THE ONLINE STORE OF THE FUTURE - HOW TO PREPARE YOUR BUSINESS AND WIN - The Consumer Goods Forum
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THE ONLINE STORE OF THE FUTURE H O W T O P R E PA R E Y O U R B U S I N E S S A N D W I N
Introduction
We track retail innovation around the world and one
of the most fascinating areas to follow has been the
rapid development of online shopping. However, we
think the biggest transformation is still to come thanks
Contents
to factors like artificial intelligence, smart homes, 5G
and the next wave of young e-shoppers. Executive summary p3
That’s why we’ve followed up last year’s physical store Change or fail p4-7
of the future report with our vision for the online store.
What will it look like and how will it
This report transports you five years ahead to reveal be used p8-13
the digital store you need to start planning for now
and gives you advice on where to build your business Preparing for this future p14-21
capabilities.
Next steps p22
We are very grateful to all the
experts globally that have
contributed. I do hope it helps to
prepare you for a very different
future and to win.
Joanne Denney-Finch OBE
Chief Executive, IGD
Research approach
In this report we answer three questions. In the next We also conducted an industry survey to test our vision
five years: and understand levels of preparation. We had 223
respondents from 42 different markets, from senior
1. What will the online store of the future look like? roles, including CEOs, vice presidents and directors.
2. How do you prepare for the future? We’ve drawn on the knowledge of IGD’s global
team of experts in online shopper insight, online,
3. What are the future considerations for your
technology and supply chain.
business?
The IGD team travel the globe from our offices in
We offer our view of the future, a benchmark of
London, Singapore and Vancouver to meet with
capability and an action plan to help you prepare.
retailers and manufacturers, and to see best practice
in action. We’ve accessed this innovation tracker to
To explore these questions, IGD has interviewed
illustrate the report with examples and case studies
global heads of ecommerce at grocery manufacturers
from around the world.
and some of the world’s leading online retailers.
2 IntroductionExecutive summary
Online stores will evolve rapidly to meet shoppers’ changing expectations, enabled by transformative
technologies. The online store of the future will contain five key features:
1 2 3 4 5
It will be a It will act as a smart It will be more It will help give It will at times be
shopper’s personal personal assistant, efficient for shoppers a invisible, with
micro store with connecting with shoppers, easier frictionless shoppers buying
individualised various devices, and quicker to combined products from
and online- preventing shoppers order products. offline and shoppable digital
exclusive products, from running out They’ll incur less online shopping content. In the
personalised of products and food waste, as meal experience. It will future, people can
promotions, supporting their planners help with provide extensive be shopping at any
recommendations, lifestyle goals. ordering quantities. information time.
advertising and Fulfilment levels wherever people
loyalty schemes. will improve, and in shop, bring
71% 53%
* cities, deliveries will personalisation to *
be very quick and the physical store
77%
* think some retailers convenient. and help shoppers say they are
will provide a service find and pay for prioritising the
think almost to use the data products. development
82%
all digital from connected * of omnichannel
communication to devices to provide marketing solutions
53%
consumers will be personalised dietary think grocery * throughout the
personal recommendations service levels will be shopper journey
significantly better say they haven’t or
than today have just started to
fully integrate their
online and offline
teams
Most CPG companies Ten focus areas
are not prepared for 1. Understanding shoppers 6. Omnichannel marketing
this future. 54% of
* 2. Omnichannel structure 7. Financial management and KPIs
54% respondents in our and processes
8. Leadership and agile culture
industry survey are only 3. Flexible supply chain
just starting to prepare. 9. Competition and new routes
4. People and skills to market
5. Range and choice 10. Future technology
*respondents to our industry survey
Executive summary 3Change or fail Grocery retail is seeing an unprecedented amount of change, driven by changing shopper expectations that can be met using transformative technologies.
Grocery retail is undergoing a revolution, driven by Societal shifts and transformative technology in
rising shopper expectations. Longstanding needs can particular, will shape the online store of the future:
now be met in new ways thanks to new technologies.
Societal shifts
Shopper expectations
• Health consciousness continues to rise. Online
Shoppers seek many things, but above all: stores must be able to offer a wide range of
healthy products, and make them easier to find.
• value (combining price with quality)
• choice • Populations in most developed countries are
• convenience aging, so online stores will need to provide
convenient ordering and fulfilment plus
This remains constant, yet shoppers’ expectations of appropriate pack sizes.
how these needs should be met continually evolve.
• Globally, the population is urbanising. Kitchens
At IGD we’ve developed a STAR framework to are getting smaller, with less storage space. The
categorise the forces of change. online store must cater for new missions, offer
faster fulfilment and new services.
Transformative technology
Societal Shifts Transformative • Artificial intelligence (AI) is rapidly advancing
Ageing population, Technology which will enable the online store of the future to
urbanisation, time Artificial intelligence, be more personalised and to anticipate demand.
poverty, health and big data, Internet of
wellbeing Things and robotics • We are increasingly surrounded by a network of
smart, interconnected devices. It means shoppers
will be able to access the store whenever and
wherever they want, through screen-based or
STAR model voice-activated devices.
• Developments in robotics, such as the picking of
products, drones and autonomous vehicles means
the online store can provide more convenient,
Altering Resource
efficient fulfilment.
Authorities Resilience
Data regulation, Efficiency, future
The shopper of the future will therefore expect more
big business and workforce and
choice, convenience, inspiration, personalisation and
start-ups skills gaps
transparency. Online stores will play an essential part
in meeting these needs.
Change or fail 5Intensity of competition Reasons to prioritise online stores
Digital commerce brings new, innovative competitors We sometimes hear people say that online retail is not
and greater price transparency. Our industry survey a priority for their business because sales are too low
showed: and costs too high. This is a risky position for three
main reasons.
Competition on price
78% of respondents think 1. Across the world, online is one of the fastest-
78% shoppers will use online price
comparison services more
growing grocery channels.
regularly to switch to the
cheapest retailer 2. Online and offline grocery shopping are merging,
and an online store will be increasingly vital to
complement the physical store.
Competition from specialists
3. The digital world evolves faster than the physical
67% of respondents think
world. Online stores will become increasingly
67% shoppers will be able to use a
wide range of specialist online compelling. New generations of shoppers will be
retailers supported by a common less set in their ways and more likely to view online
and consistent delivery service ordering as the norm.
x2
In 2017, Walmart stated that
shoppers purchasing online as well as
Competition from manufacturers
in-store, spend nearly twice as much
75% of respondents think
75% many more manufacturers will
as those that don’t shop online
be using digital to sell directly
to consumers
Alibaba’s executive chairman, Jack Ma, has said...
New services are exploring focused opportunities,
“
e.g. using online marketplaces to smooth cross-
border commerce, home meal delivery and meal
box providers. In China, consumer-to-consumer
The boundary
commerce is growing and taking sales from retailers. between offline and
online commerce
disappears as we
focus on fulfilling the
personalised needs of
“
each customer
6 Change or failYou can also read
