Digital retail: the ten trends that will mark 2018

The year 2017 was particularly turbulent for traditional retail players. Upset by the growing appetite of Amazon and Alibaba and the birth of new brands able to appeal directly to consumers, classic retailers are reacting. They form partnerships with start-ups, invest in technology and logistics and review their organization. What technologies and new strategies will mark, if not upset, the retail market in 2018? The Digital Factory met with experts in the sector and identified ten avenues to follow closely.

Digital retail

1. Hyperpersonalization through artificial intelligence

The use of automatic learning algorithms will become more widespread in retail. “Artificial intelligence algorithms and in particular deep learning algorithms will allow retailers to better know their customers and thus offer them the most relevant offers possible, both in terms of message and product,”says Yannick Franc, director of retail strategy and e-commerce at Equancy. “An American venture capitalist estimated that within the next two to three years, there would be no more AI companies, as there is no mobile company today. Everyone integrates a layer of machine learning and big data,”comments Xavier Faure, co-founder of Spring Invest, an investment fund dedicated to retail innovation.

2. The RGPD as a force

Artificial intelligence is data processing. However, the General Data Protection Regulation (GDPR) will enter into force next May. According to Yannick Franc, retailers and e-tailers can turn this constraint into strength. “There is a real issue of transparency on the RGPD. We need to be able to explain why, as a retailer, I am collecting this information, what I am going to do with it. You have to prove the value of these data, give them meaning and explain the benefits for consumers,”says Yannick Franc.

3. The emergence of conversational commerce

“Vocal commerce will be one of the major challenges for 2018,”says Yannick Franc. This trend will be boosted by the advent of speech assistants such as Google Home and Amazon Echo (which is still not marketed in France) but mobile voice searches will also count. Some French companies have already taken the subject, such as Monoprix, which launched an application on Google Home allowing customers to dictate their shopping list.

According to Xavier Faure, the development of voice commerce raises above all the question of interface control. “He who controls the interface, will control the trade,”he asserts. According to him, these new interfaces should become more important in basic purchases, such as the renewal of toothpaste or dishwashing liquid for example. “And from the moment the customer interacts with you, it’s you who controls the act of buying, he (the customer) no longer chooses,”he predicts.

4. A narrower choice

In general, there is a reduction in the supply of products. This trend is mainly driven by DNVB (Digital Native Vertical brands). “Increased choice does not necessarily mean increased value for the user. It can also be a source of stress. It is not impossible that this movement could lead to a kind of dichotomy where on the one hand there are products where we need a certain choice and on the other hand where a good product at the right price is enough. However, the border will not be the same for all consumers,”says Xavier Faure.

5. The “invisible” payments

“It’s a more classic subject, but the question of payment is a sea serpent. Mobile payment is widely developed in China, there is no reason why it should not develop in France. People are not yet accustomed because there are not many opportunities yet, but there will soon be payment without contact with RATP. The larger the offer, the more widespread the use will become,”predicts Yannick Franc.

“There are a lot of physical stores that realized that the payment experience was terrible in the stores and that it was no longer possible to require customers to wait 15 minutes to pay. Many start-ups and distributors are working on these issues today,”says Xavier Faure. This is the case, for example, of Monoprix with its Monop’ Easy application or of Auchan, which is collaborating with the Lille-based start-up Keyneosoft on this subject.

6. Premium delivery

Offers around delivery are expected to increase in the coming months. This trend can be seen, for example, in Zalando. In Belgium, the e-merchant tests the delivery where the customer is: in front of the school exit for example. In Paris and the suburbs, Zalando has formed a partnership with the start-up Stuart for returns management. It is a courier who travels to the customer’s home to pick up the parcel to be returned in a 15-minute slot. “And when pure players break new ground on these subjects, it quickly sets new standards,”comments Yannick Franc.

7. Warehouse robotization

To cope with the increase in their e-commerce activity and to meet the increasingly demanding expectations of consumers, retailers and e-tailers are investing in logistics. To gain in productivity, more and more people are choosing robotization. This is the case, for example, of the Bordeaux company Cdiscount, which has deployed a small fleet of bluffing robots thanks to a partnership with Exotec Solutions. For its part, Groupe Casino (depends on Cdiscount) will use the logistics platform and proprietary software of the British Ocado, king of automation in food e-commerce. As part of this merger, a latest-generation warehouse is expected to enter service in the Paris area within two years. Monoprix will be the first French brand to use these breakthrough technologies to improve its e-commerce business.

8. Augmented and virtual “useful” reality

Ikea, Amazon, but also La Redoute… More and more retailers have launched augmented reality applications to allow users to visualize what a piece of furniture looks like in their home. Thanks to the technological advances brought by Apple and Google (many mobile applications are based on the ARkit, Apple’s augmented reality platform), these solutions become both practical and relevant. On the virtual reality side, while many retail initiatives are still based on the simple Wahou effect, others provide real added value. This is the case with Decathlon’s RV experience, which allows customers to access a wider range of tents in a limited space. These few good examples should lead the way for the coming year.

9. The art of story telling

Content has become a key element in the strategy of brands, which now have the ability to address consumers directly. However, the latter should not simply produce content, but articulate it around a structured editorial line. “You have to have a real content management, otherwise you can have contradictory messages. The development of video is a real lever for brands if you don’t do anything,”says Yannick Franc. According to him, they must draw up editorial calendars in the image of the organisation of an editorial office. And, as more and more distributors work with agencies on content production, some would consider internalising these resources. “For this to make sense, it must be carried by the Executive Committee so that there is real coherence,”concludes the specialist.

10. The multiplication of acquisitions and partnerships

The year 2017 was marked by a number of acquisitions (including Amazon’s surprise takeover of Whole Foods). This convergence of physics and online will continue in 2018 in the form of acquisitions or partnerships, reflecting the strategic alliance formed between Alibaba and Auchan in China.