Nigel Ashton - MSFT
Posted on 01/12/14

January is prediction season.  Like the Punxsutawney groundhog we wait to see what the economic and technological climate will be like as we emerge from the Christmas period and ponder if it will be a sunny or cloudy year ahead.  This time last year I made a number of predictions on ways technology would change consumer behaviour and the retail journey in 2013 

Looking back at that article twelve months on, the shopping experience has certainly become much more personalised and we are seeing more convergence between the physical and digital.  Retail brands are realising how the consumer decision journey is evolving across multiple devices, media is becoming ever more digitalised and Christmas 2013 TV activity brought a new flavour of brand marketing campaign that was more narrative and story-telling.  The arrival of quicker 4G connectivity is still to have the impact everyone predicted but its day may only just around the corner.

After 5 years of recession and government enforced austerity, 2013 was finally the year when consumers loosened their purse strings more and increased spend on leisure and entertainment.  They started to pay down debt and importantly began to demand greater value for everything they bought.  A recent Barclaycard study of consumer spending indicated that increasing consumer confidence pushed up year on year spend + 3.3%.  Spend in restaurants, air travel and cinema saw the most positive growth but retail suffered with department stores seeing a -3.0% negative growth.

We have seen how this manifested itself on the high street during the 2013 Christmas trading period.  This is clear evidence that the balance of power has shifted dramatically towards the consumer and a response from the retail sector of unprecedented promotional activity.  The winners were brands who had got their house in order and built up shopper equity a long way before peak period, the losers were retail propositions shooting less from the value hip and more from the price gun.

So that was 2013 and let us now turn our attention to this year and the challenges that may lie ahead for the retail sector.  50 years ago American author and biochemistry professor, Isaac Asminov, made some telling predictions about what would occur in 2014 in an article for the New York Times entitled Visit to the World’s Fair of 2014.  Asminov predicted that lit up screens such as we see today in retail displays and flat screen TV would be everywhere.  He envisaged that people would be able to ‘study documents’, look at photographs and read book on screen via different screens.   He also imagined the arrival of online chat technology such as Skype and Facetime by predicting that communications would be sight-sound where you would be able to see as well as hear the other person on a phone. Technological innovation that we take for granted today and which has substantially influenced the way we behave and communicate with each other.

We can be fairly sure that areas such as mobility, multi-channel, personalisation, big data and digitalisation of media will continue to grow this year.

Here are a few more specific areas to be mindful of in 2014:

 

Brand Experience 

There is no substitute for brand equity and establishing a strong relationship with consumers over time.  Shopping has become a complicated value exchange with consumers insisting on a seamless experience and one customisable to fit their specific lifestyle.  Digital vouchers, click and collect, same day order-delivery, free returns, loyalty rewards and of course competitive pricing are not just isolated services but an integrated web of push and pull marketing where the consumer is prepared to part with their data and money if the rewards merit it.  In 2014 we will see brands add a strong CSR programme to reinforce this brand equity and engage with both the emotional and the functional consumer mind-set.

 

Social Geology

Online social channels are now a mainstay of a retailer’s consumer engagement strategy.  The plethora of communication platforms such as Facebook, Twitter, Skype and Outlook make them obvious tools with which to connect with the consumer.  The game changer will be brands plugging social in retail sales data and in the year ahead there are huge opportunities for this relationship to become more scientific.  Not only will this show how people have connected with a brand but also what they decided to go onto do as a result.  It will not be too far a leap of faith in 2014 to expect brands to want to use social and search tools to interrogate data further and make more accurate predictions about future consumer behaviour across different technology devices.  We will see a new set of relationships emerging between technology companies who can offer these services and retail brands eager to use them.

 

Join the Dots

The retail consumer journey is like a weather forecast.  Experts can fairly accurately predict the general type of weather but it changes regularly and it is not always possible to predict exactly which type it will be, where it will happen or when.  With the ever increasing mobility of the consumer across mobile, tablet, PC and TV devices this journey is a complex path to predict.  In 2014 retailers will need to think not just about just having a multi-channel retail strategy but also how to map the consumer from one channel to another.  Technology solution providers offering solutions that connect the virtual and the physical will be in pole position to allow retailers who own a stake in different channels to gain a foothold in each stage of the consumer path.   This will be a key differentiator between the successful retailers and the less successful ones this year.

 

Natural Interfaces

We will see even more disruption of the shopping environment with retailers using technology and natural interfaces that enhance the consumer experience.  Supermarkets will increase the use of digital signage and department stores will test more interactive window displays.  In-store Wi-Fi will become more prevalent and we will start to see tablets in the hands of more trained store colleagues.  We will start to hear references to the ‘endless aisle’ with retailers using technology to showcase products and promotions across multiple screens.  3D is becoming the new buzzword, driven by the novelty of 3D printing and 3D screens bringing entertainment and infotainment to the store. 

 

Thermo activation

There is a very good reason why we are obsessed about the weather in the UK.  As the Crowded House song goes it’s often ‘Four Seasons in One Day’ and in recent years we have been beset with quite dramatic and unexpectedly extreme weather.  Flash flooding over the 2013 Christmas period was no exception and it had a dramatic effect on reducing in-store footfall and driving sales online.  Weather is both a friend and foe to retail.  In 2014 retailers will employ new techniques and technologies in order to react swiftly to temperature and climate change to create the most appropriate customer experience.

 

Brand Handshakes

In 2013 we saw the first signs of new brand collaboration to meet these consumer demands and deliver a win-win for both brand and customer.  Boots and Waitrose were early pioneers of selling branded products in each other’s stores and the eBay and Argos partnership could set a new benchmark of retail innovation in 2014.  It offers the eBay customer the convenience and reassurance of being able to pick up purchased goods at a time of their choosing and the eBay business increased customer loyalty.  The deal also provides Argos with the new ways to monetise its store real estate and an opportunity to up-sell the customer in the process.

Let me know what you think of these prediction and also if you have any you would also like to share.

Nigel

Nigel Ashton, Head of Retail and FMCG, Microsoft Advertising UK

Tags: 2014, connected devices, digital, marketing, predictions, Retail, uk
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