Retailing in 2020

MKTG1250 F&T Merchandising Management

Assessment 1 Semester 2, 2015

Katharine Wallis
S35100602

Lecturer: Geoff Atkinson

Executive Summary

The following report outlines the current status of the retail environment in terms of
the modern consumer and their expectations, globalisation and new technological
era. Three technologies were then explored including The Internet of Things, Smart
Textiles and Big Data Analytics. These areas were discussed in depth both in a
fashion retail setting as well as other industries. From this, scenarios were developed
and conclusions drawn to ultimately paint a picture of what retailing in 2020 could
potentially be like with the integration of these technologies, and what retailers need
to do in order to be successful and thrive in this new era.

Contents
1.0 Introduction ______________________________________ 4
2.0 Industry Analysis___________________________________5
3.0 Technologies _____________________________________ 6
- 3.1 Internet of Things ___________________________6-7
- 3.2 Smart Textiles ______________________________ 8
- 3.3 Big Data Analytics _________________________9-10
4.0 Retail Scenarios in 2020 __________________________11
5.0 Conclusion_______________________________________12
6.0 References ____________________________________13-14
7.0 Appendices ____________________________________ 15-16

1.0 Introduction
We live in an era of increased use of diverse technologies in all aspects of life. Digital
is changing the way we communicate, the way we buy things, the way businesses
interact and even the way we talk. Our expectations of what we can do and how we
can do it have been transformed. The modern consumer is impatient, time-poor, and
technically literate giving them increased expectations of retailers. The developed
world now demands convenience of being able to do things their way and this shows
no signs of slowing down. Within the next 5 years we are expecting to see computing
use, access and application to continue to develop and improve and ultimately
change retailing dramatically. This report explores The Internet of Things, Smart
Textiles and Big Data Analytics and their potential place in the retail world of 2020.
Based on what we are seeing today as well as lessons learnt from previous
transformations, predictions can be made as to what impact these changes will have.
The retailing landscape, as we know it will be no more, as consumers will shift to
those who have evolved whilst others will be forced to liquidate. This report offers a
glimpse into what retailing could potentially be like in the year 2020 outlining where
we are now and where we are going. Developing technologies are also explored that
ultimately form the basis for the scenarios of 2020 retailing.

2.0 Industry Analysis

The impact of technology has changed the traditional conventions and scripts for
modern retailing. Today, the average consumer experiences almost seven hours of
screen time per day and checks their phones within 15 minutes of getting up (Labs,
2015). The state of the Australian and global economy has seen the emergence of a
new kind of consumer (refer to Appendix B & C) who is more attuned than ever
before to fluctuating national and global trends. This modern consumer is better
informed and therefore holds higher expectations of the brands that they shop with.
Demand for a new type of retail market, one that adapts and evolves in accordance
with the needs of the consumer is apparent(Kaldor, 2010).Product presentation
must elicit a desire to buy in the modern consumer as well as stimulate their visual,
aural, tactile and olfactory senses (RCO1_WEEK1). There has also been a major
shift in business focus as the economy has moved from industrial to service based.
Because of this, marketing has undergone a profound transformation. It is now more
important to get inside the mind of the consumer and sell them goods and services
rather than simply manufacturing the goods (RCO1_WEEK2). This new era poses
challenges for retailers as they are forced to keep up their pace in a crowded and
competitive environment. Globalization is likely to push retail into a variety of new
and different types of markets. Benchmarks of global formats will spread more
rapidly, and retailers will adapt global best practices swiftly to meet the needs of their
markets (Kantar Retail, 2015). Even local retailers will be required to understand the
global format portfolio in order to make sure they have a strong strategy to compete
(RCO1_WEEK3). The product offerings must meet customer expectations in terms of
having the right product attributes, the right price and a communication strategy that
reaches and engages the customer (RCO2_WEEK1). Understanding and meeting
the demands of the modern consumer can be challenging as technology segments
continue to evolve. How to best meet the needs of the modern consumer is a critical
component for success in 2015 and beyond (IDC,2015).

3.0 Technology Innovations

3.1 Internet of Things
Mckinsey defines The Internet of Things as the utilization of sensors and actuators
that are embedded in physical objects and are linked through wired and wireless
networks. These often use the same Internet Protocol that connects the Internet
(Mckinsey, 2010). The networks produce large volumes of data that flow to
computers for analysis. When objects can both sense the environment and
communicate, they become tools for understanding complexity and responding to it
swiftly (Mckinsey, 2010). The revolutionary aspect to this is that these physical
information systems are now beginning to be deployed, and some of them even work
largely without human intervention (Mckinsey, 2010). According to Wasik this is the
language of the future. Intelligent devices that can coordinate activities. For example,
coffee machines that can talk to our alarm clocks or a thermostat that communicates
with motion sensors (Wasik, 2013). A decade after Wi-Fi allowed computers to
become apart of a wireless networkand half a decade after smartphones put a
series of pocket-size devices on that networkwe are seeing the dawn of a new era,
where the most mundane items in our lives are able to communicate wirelessly
among themselves, performing tasks on command and giving us data weve never
had before (Wasik, 2013). Wasik believes that in order for the Programmable World
to reach its full potential, three stages need to occur. The first is the act of getting
more devices onto the networkmore sensors, more processors in everyday
objects, more wireless hookups to extract data from the processors that already
exist. The second is to make those devices rely on one another, coordinating their
actions to carry out simple tasks without any human intervention. The third and final
stage, once connected things become ubiquitous, is to understand them as a system
to be programmed, a platform that can run software in much the same manner that a

computer or smartphone can (Wasik, 2013). Once these milestones have been
achieved, that system will transform the world of everyday objects into a designable
environment and potentially change the way society thinks about the divide between
the virtual and the physical (Wasik, 2013). The impact of computerization and the
internet creates a new speed of business, meaning that traditional boarders and
barriers are becoming irrelevant as technology supports and drives globalisation
(RCO3_WEEK3).

3.2 Smart Textiles

According to the Journal of Textile Science and Engineering, smart textile
technologies integrate computer functionality into textiles. Smart clothing has started
to emerge more frequently in the sporting and healthcare sector as well as the
medical field (Dunne, 2015). Within the last ten years a dramatic increase in
academic and industry research has gone towards the implementation of smart
clothing, however very few developments have made it to the consumer market.
Commercial attempts have often met with lackluster sales as it is still early days for
this kind of technology (Dunne, 2015). However, in the emerging Internet of Things
everyday objects are becoming networked, including clothing. In order for technology
to be a comfortable part of the clothing, it is necessary to embed electronic functions
in textiles so that both electronic functionality and textile characteristics are retained
(Cho, 2015). Smart clothing for the average consumer, needs to be simple to
maintain and use, as well as washable like regular textiles. Because of this, the need
to combine wearable technology and clothing/textile science is essential in order to
achieve smart clothing wearability (Cho, 2015). For example, Nike has successfully
developed a shoe that contains sensors that connect to the users iPod. Smart
clothing is able to provide useful services in numerous fields such as healthcare,
sporting or leisure (Cho, 2015).
According to a report by the Swedish School of Textiles, smart textiles has a place

primarily in four areas of the fashion business: medical garments, workwear,

sportswear and fashion. Current research efforts concentrate mainly on the
three first areas, whereas fashion has been viewed as the weakest area for
the development of smart textiles. However, the report also indicates that it is
within the area of fashion that most new companies are established and
therefore shows the most potential for growth.

3.3 Big Data Analytics

According to Schonberger & Cukier, big data is all about seeing and understanding
relationships between pieces of information that, until recently, was not able to be
seen or understood before. Big data analytics allows information to be extracted and
new insights to be made, which create new forms of value in ways that change the
relationships between organizations, markets, citizens and governments as well as
many more. Basically, big data changes the way the everyday person interacts with
the world around them (Schonberger & Cukier, 2013). Olhorst has categorized big
data into four primary aspects; volume, variety, veracity and velocity. These aspects
all work towards the primary goal of big data analytics, which is to help companies
make more informed business decisions by allowing data scientists and other
analytics professionals to analyze large volumes of transaction data, as well as other
forms of data that may be untapped by conventional business intelligence programs
(Rouse, 2014). This could potentially include things such as web server logs, internet
clickstream data, social media content, social network activity reports, text from
customer emails, survey responses, mobile-phone call detail records and machine
data captured by sensors connected to the Internet of Things (Rouse, 2014). Big
data can be analyzed with the software tools commonly used as part of advanced
analytics disciplines such as predictive analytics, data mining, text analytics and
statistical analysis (Rouse, 2014). Mainstream BI software and data visualization
tools can also play a role in the analysis process however; semi-structured and
unstructured data may not always fit well in traditional data warehouses.
Furthermore, data warehouses may not be able to handle the processing demands
by sets of big data that need to be updated frequently (Rouse, 2014). For example,
real-time data on the performance of mobile apps or of oil and gas pipelines. As a
result, many organizations that are looking to collect, process and analyze big data
have resulted in turning to a newer class of technologies including Hadoop and
related tools such as YARN, MapReduce, Spark, Hive and Pig as well as NoSQL

databases. These technologies form the core of an open source software framework
that supports the processing of large and diverse data sets across clustered systems
(Rouse, 2014). Having access to this kind of data opens doors for businesses that
could never be opened before. This new era presents unprecedented opportunities
for companies looking to expand their horizons and practices globally as long as they
are willing to take the risk to participate (RCO4_WEEK3).

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4.0 Retail Scenarios in 2020

Looking towards the future, Cisco IBSG predicts there will be 50 billion devices
connected to the Internet by 2020 (refer to Appendix D). Because of this, and
accompanied by the continual advancements within retail technology, assumptions
can be made and from that scenarios developed. For example, a consumer may
have the opportunity to purchase an interactive item of clothing, which in turn is
connected to other devices not only around their home, but also within retail stores
and shopping centres via the Internet of Things. This wearable technology can store
big data such as where they live and shop frequently, allowing for retailers to
customise a consumers experience with them. Wearable technology, the Internet of
Things and Big Data Analytics is not only useful in a retail setting but also within the
sporting and healthcare industries as well as many more. In 2020, a consumer could
potentially be able to go for a run wearing a smart textile top that keeps track of how
far they have run and their heart rate, this data can then be shared with their doctor,
dietician or personal trainer to help them keep track of their fitness goals. The key
factors for success include research and lots of it, having the right merchandise mix
and secondary to that having the right store ambience (RCO3_WEEK1). By 2020
consumers expect the brands they shop with to be friendlier, more authentic,
personalised to them, more human and more local (RCO3_WEEK2). In order to
successfully achieve this, brands must be clearly understood, identified and
respected by the modern consumer as well as not being mixed or mingled with lesser
brands or unbranded products (RCO4_WEEK2). By looking further ahead and
understanding what the future may hold, risks and opportunities can be identified and
help shape that future (Forum for the Future, 2011).

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5.0 Conclusion
The speed and pace of technological advancement have increased radically in the
past few decades with Internet and digital communications. By 2020, the pace of
technological innovation will have accelerated even more and mastery of new
technology platforms will define the retail winners of tomorrow (Kantar Retail, 2015).
By 2020, many of the current models for successful retailing will have undergone
significant change. Surviving companies will have to develop new strategies and
tactics to engage the consumer in a profitable manner. The winning retailers will have
a superior understanding of their consumer, considering income and demographic
fragmentation, as well as behaviours, and will have the inert ability to analyse
shopper data and extract valuable information (Kantar Retail, 2015). They will
leverage technology shifts to their advantage and turn business intelligence and data
into actionable insight to grow and benefit the business. They will integrate these
insights into the demand chain and into enhanced customer service models. They
will have an enhanced understanding of market fragments and patterns of growth
and will be able to operate and manage "globally"- on a global scale with attention to
local needs (Kantar Retail, 2015). Leading retailers will address the challenges to
their economic models and adapt their frame of mind on store formats, employment
models and return on investment. The successful 2020 retailer will also build a true
omni-channel operation that allows customers to interface through any channel of
their preference on a 24/7 basis, anywhere at any time. By embodying these and
other success factors, retailers and suppliers alike can manage the complexity and
diversity of retailing in 2020 (Kantar Retail, 2015).

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6.0 References
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2015].
Australian Gift & Homewares Association, (2010). The changing face of the modern
consumer. [online] Available at: http://agha.com.au/blog/2010/12/01/the-changingface-of-the-modern-consumer/ [Accessed 07 Aug. 2015].
Cakir, A. (2011). Smart clothing technology and applications. Behaviour &
Information Technology, 30(2), pp.287-288.
Cuzzocrea, A., Kittl, C., Simos, D., Weippl, E. and Xu, L. (n.d.). Availability, reliability,
and security in information systems and HCI.
De Kare-Silver, M. (2011). E-shock 2020. Basingstoke: Palgrave Macmillan.
Fabricant, F. and Miller, J. (n.d.). Creating career success.
Forbes, (2015). CenturyLinkVoice: 5 Tech Trends That Will Hit Every Retail Store By
2020. [online] Available at: http://www.forbes.com/sites/centurylink/2015/04/03/5tech-trends-that-will-hit-every-retail-store-by-2020/ [Accessed 05 Aug. 2015].
Forum for the Future. (2011). [online] Available at:
https://www.forumforthefuture.org/sites/default/files/project/downloads/consumerfutures-2020-full-document.pdf [Accessed 12 Aug. 2015].
https://www.youtube.com/watch?v=XB0CORT1k9w. (2015). [DVD].
Mayer-Schnberger, V. and Cukier, K. (n.d.). Big data.
McKendrick, J. (2015). Industry 4.0: It's all about information technology this time |
ZDNet. [online] ZDNet. Available at: http://www.zdnet.com/article/industry-4-0-its-allabout-information-technology/ [Accessed 13 Aug. 2015].
Ohlhorst, F. (2013). Big data analytics. Hoboken, N.J.: John Wiley & Sons.
PSFK, (2015). 10% of consumers have checked their smartphones during sex.
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SearchBusinessAnalytics, (2015). What is big data analytics? - Definition from
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7.0 Appendices
Appendix A)

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From Week 1:
RCO1 - The modern consumer
RCO2 - Challenges for retailers
RCO3 - Key Factors for Success
RCO4 - Merchandise Management (definition & explanation)
RCO5 - MM strategies (diffusion lines)
From Week 2:
RCO1 - The emotional economy
RCO2 - Marketing in the emotional economy
RCO3 - Desired Brand attributes
RCO4 - Brand integrity
RCO5 - Branding strategies
From Week 3:
RCO1 - The Global Economy
RCO2 - Challenges of Global interdependence
RCO3 - Technology and globalisation
RCO4 - The new global era
RCO5 - Global trade
Appendix B)

Appendix C)

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Appendix D)

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