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Retail trends in 2019: Chatbots, Just Walk Out technology, intelligent personalization and more

Retail trends in 2019 already suggest that chatbots aren’t all that, online and in-store experiences matter, and intelligent personalization is the key to long-term customer relationships.

As 2019 progresses, some interesting retail trends have already emerged.

Just consider retail and consumer experience. Technology has made inroads in how consumers shop online and in physical stores. Both CES 2019 and the National Retail Federation’s 2019 conference showcased technologies that have made these experiences more immersive, comprehensive and immediate.

At the same time, the ways in which retailers introduce technology may have some unintended consequences. Emerging technologies, including augmented reality in retail, are on the radar of retail executives, for example. But that doesn’t mean consumers see them as enhancing the customer experience (see Figure 1 on anticipated trends in retail).

Let’s take a look at some of the key retail trends in 2019 and beyond.

Consumers aren’t calling on digital shopping assistants or chatbots . . . yet

Over the past few years, the impact of smart speakers on company-customer interaction has gathered steam. And as more of these devices find their way into daily interactions, there’s no doubt that smart speakers and appliances have changed many basic behaviors and expectations concerning a variety of consumer activities.

Source: Adobe's 2018 Digital Trends in Retail report

According to a recent study of smart speaker owners, once users adopt smart speakers, they use them on a regular basis and for a variety of activities, including playing music, controlling home lights and temperature, and asking for driving directions. But most consumers don’t want a voice assistant on a smart speaker to shop for them, according to the recent Future of Retail (FoR) report.

Based on a survey of 1,200 consumers and 400 retail executives across the U.S., U.K. and Australia, the FoR report on Just Walk Out (JWO) technology found that 95% of consumers don’t want to talk to a “machine” when shopping—whether it’s an assistant like Alexa or a chatbot. Interestingly, while 79% of retail executives believe chatbots meet consumer needs, two out of three consumers surveyed disagree. In fact, consumers say chatbots are more damaging to the shopping experience than helpful.

JWO shopping about to take off

Online shopping has changed the way we shop for everything—whether it’s online or in line at physical stores—mainly by focusing on removing as much friction from the shopping process as possible. According to the Future of Retail report, despite the popularity of online shopping, 97% of consumers surveyed agree shopping in physical stores is necessary. However, 70% of consumers say the most appealing stores feature streamlined shopping experiences.

The latest change online shopping is ushering into the in-store experience is a new era of JWO shopping, where shoppers grab what they want and leave without needing to stand in line for a cashier to ring them up. Consumers download an app on their phone and scan in as they enter the store. Then, when a shopper adds an item to his cart, it’s automatically added to the app’s virtual cart. If a consumer puts it back on a shelf, it’s removed from the cart. As they pass through the turnstile exit, JWO apps tally their purchases and charge them to an account.

JWO shopping owes its existence to other technologies, such as connected sensors, beacons, location-based services and Internet of Things (IoT) technology and artificial intelligence (AI). These technologies enable the app to detect which items are selected and ultimately chosen as well as track consumers’ location and activity throughout a store.

With JWO stores, companies are bringing the processes and principles of the e-commerce market (roughly 15% of total U.S. retail) into the physical world. And just as removing friction while maintaining a trustworthy shopping experience is critical to online commerce, JWO stores have the same opportunity to improve the in-store shopping experience for those interested in quickly getting in and out of a store.

Exploiting the cloud in retail

While survey respondents say the vast majority of consumers view in-store shopping as necessary, connected retail experiences—integrating online and offline interactions—are increasingly important for retailers to stay linked with customers over time. Major retailers are partnering with large cloud platform providers to exploit data on consumer intentions—to benefit digital and physical shopping experiences.

One major retailer partnered with major cloud providers to develop new healthcare delivery models and technologies. The idea is to combine the power of cloud platforms—particularly in AI and IoT - to uncover real-time insights and opportunities to provide better outpatient healthcare services in convenient locations.

Retailers can strategically combine the benefits of cloud platforms with physical locations in order to gain insights about customer preferences.

VR+AR +AI = augmented intelligent shopping

The FoR study indicates that while 98% of retail executives believe having augmented reality (AR)/virtual reality (VR) and AI in stores will increase foot traffic , only 14% of consumers say that those two technologies will have significant impact on their purchase decisions. But the key to the VR/AI combo may start with a digital shopping experience, and then move to in-store shopping.

MTailor popularized the concept of using a smartphone to take pictures of yourself to deliver custom-fitted shirts, jeans and suits. And while that’s pretty cool, you’re starting to see this concept taken to another level.

Recently patents have been filed for technology that can scour “selfies” taken by mobile devices, as well as looking at online calendars, to predict clothes a person may want to buy. An app would analyze photographs, appointments, location and other available information and generate recommendations on outfits and accessories. It would use pictures saved on devices to create an augmented image of a customer wearing the AI-recommended apparel. This has the potential to remove another point of friction—having to go to a store and physically try on garments. And based on customer actions such as swiping to like or dislike items, and buying items, AI gets even more information to use for improving recommendations going forward.

Of course, this takes getting user approval to mine data to provide these augmented recommendations, but that may not be that far-fetched under the right circumstances. As several studies have noted, shoppers are open to retailers using their personal data—but only if customers perceive that this use of data provides better, more personalized experiences. And retailers will need to prove that the data is safe, secure and not being shared with other companies behind users' backs.

Intelligent personalization

There can be a wide gap between retailer and consumer expectations for technology and customer experience. But this disconnect is partly about how retailers apply technology. A few data points from the FoR survey provide context here:

  • 80% of consumers don’t feel they are provided with a personalized shopping experience in-store or online
  • 58% of consumers are uncomfortable with the way stores use technology to improve personalization
  • 45% report negative emotions when receiving personalized offers online.

These numbers indicate that no matter how impressive the technology may be, if retailers don’t apply it in ways that consumers believe improve efficiency or provide additional value to shopping experience, they will not be viewed positively. No matter how innovative and exciting new technologies may be, putting them into customer-vendor interaction channels may end up degrading the customer experience. In fact, viewing technology as a replacement to human interaction, instead of using it to enhance those interactions, could lead to the negative emotions mentioned above.

Retailers introducing new technology from a cost-reduction perspective - rather than for efficiency improvements or added value—will most likely continue to widen the perception gap they have with consumers. But those that use technology to get closer to customers (rather than to voyeuristically observe them), will get the most out of technologies.

These companies will successfully use AI, voice assistants, smart devices and AR/VR to improve shopping experiences. What's more, they will positively affect customer journeys and customer relationships with them. And that’s the most important trend to grab onto.

We’ll continue to watch these retail trends in 2019 and see how providers and retailers make use of them.

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Lauren Horwitz is the managing editor of Cisco.com, where she covers the IT infrastructure market and develops content strategy. Previously, Horwitz was a senior executive editor in the Business Applications and Architecture group at TechTarget;, a senior editor at Cutter Consortium, an IT research firm; and an editor at the American Prospect, a political journal. She has received awards from American Society of Business Publication Editors (ASBPE), a min Best of the Web award and the Kimmerling Prize for best graduate paper for her editing work on the journal article "The Fluid Jurisprudence of Israel's Emergency Powers.”

Brent Leary

Brent Leary is a CRM industry analyst, adviser, author, speaker and award-winning blogger. He is cofounder and managing partner of CRM Essentials LLC, an Atlanta-based CRM advisory firm covering tools and strategies for improving business relationships. He is the chair of CRM Evolution 2019, CRM magazine’s annual industry event. Leary's blog, Voices Carry, focuses on how voice-first devices and interfaces are changing the rules of customer engagement. Leary writes regularly for CRM magazine and the Atlanta Tribune, where he also serves on the editorial advisory board.  Leary also hosts the weekly One on One conversation series for Small Business Trends and is writing a book on the impact of online retailers.