“Commerce Everywhere” Through the Lens of the European Retail Kaleidoscope

21 Feb

“Commerce Everywhere” Through the Lens of the European Retail Kaleidoscope

Ornella Urso 
Research Analyst, IDC Retail Insights
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Retailers are now offering their customers real-time (anytime) contextual experiences whether they are online or offline (everywhere). Leading brands are engaging with consumers and discovering what products and services they might need or like. Voice assistants and image recognition are some of the disruptive technologies that are radically changing the retail sector and, after years of change, retail is now all about “commerce everywhere.” Brands are reaching out to their customers through multiple interfaces rather than channels, and they can do it from any location or space and at any time.

The European retail market is more multifaced than ever, a kaleidoscope of patterns, colors, and sounds. IT investments are shaped by external drivers such as cybersecurity and the issues around digital trust, AI-driven transformation, customers’ data management and integration, retailers’ changing organizations, and collaboration between lines of business and IT departments. At the same time, national economic, political, and legislative policies challenge the status quo and push retailers to change and innovate even more.

A recent IDC Retail Insights webinar discussed some of IDC’s predictions for the retail market in 2019 including:

  • DX acceleration among the “digital determined” will result in 25% of European retail organizations advancing to stage 4 of DX maturity by 2020.

Europe retailers are increasingly moving from contextual to disruptive innovation. Overall, European retail organizations lack a clear innovation strategy, and not all retail organizations in Europe have adopted a digital “core” platform. According to IDC’s 2018 Innovation Survey, around 50% of European retailers have already implemented a retail commerce platform, with the remainder planning to adopt one in the next two to three years.

  • 50% of European retailers plan to implement a digital core platform by year-end 2019, and this will enable faster innovation and the leveraging of insights to drive intelligent action.

The European retail market is growing, and this represents a major driver for retailers to further accelerate investments in the retail commerce platform. Differences persist across segments and countries, however. The likes of Ocado, Zara, and John Lewis continue to invest in retail commerce platforms and have been increasing their profitability. Food/grocery and fashion/apparel companies are more advanced than other sectors, while retail companies in Germany and the U.K. are above the average compared with their European competitors.

AI is the foundational element of the platform and is the key enabler of contextual real-time customer experience personalization.

  • By 2021, 40% of European retailers will provide real-time contextual experiences wherein conversational search is empowering, services find customers, content supports sales, and consumers monetize their data.

Innovation-related investments focus on AI, AR/VR, and IoT technologies that give retailers complete access to and visibility of data, and the opportunity to innovate toward new business models. The webinar highlighted the central role of the mobile as the go-between between consumers and brands. Although all these trends show that European retailers are keeping up with their global peers, the situation is different in the delivery performance and the related need for retailers to meet customers’ expectations on product traceability.

  • By 2020, European retailers will increase track-and-trace and predictive agile execution investments by 40% to meet consumers’ expectation for real-time order visibility and perfect delivery performance.

Over 2019, European retailers plan to invest in omni-channel fulfillment and logistics management solutions (33% and 36% respectively, according to IDC’s European Vertical Market Survey, 2018–2019). In the next two years, retailers’ investments in digital supply chains and predictive logistics are expected to be 10% higher than in the U.S. The introduction of RFID tags to record and track products, as in the case of Decathlon, shows how it is possible to reduce labor costs while improving security, shelf availability, and track efficiency, and, ultimately, increasing customer loyalty and trust.

By leveraging advanced technologies, retailers can effectively limit the risk of data breaches and be more GDPR compliant. Data security and customer experience are among the top business and security priorities for European retailers in 2019. They will, in turn, guide retailers’ strategies and opportunities to differentiate over the next year in commerce everywhere.

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