Retail and CPG: Commerce Predictions for 2019

December 12, 2018

Last year over 7,000 retail locations shuttered, popularizing the perception that “retail is dead.” In fact, the reality is technological advancement, and evolving consumer habits, have fueled unprecedented innovation in commerce with healthy growth in retail over the last decade. As industry innovators are contributing to ongoing disruption and are evolving consumer expectations, these dramatic changes bring an opportunity for new leaders to emerge and shape the future of commerce. In particular, to lead in 2019, data—and how it’s used—will become the most important factor of success for retailers and CPG companies to prove relevance with consumers. Here are five key trends we expect will shape how brands connect with their customers in the coming year. 

  1. Data Unification Will Be the Priority
    While many companies are still working to achieve meaningful personalization at scale, brands will prioritize strategies—and make key investments—to unify data across the enterprise and customer touchpoints. Our own global research study found that 59% of companies with a data governance framework can more effectively provide a cohesive customer experience. In turn, the coveted 360-degree view of the customer will start to form, allowing retailers to better understand their customers' needs to personalize customer journeys. 
  2. In-Store Experience Will Be Fundamental to Success​
    Research conducted by IBM and the National Retail Federation (NRF) all about Generation Z, who are set to become the biggest generation of consumers by 2020, found that 67% prefer shopping in a store. Beyond the value of a brick-and-mortar location to provide an immersive, experiential shopping experience, retailers are also is expanding delivery and pickup options for online shoppers. Omnichannel technology is turning the corner on being both mature and cost-effective enough to support retailers.  ​
  3. Consumer Goods Brands Will Get Closer to Their Customers
    Brands that have traditionally relied on distribution through third-party vendors want more information about who is buying their products. CPG companies will seek to expand their business into the direct-to-consumer market by adopting new platforms and forging new partnerships. To stay aligned with consumers’ preferences, these companies will deploy new business models that allow access to real-time data to improve customer experience and increase revenue. 
  4. AI Will Help Brands Activate the Right Data
    90% of retailers globally feel the pressure to evolve toward experience-based business models. Making the move will require using AI to derive value from data, but to activate it effectively and power personalization across every customer interaction, the data needs to be centralized and integrated across the entire organization. AI-led automation is already proving to be a powerful differentiator in retail. In 2018, personalized product recommendations and intelligent product sorting increased gross merchandise value (GMV) by surfacing highly relevant products in real-time. As additional AI use cases mature, companies will see greater returns on investment through enhanced search capabilities, like visual search, and by providing shoppers with inventory visibility and weather insights that impact delivery times. 
  5. Data Privacy Will Make or Break Reputations
    Consumer demand for fast, easy, and convenient shopping brings a broader risk exposure to security vulnerabilities. Meanwhile, highly-publicized data breaches, including Facebook’s data protection issues, and the EU’s GDPR regulations have made consumers more concerned about their data privacy than ever. Consumers are willing to share personal data in exchange for better service, but also expect more control of their personal data. To earn the trust of consumers, companies will take a more comprehensive approach toward data protection and security. By 2020, retailers will have raised annual spend on data privacy safeguards by 25%. Security initiatives will need to both evaluate and mitigate risks while ensuring privacy, confidentiality, integrity, and availability. In practice, companies driving customer experience that is event-triggered and/or contextually personalized will need to consider if they’re possibly threatening a shopper’s sense of privacy by delivering unexpected offers. Additionally, as data breaches continue to be a common occurrence, companies with vast data lakes will need to ensure that customer information is protected at all costs or risk losing the trust of their customers.

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