How can Australian retailers address the big challenges of staying relevant in a world increasingly driven by omnichannel engagement and new transaction types which require offline and online integration?

Historically, change in retail has sometimes been fast and at other times appeared slower, yet as an industry sector retail has always been driven to innovate. Global competition is increasingly fierce with new entrants challenging incumbents.

But now, there is now a revolution happening at a pace of change unlike anything that came before.

The digital revolution is levelling the playing field and creating many opportunities, so much so in fact, retailers could be forgiven for thinking that reports of their demise, as expressed in “Death of retail” headlines – is somewhat exaggerated.

The high street, supermarkets and shopping centres are going digital in a manner that spans engagement, transaction, partnership and supply chain. This is all brought about by the convergence of the mobile based consumer, cloud based technology and data driven production and logistics.

Yet it must be remembered that while digital is key, simply abandoning bricks in favour of clicks and seeking to replace physical experience with purely digital engagement is not a basis for success. In fact, it is futile to divide the world into real or virtual economies, only the old and the new.

Those who cling to the old ways of retailing run the risk of being disrupted. Meanwhile, bricks-and-mortar businesses will be able to create added value for consumers if they are integrated with the power of mobile reach, real-time consumer insights, and technology capability to improve operating efficiency. The objective of this is to create a seamless and engaging shopping experience for consumers.

We’re already seeing the merging of online and in-store, with programs like Refinity pointing to what lies ahead. This is a new sensory experience engineered to make retail come alive. It achieves this by employing mixed reality and autostereoscopic objects, driven by ultra haptic displays. For the consumer choosing something like a new bathroom suite in a store environment, as well as having a 3D view of the items, they can virtually touch, feel, and even smell products ahead of settling on their chosen design. This helps bring the creation and configuration process alive, making it more immersive in a way that has never been achieved before.

The different elements that provide seamless engagement across physical and digital are becoming well known. At the front end these include: mobile and app; new in-store digital hardware; Data capture and analytics.

At the back end they are: Optimised production and customisation, optimised supply chains and logistics; partner ecosystems; automation; data capture and analytics. Blockchain has the potential to remove much of the friction from retail supply chains.

Across the multiverse

It is widely accepted that China and other advanced Asian economies are the home of New Retail – where every type of company is embracing what Jack Ma, Alibaba founder, called: ‘boundaryless retail’. Chinese consumers buy products and services in a manner that combines the physical and the digital in ways that have only started to seep into most European markets. China’s Freshippo is a chain of 65 stores which describes itself as a combined “experience centre, consumption centre and logistics centre” providing fully integrated offline physical and online experiences.

This type of engagement is expected by an entire digitally native consumer generation that has, in large, part-skipped internet shopping and gone straight to mobile.
Australian retailers have taken notice, and many are already revisiting their online properties to make them more mobile friendly, or are re-platforming completely to create app-based engagement experiences and transactions.

“Retailers across the globe are rapidly adapting to the fact that, from the consumer perspective, shopping is not about bricks versus clicks or one channel versus another. Instead, consumers are channel-agnostic. The shopping journey and pre-shopping research is a fluid process with consumers bouncing between online and offline along the path to purchase,” according to Deloitte.

When I want it, where I want it, how I want it

While a few people might consider buying a car via an app, many would now expect an AR experience when visiting a car showroom. Estate agents providing VR walkthroughs of properties are already common. Fashion brands are digitising their outlets at a remarkable pace using AR, smart mirrors and smart shelves. It is part of the new technology system in retail where the Front End is focused on new experience enabled by machine intelligence, interaction and AR. The middle end provides new intelligence through big data, cloud storage and ML. And the back end built on 5G and new hardware technologies.

In 2019 the retail sector will spend $203.6 billion on technology up 3.6 per cent year-on-year according to market analyst Gartner. Annual software spending will reach $40.5 billion by 2023.
But for those retailers on the journey to providing the total shopping experience of the digital age – a component-based approach built on point solutions such as AR, smart shelves, smart mirrors and app-based engagement – does not amount to a strategy.

The physical hardware solutions of digitalisation have seen some retailers ‘dip their toes’ by rolling out point solutions such as a kiosk, touch screen, or an AR headset onto the shop floor. Too often this proves to be a disappointing experience for the merchant and shopper, involving high capital outlay, low engagement and impossible to measure ROI.
The issue is not with the product or solutions. There are thousands of digital products and digitech solutions available for shop owners and retailers to deploy. The issue is with the context in which they are used.


Only when deployments are part of an integrated data driven approach which spans different platforms, optimised production and supply chains and a wide ecosystem of engagement partners can a retailer be said to be thinking strategically.

The issue then becomes one of overcoming the fear factor. How can a retailer roll out a digital strategy that doesn’t overwhelm the operation when just the task of deploying and integrating the different elements already sounds immensely complex.

The key is to find the starting point that provides the greatest benefit and is the platform from which to scale. And the best starting point, is data. By beginning with a data strategy, setting clear objectives and key milestones, retail can engage and scale up its digital and physical integration strategy – without betting the business.

Partner Ecosystems

Retailers must think in terms of building an ecosystem of partners in fulfilment, transaction, content, experience and most importantly, logistics for online retailers.
Ecosystems are the key to helping draw consumers and merchants together. They narrow the gap between supply and demand.
Today’s consumers want fast and secure multi-channel digital choices combined with great physical experiences. For retailers it is the only path to successful and repeat engagement.

About the Author

Raymond Ma is the GM of Alibaba Cloud Australia and New Zealand. Alibaba is a member of the Which-50 Digital Intelligence Unit. Members provide their insights and expertise for the benefit of the Which-50 community. Membership fees apply. 


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