The world is changing incredibly fast — maybe faster than ever — primarily due to rapid technology innovations. If our business models don’t keep pace, we’ll quickly be left behind. Since I believe that defending the status quo is what kills companies, thriving and surviving requires somewhat accurately predicting the future. So I thought I’d take a few moments to predict the three advances I think will most affect retail in the next 15 years.
I’ll start with an easy one:
1. Just about everyone will be connected at high speeds at all times
Heck, we’re almost there now. Technologies like WiMax and its successors will be incredibly prevalent in 2024. Furthermore, screen size will no longer be an issue. Innovative technologies like OLED will allow for large foldable and rollable screens that can be neatly tucked into devices the size of ballpoint pens. But it won’t just be mobile devices that are connected. Our cars, our clothes, our sunglasses, our appliances and just about everything else will be connected. Everyone will have exactly the information they need at any given time immediately accessible at any point in time.
2. Video communications advances will make today’s office spaces almost extinct
This one is where I’ve met with the most dissent when I’ve discussed it with people. I think we’ll all have wall-sized screens in our homes that allow us to have life-sized video conversations with people, and that technology will allow us to telecommute in massive numbers. So many people will telecommute that offices as we know them today will no longer make sense. Our co-workers will be spread throughout the globe, yet our communications with them will come close to the same quality we have today with someone in the same office.
The normal argument I hear against this prediction is that nothing can take the place of the types of in-person conversations we have today. That may be true, but maybe we don’t need that level of quality for the vast majority of our office conversations. We’ve proven over and over throughout the years that we’ll trade quality for convenience. In communications alone, we’ve traded phone conversations for what used to be in-person conversations. We’ve also more recently traded the higher sound quality and reliability of land line phones for the lesser sound quality and lesser reliability of mobile phones. Texting has replaced email for many, and even instant messaging has frequently substituted for in-person conversations. I’ve seen people IM each other even though they’re sitting in directly adjacent cubicles where they could have easily just spoken in normal voice.
I’ve used current versions of video conferencing that are pretty impressive. I once attended a meeting at Google’s Ann Arbor office where we met with people in Google’s Mountain View office via video conference. After a couple of minutes adjustment, I felt like we were in the same room. We were even drawing on the white boards for each other.
This particular technological advance will also be driven by environmental concerns and continuously rising prices of fuel. The “world is flat” phenomenon may also be a significant contributing factor as companies will be able to leverage their use of these technologies to hire the best talent available regardless of physical location.
3. Supply chain advances will make same-day delivery commonplace
One of the most often cited advantages of physical retail over e-commerce is the immediate gratification available at a local store. This advantage will not hold for long. I can just about guarantee someone at Amazon is currently trying to find a way to deliver most of their goods to almost anyone in the same day. They’re actually already doing it for some items in some cities today. And they’re not alone. The auto parts retailers have long been able to deliver parts to commercial garages within an hour. In fact, I can imagine the types of distribution networks built by auto parts stores becoming a model for many retailers. Supply chain professionals are some of the most amazing people I’ve ever met.
They are constantly finding new efficiencies in their processes, and I have no doubt they will be able to solve the issues associated with same day delivery.
Do these predictions sound crazy?
If so, think back 15 years to 1994. Hardly anyone had mobile phones or emails. Amazon didn’t exist, nor for all practical purposes did e-commerce. Those of us who connected to the internet did so on dial-up modems at 56k speeds. We’ve come a long way in the last 15 years, and I don’t see any sign of us slowing down for the future.
So, what does this mean for retail?
Many of today’s current physical store advantages are going to be neutralized, so multi-channel retailers are going to have to significantly change their business models. Furthermore, the commonplace usage of video conferencing will likely cause population shifts and cause the need to shift real estate strategies. I can see some people migrating towards urban environments to satisfy their needs for more personal interaction in their social lives, and I can see others going the opposite direction and moving to rural environments to satisfy their needs for more solitude and outdoor living. Suburbs as we know them today will have less appeal and may see significant population decreases.
As I think is already the case today, the retailers who create the best customer experiences across all channels are best positioned to thrive in the future. As retail becomes increasingly self-service via customers’ constant connections to retailers and to each other and to general information everywhere, it’s going to be the retailers who get customers the right information in the right way at the right time and with the best overall customer experience who will garner the most loyalty among customers.
Retailers with physical stores may consider leveraging those physical stores as distribution warehouses while maintaining selling spaces that are in many ways showrooms. Retailers will need to consider whether or not distribution and delivery should be outsourced or become core capabilities. Will sales associates and delivery drivers become one in the same? Will sales assistance occur both via video conferencing and via direct discussion on a customer’s doorstep? Is that crazy from a customer’s perspective or incredibly convenient?
I believe the retailers who best leverage their cross-channel capabilities today will be best positioned for this brave new world. And those who attempt to protect the status quo will face pressures from all fronts.
There are lots of other things that could happen in the next 15 years that are potentially even more radical than anything I’ve predicted here. But one thing’s for sure: there can be no doubt the retail landscape 15 years from now will be very different from what we see today.
What do you think of my predictions? Even more importantly, what are your predictions? How do you think retailers should react?