Manhattan Associates predicts omni-channel customer service, AI-driven personalisation and dynamic delivery to shape retailer strategies in 2017

Manhattan Associates, Inc. predicts etailers establishing a high street presence, dynamic fulfilment innovations, wider adoption of artificial intelligence and AR/VR technologies, and a shift to "omni-channel customer service" will be key themes for the retail industry in 2017.

Henri Seroux, senior vice president, EMEA at Manhattan Associates, commented: "Retailers need to be ready to meet the fleeting demands of 'loyal consumers' who want a personalised, streamlined and consistent service experience, no matter what the channel. As consumer expectations rise, technological innovations advance, and economic conditions continue to challenge, the pace of change in the retail industry in 2017 will accelerate with profound implications for the way consumers engage and how retailers operate across channels. We see five key trends that are likely to influence the UK retail scene and shape retailer strategies in the coming year."

  1. Pure-play Moving In-store
  2. A New Level of Dynamic Delivery
  3. Artificial Intelligence a Game-changer for Personalisation
  4. Virtual and Augmented Reality to Reshape Retail
  5. Enterprise Grade OMS Key to Omni-channel Customer Service

1. Pure-play Moving In-store

Over the last year or two, a number of highly successful etailers have opted to establish a physical store presence. And this trend is only going to continue during 2017, with online stores increasingly looking to fill real baskets as well as virtual ones – whether that's via a pop-up concession, permanent store or retail partnership. The 'novelty' of online-only shopping has worn off for a large number of consumers.

This trend has picked up steam perhaps most notably in the US with Amazon opening the first of potentially hundreds of bookstores, planning multiple pop-up stores to showcase its hardware devices, particularly its Echo home speakers, and its trialling of the "zero-queue" Amazon Go grocery store concept. Here in the UK, fashion etailer Missguided opened its first store in London in 2016 whilst Asos gained a high street foothold through its partnership with Asda toyou. Other examples from recent years include eBay, which allows customers to collect and return goods to a high street store via its collaboration with Argos, and online luxury menswear brand Mr Porter which has successfully opened several pop-up stores. Chocolatier Hotel Chocolat and furniture retailer both started out life as online only retailers and today operate with physical stores and showrooms respectively.

Research conducted by Manhattan Associates in December 2016 revealed that the top two reasons consumers visit a physical store are to try out and feel a product before buying, and to get the product "there and then". With the click-and-collect trend gathering pace and with consumers becoming increasingly demanding in terms of having access to a location, other than their home, where they can conveniently collect and return goods, more and more online-only retailers are considering the merits of a physical store presence. The real challenge in 2017 will be for these retailers to seamlessly transfer the brand identity they have created online to the retail store environment.

2. A New Level of Dynamic Delivery

58 per cent of UK consumers are choosing to shop in-store in order to get the product there and then[1]. With this in mind, retailers are having to respond by ensuring their online delivery and fulfilment methods also meet the expectation of instant gratification as closely as possible. Moreover, as online and in-store channels merge, retailers will have to work harder than ever to ensure that the consumer experience over 'the last mile' is consistent.

Amazon managed a staggering 13 minute click-to-delivery service with their first ever customer drone delivery. Whilst this kind of fulfilment approach might not become the norm straight away, Amazon's historic achievement will likely inspire other retailers to instigate trials of their own in the not too distant future.

Drone delivery isn't the only fulfilment method that has attracted an increased level of investment. Other fulfilment innovations are being rolled out. For example, at the end of 2015, Asda launched its pioneering toyou service. In partnership with a number of household brands, the service allows deliveries and returns to be made at greater convenience to the consumer. Courier services such as Deliveroo and Stuart have also expanded their services, providing retailers with another delivery option.

In 2017 there will be a more collaborative approach by retailers to respond to the consumer want / need to have something delivered within hours or even minutes. This is not only being driven by consumer demand, but also by retailers wanting to introduce greater efficiency to every aspect of their service operation. The real trick will be to give customers what they want, when and where they want, while ensuring new fulfilment options are not a drag on profitability.

3. Artificial Intelligence (AI) a Game-changer for Personalisation

Customer service chatbots were all the rage last year, with some commentators describing them as AI in action. But most chatbots use more guesswork than any real intelligence. With the scope and complexity of a chatbot determined by the creator's algorithmic aptitude and degree of data access, most chatbots today make a "best guess" as to the most likely answer for any given question and lack the computational strength to really customise and personalise.

While human-like logical reasoning, inference, and decision-making by a computer is still a way off, there has been remarkable progress in the application of AI techniques. This is in part due to the ability of AI to encompass natural language processing, neural networks and deep learning, and in part because of the wealth of data now available that AI can accumulate over time and learn from. All of which helps AI technologies better think, talk and categorise concepts and makes them easier to interact with.

The North Face's launch of its digital shopping assistant last year was one innovation that took personalisation to the next level, quickly and intelligently determining customers' needs through serving up real-time recommendations to an online shopper simply by asking a series of intelligent questions that allows the consumer to respond using their natural language. In less than two minutes it can ascertain what the customer wants and for what purpose, what style they're looking for, in what specific colour.

Similarly, Macy's recently piloted its AI-powered "Macy's On Call" in-store shopping assistant to provide shoppers with information as they navigate their way around 10 of the retailer's US stores. After customers have submitted a question on where specific products, departments and brands are located or about what services and facilities are available in a particular store, the cognitive mobile web tool serves up relevant and customised responses.

Whilst these are just a few of the AI applications currently being developed and trialled by retailers, AI clearly has the potential to have a huge impact on customer service expediency, particularly where it can plug into a retailer's data on enterprise inventory and its customers. With AI assistants like Amazon's Alexa, Google's Assistant, Apple's Siri and Microsoft's Cortana becoming more pervasive, they continue to accumulate more data and personal information to learn from and make them even more powerful. Imagine a world where retailers could combine AI technologies with sophisticated Order Management solutions that possess rich data on inventory and customer transactions. Such a world may not be that far away, meaning it won't be too long before retailers know a consumer's interests and tastes better than they do and will be able to pre-empt purchases and preferred fulfilment options before they even realise they have a need.

4. Virtual and Augmented Reality to Reshape Retail

For several years, there has been much hype around an impending explosion in the commercial deployment of virtual and augmented reality (VR/AR) to enhance the consumer buying experience and drive enterprise sales revenues. With wearable tech having become more accessible in the last 12 months and businesses investing more in apps that allow consumers to engage in a more immersive browsing experience, 2017 might just be the year when VR/AR moves from niche to mainstream. BMW teaming up with Accenture and Google Tango to create an app that allows customers to visualise how various car models would look in real-world situations, Sephora's Virtual Artist app that gives users a chance to immediately see how a certain make-up colour looks on their face, and US home improvement retailer Lowe's Holoroom which enables customers to design their dream kitchens or bathrooms on an app, and then, with VR goggles, virtually step into the design, are just a few of the apps launched in the last 15 months.

What's more, with major players of wearable tech looking to extend the positioning of their products into the B2B market, 2017 could also see the introduction of VR/AR technology onto the shop floor, allowing store associates to have one foot in the virtual stockroom at all times. Wearing a HUD (Head-Up Display) device or smart glasses would allow a store associate to be well informed and answer some of the most difficult questions about products, their availability, fulfilment options and costs, all in real-time, without ever having to leave the customer's side or even look down at a tablet or smartphone.

5. Enterprise-grade OMS Key to Omni-channel Customer Service

Retailers across the globe have dedicated themselves over the last 7 to 10 years to optimising their front-end sales processes and systems, often investing in an enterprise-grade commerce platform as one of the cornerstones of their transformation to an omni-channel operating model. Many of those companies have in the last few years turned their attention to building the equally important back-end processes and systems that will allow them to provide the truly seamless, integrated, omni-channel service experience consumers have come to expect. A key part of this effort has been the adoption of an enterprise-grade Order Management System (OMS), now regarded by leading retailers as an equally important technological component in the formulation and execution of a successful omni-channel strategy.

More and more retailers are recognising that a joined-up customer experience and a single view of both the customer and inventory is becoming a prerequisite to modern retailing success.

The adoption of an enterprise-grade OMS is crucial in order to keep up with increasing consumer expectations and allow retailers to stay competitive in a market where choice is boundless and customer loyalty can be fleeting. Whether you're offering something via an app, on a website, in-store on through a call centre, you should be able to tell a customer a) if it's in stock, b) how quickly you can get it to them, c) which fulfilment options are available / most convenient for them, d) how they can pay for it, e) that they can pay, return another product of differing value at the same time, and can complete multiple transactions with a single swipe of their credit card, and be able to do all of this whilst ensuring the business can make a profit on every transaction.

Only six per cent of retailers believe they have an accurate picture of inventory across the business 100 per cent of the time whilst one in three consumers would choose to shop elsewhere or not buy the product at all if it wasn't available on the store shelf[2]. These figures should and will inevitably rise as more retailers begin to recognise the importance of an enterprise-grade OMS so they can provide customers with real-time information on product availability and do everything in their power to ensure a sales opportunity is never missed.

[1] OnePoll research, commissioned by Manhattan Associates, Dec 2016
[2] OnePoll research, commissioned by Manhattan Associates, Dec 2016

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