A few decades ago before the surge of the new technologies, retail only meant a physical store. The retail industry has changed totally in the past few years. Internet and the development of the e-commerce has changed the industry and the consumer behavior. Also, the new technologies have enabled consumers to research and shop anytime and anywhere.
However, even if the way of buying goods has changed for consumers, the motivation behind their purchases are the same. They want their goods as soon as possible, and at a reasonable price.
As part of my end-of-studies internship, I am currently working in Brand Management at Luxottica in Singapore. According to Luxottica’s own website, “Luxottica is a leader in the design, manufacture and distribution of fashion, luxury, sports and performance eyewear. Among its core strengths, a strong and well-balanced brand portfolio includes proprietary brands such as Ray-Ban or Oakley, and prestigious licensed brands such as Giorgio Armani, Burberry, Bulgari, Chanel or Dolce & Gabbana.” The company is currently in a process of merger with a top French company: ESSILOR.
As part of my internship, I am currently responsible for the Luxury Brands Portfolio and manage a portfolio of 7 eyewear brands (Coach, D;G, Giorgio Armani…) across 4 markets (Malaysia, Thailand, Indonesia, Singapore) in South East Asia.
The reason why I am writing my thesis about the technology in the retail industry is because during the past few years, I have developed a strong interest towards the retail industry, and I got very excited by the new technologies: which is the reason why as part of my last year of study, I decided to study the future of retail, and especially how the new technologies are changing the way we purchase goods. In this thesis, I will discuss the profound impact that technology is having on brick-and-mortar retailers and explain how retailers that understand the implications of these changes, and adapt their retail business models to these new technologies will be successful. Luxottica is contributing for 85% of the market share of the eyewear industry. It is very important for such a big retail company like Luxottica to understand how the technologies will impact the retail industry.
In the first part of this thesis, my main focus will be the explosive growth of E-commerce. Then, I will discuss about the new retail store formats integrating new technologies, and to conclude, I will talk about how Artificial Intelligence is redefining the retail experience.
In this thesis, all my analysis and my insights have been based on the survey I had conducted on 40 people.
1.1Origins of Shopping:
Shopping malls have been existing since a very long time. In ancient Greece, the central shopping area of the villages was called “the agora” and it was defined as a vaste, open area in which people were displaying and selling their products.
Shopping malls are not the result of wise planners deciding that suburban people, having no social life and stimulation, needed a place to go (Bombeck, 1985). The mall was originally conceived of as a community center where people would converge for shopping, cultural activity, and social interaction (Gruen ; Smith, 1960).
The huge expansion of the malls started in 1960. At this date, in the United States, there was approximately 4000 malls contributing for 15 % of the total retail sales. In 1976 there was 16400 shopping centers representing 34% of the total sales. In 1987, there were 29000 malls contributing for more than the half of the retail sales. Today, shopping centers are now everywhere in our daily lives.
Since the mid 90’s, internet has become a big disruption in the retail industry. People can now search for the product that they want online, place their orders, and get it deliver in a few days at their own home. The B2C business model has made it very convenient for shoppers to choose a product online from a retailer’s website and to have it delivered very fast. Using online shopping methods, people do not need to go in-store, and save much more time, and also the cost of the travel.
Shoppers enjoy going to shopping centers. We like to see the product, touch it, as well as the contact with the sales staff asking for more advices, or simply the fact of being treated well, like in the luxury shops.
According to a report from Brennan Bridget in Forbes in 2015 “If the consumer economy had a sex, it would be female. Women drive 70-80% of all consumer purchasing, through a combination of their buying power and influence. Influence means that even when a woman isn’t paying for something herself, she is often the influence or veto vote behind someone else’s purchase.”
In this report, we can also see that Women are the world’s most powerful buyers. Their global impact on the economy is growing more and more every year. According to EY, The global incomes of women are predicted to reach a staggering $18 trillion by 2018.
1.2 Research Problem:
The objective of this thesis is to analyze the new strategic opportunities that digital is bringing to the current traditional retailers.
Berman defines retailing as “the business activities involved in selling goods and services to consumers for personal, family, or household use. It is the last stage in the distribution process”.
With the very fast growth of digital and the new ways of buying product online, the retail concept needs to be review due to the changes that these new technologies are bringing to consumers.
The objective of most of the companies it to reach a point where the company is sustainable. In order to do that, they need to innovate.
Since a few years, we assist to a mobile revolution which is completely reshaping the retail industry with a fast-growing number of people using everyday their phones to buy products.
This Thesis has for objective to explore the opportunities that these new technologies are bringing to the retailers, and how these retailers are going to adopt the new technologies in their business model in order to keep their business healthy.
1.3 Research questions
This thesis demonstrates a structure to identify the main disruptive technologies for current brick-and-mortar retailers. First of all, in order to do that, we will need to understand the aspects that affect the behavior of the modern consumer.
What are the reasons behind buying product and/or services, and what are the most important factors in the consumer’s journey. Here is the first research question :
1.Why is E-commerce the fastest growing retail channel ?
Digital transformation has impacted how people exchange value with each other. In this thesis, we will examine the opportunities created by these digital technologies and the new strategies that retailers needs to adopt in order to stay profitable. This ideas are reflected in the second research question :
2.How physical retail stores will be integrating new technologies, and which one ?
After that, we will go more into details and understand how one of the most promising technology can really have a huge impact on the retail industry in-store, as well as online. This appears in the third research question articulated below.
3.How Artificial intelligence is redefining the retail experience ?