bring more personalisation to the physical store and help shoppers find their favourite products quickly and discover new ones. This is an opportunity that many companies need to work on, with 53% of survey respondents having said they haven’t or have only just started to integrate their online and offline teams.

“Before visiting a physical store, you will be able to look online to check in-store, real-time availability, access product information, get product usage ideas and read reviews,” ​said Mayhew.

“When you arrive at the physical store you will then benefit from personalised offers and recommendations. An online app will help you find products and pay for your shopping without cash.”

One example today in China is Alibaba Hema Supermarket, in which shoppers download the Hema app to access product information, recommendations and make in-store payments. It is also a fulfilment centre, capable of delivering products to shoppers within a 3km radius in 30 minutes, 24 hours a day.

5. The invisible store

At times, the store of the future will be invisible, without even the need to visit an online store. Shoppers can buy products from shoppable digital content such as videos, photos and social media.

China has been leading the merging of media, entertainment and shopping, and Europe and North America will follow.

WeChat has close to one billion users and allows them to sell goods and services to their contacts, advertising them through the app’s newsfeed, called Moments. It also has integrated mini-programs or apps that can be used to sell products.

Said Joanne Denney-Finch, chief executive of IGD, “Grocery retail is seeing an unprecedented amount of change, driven by changing shopper expectations and the ability to meet these using transformative technologies.”

“This offers great opportunities for companies of all sizes. The winners will put the needs of their shoppers first, be prepared to act decisively, maintain the highest everyday standards and exhibit tremendous agility.”

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