The retail space is ripe for disruption – again
It’s easy to gush about digital disruption and the transformative effect that innovative companies like Uber and Netflix have had on their sectors.
Disruptive innovation, however, long predates either of these companies – even within the context of the recent digital revolution.
Apart from perhaps the humble letter and envelope, bricks and mortar stores and shopping centres were among the very first things to be disrupted by the broad uptake of digital.
More than a decade ago, Amazon paved the way for more specialist online-only shopping destinations – think Missguided, ASOS, Net-a-Porter – to outgrow the offerings of traditional high street shops. Sites like these were also able to capitalise on changing attitudes to shopping online.
But the total online takeover of bricks and mortar stores isn’t complete. What’s more, suspects Mustafa Khanwala of IDEALondon resident retail start-up MishiPay, such a takeover isn’t likely to happen if the retail sector continues in its current direction.
Ready for round two
Believe it or not, the sector is gearing up for another round of technology-driven disruption.
A recent Cisco report on the subject found that retailers are not investing enough in the areas that create competitive differentiation and new revenue streams.
This would suggest that most retailers are falling behind when it comes to digital, and are at risk of being out-performed by more agile, innovative outfits.
The biggest innovations, says Mustafa, are now going to come in the offline environment: “Ecommerce has provided huge disruption, but 90% of the $25tn retail industry is still in offline retail.”
This hasn’t gone unrecognised by the world’s big tech companies and investors, says Mustafa. The like of Alibaba and Amazon (with its ‘Go’, checkout-free store concept) have been putting their efforts into getting a secure footing in the market ahead of the next big round of disruption.
Choosing the right path
Not that Mustafa and the team at MishiPay are concerned by this. Quite the opposite, in fact.
“The past year has been extremely exciting, as the big tech companies have made a clear move in the market direction that MishiPay has already chosen,” he explained.
“That is, that shoppers want to have a seamless offline checkout experience, and retailers want to bring all the best elements of data analysis and the online retail experience into the offline environment.”
Indeed, MishiPay’s innovative queue-busting digital solution appears to be right on the money.
With MishiPay’s app, it’s possible to scan a product’s barcode with your phone whilst in the shop. Then, just as you would while shopping online, you can add it to your basket or proceed straight to the virtual checkout. Payment can be made via the app too, and then you’re free to leave without queuing or visiting the counter.
Taking things offline
Perhaps the most notable indicator of this trend of merging online with offline is that pure-play online retailers, such as Missguided, are beginning to extend their offering by establishing a bricks and mortar presences.
These companies have realised, Mustafa says, that “to grow beyond a certain extent they do need that offline environment to help them engage at a human level with their customers.”
It’s an interesting point: in our increasingly interconnected world, there still is huge value in a face-to-face interaction, particularly when it comes to making sales.
But how is this disruptive?
It’s the fact that these companies are coming into offline in a different way, explains Mustafa.
“They’re arriving after already establishing all of their online processes, and they’ve excelled at making their supply chain really efficient and learning how to collect data from shoppers and use that data in the best way.”
It’s this almost reverse engineered approach that is set to shake up the sector.
The real disruption will come from delivering “a truly omni-channel experience: merging the best of the online and offline so that the shopper uses them both without realising the difference.”
The time is now
Like many of the best ideas, this seems like an obvious solution.
“This coming together of the online and offline has been talked about for years,” says Mustafa. “But I think this year the right critical mass of technologies, investment into the field, and user expectations have built up to make this year the one that will see this blow up into the mainstream.”
Indeed, the possible use of technologies like VR, AR and AI has been pontificated on for decades. It’s only in very recent years that they’ve begun to properly enter the mainstream.
A recent report by DigitalBridge suggested that technologies (such as VR and AR) that allow consumers to virtually place products in their homes could boost the retail market by as much as £1bn a year.
Cutting the queue
Mustafa is confident that 2017 will be the year when “the true connection of online and offline retail will start to come into the mainstream.”
Start-ups will play a vital role in this, accelerating the process for big retailers who have been asking for years for a solution to queues.
With as much as 6% of sales lost in in-store checkout lines, there’s huge potential for innovators like MishiPay to help usher big retailers into a more efficient, omni-channel existence.Tags: