How Mobile Technology Will Change Retail in 5 years

This is the winning essay by Kasumi Higewake, chosen from 50 entries submitted for consideration in the Iflexion Scholarship Program throughout 2017. Follow us for more news on the upcoming tuition funding opportunities.

Five years can be the difference between being born and starting school. For the founder of Millennial Money, five years was the difference between the initial $2.26 and the net worth of over $1 million. The same five years was the difference between a pro-democracy peace rally and 250,000 deaths in Syria. For technology, five years is the difference between Apple’s iPhone 4 and 6 (not forgetting that between those models Apple also released four others). That said, five years is a sufficient time span for significant technological developments to occur.

Today, the growing device convergence is making mobile phones single items people carry with them all the time. But because retail has transformed from traditional practices before mobile technology became ubiquitous, it is important to discuss how mobile solutions will continue to restructure retail in the next five years. This essay will explore how mobile technology will be enhancing customer empowerment with augmented reality and artificial intelligence, shifting the retail culture to Dark Stores, and introducing face identification as a new secure payment method.

Augmented Reality: The New Experience

Augmented reality refers to the technology enabling to view and experience an augmented environment added to an actual environment in real time. Pokémon Go is an example of an augmented reality mobile entertainment app where users interact with characters added onto a visual representation of the environment captured through the phone camera.

Augmented reality works with electronic sensory elements such as graphics, sounds, and locational data within a mobile application. It is highly likely that the technology will advance to include touch and scent as well, making this experience unbelievably real.

With regards to mobile technology and retail, brands are increasingly utilizing augmented reality in their product campaigns. Nissan, Toyota, and BMW all provide three-dimensional views of their vehicles through QR codes printed in their sales magazines. This allows customers to view 3D models of the cars without physically visiting dealerships.

Augmented reality is also used in the N Building in Tokyo through enlarged QR codes visible through its windows. Pedestrians capturing these codes with their phones below in the street can open the website to find out more about the retail outlets there or make restaurant reservations without having to physically step into the building or search its web address in a browser while crossing busy streets.

As Apple’s new iPhone X already includes improved augmented reality facilities, within the next five years augmented reality will likely become common in retail advertising strategies. For example, homeware brands will be able to include an augmented reality option in their mobile application in addition to the existing photos, dimensions, and prices of their products. In their turn, customers will be able to capture their living room and place their item of interest there to see if it fits before the purchase. This service will empower customers as they will have additional information to make their purchasing decisions.

Artificial Intelligence to Empower Customers

As artificial intelligence becomes better, it will be empowering customers ever more. Previously, physical stores were the only place to access product information, while today mobile technology makes it as accessible as possible. The quality of product research has also improved as technology now supports price and review comparisons between different brands. Moreover, mobile technology also fosters relevant product offers to consumers depending on their location, time of day and weather. For example, Spotify will be able to advertise winter car tires for its subscribers logged in from the Northern Hemisphere in December.

In line with these developments, Instagram has modified their ads by introducing strategized marketing. Run by machine learning algorithms, such applications can analyze their users’ needs and likes. The strategy is based on a user’s previous interactions, such as liking a post or following a brand, to advertise similar products that the technology assumes the user will like.

In five years, such AI-based applications as Siri and Alexa will truly transform into consultants. Artificial intelligence could support users by analyzing and filtering product information matched to their web browsing and liking history, location, and age. This means artificial intelligence will distance itself from being just a utility tool and begin functioning as a personal assistant.

Moreover, traditional marketing strategies that typically involved models as brand ambassadors will disappear as mobile technology is pushing brands to turn to online influencers instead. For example, Orton announced that they would not renew their campaign contract with Australian actress Rose Byrne because they wanted to turn to young online influencers in order not to fall behind with the digital audience.

Dark Stores and the Shift to Loyalty

The last few years saw a decline in the number of physical stores worldwide. Going to retail outlets has transformed into a leisure activity because of the ease of online shopping and postal services. Searching for similar products with better value or return policies is now much easier than visiting stores thanks to specialized mobile apps. All this will result in the rise of Dark Stores – with increased online shopping opportunities, customers will only go to stores for professional advice or hands-on experience.

Dark Stores are already there. They are becoming comparatively smaller to downscale expenses on staff, inventory and rent. Dark Stores are already growing among French grocery retailers, where stores have transformed into just a location to collect orders. In five years, shopping-floor staff will only be needed to gather and pack the items in the store that will be functioning more like a warehouse.

Moreover, mobile technology will impact employment in the retail industry. Expertise in merchandising and sales will no longer be prioritized as it will be replaced with the skills related to optimizing supply chain flows. More tech-oriented requirements will be seen in job descriptions, while traditional sales and direct customer assistance skills will be disregarded.

The development of mobile technology in the next five years will also shift traditional retail priorities from location to loyalty. Loyalty programs refer to the schemes of rewarding regular customers with larger discounts and other perks, and this strategy is increasingly implemented in retail. For example, customers who download a retailer’s mobile app can receive special offers unavailable for others. As a result of these transformations, accessible locations would mean nothing for retailers’ competitiveness in five years, as long as they build a loyal and trusting relationship with their customers.

Disruptive Payment Technologies

Finally, payment methods as we know them will change due to improving mobile technology. We already have Samsung Pay, Apple Pay, After Pay and other digital wallets. These innovations were brought to life by the need to provide quicker services and are predicted to become mainstream within the next five years.

While NFC payments are common, mobile technology will promote the use of remote payments that include using an application or a cloud-based terminal, such as PayPal, to pay at an outlet. This sort of technology has already been used in fashion shows in Japan, where the audience can purchase the outfits presented on the catwalk in real time. Through a special mobile application, participating brands send photos and purchase links to the outfits to the audience attending the show and directing them to the checkout. This way, mobile technology enhances customer mobility and the freedom to make purchasing decisions anywhere and anytime.

Speaking of another innovation, with the improving mobile technology and Apple’s iPhone X promising to make the user’s face a new form of identification, mobile payments will not require passwords or CCVs in the next five years. Face identification will be incorporated into remote payments allowing for a quicker checkout on top of added security, reducing the risk of online identity theft.

In Conclusion

This essay discussed how improving mobile technology will bring about exciting changes to the retail industry. In the next five years, augmented reality and artificial intelligence will be integrated into everyday marketing. The continuous shift to online shopping will also mean that more Dark Stores will be introduced in the physical world, and retail employers will be looking for different professional skillsets. And finally, more secure payment methods will be introduced over time, with the promising integration of face identification into mobile payments.