The 2017 retail apocalypse noise was fueled by stores closing and diminishing sales at large departments stores — the predictions were dire. Now in 2018 the noise is suddenly less strained as several big names have turned things around showing encouraging growth… ahem… Macy’s. 

“Sales were up 4.2% in the first three months of the year, reversing a mostly downward trend the retailer has experienced over the last four years.” - https://www.usatoday.com/story/money/2018/05/16/macys-sales-spike-profit-blue-mercury-bloomingdales/609171002/

Analysts work with what information they have to deduce a future outcome. There is no guarantee of this outcome in part because they are working with limited information (or too much information). However, there is an undercurrent of reality below the ripples of evidence and information that are unseen or ignored when making these or any predictions. Existing public reports of consumer fickleness and current brand marketing strategies are limited by the fact that large amounts of information is hidden by a core few tech giants (Facebook, Google, Apple, Amazon). Retail’s future relies heavily on how these data hoarders manipulate their algorithms to gain the most revenue. They will always claim our best interest but this is like removing straws from restaurants or not washing towels in hotels. It’s true, both help the environment, but the main reason companies go along with it is because it helps them save money. 

Digital natives and D2C strategies have successfully freed brand’s from full reliance on tech giants. Like craft breweries, brands focused on outdoor apparel, fashion or cosmetics have found ways to overcome the big tech dominance. However, they have barely worked their way into the overall pie. Worse, digital natives ultimately hurt themselves by fighting over a small group of savvy consumers who go out of their way to avoid big box purchases in search uniqueness or a sense of doing good. 

Long term, the struggle for digital natives is scalability. D2C has a ceiling in terms of growth, revenues and success. That ceiling has gone up as D2C brands take advantage of opportunities such as celebrities, creative marketing tactics and bad press from the large bohemouths. However, thus far true scalability has only been achieved by either partnering with a big retail or selling outright. Many are seeking the holy grail of D2C scalability without sacrificing or selling their brand. This issue is a big question for companies like  Glossier who wants to become a “massive” brand purely on it’s own merit. Having a celebrity and a popular blog helps but beyond that it comes down to technology. 

“Even so, most beauty brands are owned by large companies with massive advertising budgets,” https://www.digitalcommerce360.com/2018/03/06/glossier-president-talks-about-its-growth-missteps-and-community/

Technology and the internet is heading towards a tipping point. Up till now we have enjoyed 10+ years of innovation and progress as we’ve shifted from desktop to mobile and from static web pages to dynamic content proliferators. We now socialize, communicate and share through the many companies and services who have capitalized on the internet’s original foundation. Some have coined this time as “Web 2.0”. The end result is a stagnation as we settle into a consolidation of tech giants who increasingly control and manage our lives.  

“Unfortunately, advertising as a business focuses on eyeballs over quality, leading to much of the degradation and clickbaity titles of today.” - https://thenextweb.com/syndication/2018/03/28/blockchain-will-disrupt-google-apple-amazon-facebook/
“A handful of people working at a handful of tech companies steer the thoughts of billions of people every day” - https://www.ted.com/talks/tristan_harris_the_manipulative_tricks_tech_companies_use_to_capture_your_attention

In order for the internet to enter it’s next evolution (“Web 3.0”), several existing technologies need to find their way into the mainstream. A convergence of sorts. Each of these technologies alone are interesting but considering that all three are maturing around the same time they provide a revolutionary push we need. For retailers, each of these provide a puzzle piece towards scalability. Scalability as a term in this blog is focused on two key areas. 1) Supply chain management and 2) Interacting with as many consumers as possible in a meaningful way. 

The three technologies that exist but are steadily maturing are 5G, IPv6 and Blockchain. 

5G - “blow-your-hair-back speeds”

A Glimpse Into 5G’s Impact On Retail Mobile - https://www.forbes.com/sites/nikkibaird/2017/08/29/a-glimpse-into-5gs-impact-on-retail-mobile/

5G relies on infrastructure at the cost of companies who only spend money if they can make money. All the benefits in the world to end users is meaningless in the eyes of a profit driven company. Luckily, Verizon, AT&T, T-Mobile all see this as a competitive edge and thus are investing time and money to make 5G a reality by 2019 or 2020.  

For retailers and brands this will allow savvy ecommerce shoppers to interact more fluidly and more instantaneously. It could draw more eyes away from the tech giants as things like VR become more accessible to smaller brands. 

“Within the next few years, a spontaneous shopping trip won’t require an hour in the car or on a bus, or being cooped up indoors close to decent WiFi signal. You could do it while having a picnic in the park or even at the pub. If your favourite retailer has just released their summer collection and you want to be a textile trailblazer, all you’ll need is to pop your headset on or simply look at your screen and have a browse, remotely, without having to lift a finger.” -https://www.home.barclaycard/insights/payments/How-will-5G-change-mobile-payments.html

IPv6 -  The foundation for IOT

A super geeky concept, but all this means is that we are moving towards a world where devices (your phone, your security camera, your toaster) all have a unique address. This enables more direct communication. Instead of your toaster talking through your wifi to a central server, then back to your phone, you could talk directly to it from your mobile phone. 

“Another huge potential of IPv6 lies within the possibility to connect devices to each other at any time, in any location, allowing them to communicate easily with each other.” - https://www.itproportal.com/features/why-ipv6-is-becoming-the-next-big-thing-in-mobility/

For retailers and brands this means the potential of direct interaction with consumers. At this point brands must find or attract customers by casting a net strategically or broadly using marketing nightmares like Facebook’s complicated campaigns based on bidding. IPv6 benefits are less obvious alone but once fully in place our ability to move around and connect becomes easier because our address no longer need to continually change. The addresses become consistent and more controllable data points that retailers can better monitor and use. 

Blockchain - democratization of data!

The most controversial of the three technologies, blockchain is overly hyped and has a difficult road ahead. However, the implications for blockchain are significant. Especially for brands and retail because it offers an opportunity to truly extract valuable consumer data from the big tech giants. More importantly, but also more unknown is the degree to which consumers will have more control of their data. Blockchain promises a world in which the internet finally becomes fully contextual. For example if my health records, credit card purchases, and movie habits could be integrated and managed by me, I could allow certain vendors insights that target more accurately what I need. No more pharmaceutical commercials for some disorder I clearly do not have. Or no more car ads for a car I don’t need or want. Suddenly smaller brands could gain access to my data not because they paid for it but because I want them to find me. 

“These numbers supply damning evidence this movement is indeed a revolution in the works. And not unlike France in the 18th century, this revolution was born out of the frustration of inequality between millions of people and the few in power. And justly so, the Web 2.0 provided a fertile ground for corporations to monopolize control and profits.” - https://medium.com/@matteozago/why-the-net-giants-are-worried-about-the-web-3-0-44b2d3620da5
“Walmart uses blockchain to keep track of its pork it sources from China and the blockchain records where each piece of meat came from, processed, stored and its sell-by-date. Unilever, Nestle, Tyson and Dole also use blockchain for similar purposes.” - https://www.forbes.com/sites/bernardmarr/2018/03/23/how-blockchain-will-transform-the-supply-chain-and-logistics-industry/#739291505fec

Summary

Millennial quirks, the latest social media feature, or a big brand’s Q2 earnings reports, all offer insights into the future of retail, but they all remain just ripples on a sea of bigger things taking place. “Digital Transformation” has grown into an oversimplified call to action. The reality is far more complex and riddled with legacy technology, general apathy, and big players with big dollars who don’t want to lose control.  

In follow-up blogs I will be interviewing CEO and technology leaders to better unpack how to prepare, or better, what technology that can be used now.