This article summarises a section of the Retail 5.0 report by QUT Chair in Digital Economy. Click here to read the full report.
Retail goes right back to farmers selling their wares, a completely manual process from beginning to end. As centuries rolled on this got incrementally more sophisticated, with longer supply chains and international trade introduced as seafaring and navigating improved. Then banking and finance cropt up to foster even more.
The climax of this early phase of retail were the first department stores. But the overarching theme is false starts, as entrepreneurs experimented, probing the depths of demand and what is feasible in a technological world completely foreign to the one we currently inhabit.
The second stage of retail takes over as value chains become increasingly sophisticated, generating both scope and demand for economies of scale and greater reliability, two hallmarks of modern retail. In this stage retailers focused on streamlining, industrialising and cutting costs. Management science is created as best practices are developed, discovered and popularised.
Mass production and assembly lines are introduced, further complementing the drives for rationalisation, lower costs and consistent quality. This was accompanied by a new form of retail — the retail chain. Along with centralised storage and distribution centres, this encouraged economies of scale and standardised sourcing, product and experience.
The third stage is characterised by automation as technological advances allow data and information to start flowing more freely. Machines take over repetitive tasks and the increased productivity and reduced error lead to faster and more complex decision making.
Together with improvements in communication, this leads to more complex and interconnected supply chains, inventory management and demand forecasting. Altogether this creates a more efficient customer experience.
The fourth stage is where digitisation really begins. Existing processes begin to be computerised and the emphasis on customer experiences takes over. Building upon an already digitally literate and connected consumer base, retail moves online and into an omni channel — consisting of myriad apps, devices and social networks. Crowdsourcing, self service and peer to peer networks encourage even greater customer interaction and buy in.
One of the hallmarks of this period is the explosion of choice. And the consumer becomes ever more empowered with information about the provenance and quality of the products on offer.
What’s on the horizon?
Even more innovation brings us to the final stage, where voice control, flexible production processes and ever more customer orientation allow us ever more individualised products and experiences. This stage is characterised by even more focus on people, with consumers at the centre of all activities.
Consumers generate data that trusted organisations can use to personalise experiences and products. The focus is no longer on streamlining business processes, but on understanding and optimising demand, and especially the time between demand and service.
We have not yet reached the culmination of this stage of retail, as we have only gotten a taste of the power of some newer technologies — virtual and augmented reality for instance — to shape experience and customer choices.
Click here to read the full report.