In this report the future of retail business is discussed specifically focusing on markets of Australia by taking the case study of JB Hi-Fi which is one of the leading retailers in the region. The report describes the present scenario and change in customer expectations and demographics showcasing some technological adaptations that will improve future effectiveness of retail. Finally some recommendations are provided for integration with internet technology that will leverage benefits.
Retailers who have come out successfully from the evolving hard blow waves that is impacting retail industry in Australia have realised that to survive the tide they need to re-invent and re-structure their physical outlets and supply chains networks to meet evolving needs of digital savvy consumers. With more advances in future, competitive pressure from international retailers and rapid growth of e-commerce, the future of physical retail stores is less clear as it is evident that they would be dead if not prepared to adapt to changes. This is due to the fact that digitalisation and technology advances that has mopped up from books, music and travel has now taken a blow to equally stride a chill through all retail groups. As known around one third of traditional retail stores have closed and Amazon has crossed over 50% mark of their share in e-commerce markets (Research and markets 2012). Another reality is that for retail industry the propensity of millennial and Gen Z has taken priority and both these demographic categories have largely moved from experiencing products within in-stores to ordering at online stores. According to Research and markets (2012) this is because of the fact that their behaviour has changed due to smartphone and wearable devices which offer personalised assistance from virtual agents and this has shown its impact even on retail as this high priority consumer group is more technology and convenience inclined over being price sensitive. The millennial group in particular is currently ruling retail industry and have overtaken baby boomers and their population is expected to rise to 80 million by 2025 due to demographic change and increased immigrations. The millennial initiated mass disruption in retail industry and this digital savvy group with high spending power are armed with huge information accumulated over various online platforms and social networks.
As stated byBailey (2016) the emerging group of millennial have characterised flair for convenience as they expect easier and effortless retail shopping. They expect advanced technology to be utilised from the time they initiate searching products, to purchase, shipping and delivery. Hence in future convenience, distribution of experiences will be accelerated and with rise of innovation payment gateways the power of technology will boost giving rise to future facilities like mobile checkout, evolving fulfilment technology centres such as airborne warehouses. Moreover the millennial customers prefer visual and experiential retail as they expect not only captivating and connected shopping but also expect more fun, moment creating experiences which should be supported through technologies like augmented reality (AR). Further they dislike conventional sales event and promotions. According to Market Research Reports (2013) in future millennial who face time crisis will respond to time saving deals that will impact majorly the sales promotions of retailers. As such retailers need to integrate with technology and machine analytics to incorporate digital promotions that can be communicated 1-to-1 in real time through mobile phones both in-store and online. As a result stores sales promotions in future would become largely personal and instant like for instance as customers enter a store, they would be receiving alerts for price breaks on products they purchase frequently or browse online. In future retailers would be using in-store or offline avenues to provide instant discounts on slow moving items. As stated by Baxendale, Macdonald and Wilson,(2015) further in future the millennial will show greater enthusiasm for content and a larger appealing content will be necessary for retailers to instantly catch attention of millennial as the attention spans are collapsing a lot now. So in future retailers in order to remain successful will have to focus on customised contents such as for instance retailers would need to collate images, video and texts related to products or offers and then share them with shoppers who will be followers on social media pages through Snapchat stories etc.
According to Ferraro, Danaher, Danaher and Sands (2017) the disruption fashioned by Millennial is further elaborated through customers of Generation Z which refers to those who were born after mid-90’s and are often said to be iGeneration. These set of consumers are largely occupied with technology and are digital native. They too are overtaking retail priority after significant Millennial and Generation Z are imposing competitive landscape and reshaping retail with omni channels. As most of the shoppers no longer have an emotional connect with retailers now through in-person purchases so this behaviour is further going to be accelerated with Gen Z in future. According to O’Cass and Carlson (2012) around 50% of these set of Gen z consumers are reported to buy online at least once a month. And once this Gen Z will have their individual spending power in future with larger access to funds then this figure of trend is expected to rise significantly, far outpacing the online purchase activity of Millennial. Today most of the retail consumers already exert a choice for convenience and exceptional personal value and these trends will become even more pressing for Gen Z and this reality points out their expectations to clearly demonstrate where the retail industry would move in future and what a true retail experience needs to be. Hence to survive this transformation in retail they need to embrace digital and conceive ways to serve and meet customer need so as to make the physical stores livelier to deliver an immersive experience. The dependency on sensors to seize and evaluate data in real time and borderline between online and offline shopping has already dimmed. So to exploit more opportunities in future the retailers need to understand what the customer’s desire and expect more clearly and with high level of certainty to remain effective. As opined by Colton (2012) he physical and online stores in future would become phy-gital where there will be no longer distinctiveness between physical and online stores and no longer in future customers would debate about the benefits of one or another as both will merge and shared. Like for instance the future retail stores will be those that would allow customers to be self and respect their needs and demands to indulge more on snapping photos, taking videos and sharing their experiences. So in future social media like Facebook, Instagram etc will be ingrained with buy options as that will become largely lucrative and they will be extending to e-commerce programs. More shoppable images on products and labels will be posted on Instagram, Facebook etc thus sooner or later taking customers to a shop now option and next to the brand’s webpage so as to finish the purchase transactions.
JB Hi-FI is among the biggest retail business operating in Australia and is one of the most credible brands among customers. Their current business includes operating around 303 stores under name JB Hi-Fi and JB Hi-Fi Home across territories of Australia and New Zealand. Within Australasia JB-HI-FI operates with six locations that include Melbourne, Sydney, Hobart, Brisbane, Perth and Auckland. Further within Australia JB HI-FI inaugurated another 6 new outlets and in New Zealand 1 new store was launched in year 2017 (JB hi fi ltd 2017). Moreover after acquiring The Good Guys, JB Hi-Fi operated another 103 stores and post acquisition 1 new The Good Guys outlet was opened. There are nearly 102 The Good Guys outlets operating since 2017. Their business does not operate directly out of the JB Hi-Fi stores and currently more focus is leveraged on extending their store network to support delivery and pick up of goods from any outlet across Australia.
According to Rao and De’ (2015) as digitalisation has already rephrased the rules of competitive landscape for retail function so adaptation with more advances in technology is likely to maintain future effectiveness. Also integration and collaboration is the new disposition of current retailing changes where even supply chain operations of JB Hi-Fi need to be effectively integrated with technology so as to remain connected with automated elements such as inventory, logistics and fleet management systems. Already airborne fulfilment centres and drone delivery have sealed the gap of new retail definition. Hence in future there are likely more expectations and JB Hi-Fi stores have to re-imagine themselves with technology to respond to customers. According to Häikiö and Koivumäki (2016) by year 2025 physical outlets will need a strong reason to exist as digital interactions will replace many conventional interchanges and by 2020 customers will begin managing 85% of their relationship with retail or other business without interacting with human. Moreover the demand for larger physical store spaces will drop down as improvement in logistics for online deliver and click and collect archetype will minimise the requirement to keep entire inventories in stock at all stores. Also as real estate prices currently make no economic sensitivity and leases reach to end dates so more of JB Hi-Fi physical outlets in future would be transformed into retail fulfilment points or used for other functions. And embracing the store-to-warehouse tendency will add leverage to supply chain and capacitate delivery time, but stores lower space requirements will overcome the pressure to become more effective and proficient.
According to Bhakoo, Singh and Chia (2015) in future the JB Hi-Fi retail stores will be more focused on data and analytics that are available till now for e-commerce platforms and will use these information’s for store decisions. Example, Internet of Things (IoT) will be new technology platform for stores with wider usage across store aisles and operations. Equipped with mechanism like sensors, RFID tags the physical stores will become more effective and prepared to embrace changes with help of IoT advancements by capturing and evaluating data in real time. As stated by Pinto, Claudio Dell’Era, Verganti and Bellini (2017) by reckoning the in-store information to data lakes, JB Hi-Fi in future will be capable to accurately forecast and foretell customer patterns and demands with more conviction. Each thing from holographic mirrors to electronic shelf will be adapted and provided IP address as sensors will have large impact on JB Hi-Fi restructure of outlet designs which will speed their process, enhance performance and build capabilities. Moreover smart sensors and mirror technology will enhance sales with use of IoT for innovation. Further JB Hi-Fi can carry sensor technology to next level with staff free brick and mortar storefronts where stores can be ensemble with sensors that can recognise pre-registered customers and items they choose and then automatically can initiate payments. In future stores of JB Hi-Fi can be made advanced with internet and digital integration that will enable associate free, checkout archetype along with image recognition with high resolution cameras and machine learning to accurately recognise and deliver items to pre-registered customers.
Conclusion
Hence it can be concluded that potential for growth and profits in face of retail change is awaiting for retailers who would focus on onmi channel or unified commerce. Customers who agilely switch across multi-channels offer more lifetime value over those who engage with only one. So retail store formats that coincide all elements of physical retail with digital service and e-commerce platforms will evidently lead the change by satisfactorily delivering a fully integrated shopping experience with all channels sharing common marketing, merchandising, supply chain approaches and even data formats. Some recommendations for future effectiveness with focus on technology for JB Hi-Fi is it can show agility in embracing augmented reality AR for making their stores more experiential and interactive with in-store smartphone apps that can layer to-do lists over store map and would enable shoppers click on product reviews and book their orders for purchase. Further hyper personalised real time promotions particularly enabled with sensor technology, electronic beacons and AR solutions can be useful for JB Hi-Fi such as Apps can be used that can allow stores to connect with shoppers with mobile devices so as to aid them locate their items and even virtually find expert assistance. These possibilities in future if implemented by JB Hi-Fi will improve customer experiences by giving them autonomy, sense of controlled personalised experiences thereby appealing future customers who have huge expectations.
References
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