Signifyd lead storyteller, Mike Cassidy writes about the glimpse into the future that coronavirus has given us
The pandemic has been called The Great Accelerator, a worldwide event that has in nearly every aspect of life amped up changes that were already underway or inevitable in due time.
And so it is with retail. You’ve no doubt read of the retail apocalypse, the much-debated idea that retail as an industry is in free-fall and that each store closing and every instance of bankruptcy, is a sure sign that retail won’t survive.
That extreme view, of course, is nonsense. What we are seeing is not an apocalypse, but a transformation. Retail has been morphing for years — more experiential, more brands selling directly to consumers, more personalised, more omnichannel, and more than anything, more digital.
The pandemic has merely catapulted retail’s digital transformation a few years into the future. The data tells the story. Online sales in Europe are up 50% over their pre-pandemic levels, according to Signifyd Ecommerce Pulse data.
In some verticals the increase is much more dramatic. Home Goods & Decor sales are up 278%. Auto, parts & Tires sales have increased 158%. Electronics are up 75%.
And behind the statistics are consumers who have all-but fully embraced changes in shopping behaviour that have gradually been moving commerce from brick-and-mortar stores to online shops — or some digitally powered combination of the two.
How powerful is consumers’ embrace? A Signifyd survey of 1,500 UK consumers shows that in the near future the embrace is a vice grip. Nearly 80% of respondents said they would limit their shopping in stores this Christmas season, including 22.9% who said they would not shop in stores at all.
And consumers indicated that their aversion to in-store shopping would not end anytime soon. Well over half of respondents, 56.4%, said they’d be doing more of their shopping online a year from now. And 47.9% said they’d be using click-and-collect more a year from now than they do currently.
The shift has plenty to do with fears over COVID-19. But they also have to do with more consumers discovering the potential of digital shopping in the 21st century.
So, where is all this headed? Within a decade or two, advancing technology will mean that stores as we know them today will be nearly extinct. Smaller shops, selling unique inventory and experience, will still be around. There will still be salons where customers, more like fans, will connect with their favourite brands. Maybe they will sip tea or something stronger while seeing a demonstration of Samsung’s latest gadget or watching a fashion show displaying the latest from Nike or lululemon.
But department stores and big box stores will be a thing of the past.
There will be plenty of commerce-related buildings. But retailers will use them as staging for forward-deployed inventory — a model that will rely heavily on continuing technological advances.
Stores, then will return to the original meaning of the word: a place where inventory is held. What we think of as stores today will be hubs that customers visit to pick up items they’ve already purchased online. They will be fulfilment centres where ecommerce orders are picked and packed and sent on their way to nearby homes.
This brave new world will, of course, require that the retail innovation that has gotten us this far continues. The rise of ecommerce brings to mind the gadgets consumers use to buy on — and the ubiquity of those gadgets.
Desktop commerce gave way to laptop commerce, which gave way to mobile commerce and commerce conducted over smart speakers. But that misses the amazing leaps forward that have happened on the other side of the transactions — and the future strides that will be needed to build our nearly storeless society.
In a world where consumers can truly buy what they want, when they want and have it in hand by the method they want, inventory management is going to need to continue it’s transformation. Merchants will need to know what products are where, when. And they’ll need to know how many consumers are likely to want to pick those products up or have them delivered from that very space.
Amazon — of course it’s Amazon — has already started making great strides in tackling this challenge. The retail giant has filed a patent for a system that anticipates what a particular customer is about to order and ships that ahead of time to a nearby staging area.
In fact, the whole area of personalisation will need to continue to progress in order for retail to trade in stores for delivery and click-and-collect. Sure a commerce site today can "recognise" a consumer and serve them products they are likely to want to buy based on past transactions, the time of year, the weather, onsite behaviour and the like. But those insights are going to have to be integrated in more sophisticated ways to ecommerce’s backend and supply chain.
The supply chain itself is going to have to undergo its own digital transformation. The shift to all-digital-ordering-all-the-time will put a tremendous strain on the supply chain, both the links from manufacturer/supplier to retailer and retailer to consumer. The unprecedented pressure will require retailers and brands to understand buying patterns and the influence of seasons, geography, trends and individual preferences.
All of this will be driven by advances in artificial intelligence and our ability to rapidly interpret data.
The same advanced AI will need to be applied to questions of security as more transactions move online. As the digital entry points into ecommerce expand and multiply, so too do the potential vulnerabilities open for attack by bad actors.
Companies around the world and in Northern Ireland are working constantly to improve the way they help enterprises protect the troves of data they rely on to conduct business. And companies like Signfyd constantly improve their models and tools to protect the integrity of online transactions.
The continued transformation of fraud protection and abuse prevention will be crucial in providing consumer trust in the commerce networks that are rapidly replacing traditional stores. Each new convenience — mobile commerce, click-and-collect, click-to-car — requires a commensurate leap forward in the technology protecting those forms of transacting.
Because Signifyd is well-versed in the area of fraud protection, let’s take a look at click-and-collect as an example of the technological sophistication required for retail’s digital transformation.
Click-and-collect is a hybrid of online and in-store shopping. The order reaches a merchant as any ecommerce order would. But the order lacks a delivery address, which provides a number of key signals that help determine whether the customer is the rightful owner of the credit account being used in the transaction. Those orders also must be filled quickly, or the service loses it’s main attraction: The ability to order online and still receive the order within an hour or two. Those two distinctions — the lack of delivery address and the need for speed — tip the equation in favour of fraudsters.
The answer to the challenge lies in AI and big data. Specifically, an automated fraud protection solution leverages a vast network of merchants. That network means that Signifyd, for instance, has already seen some signals from 97% of consumers executing online transactions at any given retailer. In short, the model recognises the consumer as trustworthy or not.
That sort of vision allows an automated fraud system to instantaneously sift fraudulent orders from legitimate ones with a very high degree of accuracy. In order to remove any delay from processing online orders, a breed of fraud prevention has emerged. It’s known as guaranteed fraud protection and it provides a financial guarantee for any approved orders that turn out to be fraudulent.
It is the sort of innovation — both technological and strategic — that will be required to constantly evolve as the retail landscape continues to evolve at warp speed during the time of coronavirus and well beyond.
This article first appeared in the 'Future Tech' edition of the Sync NI magazine and it can be found here.
