Being Attractive – Or What Retailers Will Offer in 2040

The retail industry has changed rapidly over the years. New technologies and market conditions mean that retailers are constantly facing new challenges. In this article, we highlight three key conditions that companies in the retail marketing sector must deal with in order to remain competitive.

Availability of goods and the central importance of communication

Due to the uncertain conditions in the global economy, such as pandemic-related disruptions in supply chains or geopolitical tensions, the availability of goods has become one of the most important factors in retail. Consumers today not only expect products to be available, but also seamless and transparent communication with retailers.

The key challenge for retailers is to manage inventory levels efficiently while also ensuring close and continuous communication with customers. Warehouse transparency and availability are only part of the puzzle. To increase customer loyalty and build trust, interaction between consumers and retailers is becoming increasingly important. This applies not only to classic customer service, but also to digital and physical communication – whether via social media, messenger services, flyers or chatbots on the retailer's website.

The importance of creating customized experiences is demonstrated by a survey in the US in which more than half of retailers said that personalized customer experiences and inventory visibility were among the top two technology areas in need of improvement.

This is the only way to meet customer needs and build long-term loyalty.

Creating meaningful customer journeys with growing amounts of data

“The fact is, retailers who address customers in the right way sell more. In the future of retail, the right way will be personal, individual, and across all available channels, making optimal use of the possibilities offered by digitalization while, of course, incorporating the necessary emotionality. The road to such excellence, to an optimal shopping experience, is long and rocky, and the challenges are great. However, in my view, there is no alternative route.” - Dr. Markus Ackermann, Member of the Executive Board, Multichannel Distance Selling, Otto Group in Handelsblatt Journal.

In today's digital world, the path of a customer from the first contact with a brand to the act of purchase is anything but linear. Customer journeys are often complex and involve a variety of touchpoints across different channels – from online shops to social media to physical stores, printed communication and apps.

The tension between creating meaningful customer journeys and dealing with an enormous amount of data is one of the biggest challenges in modern retail. Access to data has never been as easy as it is today – from personal preferences and shopping behavior to location data, social interactions and search histories. Nevertheless, there is a risk that these data volumes will not be used efficiently or even misunderstood.

“Increasing data volume – it is necessary to capture and analyze the data and then operationalize insights across all channels so that retailers can reach a potential customer or supplier. For example, it has been observed that some 74 zettabytes of all the data created in the world in 2021 was unstructured.” - Research Nester.

Another aspect is the aggregation and harmonization of data on a global scale. While large retailers such as Amazon and Walmart already use globally networked systems, smaller retailers also need to coordinate their data on a regional and international level in order to keep track of it. This makes personalizing the customer journey while using data efficiently a real challenge.

The solution lies not only in technology, but also in strategic data integration. By using data analytics platforms, companies can make personalized offers based on real-time data that adapt to the customer's journey. This creates a coherent and targeted experience that accompanies the customer from initial contact to purchase.

Technological integration and protection of the business model

“The question used to be: how do you get the product from the factory to the fridge? Today, the question is: how do you get the data from the factory to the fridge and back?” This expansion of product logistics into data logistics shows how fundamentally retail has changed. The technologies used in retail today permeate all areas – from warehouse and store management to customer interactions and consumer analysis.

Technologies such as cloud-based systems, blockchain and IoT (Internet of Things) enable greater visibility and traceability of products and inventory. But not only that – they also provide a platform for customer data analysis, which has increasingly become a competitive advantage in recent years.

However, the question of how to compete in an increasingly saturated and digitized market, against competitors that are both physical and virtual, remains one of the biggest challenges. Protecting the business model and continuous innovation are essential. In view of the multitude of new business models that are being enabled by digital technologies – such as direct-to-consumer approaches, online marketplaces or subscription services – retailers must continuously question and adapt their existing structures.

This means that competition takes place not only in the physical world, but also in the digital world. Technologies not only offer new opportunities, but also new threats. To remain competitive in the digital world, retailers must both protect their business model and integrate new, innovative technologies into their strategy.

Supply Chain Management

In summary: Customization is the key

The future of retail will be characterized by a dynamic interaction between technological innovations and changing consumer needs. Retailers must continuously adapt to keep pace with the ever faster changing market condi­tions. Technologies such as AI, AR and VR, new business models, the development of new sales channels and the intelligent use of consumer data offer opportunities to stay ahead of the competition. At the same time, they must take into account consumers' growing expectations in terms of convenience, experience and ethical responsibility. The retail trade of the future will have to strike a balance between technological progress and the emotional needs of consumers – a challenge that can be successfully met with the right tools and an agile business strategy.