In Part One of our Living Retail series, we laid out our definition of Living Retail and discussed why it’s so important that retailers adapt to the idea of “change as the only constant.” In Part 2, we’ll discuss how retailers can effectively address one of the major change agents in the age of Living Retail: a power shift toward the consumer.

The word “disruption” has been thrown about so freely lately that it’s almost grown meaningless. However we choose to define it, though, it’s unquestionably driving one consistent consequence: “disruptors are reshaping consumer behavior and training swaths of consumers to view disruption as the new default setting.” This amounts to a power shift toward consumers, and is one of the major change agents in the age of Living Retail.

The Rise of Omni-Channel

In the past, when consumers had a geographically restricted pool of options to shop, retailers were able to operate from a position of security. The technological progress of recent decades is changing that power balance. With the rise of omni-channel shopping, consumer options have grown virtually limitless.

Online buying is still a relatively small slice of the overall retail pie, accounting for some 10% of all U.S. sales last year. For high-ticket items in particular, most consumers still prefer to talk to salespeople and inspect items before purchase. Even for low-priced items, many still value the experience of browsing store aisles and the immediacy of leaving a store with purchases in-hand.

That said, omnichannel shopping is increasingly seen as both a convenience and an indicator of service quality. In grocery, for example, shoppers want to browse produce aisles when they have time — but they also want 2-hour deliveries or click-and-collect options for their busy days.

Customers are increasingly shifting toward omnichannel shopping, and retailers must be prepared to adapt. Amazon and Alibaba in particular have been forerunners in this area. They model the success that can follow when companies embrace new conceptions of retail — in this case, rethinking retail as first and foremost a digital ecosystem. Both companies have proven fearless in their experimentation with technology that more closely connects sellers to buyers in online spaces.

Unfortunately, a seamless shopper experience requires a lot of work, including improved forecast accuracy, data transparency, unified planning processes across different operational areas, highly developed analytical capabilities, and investment in the technologies that make all of that possible.

I Want What I Want and I Want It Right Now

Some of the biggest players in retail — including Amazon and Alibaba — have invested enough in their supply chain and fulfillment infrastructures to offer two-day, one-day, and even same-day delivery, along with free returns and transparent shipment tracking. These services are now so common, their absence may already feel out-of-date in some sectors.

This pressure on supply chain efficiency, accuracy, and data visibility is unprecedented. While these developments are amazing for consumers, most retailers simply cannot afford them without rethinking their operational models. The best starting point is to prioritize agile supply chain structures capable of meeting these expectations for instant gratification.

Limitless Power in the Palm of Your Hand: The Impact of Technology

A recent report found that 45% percent of consumers, averaged across retail categories, read online reviews before reaching purchase decisions. This isn’t a new trend — as far back as 2011, research suggests that consumers are being driven less by brand recognition than by online research. Consumers no longer feel limited to a handful of brands whose value they trust.

With the entire internet’s worth of information available in a cell phone, it’s no surprise that consumers are conducting research on the go as well. One survey found that “almost half of the consumers who conduct research on their mobile phones have done so while in stores.”

Even in-store, consumers are conducting comparative research on pricing and features to determine where to spend their money. If the better deal or product is to be found at another store, they’ll go there. If it’s found online, they’ll place an order on their phone while standing right there in your store.

With the sheer abundance of information available to them today, consumers no longer have to settle for what’s in front of them.

Will Retailers Ever Regain Control?

Of course they will! But it won’t look like it used to. It turns out that having control in the age of Living Retail starts with letting go of the idea of control. In the coming years, technology will change, demographics will change, consumer and retailer priorities will change, and there’s very little a retailer can do to stop that from happening.

What retailers can control is their ability to adapt. One of today’s biggest challenges is the prevalence of outdated legacy systems that hold retailers back from updating their operational processes. At RELEX, we always recommend partnering with providers whose technology empowers you to take control over your ability to adapt, what we call a “configure — don’t code” approach. The retailers whose technology lets them experiment and innovate quickly will best positioned to meet changing business conditions, and ultimately stay competitive in these times of rapid change.

In the third installment of RELEX’s Living Retail series, we’ll explore the impact of increasing urbanization on retailers.

Mikko Kärkkäinen

Mikko Kärkkäinen

Group CEO, D.Sc. (Tech.)

Phone+44 7802 658 237

Mikko Kärkkäinen is the Group CEO at RELEX and the author of more than thirty papers on logistics and supply chain issues delivered at conferences or published in leading magazines.

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